With Covid-19 restrictions easing, plans are afoot to revitalise Australia’s city centres, even though international students and office workers may never return in the same numbers. By Max Opray.

How Covid-19 will change cities

As far as launching a cafe goes, Chris Ashton could have timed it better. A prime location in Adelaide’s central business district doesn’t count for much when the streets have been emptied by a pandemic.

Office workers are now largely home-based, international students have flown home and tourists are locked out of the country entirely. “I’m barely covering the wages of the baristas,” Ashton says.

But there is a lifeline: a building site just down the road. “The construction workers there are well employed, and they come by for coffee or a takeaway focaccia,” he says.

There are plans for another high-density residential building on the street, which could send more builders Ashton’s way – not to mention residents once it is finished.

However, just as it’s a bad time to be launching a cafe in the middle of an Australian city, it is also a bad time to be selling apartments.

Analysis from SQM Research showed Australia’s residential rental vacancy rate recorded a one-month jump from 2 per cent in March to 2.6 per cent in April. But for CBDs, the numbers are far worse.

In the same month, vacancy rates in Sydney’s city centre jumped from 5.7 per cent to 13.8 per cent. Melbourne rose from 5 per cent to 7.6 per cent, while Brisbane spiked from 5.7 per cent to 11.3 per cent.

“This is one of the largest one-month rises ever recorded on our vacancy rates series. The blowout in rental vacancy rates for the major CBDs suggests a mass exodus of tenants occurred over the course of March and April,” SQM Research managing director Louis Christopher said in a note accompanying the findings.

If the high vacancy rates are sustained through the year, Christopher says, city tenants may enjoy vastly cheaper rent, but new challenges will arise. “There will also be economic consequences with further sharp falls in building approvals likely, thereby risking a major depression in our residential construction sector as well as the rather obvious risks for housing prices,” he cautioned.

There is a particular threat to the international student housing projects that have been springing up in city centres in recent years.

A report by property services provider Savills Australia detailed occupancy-rate falls of between 20 per cent and 50 per cent reported by student accommodation operators, with just 30 people – in total – arriving in Australia on a temporary student visa in April.

Savills Australia student accommodation director Paul Savitz is nonetheless bullish on growth in the sector continuing, telling The Saturday Paper there was a severe undersupply of student housing prior to the pandemic.

His report forecasts that Australia’s success so far in suppressing the virus will see it gain an advantage over education rivals. “If you look at competitor nations in the US, UK and Canada, in terms of handling the virus, ask where you would rather study,” he says.

The sector appears to be banking on Savitz’s prediction coming to pass. This month, Savills Australia was involved in M3 Capital Partners’ $2 billion sale of its 6875-bed Urbanest Australia platform to student housing operator Scape.

The deal includes 14 student accommodation facilities in Sydney, Melbourne, Adelaide and Brisbane.

Australian National University higher education analyst Andrew Norton is more cautious, telling The Saturday Paper that even if “fairly optimistic scenarios” of a recovery by 2021 come true, there will still be a flow-on effect for student accommodation.

“The people who would have been first-year students this year will not be second-year students in 2021, or third-year students in 2022,” he says.

Norton is sceptical that demand from domestic students will make up for any international shortfall.

“Even assuming there is an increase in domestic undergraduates, I expect the already high rates of living at home of young university students will increase as students and families try to save money,” he says.

The challenges for CBDs extend well beyond international students. Google location tracking technology indicates a drop of 22 per cent of people in workplaces compared with baseline numbers, denting commuter numbers in city centres.

Fewer people are visiting shops, too. In the four weeks to May 25, Melbourne’s retail-heavy Bourke Street Mall recorded average pedestrian numbers of 6476 a day. Typically, the busy shopping strip would see more than 25,000 people on an average day.

As shutdown measures ease, foot traffic will return, but not necessarily to previous levels.

Chris Pettit, a professor of urban science at the University of New South Wales’ City Futures Research Centre, says that while workers have been able to work remotely in the past, it is only now being put into practice as a norm.

“We’ve found 40 per cent of workers can telecommute, but there’s been issues of trust and culture within organisations,” he says. “Now people have been working at home full-time, what does it mean for offices if they now prefer to do that two or three days a week?”

Then there’s tourism, with bookings and revenues for Airbnb dropping by more than 70 per cent in Sydney and Melbourne during April.

Pettit has been analysing the impact of Airbnb on the housing market, and says it has had a significant impact on rental prices in Australian cities. “This development could be a very good thing for housing affordability,” he says.

If lower rents eventually coax more residents into city centres, urban planners are considering how these spaces will adapt.

Operating out of his studio in the Perth CBD, RobertsDay urban designer Peter Ciemitis is one worker still supporting retailers in the city centre, grabbing lunch at cafes down the street and provisions from the deli below his office. He’s seen the change firsthand.

“Walking around, it is clear that the CBD has become an estranged place,” he says. “Its mood has dampened; it is no longer convivial and lively. There are few people on the street, and it feels that there is an undercurrent of social anxiety.”

He thinks about the Spanish flu pandemic of 1918-20, which prompted Australia’s suburban “garden city” movement. “We saw better building codes for ventilation, room sizes and crowding,” he says. “We are still enjoying most of these legacies today.”

Ciemitis says those better building codes should mean people are comfortable with living in higher-density buildings, even in the age of Covid-19 – if efforts are made to create space in public thoroughfares.

He envisions wider footpaths through removal of parking strips, and new developments set further back from the street. While this would allow for better social distancing, it would also create more opportunity for socialisation.

Ciemitis sees more space for public art in our post-coronavirus cities, too. “Perhaps we might see pop-up exhibitions helping to reactivate ‘ghost retail’ spaces where more shopping has gone online,” he says.

He says that any attempts to bring people back into cities will need to strike a balance, offering space for people to be comfortable while still allowing for “compact living that makes viable, sustainable walkable cities”.

Around the world, cities are using the lockdown to experiment with pedestrianisation and repurposing shared spaces, and Ciemitis feels Australia should follow suit.

Pettit says city governance needs to be less rigid in its approach. “Cities are highly regulated with three levels of government, so in getting projects off the ground there’s a lot that needs to be ticked off on,” he says.

Vacant offices, for example, could be engaged for vertical agriculture. “Liverpool [in Britain] is looking at how to cluster food industries, on having hydroponics grow in the city, greener buildings,” he says. “Maybe it’s a matter of tomatoes on level 13 and 14 because the law firm in the building doesn’t need as many floors.”

Pettit says the shutdown has highlighted the importance of outdoor spaces, as people escape to parks, and cycle instead of taking public transport.

He points to the NSW government’s announcement this month of trial pedestrianisation programs, alongside a new $15 million Streets as Shared Spaces program, as an example of the kind of initiatives needed to improve the liveability of city centres.

Adelaide’s CBD already features plenty of green space, thanks to a wide belt of parkland that surrounds the city centre, an example of 19th-century urban planning foresight that’s still paying dividends today. But the city is considering a new set of trails as part of the Covid-19 recovery effort.

Chris Ashton’s pop-up cafe sits across the street from the eastern strip of parkland, which provides him with more than just a nice view. Seeking customers beyond the construction workers, he put up a sign in the park advertising takeaway coffee to the hordes of walkers and cyclists seeking a reprieve from the stir-craziness of lockdown life.

“They see the sign and do come over,” Ashton says. Whatever happens next with international students, office commuters, tourists or construction workers, he’s taking solace in the fact those parkgoers are going to keep on walking past, at least.

This article was first published in the print edition of The Saturday Paper on May 30, 2020 as "For cities’ sake".

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Max Opray is Schwartz Media’s morning editor and a freelance writer.

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