COVID will kill CBDs. And that’s a good thing

The usual business lobbyists are calling for workers to return to CBDs, warning that the economy risks destruction if if workers and the community cannot be encouraged to safely return to them:

Renewed COVID-19 outbreaks in Sydney and Melbourne threaten to delay the return to the office of tens of thousands of workers in the nation’s two biggest central business districts, with warnings from business leaders of further damage to the economy…

The prospect of a slow return to the city sparked a warning from Australian Industry Group chief executive Innes Willox that delays risked further economic damage.

“We risk destroying the economies of our major CBDs unless we can encourage workers and the community to safely return,’’ Mr Willox said.

“The vibrancy and ­attraction of our cities depends on people coming into city centres for work and social engagement. In the long term, the longer we stay apart the more damage will be done to our economy”…

“The CBD plays such a significant role in the economy. It’s 25 per cent of the economic value of the state so we do want to have a thriving CBD, and the workers play an important role in this” [Sydney Business Chamber executive director Katherine O’Regan said]…

Australian Chamber of Commerce and Industry acting chief executive Jenny Lambert said a slow return to the CBD would significantly impact not only businesses which operated in the city but hospitality which operated on a face-to-face model.

A little balance wouldn’t go astray, would it?

The fact remains that the CBD’s loss is the suburb’s gain. The decentralisation of activity away from CBDs via working from home (WFH) has revitalised Australia’s suburbs as employees now live, work and socialise locally.

In turn, this forced decentralisation has bestowed many important societal benefits.

WFH has eliminated the need for hundreds of thousands of workers to waste money, fuel and time travelling into a central location to work.

WFH frees up transport infrastructure, eliminating the need for massive investments to expand capacity. It also reduces the need for companies to waste huge sums on expensive office space.

WFH is arguably better for the environment too, given it reduces traffic, congestion and emissions on our roads (albeit offset by more energy use at home).

WFH frees up time and gives parents incidental interaction with their children.

Finally, WFH offers housing affordability benefits and greater housing choice, since it enables workers to live further away from the office, including in regional areas.

With so many Australians now working behind computers in so-called ‘knowledge jobs’, there is little justification in requiring hundreds of thousands of workers to travel to a central location every day on crowded roads and sardine-packed trains. This is both inefficient and archaic.

The main beneficiaries of this outdated business model are property moguls and commercial property owners that would have us make an unnecessary one hour commute, for no productive benefit (more likely a disbenefit) in order to uphold the value of their assets and prop up muffin sellers in the CBD.

We should instead be seizing this opportunity to work more efficiently and cut out a wasteful part of the production process. Unfortunately, there are many loud, vested interests trying to stop that, as illustrated above.

The CBDs have gotten too much political attention and funding for too long. It’s time to shift focus to the suburbs where the bulk of people actually live and work.

Diversifying economic activity away from CBDs should be viewed as being unambiguously positive, not a threat.

Unconventional Economist

Comments

  1. Hernando de Soto

    Many NSW government departments are currently forcing workers to return to the office at least 4 days per week as part of Gladys’ plans to rescue Sydney, North Sydney and Parramatta CBDs.

    Non gov workers are still mostly free to work from home.

  2. MountainGuinMEMBER

    Similar push occurred for Cwth employees. My agency is min 6 days fortnight in the office, but we have been restricted from time to time from having external clients/stakeholders coming into the office.
    So currently the option of living away from the ACT and working remotely is not an option.

  3. Have always felt the daily migration of worker wildebeests was beyond ridiculous. It should have ended decades ago.

  4. “WFH is arguably better for the environment too, given it reduces traffic, congestion and emissions on our roads (albeit offset by more energy use at home).”

    Really? More energy use from what? People using their computers at home instead of people using their computers at work?

      • The Rentier class are beside themselves with fear their little members only cartel is evaporating in front of their eyes.
        Good Job !

      • open the window like i do
        feel the summer breeze which makes me feel fine all of the time

        • kierans777MEMBER

          Or use a fan.

          Those who have worked in buildings in a CBD know they are always way too hot in winter and way too cold in summer as noone sets the thermostat at a comfortable (or energy smart level).

          The energy use of people at home for heating/cooling has to be way less than in CBD office.

      • If workers have to pay for their own aircon/heating they’re more likely to put on/take off a jumper or open/close a window. It’s not like we live in sub-zero temps. Also offices are excessively overheated and cooled.

        As well, it’s healthier without huge numbers on PT and germs circulating in artificial aircon/heating.

      • All fair points. I wasn’t necessarily saying that higher aircon energy was going to happen with WFH – more that it’s what some critics are likely to point out. Keep in mind, too, that plenty of people use way too much aircon, and set it far too warm/cool, so it does have some merit – though hopefully we all learn to use clothes, windows and fans far more first! I only really use aircon with especially cold or humid or hot days, particularly if I really need to focus or be productive.

  5. … How will entities resisting this change attract staff ? …

    APS (Australian Public Sevice) managers won over by working from home … Government News Australia

    https://www.governmentnews.com.au/aps-employees-say-working-from-home-works/
    .
    .
    The New New Normal VIDEO … David Levinson … University of Sydney / Transportist

    https://transportist.org/2020/11/03/the-new-new-normal-mobility-and-activity-in-the-after-times/
    .
    .
    In to the New Year with containerization creator Malcom McLean … lessons … VIDEO … Malcolm Gladwell

    https://www.patdek.com/blog/2015/12/17/into-the-new-year-with-malcom-mclean

  6. Know IdeaMEMBER

    All these bods talking their own book. Now what weight should be given to those views? Let me think.

    For a service organisation, or a service element of a larger organisation, in which most CBD workers are involved, the second biggest expense is typically rent. Even the most dense of managers in most private organisations would have a hard time knocking back a 30-50% rent reduction.

    But, hey, I have been surprised before.

  7. Most of these jobs are BS jobs anyway. All that they required you to do was to get up in the morning, get dressed and make a presence in the office so you can participate in office banter, socialising at the cafe and flirt around. If that can’t happen now then just get rid of the job.

    • Agreed. We should get rid of the BS jobs, but we cannot create a higher unemployment rate and more poverty. Either we have a UBI or we create more useful jobs.