What’s happened to the idea of the compact city?

Number of Newly Constructed Residential Dwellings by Dwelling Yield Range, 2004 to 2008 (DPCD)

Pending completion of the Government’s new urban strategy for Melbourne, the two major strategic planning documents that jointly guide the metropolitan area’s development – Melbourne 2030 and Melbourne @ 5 Million – are rich with rhetoric about the importance of directing development to established suburbs rather than the periphery. They also emphasise the desirability of concentrating that development around activity centres instead of dispersing it throughout the existing suburbs.

In a show of great political courage, Melbourne 2030 sought to limit the share of Melbourne’s population growth in peripheral Greenfield developments to just 38%. Virtually all the rest would be located within the established suburbs, of which 40% would be concentrated in activity centres.

However the supplementary strategy released six years later in 2008, Melbourne @ 5 Million, relaxed the target considerably. It was clever – it slackened the numerical target to 47% while simultaneously narrowing its geographical ambit to just the six Growth Area municipalities. These six cover an area much smaller than that implied by the term ‘greenfield’ used in Melbourne 2030.

This statistical report prepared by the Department of Planning and Community Development (DPCD), Housing Development Data 2004-2008, reveals that the new Melbourne @ 5 Million target wasn’t very demanding. It merely echoed the way the market had behaved over the preceding four years.

Over 2004-08, the Growth Area municipalities accounted for 44% of net new dwelling construction (after subtracting demolitions). Once the larger average household size of outer suburban households is taken into account, this is much the same as Melbourne @ 5 Million’s 47% population “target”. Rather than seek to change the market as its rhetoric suggests, Melbourne @ 5 Million was essentially business as usual.

In any event limiting the target to Growth Areas could be construed as misleading. They are not the same as the outer suburbs. There was considerable growth in other peripheral municipalities over 2004-08 e.g. Frankston, Nillumbik, Mornington Peninsula and Yarra Ranges. When they are added to the Growth Area municipalities, the outer suburbs accounted for 54% of all new dwelling construction in the metropolitan area over 2004-08. In terms of the share of population growth, the number would be somewhat higher.

So Melbourne @ 5 Million essentially had no real ambition to drive significantly higher housing supply in the established suburbs. Despite what the text sought to imply, it settled for them absorbing just 46% of new dwellings.

Melbourne @ 5 Million also dropped any numerical targets for activity centres. Previously, Melbourne 2030 projected that 40% of the population growth within the established suburbs would be concentrated at relatively high densities, with the other 60% in small infill developments dispersed across the suburbs. Read the rest of this entry »

Can activity centres supply enough housing?

Average annual growth in population of centres (%) - data from BITRE

Melbourne 2030 envisaged growth of high density housing and office employment within established suburbs would be located in activity centres, especially those with a rail station. In fact it specified that 41% of all dwellings should be constructed in activity centres over the period 2001-30 (with 31% in Growth Areas and the rest dispersed in small projects throughout established suburbs – at present though, about half of all new dwellings are constructed on the fringe).

Locating more intensive development within strategically important activity centres makes a lot of sense. In particular, it means a larger number of people will be within walking distance of frequent public transport, giving them an alternative to driving. Bigger activity centres should be more sustainable and might even cost the public sector less in infrastructure outlays and operating costs.

Yet it doesn’t seem to be happening – outside of the city centre, only a small number of activity centres are experiencing significant growth in multi-unit housing. Moreover, according to research by BITRE, Melbourne’s six Central Activities Areas (CAAs) and 25 Principal Activity Centres (PAC) only accounted for 3.6% of all population growth in the metropolitan area between 2001 and 2006. The number of people living in CAAs fell (by -0.3% p.a.) over the period and the number in PACs grew by just 0.8% p.a. – much lower than the growth rate for the metro area and the CBD (see exhibit).

Nor are activity centres generally successful in attracting employment – BITRE found jobs growth was actually negative in the CAAs, falling by 0.5% p.a. between 2001 and 2006. Jobs grew by 1.25% p.a. in dispersed areas outside of centres over the same period, but by only 0.5% p.a. in PACs.

There are reasons why it’s hard to attract developers to larger centres. Assembling land is difficult – existing holdings are in diverse ownership, values are often high and lots may be small. Moreover, Planning restrictions mean suitable sites are in short supply or have constrained redevelopment potential. But perhaps the key issue is opposition to development from existing residents.

As the strong reaction to Banyule Council’s proposed structure plan for Ivanhoe shopping centre shows, many residents don’t like the idea of redevelopment at up to 4-8 storeys in their local centre. They fear higher housing and employment densities will increase traffic congestion and noise and they expect the character and familiarity of their local centre will change for the worse. They see few, if any, upsides for them personally from a higher density centre.

It seems putting most higher density redevelopment eggs in the activity centres basket isn’t paying off. The politics of dealing with existing residents is simply too hard for all levels of government, whatever their colour. That’s not surprising given residents generally feel redevelopment makes them worse off and the planning system emphasises the interests of local residents.

Economists like Edward Glaeser and Ryan Avent have proposed ways that in theory might give existing residents an incentive to be more accepting of redevelopment, e.g. residents could buy the right to remain living at low density. These are novel and interesting ideas but at the present time they’re simply not going to fly politically.

Any redevelopment within established suburbs is going to be difficult. However the level of opposition can be reduced, although by no means avoided, where more intensive development is proposed for disused industrial areas. Even so, “brownfield” sites come with their own set of issues, like potential contamination and possible alternative uses.

Further, there don’t actually appear to be many brownfield sites. The authors of Challenge Melbourne – the discussion paper prepared in 2001 as part of the Melbourne 2030 process – estimated suitable brownfield sites within established suburbs have a total potential yield of 65,000 dwellings. That’s impressive, but even if all of that estimate could be realised, it’s not a big enough contribution, given the number of households in Melbourne is now projected to grow by 825,000 between 2006 and 2036. Read the rest of this entry »

Is Melbourne 2030 achieving its objectives on housing?

Percentage of new dwelling construction within 1km of a principal or major activity centre

A new research paper suggests that many of Melbourne 2030’s key ambitions in relation to housing have come to nought.

The paper, Planning and the characteristics of housing supply in Melbourne, was written by Dr Robin Goodman and a team of fellow academics from the RMIT Research Centre and published by the Australian Housing and Urban Research Institute (AHURI).

The first part of the project analysed a number of data bases on land transactions over the period from 1990 to 2007.

Contrary to the aspiration of Melbourne 2030, the researchers found that the proportion of new housing located within one kilometre of an activity centre did not increase following the promulgation of the Strategy.

In fact activity centres are not generally a favoured location for new housing. Of the 115 studied, just four account for almost a third of all housing built within one kilometre. Those four are all very close to the city centre – South Melbourne, Melbourne (CBD), Port Melbourne (Bay St) and Carlton (Lygon St). The ten with the highest proportion of new housing were either close to the CBD or in new parts of Growth Areas where developable land was still available close to activity centres.

When the radius is extended to two kilometres, the researchers found that the proportion of new housing actually declined since Melbourne 2030 was released.

They found a similar pattern with rail stations – the proportion of dwellings built within a one kilometre radius of a train station declined after Melbourne 2030 came into effect.

In addition, the delay between acquisition of property by a developer and completion of construction is more protracted on parcels that are closer to activity centres. Read the rest of this entry »

Will Melbourne be like Watts (L.A.) in 1965?

What if the geographically most extensive countries had the biggest populations?

Journalist Kenneth Davidson is often quite sensible so I’m astonished to see him arguing that Melbourne’s planning system is creating a potentially explosive situation like the 1965 riots in Watts, Los Angeles.

In fact there are a number of contentious propositions and assumptions in his column in The Age (6/12/10), Planning must be for people not developers.

He argues that Victoria’s planning system is dominated by developers and is effectively creating two cities in Melbourne – the inner city and the fringe suburbs – with citizens divided by geography as well as class.

Now there’s no doubt there are clear geographical differences by social class across Melbourne – there’s nothing new about that – but invoking the spectre of the Watts riots of 1965 seems a bit excessive. They were a reaction by the black community to racial injustices, including severe police brutality and entrenched job and housing discrimination. More than a thousand people were injured and 34 died. The Watts riots were different by orders of magnitude to Sydney’s 2005 Macquarie Fields riots or the 2004 Redfern riots.

Mr Davidson seems intent on sheeting home almost every planning issue in Melbourne to greedy developers. I accept the argument that speculation and lack of competition are issues in the Growth Areas, but there’s much more to the “two cities” phenomenon than that. Read the rest of this entry »

Should most redevelopment be in activity centres?

Maribyrnong Rd, before redevelopment and after (from Transforming Melbourne)

I noted yesterday that Melbourne @ 5 Million envisages just over half of all new dwellings constructed between now and 2030 – about 16,000 per year – will be located within the built-up area. The rest will be built in the fringe Growth Areas.

This is a significant reduction compared to the 69% share Melbourne 2030 envisaged would be built within established areas over 2001 to 2030.

My view is that the disadvantages of sprawl are routinely exaggerated and the fringe will necessarily be an important location for some of the expected future growth.

But I think home buyers’ preference for the outer suburbs is also commonly exaggerated. I expect many fringe settlers would prefer a location closer to the centre if only the market could deliver a better space/price compromise.

I think one of the reasons they can’t find that compromise could be the Government’s policy of prioritising redevelopment to strategic locations, like activity centres and along main transport routes. Read the rest of this entry »

Should rail commuters pay a congestion toll?

Melbourne’s peak train services are overcrowded and have been for quite a few years. Given the high costs that peak period commuters impose on the rail system, wouldn’t it be more efficient and more equitable if they paid more for their tickets?

After all, the capacity of the system is determined by peak demand – all those trains and the associated infrastructure and personnel required to handle the peaks are under-utilised or sit idle for the rest of the day and on weekends.

Too crowded to get a seat?

As would be the case with congestion charging on roads, a charge on peak hour train travellers should reduce over-crowding (congestion) by suppressing travel, moving lower value trips to off-peak periods and encouraging shifts to other modes. Passengers who continued travelling in the peak would make a larger contribution towards what it actually costs to get them to work.

I’m prompted to think about this issue by a proposal to levy a $0.50 per trip surcharge on customers of Washington D.C.’s Metro system who use or pass through the network’s busiest stations during the busiest period of the peak. If approved, the congestion toll would apply from next month. Read the rest of this entry »

Are all suburban centres the same?

Last week I looked at the geography of suburban jobs in Melbourne (Where are the suburban jobs?), finding there are 31 centres that account for just 20% of all suburban jobs. There is a large variation in the size of centres, with the largest four – Clayton, Tullamarine, Kew/Hawthorn and Box Hill – accounting for nearly half of the jobs in these centres.

Today I want to look at the economic functions of suburban centres, as indicated by their industry composition. If a centre is specialised by industry compared to jobs in the rest of the suburbs, it suggests it has a distinct economic role. It could also mean that the benefits of agglomeration may not be especially important.

Specialisation Index scores for suburban centres. 13 centres score 0.3 or higher. Dotted line shows score for suburban jobs located outside centres (click to enlarge)

Actually it’s a little more complex than that – specialisation implies that being in a large, diverse centre is not that important, but being spatially close to firms in the same or a related sector is. In other words, firms seek to minimise the costs of density by locating just with “their own kind” and avoid the overhead of firms from whom they obtain little benefit.

The data shows that the economic functions of suburban centres are many and varied and differ markedly from the 80% of suburban jobs that are not located in centres. Some centres are dominated by a single industry and accordingly have a distinct “personality”. There are thirteen such centres, mostly focussed on Retail or Manufacturing, although Latrobe is concentrated in Education and Heidelberg in Health.

Yet that only tells part of the story. With only one exception, all centres have a specialisation in at least one of 17 industries and some are specialised in multiple industries. For example, although Box Hill is not dominated by a single industry like Latrobe is, it nevertheless has specialisations in Health and Government (defined as having at least twice the share of jobs in each of these two industries as jobs located outside centres do). Health accounts for 27% of jobs in Box Hill and Government for 17% – the respective figures for suburban jobs outside of centres are just 11% and 4%.

Some centres like Burwood East, Sunshine and Broadmeadows are specialised in three industries. The only truly “diversified” centre is Kew/Hawthorne, whose sectoral composition is reasonably similar to that of the rest of the suburbs in all industries (note that larger centres tend to have fewer specialisations because there is less variability). Read the rest of this entry »

Where are the suburban jobs?

Where are suburban jobs – are they located in activity centres or are they spread more or less uniformly across the suburbs?

Many people are surprised to learn that nearly three quarters of the jobs in Melbourne are located more than 5 km from the CBD i.e. in the suburbs (see The jobs are already in the suburbs). Here’s another surprise – only 20% of those suburban jobs are located in medium to large activity centres.

The other 80% aren’t sprinkled throughout residential areas in stand-alone developments (although some most definitely are). Rather, they’re mostly located in relatively small centres, for example in what Melbourne 2030 curiously calls Major Activity Centres.

Suburban employment centres - circles proportionate to job numbers. Click to enlarge

Defining an activity centre is not as straightforward as it might appear. There are a number of possible approaches, such as identifying higher density clusters of jobs, people or trip ends. Another way is to look for concentrations of particular land uses such as retail space. In practise, planning agencies don’t always seem to apply a lot of rigour to defining centres. Counting the area of retail space seems to suffice in many cases, or accepting historical hierarchies in others.

I defined centres as agglomerations of employment. This is in line with the customary approach in the literature on this topic and is appropriate because employment is a good indicator of economic activity. I broke Melbourne down into 1,950 zones and applied minimum thresholds for job numbers and gross job density to each zone using 1981- 2006 Census data. Zones that exceeded both thresholds constitute centres (contiguous qualifying zones are aggregated to a single centre).

Using 2006 Census job data, I found there are 31 suburban centres in Melbourne. These contain just one fifth of all suburban jobs. That low proportion is not because my thresholds are taxing – I used the mean values of employment and density for all zones across Melbourne. The suburban centres collectively are only around one eighth as dense as the CBD (defined to include Docklands and Southbank).

If I were to set the density threshold at the same level as the inner city (including the CBD) then only 7% of all suburban jobs would be in centres. If it were set at just over half the density of the CBD then just 2% of suburban jobs would be in centres (they would be Box Hill, Doncaster, Dandenong, Wantirna Sth and Heidelberg).

I also found that the proportion of suburban firms located in centres declined significantly over 1981-06, although the number of centres increased. This is a near-universal trend in US cities and is often interpreted as signifying that density is declining in importance as transport and communication costs have fallen.

That such a relatively small proportion of suburban jobs is located in centres is an enormously important finding. It indicates that the great bulk of firms in the suburbs (and hence most firms in Melbourne) either eschew anything but modest density or, alternatively, simply can’t get access to higher density locations. Read the rest of this entry »

No foundation for policy on centres

The  six building blocks for a better Melbourne announced yesterday by the Premier are innocuous (the term mother’s milk springs to mind) except for the third one, in which he pledges to ensure the planning system “encourages the transformation of Melbourne from a mono-centric to a multi-centred city, so that people can work closer to where they live”.

The belated recognition that large modern cities tend to have multiple major employment centres was set out in the Victorian Government’s supplementary strategy plan, Melbourne @ 5 Million, released in late 2008. The original strategy, Melbourne 2030, implicitly conceived of Melbourne as a nineteenth century monocentric city – with jobs in the centre and with the suburbs acting as dormitories for workers. The multitude of small suburban centres identified in Melbourne 2030 were seen as largely providing retail and personal services for residents.

It seems the Premier knows that 72% of Melbourne’s jobs are now located more than 5 km from the CBD and 50% are more than 13 km out. But the Government doesn’t seem to know much about the geography of suburban jobs, particularly the number and role of major suburban activity centres.

Melbourne @ 5 Million designated six new Central Activities Districts (CADs) to provide “significant CBD-type jobs and services” in the suburbs. The Age described them as “mini-CBDs”. They are Broadmeadows, Box Hill, Dandenong, Footscray, Frankston and Ringwood.

I find it very hard to imagine that any of these CADs can seriously be thought of as having the potential to provide “significant CBD-type jobs and services”, at least in the foreseeable future. All the indications are that six of the existing Transit Cities were simply redesignated as CADs without much further thought.

Consider the case of Broadmeadows. On 24 March The Age ran a story headlined “Broadie all set for major revamp”, with the subtitle “Broadmeadows could become a major economic centre in the north”*. According to the story, the outstanding prospects for Broadmeadows come down to its designation as a CAD.

I don’t however see much evidence that Broadmeadows is acquiring a CBD-type character. The story lists a number of major investments that are either proceeding or planned, all of which are public sector driven.

There’re new Council premises, a Global Learning Centre, a leisure centre, a secondary school, a tree-lined extension of Main St, an upgrade of the railway station and a parking station. There’s a planned seven level office building but it is intended to accommodate public servants. All in all, there is little evidence that the private sector, which is the backbone of the CBD, has much interest in Broadmeadows beyond retailing and consumer services.

An examination of the composition of jobs is revealing. Whereas almost half of all jobs in the CBD are in Commercial Services (i.e. Finance, Insurance, Business and Property), the corresponding figure for the Broadmeadows CAD is just 4%. Where it excels however, as the projects listed above suggest, is in government – 44% of jobs are in the public sector.

Broadmeadows also has neither of the other two key characteristics of the CBD – size and density. It has only 1% as many jobs as the CBD and is only one eighth as dense. The idea that it could function like the CBD in the foreseeable future seems fanciful. Read the rest of this entry »