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The Planet of Cities: Business districts as usual?

Greg Clark is an urbanist and writes here in a personal capacity. He is Global Head of Future Cities at HSBC and Chair of the Connected Paces Catapult. He also holds thought leadership roles with UCL, Strathclyde University, the Brookings Institution and the Urban Land Institute. In this month's column, he ponders the future of central business districts in the coming era of dispersed urbanisation.

16 October 2020

The COVID-19 crisis has only sharpened the debate over the future of cities. Distinct perspectives, underset by a variety of considerations, are emerging across the world. Attitudes towards public and private amenities, the adoption of new technologies, and existing preferences for mobility, transport systems and housing all appear to be shaping the narrative. These views have produced an extreme range of opinions about city centres in general, and central business districts (CBDs) in particular.

The longer-term impacts of COVID-19 on city centres remain hard to predict; we are all, in effect, engaged in a guessing game. Such uncertainty is the result of at least six, as yet unanswered, questions.

  • How long will it be until a trusted vaccine is in place, and the new normal emerges?
  • How many of the behaviours necessitated by the current pandemic management phase will be carried forward into the longer cycle?
  • To what extent will the coming recession reset the economy, and how might it change patterns of fiscal activity, and the sectors that cities need to service?
  • How will the burst of technology and digital systems accelerate the adoption of new practices?
  • How adaptable and agile will city centres be to the new and emerging patterns of demand and use?
  • Will the imperatives for greater inclusion and sustainability actively shape the recovery, as is widely hoped?

I am especially preoccupied with the future of CBDs. They are likely to be particularly affected by the pandemic and resultant recession, as well as technological advances and other shifting patterns of behaviour.

CBDs are where the major concentration of work activity occurs within our cities. They are places of corporate production and decision-making. Many of them have substantial office stock of variable usage. They host corporate support functions like law, finance, exchanges, media, marketing and IT, as well as the traded functions of global corporations and specialist industries.

Several CBDs are also centres of government and political administration. They’re often home to deeply embedded heritage, culture, and academic institutions. While they can be dominated by a single specialist industry, they’re often highly diversified. Within any larger city we might have several CBDs playing different roles, with new purpose-built districts competing and collaborating with more historic or established counterparts. Thus, some enjoy hard-won reputations, while others are more adaptable. Some CBDs are already great places of fun and consumption with compelling entertainment and food choices. Others host a significant residential population.     

Greg clark portrait
Greg Clark CBE - Urbanist, thought leader and WBEF columnist

Last week I conducted a small and unscientific experiment. I spoke about this topic with friends on three different continents.

During these conversations, I was told by some that CBDs are already beyond resuscitation; the jobs are gone forever, and a new truth has been revealed. The cost of concentrating jobs in CBDs simply cannot be justified given the health risks and advances in digital capacity. CBDs are dead, long live the mobile worker. Most of these voices belonged to my friends in North America – more so the USA than Canada.

I have heard other, more determined voices tell me that CBDs remain essential places of work. They provide the well-equipped offices our workers need, promote corporate identity, knowledge exchange, teamwork, creativity, trust and confidence. They are, in fact, safer places to work, providing cyber secure environments essential to our new economy. For these reasons, we need our CBDs back up and running as soon as possible. This can only be achieved with the support of local services and high capacity, reliable public transport networks. I heard these voices predominantly in Asia; they emanated from both mature and emerging economies.

In a single day last week, I spoke to friends in New York, most of whom were working remotely in locations far from the city. I also spoke to friends in Shanghai, all of whom were back in the office. The difference in tone quite astounded me.

Later, a third voice entered the debate. It said that CBDs will have lower aggregate demand in the coming cycle because more people will work in a hybrid style between office and home. But, it noted, CBDs also house many of the wonderful institutions and amenities that we enjoy as part of modern life. It is, therefore, likely that city centres will grow their housing stock, increase their vitality, and achieve a better mix of resident and commuter. More home working will also be good for smaller, neighbourhood centres, which could acquire the traits of mini-CBDs. Alternatives to the office will soon include work near home as well as work from home. This was the voice of Europe.

In a single day last week, I spoke to friends in New York and Shanghai about the future of central business districts. The difference in tone quite astounded me.

Though my observations are clearly not scientific, I was surprised by just how decisively different the message was across the three continents.

Of course, there are other factors at play. The American view is seemingly influenced by the deep social inequalities either revealed of magnified by the crisis. Because inequality is most evident in cities, it appears logical to think that inequality is produced by cities; this, surely, informed the consensus. In Europe, where the deep seams of history manifest most obviously in the built environment, people often derive a sense of identity from their cities. Across Asia, CBDs symbolise new forms of prosperity, opportunity and modernity. A professional job in a recognised company based in the CBD is a new birth-right for talented young Asians. This, they will not surrender easily. 

So, how will our CBDs emerge through COVID-19?

I want to suggest three ways in which CBDs will evolve to survive beyond the pandemic. Some may try and succeed in all three areas; others will focus on only one.

CBDs will become centres for new industries – especially those fuelled by the application and monetisation of new technologies. These industries have dynamic enterprise processes and creative design paths that require face-to-face contact, eco-system orchestration, tacit knowledge exchanges, and high visibility. They also attract younger workers, typically less concerned about infection with a greater need for shared workspaces – on account of push, as well as pull, factors.     

The resident populations of CBDs will grow. In some cases, this process will be enabled by office to residential conversions. In other cases, we will see the balance within mixed use assets shift decisively towards residential. In a few cases, this may even contribute to improved levels of affordability. Residential populations will add a new buzz and dynamism to our city centres and allow them to become seven-days-a-week communities, with a wider range of amenities. Those who live in city centres will also have lower carbon footprints.

CBDs will also lead the experience economy, providing a mix of activities that can’t be consumed on-line, but can be augmented by artificial intelligence, virtual reality and social platforms. They will become omni-channel experience hubs, with a startling range of face-to-place activities that cannot be replicated in any other location. CBDs will get much better at curating their offer and winning the loyalty of a new, blended customer base: residents, workers, tourists, students, and fun-lovers.

Central business districts will become omni-channel experience hubs, with a startling range of face-to-place activities that cannot be replicated in any other location.

Why do I believe that CBDs will embrace these three paths? I am guided by what I have seen before. Since 9/11, Lower Manhattan has gone from a Monday-Friday business centre and weekend ghost town, to being a 24/7 neighbourhood. London’s Shoreditch has, since the Global Financial Crisis, become a new tech centre, feeding off the power of the financial sector and leveraging its expert support services. The Rappongi Hills district of Tokyo has been reinvented as a world class experience economy venue.  

Rather than looking at the risks to the CBD of the COVID-19 pandemic we should embrace the opportunity for change. I cannot say for sure whether the route forward will be so starkly divergent across the continents as my calls last week would suggest. But it is clear that agility and adaptability are vital requirements for resilience. In the process, our city centres will become much more funky.