The demography of employment part one: a suburban economy

There is no easy answer in this but setting unrealistic public policy targets for public transport systems in cities where employment is overwhelmingly suburban and not easily serviced, is setting ourselves up for public policy failure and community disappointment.

Another implication that flows from this spatial distribution of employment involves TODs (transit oriented development). The premise on which much TOD thinking is based is that creating housing options around transit nodes such as suburban train stations will allow people more convenient commutes to the inner city and hence relieve road congestion by lifting public transit patronage, among other promised benefits. There will no doubt be a proportion of the population for whom this is very appealing but given the low proportion of jobs actually located in CBDs compared with suburban locations, this level of demand is finite. Indeed, it may be that as well as creating higher density housing opportunities around suburban train stations in order for residents to commute into the city, we could equally consider creating higher density employment opportunities around suburban train stations, so that inner city residents could commute to suburban workplaces. Is it fair to suggest that to date, the emphasis on TOD planning has been largely on TODs as dormitory residential opportunities for inner city workers, and that this doesn’t align very neatly with the realities of the demography of employment? The evidence points to a broader land use mix for TODs than many have envisaged.

Another public policy implication is both planning and market based. Our CBDs are expensive places for businesses to operate from, but this higher cost base is offset against a number of locational and marketing conveniences along with amenity factors that CBDs have in their favour. However, steeply rising rents, combined with costly car parking may be pushing more employers out of these locations and into city fringe or suburban locations. The evidence is there to support this. 

A number of our CBD offices command rents in excess of $800 per square metre per annum – more than the cost of quality office in downtown Manhattan, New York. Our CBD car parking costs have risen rapidly, partly due to punitive taxes designed to discourage city parking (as found in Sydney), partly due to planning limits on parking spaces in new developments, and also partly due to the balance of supply and demand. A study by Colliers International (Colliers International Global CBD Parking Rate Survey, 2011) shows that the daily cost of parking in Sydney and Melbourne are the 3rd and 4th most expensive of a series of world cities: more expensive than midtown Manhattan and more than London or Tokyo. Brisbane parking costs came in at number 14, ahead of midtown Manhattan or Paris. Suburban employment locations in our cities offer considerably lower accommodation costs and parking costs are negligible by comparison.

This high cost structure may be encouraging a decentralisation of employment away from CBDs. If this is true, this would mean that costs are pushing jobs into locations that are less well served by public transport. Suburban employment is efficiently served by the private vehicle while centralised jobs in high density CBDs are well served by public transit. Further public policy attempts to raise the cost of business in CBDs (such as cordon tolling - a vehicle tax on the inner city) may only have the effect of further decentralising employment and working against the very claims of its proponents (to encourage more public transport use).

Opportunities

There are possibly also opportunities in understanding the spatial distribution of employment in our major cities. If people want to live closer to their workplaces for example, is it not sensible to try to identify additional housing supply options near major suburban employment nodes? Inner city and CBD housing markets offer premium pricing and possibly concentrated demand but there is potential to oversupply demand in these. This is possibly what is happening in Melbourne now, and what has happened in other capitals in different parts of the cycle.

Planning regulations which typically favour housing density in inner city areas may need to be more flexible in the future if creating housing closer to places of employment is to be a reality.

It’s equally possible that the potential for employment land uses in suburban locations has been inadequately considered by policy makers. It is a complaint of many developers that access to suitably zoned employment land in suburban locations is constrained. Perhaps allowing more opportunities for this to happen would mean creating opportunities to take workplaces closer to peoples’ homes? The same could be said for major transit nodes. As noted earlier in this article, while these have traditionally been thought of as high density dormitory opportunities for inner city workers, the evidence suggests they may equally offer opportunities as high density employment locations for residents living along the network. 

Conclusion

We have collectively developed a fixation on our CBDs and inner city areas as economic drivers of employment. While they are very significant in size, they are not dominant relative to the spatial distribution of jobs throughout metropolitan areas. If the evidence is clearly pointing to cities with employment overwhelmingly located in suburban locations, and points to this trend continuing, it is possible that a variety of public policy settings could need resetting given the realities of our urban environment. It is equally possible that opportunities for growth and development to meet market demand for employment lands in suburban locations haven’t yet been fully captured.