Residential housing in the Sydney CBD may be on the cards as the New South Wales government announces a third CBD summit to hear from business, government and industry groups on how to drive the revitalisation of the city.
The summit also intends to explore how people could live in the CBD, opening up the question of how to increase residential housing or mixed-use space.
More residents in the Sydney CBD would create foot traffic for businesses and change the mix of businesses that operate in the CBD.
The summit also ties into New South Wales’ economic plan to revitalise the Sydney CBD in a Covid-safe way.
“In the space of just two years, the way we travel, work and come together has changed so much, but we cannot stop imagining a better future for our CBD,” Premier Dominic Perrottet said.
“We know we need to find new solutions, conscious that people need reassurance for their health as well as for the health of our city’s economy.”
The summit comes after the Committee for Sydney and ARUP released their Commission into the Future of Sydney CBD report last month.
“Right around the world, people dream of visiting our grand harbour city,” Perrottet said.
“The lucky ones get to call it home.”
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The report recommended that the government explore options for people to reside in the Sydney CBD from build-to-rent schemes, converting serviced apartments into fixed rental properties and looking into community ownership options.
It also asked for models that allowed first home buyers to buy into property in the CBD and collaboration between businesses and commercial developers to offer creative housing options near workplaces.
“We also need to start thinking about affordable housing in terms of what it can do in terms of creating city and creating diversity, not just cultural diversity but age diversity and employment diversity in the heart of the city,” Museum of Applied Arts and Sciences representative Lisa Havilah said.
The Sydney CBD has very little residential use compared to its main mix of office and retail properties, most of which is reliant on foot traffic from office workers during business hours, which created a lot of instability when the pandemic hit.
It kickstarted a debate about whether the effects of the pandemic were cyclical or structural and whether it meant there needed to be more office space converted to residential space, something that would mean a lot of investment to bring spaces up to legal liveable standards.
But even now, as people try to plan for a post-pandemic future in the CBD, investors seem keen on investing in office space.
Sydney CBD recorded a high amount of enquiries about office space in 2021, signalling that people were keen to organise leasing office spaces long term despite the pandemic.
According to Property Council of Australia data, office market vacancy rates were 9.3 per cent for Sydney CBD, with rates decreasing slightly for premium and Grade A office space.
“[2021] was a record year with 634,000sq m of office enquiry, and 2022 has also started well with very strong enquiry despite a slower-than-expected return to the city by many office workers as a result of Omicron,” CBRE director Chris Hanley said.
Most of the growth in the interest in office space seems to be coming from the technology sector where there is an increase in employment growth.
Restrictions or the lack thereof is also driving interest.
“We expect that increasing numbers of people returning to the office and an end to indoor mask mandates will result in a strong uplift in transaction activity,” Hanley said.
A third of the nation’s future office space supply (178,760sq m) due to come online in 2022 is in the Sydney CBD, according to the Property Council of Australia’s 2022 office market report.
A further 7,772sq m is expected in 2023 and 91,000sq m from 2024.
Sydney’s demand for office space also increased, according to the report.
The demand is spurred by a focus on quality within workspaces as tenants try to tempt their workers back to the office environment after working from home.
“Existing quality fit outs and new build fit outs are the key focus for tenants, as opposed to refurbished suites,” Cushman & Wakefield’s national director Jamie King said.
“Working from home pressures continue along with a fight for talent, resulting in tenants keen to place make their new office providing a reason for a return from staff.”
Place-making is also part of the commission’s recommendations, stressing that it was important to acknowledge the CBD’s Aboriginal heritage and history and to create spaces incorporating cultural heritage and community.
“How do we tell the different stories of different communities across the greater metropolitan area?” 24-hour economy commissioner Michael Rodrigues said.
“If that’s done well, then you’ll create places of interest that people just simply want to be at and people will commute to.”
It also recommended better curation across the city of spaces for art, artists and public artwork and that creating mixed use spaces would bring people into the CBD.
People don’t want to work in single use precincts anymore,” Business Western Sydney’s David Borger told the Committee For Sydney.
“We need to have mixed uses in various places for attraction… Sydney precincts need our focus on investment attraction, they need sophisticated government models, and they also need the important ingredient of place-making.”
Australia Council for the Arts CEO Annette Madden agreed:
“The city can be a platform to broker new ways of working,” she said.
“It’s about trying to redefine how business and the arts industry can work together to mutual benefit and the benefit of citizens and visitors.”
Recommendation 4.9 stated that micro-distribution hubs within the CBD were also important allowing businesses to thrive in the CBD.
“Joint use for major facilities is a challenge,” Australia Logistics Council’s former CEO Kirk Conningham told the Committee. “We see our major exports and most people say they are vertically integrated but they are not.”
“The next step beyond that is micro distribution centres.”
S&P Global Rankings also forecast that more industrial investors would pivot to adapting spaces to function as dark stores or micro-distribution centres.
The summit will take place this Friday, 11 February at the Museum of Contemporary Art.
“This is a once-in-a-generation opportunity to reshape the city of the future and this summit will help do that,” Perrottet said.
