1492994131993 - Justin Kean: Why CBDs refuse to die

Justin Kean: Why CBDs refuse to die

Every time there is an advance in communication or transport technology, there is invariably comment that this new leap forward is likely to lead to the decentralisation of economic activity and the demise of central business districts.

It goes by many names, “electronic cottaging,” working from home, e-commerce, the sharing economy, telecommuting or any other work enabled by computing, transport or audio- visual technology.

The widespread adoption of modern work practices will – it is said – commute CBDs and city centres to the scrap heap, decentralising commerce and enlivening the suburbs.

The prophecy states that as technology advances, modern shiny office towers will be devoid of people and the high streets below will be populated only by tourists, tumble weed and fund raisers for the World Wildlife Fund.

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In reality, the opposite is true.

The invention of the telephone, along with high speed lift-enabled skyscrapers and email, ensures more time at your desk than ever. 

Conference call facilities are located in offices downtown, not in the burbs.

Building rail and mass transit lines only intensifies development in the CBD. And decentralised CBDs like Manukau City and Henderson in Auckland, or Upper Hutt and Porirua in Wellington, only prove that you’re either in the actual CBD when it comes to commerce, or you are in Nowheresville.

I am not aware, for example, of too many tourists that schlep out to Manukau or up the Hutt to walk the high street. But there are innumerate of the same on Lambton Quay or Wynyard Quarter. 

This raises an interesting question: why are CBDs so attractive when they are so difficult to get to, and why are technical and transport advances not able to sow the seeds of their demise?

Firstly, people like to be with people. The simple fact is that where people concentrated, as is the case with high rise developments in the CBD, this creates an environment which draws people in.

This has been the case since the very first market towns formed thousands of years ago. Where there is commerce and entertainment, there is verve, gossip, unplanned interactions, and the coffee meeting which lubricates the commerce is only a 200-metre walk up Queen St.

Secondly, and not unrelatedly, CBDs feed off themselves. Where there are lots of people there are opportunities for cafes, bars, sandwich shops, supermarkets, specialty retail and other such offers, which add significant amenity to a location.

This in turn attracts more people, which in turn creates more opportunities and before you know it, you have a virtuous reinforcing circle.

Lastly, bosses and managers struggle to totally trust the people that work for them.

As much as the vast array of new technologies allow workers to work from wherever they like, whenever they like, the old school mentality of a lot of firms ultimately prevents them from doing so.

People work best and deliver at their highest capacity when they work how they want in the style that best suits them (I am writing this from my dining room table drinking a glass of Prosecco by the way).

The desire to have a team “on tap” in an environment where they can be observed prevents a lot of workers from e-commuting and chains them to their desks.

That might not be the best for them or for the firms which they work, but it is an enduring human habit which ensures the likely survival of CBDs for years to come.

Justin Kean is an asset management director for the Wairaka Land Company. He was formerly the national director of research for JLL New Zealand.