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With Omicron keeping office workers at home, Australia’s once-bustling CBDs have become eerily quiet and the small businesses reliant on the foot traffic they used to bring are floundering. According to data from the Property Council of Australia, office buildings in Sydney were only 7% occupied in January 2022. Commercial tenant advocate Tenant Representation Services is reporting vacancy rates of 8.8%, 15% and 15.8% in the Sydney, Melbourne and Brisbane CBDs respectively.
As working from home 2-3 days per week cements itself as the new normal – at least in the short term – we must think of innovative and creative ways to revitalise our CBDs.
Our CEO, Alexi Boyd, recently had the opportunity to be a panelist at the NSW Government’s CBD Summit alongside Premier Dominic Perrottet, Business Council of Australia CEO Jennifer Westacott, and small business owner Renee Baltov from Club Barberhood.
The big take away from the Summit was the need to incentivise people to return to the Sydney CBD by making it a fun, appealing place for people to work, live, and visit.
Of course, the CBD isn’t the only area of Sydney affected by COVID-19; areas like Parramatta and Chatswood are experiencing similar drops in traditional foot traffic, as are popular tourist spots such as China Town and The Rocks. The following solutions apply not just to CBDs but also other centres of economic activity.
Discussions of ‘CBD revitalisation’ also risk prioritising businesses in certain geographical locations at the expense of others. Many suburban cafes, hairdressers, newsagencies, etc. have experienced a booming trade thanks to the popularity of remote work – let’s not leave them behind.
The return of office workers
Office workers were the anchor of CBD economies, supporting small businesses with their morning coffees, lunch hour haircuts, midday massages, and after work drinks. They popped in and out of supermarkets, convenience stores, newsagencies, and pharmacies to grab essential items on their way to and from work.
As much as many CBD businesses would like to see office workers return five days a week, the hybrid work model is likely here to stay, at least for the short term. We can minimise its impact by encouraging government and private sector employers to use rosters to allocate working from home days (at the moment, CBDs are particularly empty on Mondays and Fridays), removing official government recommendations to work from home (as the NSW Government has now done), relaxing mask mandates in offices, and incentivising people to come to CBDs for reasons other than work.
A major incentive for people to visit the city centre is their arts and cultural offerings.
Drawing in visitors with arts and culture
Art, entertainment, and culture are major economic drivers for city centres around the world. For example, a 2019 study by the Chicago Loop Alliance found that arts in the Chiago CBD – including cultural assets, works of public art, performing arts venues, museums, and galleries – generated $2.25 billion USD for the city’s economy each year.
People who come to the city to visit art institutions also spend money at local restaurants, accommodation, and retail. The study found that arts in the Loop (Chicago CBD) were responsible for driving $113.5 million in restaurant revenue, $81.3 million in real estate revenue, $78 million in hotel revenue, and $63 million in retail sales. A staggering 75% of visitors surveyed said that they would not have made trips to the Loop if not for the arts.
If we want to support small businesses in the CBD, we need to support the arts.
Targeted grants and financial support have a role to play, as does amending local regulations to allow for more flexibility. The recent removal of the 2 person per square metre rule in Sydney and Melbourne is an important first step, but more can be done to make it easier to establish music and arts venues, such as the creation of a small bar licence and declaring certain districts special entertainment zones.
Supporting commercial tenants in the CBD
Having a unique mix of thriving small businesses is also a major draw card for CBDs. You don’t travel to the city so you can go to the same big-box retail and fast-food chains – you go to experience the historic pub, the quirky bookshop, the five-star restaurant, the specialty retail store, and unique small business communities like The Rocks.
An important part of revitalising our CBDs is therefore ensuring that their existing small businesses are supported in recovering from the effects COVID-19.
A big sticking point in small business recovery is the burden of deferred debt, much of which is deferred rent. COVID-19 tenant relief provisions are due to expire in NSW and Victoria on the 13th and 15th of March respectively. This situation will need to be managed carefully in order to avoid creating ghost towns full of vacant shop fronts and boarded windows.
COSBOA recommends addressing this issue by extending the moratorium on evictions, funding state Small Business Commissioners to provide compulsory mediation between landlords and tenants, and introducing break lease provisions to allow unviable businesses to walk away from their leases without incurring further debt from future rent liabilities.
Making CBDs more liveable
Increasing local foot traffic is another way to inject energy into our city centres. We can repurpose sections of office buildings as apartments so that people can work from home in CBDs and other centres of activity like Parramatta. We can improve greenery, parks, and public spaces to make these places more attractive to live in. We can activate new cultural precincts by commissioning permanent artwork installations.
These are just some of many suggestions to generate economic activity in our CBDs. CBD revitalisation is a complex topic and there’s no silver bullet that’s going to fix it. Relying on offices to be the economic anchor of our CBDs is not the answer. We need to be willing to support policy experimentation, and not be afraid to try and fail.