Reports of the death of Adelaide’s CBD are greatly exaggerated

COVID-19 is challenging Adelaide’s CBD but the transformation to come might not be what many expect, particularly as the gloss comes off working from home, argues Andrew Beer.

Oct 05, 2021, updated Oct 05, 2021
King William Street during last November's brief lockdown. City visitation has never fully recovered. Photo: Tony Lewis/InDaily

King William Street during last November's brief lockdown. City visitation has never fully recovered. Photo: Tony Lewis/InDaily

There can be no denying that COVID-19 has fundamentally transformed virtually every dimension of life in Australia. It has reshaped our economies, our politics, our understanding of health, the way we think about holidays and our attitudes to work and each other.

Many have argued COVID-19 will mean the end of the city centre, as more and more of us work from home or work – at most – for three or four days in the city.  The impacts are potentially enormous as the city centres remain central to the wellbeing of the national economy and jobs growth. More than 100,000 people work in Adelaide’s CBD each day, and the numbers are far higher along the eastern seaboard. The absence of office workers could devastate cafes, retailers and other small businesses dependent on them.

But while there has been a lot of conjecture, what does the evidence say?

At first glance, the evidence is compelling – people with a job were more likely to work from home one or more times a week in February 2021 (41%) than before COVID-19 restrictions began (24%). And the main reasons employed Australians worked from home in February 2021 were COVID-19 restrictions (12%) and the availability of flexible work arrangements (11%). Employed women (17%) were more likely than employed men (11%) to want to increase the volume of work done from home.

Market research company Roy Morgan found significant differences between sectors, with half of those working in Finance & Insurance (58%) and Public Administration & Defence (51%) home-based workers, alongside 47% of Communication sector employees. Australians working in ‘hands-on’ industries were much less likely to work from home, including just 16% in Manufacturing (16%), 15% of Transport & Storage (15%) workers and 12% of retail employees.

Cities will remain at the centre of the Australian economy, but we might witness a revival of the suburbs as something more than dormitories.

Many employees have found they like working from home but business leaders are far less bullish.  They are concerned about productivity and how to sustain innovation and workplace culture when staff no longer come to the office.

Early in the pandemic, working from home delivered productivity gains, but these have now waned and businesses report it harder to implement change when personnel are distant from each other. They also worry about the physical and psychological impact of blurring the lines between home and work, with some staff struggling to limit their hours, while others are at risk of work-related injuries in the home.

Atlassian service provider Adaptavist conducted a survey on remote working with 2800 knowledge workers across the United Kingdom, United States, Canada and Australia. More than a third of those in Australia said the “always on” nature of digital communications was a source of stress, along with the number of channels to check and the absence of boundaries between work and home life. Nearly two-thirds did not switch off work notifications out of hours.

Some have even argued that our metropolitan areas will stagnate, or even experience a loss of population, as households – mindful of the risks associated with living in a built-up area in a time of pandemic – flee to the countryside. Once again, there is some evidence to support this view.

The Centre for Population within the Australian Government Treasury concluded that since February 2020 there has been a shift towards regional areas, especially in Victoria, which has also seen outflows to other states. Provisional ABS data found a net gain of 36,200 people in regional areas in September 2020.

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But most of this growth was caused by young people living in regional areas postponing their relocation to a capital, rather than metropolitan residents fleeing to the country to experience ‘the good life’. And where growth has occurred for regional centres, it hasn’t been a consequence of COVID-19 alone. Instead, movement away from the capitals has reflected the broader trend to working from home, the impacts of increased economic uncertainty, restrictions on migrants entering this country and settling in our biggest cities, and young people staying in the regional communities where they grew up.

Most experts predict we will see a return to the long-term trend of big-city growth once the economy opens up. For the last 60 years, our major centres have grown relative to other parts of Australia because they are attractive places to live, work and study. This economic strength is important, as people relocate because of the benefits they anticipate, and it is our major metropolitan areas that offer the best employment opportunities and unequalled health and other services.

Cities will remain at the centre of the Australian economy, but we might witness a revival of the suburbs as something more than dormitories. The embrace of working from home would be a key factor in that change, but on balance it is likely to be a muted impact.

Businesses remain reluctant, if not sceptical, about working from home. They worry that productivity cannot be sustained long-term under working from home arrangements and they are concerned about the potential impacts on workplace culture.

And while many CEOs will continue to work wherever and whenever they like, other parts of senior management appear wedded to central city locations and to being in close proximity with each other. Those who aspire to be senior managers will exhibit similar preferences.

So Adelaide’s CBD is neither dead, nor in terminal decline. There is no doubt change is coming, but it has always been a place of ongoing transformation.

The challenge for businesses and governments alike is to craft a future for our city centre that acknowledges the need for change and builds on strengths in tourism, hospitality, the experience economy and education to shape a more prosperous future.

Andrew Beer is the Executive Dean of UniSA Business. His research interests include Australia’s housing markets, the drivers of regional growth, structural change within the economy and the impacts of an ageing population.

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