‘Beauty’ in architecture can’t be enforced – but design competitions could help architects strive for it

Gethin Davison is an interdisciplinary researcher with a background in human geography, planning and urban design. His research focuses on the governance of design and the relationships between people and places. Gethin's work has been supported by a range of grants from the Australian Research Council and Australian Housing and Urban Research Institute. His work has been published in a wide variety of academic and non-academic outlets across the fields of urban studies, architecture, housing, urban design and planning. 

In 2021, the UK government made beauty an explicit objective of the English planning system. The Levelling Up and Regeneration Act, which received royal assent on October 26 2023, now requires local authorities to use design codes to deliver beauty in new developments.

Driving this emphasis on beauty (which is likely to be strengthened through further planned revisions to national planning policy) is a particularly knotty problem in England’s approach to housing. Everyone agrees that more housing is needed, but no one wants it to be built near them. The government’s hope – as the secretary of state for levelling up, housing and communities, Michael Gove, has put it – is that “communities will welcome development when it is beautiful”.

English towns and cities do desperately need attention. A 2019 national audit by advocacy group Place Alliance found that, in terms of design quality, new housing developments are overwhelmingly mediocre or poor. Office buildings converted under permitted development rights into housing have been characterised by the campaign group Town and Country Planning Association as creating “slums of the future”.

Meanwhile, outstanding heritage assets are being harmed by insensitive new development. And under-resourced local authorities are in no position to help because they have so little design expertise.

There is mounting evidence that buildings and places have a profound influence on public health and wellbeing. The British designer Thomas Heatherwick has gone so far as to claim that boring architecture has brought us “misery, alienation, sickness and violence”.

The government is right to expect more of development. However, it is debatable whether beauty should or realistically can be a planning objective. My research looks at how planning rules influence the design of the built environment. The best way “to build beautiful” – to reprise Gove’s leitmotif – might be to regulate design processes, rather than outcomes.

The problem with beauty

Design codes establish detailed requirements and rules for how sites or areas are developed. They exist to improve design standards. It is questionable, however, whether they can ensure a new development is beautiful.

This is because beauty is mutable, multifaceted, emotive and subjective. It defies definition, let alone physical prescription.

This is evident in the way national design guidance sidesteps the issue of how beauty should actually be achieved. Nowhere is “beauty” – or “beautiful development” – even defined.

This lack of clarity could result in “beauty” ending up being whatever certain planners or politicians say it is. Further, it risks sidelining more pressing matters, including sustainability and affordability.

There is evidence that even planning inspectors are opting not to use beauty in their decisions on planning applications. The question, then, is whether expecting local authorities to codify it in planning rules is realistic.

Regulating processes rather than outcomes

My colleagues and I have looked at how design is regulated internationally. In Sydney, Australia, rather than prescribing design outcomes, the approach is to regulate the design process. In other words, planning rules do not specify the exact types of buildings and spaces that must be developed on a site. Instead, they specify that a particular process must be used to find the right design.

Through the local planning system, it is a legal requirement in the City of Sydney that all major developments, public and private, start with a design competition. Developers of residential blocks, office buildings and even electrical substations cannot simply produce a design in-house, or hire their tried-and-tested architect to do the work.

Rather, they must invite at least three different firms to come up with a proposal. The brief these firms work to sets out the design objectives for the competition, the commercial and construction considerations, and the criteria against which entries will be assessed (such as compliance with the design brief or buildability). A panel of judges then picks the winner. It is a form of competitive procurement, not unlike those used for UK public contracts.

The focus in the Sydney planning system is not on achieving beauty but “design excellence” – a similarly multifaceted and intangible quality that defies simple definition. But by regulating the design process through competitions, Sydney’s planners can require that new developments achieve design excellence without needing to define or prescribe it. They simply establish some basic ground rules and challenge the competing architects to find the best way of delivering an excellent design.

Where other prescriptive approaches to planning often see developers doing the absolute minimum required to gain planning approval – resulting in poor-quality designs – this lack of prescription gives architects the freedom to think outside the box. The sheer fact that a competition generates multiple designs for a site ensures against ugliness. It makes it more likely that the best possible design will be found.

Design competitions have a reputation for being costly and unpredictable, but they don’t need to be. The UK government wants to better enable communities to take control of their housing future. Competitions are a proven way of engaging members of the public in debate about the relative merits of different designs for a site or area. There’s no reason why those members of the public couldn’t also be part of the judging process.

When it comes to our towns and cities, it’s hard to argue against beauty in the abstract. Who wouldn’t want to live in a beautiful home or neighbourhood?

But new development doesn’t happen in the abstract, it happens in real places. Beauty in the built environment matters, but enforcing it through design codes risks creating confusion and disillusionment. Mostly, it serves as a distraction away from more pressing priorities.

This article is republished from The Conversation. Read it here.

WHY WE NEED INVESTMENT IN SOCIAL INFRASTRUCTURE

Robust social infrastructure is essential for the good of our society and the growth of our economy, yet without adequate investment, rising demand from our ageing and growing population will not only cause drastic social and health problems but impact our future prosperity as well, writes Executive General Manager of Social Infrastructure at Australian Unity Ryan Banting.

Australia has a serious undersupply of the social infrastructure that is needed to support the wellbeing of our communities.

Whether it’s in aged care, student accommodation, childcare, specialist disability accommodation, retirement living or hospitals – we fall short on many fronts.

Robust social infrastructure is essential for the good of our society and the growth of our economy, yet without adequate investment, rising demand from our ageing and growing population will not only cause drastic social and health problems but impact our future prosperity as well.

It’s clear we need structural change to ensure we have the facilities and services that support the health of our communities. This will enable healthy economies where we all have the opportunity to thrive – now and into the future.

A unique opportunity for value-aligned private capital

There’s no magic formula for solving the infrastructure funding gap. The financing arrangements for such projects are varied and depend on the mix and relative cost of debt and equity financing. This, in turn, depends on the risk profile of different projects, along with the composition and risk appetite of prospective investors.

Government has had and will continue to play a vital role in financing and delivering critical health and aged care services. But it can’t do it alone.

Private investment, particularly from the pools of institutional money tied up in our capital markets, also has a critical role to play.

However, to realise the opportunity for private capital, investing in social infrastructure must be about more than a blank cheque and the hope of good returns.

Instead, it’s about getting the most out of value-aligned capital partnerships to ensure participants are incentivised to invest in long-term development and delivery relationships.

We see a solution that embraces and includes the important views and experience from industry, government, investors and capital partners, planners, operators, contractors, and health and medical research to face into the challenges ahead of us. Together, by taking a broader and longer-term view, we can get this sector into a shape that shifts the dial on community wellbeing and boosts Australia’s productivity.

But with opportunities come challenges 

The business case for investing in social infrastructure sector is compelling: strong macroeconomic drivers (education and childcare) and macro-demographic drivers (accommodation and living); bi-partisan government support; and favourable supply and demand dynamics. However, the sector is not without its challenges. For example:

• It generally takes longer to get investors up to speed in understanding these types of assets before they are able to commit capital – this of course will improve over time and we are already seeing positive shifts in awareness driven by the growing attention on healthcare infrastructure investing and, more recently, in the build-to-rent and student accommodation sectors;  

• Investors need to consider whether social infrastructure investments fall in the ‘infrastructure’ bucket, the ‘property’ bucket or the ‘alternatives’ bucket, depending on how they manage their capital; and

• Healthcare property, disability accommodation, childcare and aged care sectors are all facing long-term, protracted workforce shortages, while the demand for these services is only growing.

Successful, fit-for-purpose social infrastructure relies on workforce, technology, service delivery, good system design and the built-form.

In an investment portfolio, it doesn’t need to be a separate asset class, but rather a lens for robust due diligence and to help determine appropriate asset allocation and portfolio construction decisions for assets that are in high demand across our communities.

Measuring investment

While the investment proposition is strong, measuring the impact of social infrastructure investment extends beyond capital growth or the regular income it provides.

Investors are increasingly using risk-adjusted returns to make ‘initial screen’ investment decisions but more and more they are seeking measures of impact in deciding where to put their money.

When we invest in good, shared places and precincts we can build communities, we can increase wellbeing, we can build connections and we can build places that make people feel better.

It’s one of the reasons that Australian Unity developed our Community & Social Value framework. Established in 2021 with social impact specialists Social Ventures Australia, we can now measure the tangible social and community impacts our investments have, above and beyond straight financial returns.

The framework is based on three key impact areas:

• Lifelong wellness – ensures access to better healthcare through diverse services and initiatives, emphasising tailored care for improved health outcomes;

• Economic empowerment – focusing on building financial resilience, enabling individuals to fund their own wellbeing;

• Strong communities – fostering social innovation, bridging service gaps, and promoting living in place through investments in care, infrastructure, and specialist housing.

These areas underpin the measurement of unique social impact and inform Australian Unity’s investment in its business decisions, such as our investment in social infrastructure.

Addressing Australia’s social infrastructure needs is essential to support the growth of our economy and the future wellbeing of our communities. But getting it right relies on the coordination of workforce, technology, service delivery and system design.

This article was originally published on CEDA. Read it here.

Five bold expert opinions on property’s biggest issues today

From residential price growth to the state of construction costs, these are the expert opinions around today’s biggest property sector issues.

CBRE provides thoughtful, forward-looking insight into real estate trends, strategies and opportunities around the world.

While progress towards a post-pandemic recovery is tracking in the right direction for the economy, Australia’s real estate sector isn’t entirely out of the woods yet. That’s the latest diagnosis from CBRE’s senior experts in our final 2023 podcast episode of Talking Property: The House View Q4. 

Phil Rowland, Pacific Advisory Services CEO, and Sameer Chopra, Pacific Head of Research, identify the ongoing challenges in the real estate sector, particularly in the capital markets arena, as the cost of debt rises and sentiment wanes. An acute housing supply shortage in Australia is also continuing to dominate the media headlines. 

But with challenges also comes the opportunity to capitalise on specific areas of the market while forecasting the trajectory of certain sector trends.  

The five bold expert opinions on today’s most important property sector topics are: 

1. When will the fastest growth in residential prices occur over the next three years

2. When will office occupancy return to pre-pandemic levels 

3. When will construction costs ease  

4. The outlook for big refurbishment projects  

5. The outlook for alternative investments like purpose-built student accommodation  

Residential House Prices 

Chopra remains bullish on the local residential market and is steadfast in backing its strong outlook.   

"It's partly because of the robust jobs picture,” he says.  

“And our new controversial view here is that the fastest growth will be at the front end of the cycle and late cycle. I'm expecting 2023 and 2025 will be double-digit capital value growth, whereas 2024 will be more modest and sort of flat - low single digits. So, I'm calling it plus 10% this year, plus 5% next year and then plus 10% the year after.  

“You’ll get to about 25% price growth over three years and that reflects the higher cost of building new stock.” 

Chopra says this outlook is due to the expectation of supply shock in the early stage followed by interest rate relief in the late stage set to play out.  

“There is a 28% mismatch between construction costs for new stock and capital values, so we expect overall prices will need to increase by about that much through this cycle.”
    
For growth in apartment values specifically, Chopra’s research team have compiled the following forecasts: 

Office occupancy revival 

Office occupancy continues to be a controversial talking point amidst the global embracement of hybrid work models. Despite the resistance towards returning to the office full time for many, Chopra maintains the bold and controversial prediction that occupancy in Australia will be back to 2019 levels by the end of this year or early next year for CBD offices. 

“If you fly on a plane now, it feels just like the time before the pandemic. Kids who are going to university are talking about better experiences like their parents had, and retailers are talking about returning back to just in time supply chains. So why not the office environment?  

“I expect office occupancy will start to recover and it’s possible we will be talking less about office occupancy next year.” 

Rowland agrees, citing the company’s recent global Office Occupier Survey which found that over a third of firms still expect office utilisation to grow from current levels compared to less than 10% who expected it to fall from current levels.  

“I think that office normalisation is a good trajectory,” he says.  

“There is an an upside and portfolio optimisation could also lift that utilisation, but we also need to be cognisant of the opportunities that are offered from hybrid work as well.” 

Easing construction costs 

Construction costs were a major talking point as Australia began its wake from a pandemic-induced slumber. 

“We know construction cost growth roughly peaked in June 2022 when it was increasing at about 17%,” says Chopra. 

“And currently it's increasing, but at about 7% year-on-year. It's kind of halved in terms of its growth rate and my view is that we'll see flat growth by the year’s end.  

“The key here will be just what goes on with construction and labour wage pressure - whether it starts to ease as some of these residential projects get completed.”  

Rowland adds that due to the size of the infrastructure pipeline and the tightness in the labour market, he is still expecting Australia to reach mid to high single digits in construction cost growth. 

“I'm afraid this will continue to add challenges to the development pipeline, particularly in housing.”  

State of big refurbishment projects  

When it comes to refurbishment CapEx, it’s important to consider what’s being reflected in the current market landscape.  

“A number of our clients have articulated some very large pipelines of new projects. This includes refurbishments featuring net zero initiatives,” says Chopra.  

“These commitments were all made when debt was cheaper, construction was cheaper and valuations were higher.  

“I expect that we will probably see a major downshifting, unfortunately. Not because clients don't want to do this, but more because the economic climate does not let them do it.” 

Potential of alternatives and PBSA  

It’s not all bad news for the real estate sector. In the alternatives space, purpose-built student accommodation (PBSA) is looking like a very strong performer in Australia.   

Currently, there are more students looking for on-campus living than there are vacancies.

“It is very tight and stressful situation,” says Chopra.  

“There are around 1.6 million university students in Australia and currently we have one purpose-built student accommodation bed for every 16 students. So it's a deeply underpenetrated market.”  

Rowland echoes similar sentiments, stating that even with the supply coming through over the next three years, it still won’t be enough to alleviate the immense demand with the market continuing to remain very tight.   

There will also be a lot of dispersion in student rentals, according to Chopra.   

“A lot depends on the location and whether it's a new or recently built facility with some amazing amenities around safety, socialising and gyms.  

“I've seen everything from suites that are at $350 a week, up towards $800 a week. We have a lot of proprietary CBRE data and what it shows is that on average, student accommodation has rent growth of about 5.5% per annum.”  

Beyond the local appetite, Rowland explains that PBSA is also an asset class which has been favoured by the global investors.  

“Yields have been more resilient to interest rate changes than the more traditional sectors – but they are about 0.75% higher than build-to-rent.”  

Elsewhere in the alternative assets sector where Rowland is spending more time with clients includes the energy transition.  

“There's certainly a growing role for real estate investors to carve out the value of the hard assets like land and infrastructure from energy supply,” he says.  

“And this could be like what we experienced with telecom towers and healthcare, for example. It's a high growth business where we are dedicating more of our time and resources.”  

This article was originally published on CBRE. Read it here.

Stress levels in Australian workplaces among the highest as we battle constant interruptions and irritating colleagues

Libby Sander, PhD, Master HRM, Bachelor of Arts (Japanese), Bachelor of Business, is an Assistant Professor in the Business School at Bond University. Libby is an agenda contributor at the World Economic Forum and her articles have appeared in US Newsweek, the BBC, the World Economic Forum, The Guardian, Huffington Post, Fast Company, Sydney Morning Herald, The Age, and on SBS, amongst others.

As more companies mandate the amount of time to be spent in the office, employee stress levels are on the rise.

A recent study found 34% of employees reported lower mental health levels compared to six months ago. Alarmingly, 37% also reported decreased levels of engagement and sense of belonging.

So why might the return to the office be increasing employee stress? Research indicates a combination of commuting, cost of living pressures, noisy open-plan offices, work culture, interruptions, decreased autonomy and coworker relations are contributing to workers feeling more stressed.

In Gallup’s State of the Global Workplace 2023 Report, the US and Canada region along with East Asia tied for the highest level of stress at 52%, and Australia and New Zealand had the second-highest rate at 47%. These results maintain the record high set in 2021.

And an analysis of 382,000 employee exit interviews found reports of employee burnout have almost doubled in the past year.

The return to the office appears to be a contributing factor with 52% of employees preferring flexible/hybrid work to minimise mental health concerns.

So how might returning to the office be making employees more stressed?

Noisy offices are a significant contributor to stress

As staff have returned to the workplace they have been confronted with the thing employees dislike most about open plan offices, according to research: noise.

Noise has significant implications for both employee well-being and performance. Our research found relatively moderate levels of open-plan office noise caused a 25% increase in negative mood and a 34% increase in physiological stress.

In addition to making employees more stressed and cranky, noisy open-plan offices reduce performance. Research shows employees in quieter one-person offices perform 14% better on a cognitive task than employees in open plan offices.

Fewer interruptions when working from home

In addition to not having to commute, for many employees, fewer interruptions and less noise from coworkers were some of the key benefits of working from home.

Modern knowledge work requires employees to focus and concentrate for lengthy periods. That is hard to do when colleagues are having impromptu meetings next to your desk, or discussing their weekends as you struggle to hit a deadline.

In many open-plan offices, the drive for increased interaction and collaboration comes at the expense of the ability to focus and concentrate. When distraction makes it hard for employees to focus, cognitive and emotional resources are depleted. The result is increasing stress and errors, undermining performance.

Research shows it takes about 23 minutes to get back on task after an interruption. Being constantly interrupted by impromptu questions and random conversation will not only reduce productivity but can lead to withdrawal from work.

To cope with the unwanted noise and interruptions, increasing numbers of employees are wearing headphones while they work.

Keeping tabs on your employees

As resistance to returning to the office continues, companies including Meta, Google, JP Morgan Chase and Amazon have stated they will use technology to monitor building access card data and system usage to track employees who are not complying. Employees have been advised repeated violations could lead to termination.

A recent study by the American Psychological Association found employees who were subject to monitoring technology were 14% more stressed than those not monitored.

And 42% of employees who were monitored intended to look for a new job within the next 12 months, compared with 23% who were not monitored.

Employees who are monitored while working reported higher levels of feeling they do not matter at their workplace (to their coworkers [32% vs. 17% of those not monitored] or to their employer [36% vs. 22%]), they are not valued (26% vs. 17%), and they are micromanaged (51% vs. 33%).

Commuting is stressful and expensive

The lost time and expense of commuting on top of rising cost of living pressures has been a consistent theme as to why employees don’t want to return to the office five days a week.

The Real Australian Commute Report 2022 surveyed 5,000 Australians revealing the average cost of commuting per day is now $20. According to a recent study published by Fortune, the time Americans spent commuting in 2022 increased by 239 hours, a 20% jump from 2019 figures.

But it’s not just the cost in time and money that is of concern, commuting adds to employee stress. A systematic review and meta-analysis of the relationship between commuting and stress found objective measures of commuting (distance travelled and time spent) were positively associated with strain outcomes, especially perceived stress.

Our coworkers can be part of the problem

Returning to the office is great for social connection and can lead to a range of positive work outcomes. However, our coworkers can also be a source of stress.

During my research, I am frequently told by employees of colleagues who eat offensive smelling foods at their desk, make loud sounds while eating, and conduct animated personal phone calls right next to them. Then there are those who wear sweaty gym gear for the rest of the day after working out at lunchtime.

Most famously perhaps in the annals of annoying colleagues was the case of the employee on a research station in Antarctica who stabbed a coworker who persisted in telling him the endings of books he was planning to read.

Workplace culture remains crucial

Being back in the office brings the culture of the organisation into sharp focus. More than one in four workers (26%) indicate a toxic work culture is negatively impacting their mental health.

Employee stress, under performance and turnover are inevitable if organisations are more focused on tasks or just getting their staff back in for face-time for the sake of it, rather than on results. Similarly, if poor leadership is tolerated and understaffing is the norm, low morale and high turnover are likely to follow.

Well designed workspaces that include acoustic treatment, psychological safety, effective leadership, healthy organisational culture, and work arrangements that support autonomy and employee well-being are crucial to reducing stress and employee turnover.

This article was originally published on The Conversation. Read it here.

Australian cities failing on walkability

The World Heath Organization has set targets to promote physical activity but an international study shows Australian cities are built around cars rather than encouraging walking

By Dr Melanie Lowe, University of Melbourne

More than half of Australian adults don’t do enough physical activity – and our cities aren’t helping.

A healthy level of physical activity isn’t just about going to the gym or playing sport, it is about the built environment around us and how that makes it easier or harder to walk around.

Walking is an easy, popular, equitable, and accessible way to achieve World Health Organization (WHO) recommendations that we each do 150 minutes per week of moderate-intensity physical activity.

But large parts of Australian cities aren’t pedestrian-friendly. Instead, our urban planning is car-centric, creating barriers to healthy, active and sustainable lifestyles.

I’m part of an international team of researchers, led by Professor Billie Giles-Corti at RMIT University, that has developed indicators of healthy and sustainable city environments, which will help achieve the WHO’s 2030 target to reduce physical inactivity by 15 per cent – now published as a Lancet Global Health Series on urban design, transport and health.

Using data from the International Physical Activity and the Environment Network (IPEN) study, our research, led by Professor Ester Cerin from the Australian Catholic University, calculated that to get people walking enough to meet the WHO’s target, neighbourhoods need sufficiently dense populations to support nearby services like shops and public transport – at least 5,700 people per km².

Cities also need connected roads or paths for people to use – about 100 intersections per km², and readily accessible public transport – about 25 stops per km².

Pedestrian-friendly neighbourhoods are associated with reduced non-communicable disease risk and built environment characteristics like population density, street connectivity and access to public transport are important for neighbourhood walkability.

Our further research in The Lancet Global Health Series, led by Dr Geoff Boeing from the University of Southern California, then used these benchmarks to assess 25 major cities across 19 countries.

We found that all three Australian cities included in the study – Melbourne, Sydney and Adelaide – fell short against optimal thresholds for population density and street connectivity that support walking.

Only 51 per cent of Sydney’s population, 18 per cent of Melbourne’s, and none of Adelaide’s population live in neighbourhoods that meet the minimum threshold for population density. This reflects traditional Australian suburbia characterised by standalone, low-density housing.

As contrasting examples, 97 per cent of the population in Lisbon in Portugal and 96 per cent in Valencia in Spain, live in areas with adequate population density. The average for meeting density thresholds was much higher for cities in middle-income countries compared with high-income countries.

Australian cities also have low street connectivity.

Only 13 per cent of the population in Sydney and Adelaide, and 21 per cent in Melbourne live in neighbourhoods that meet the optimal threshold for connected streets to help achieve WHO’s physical activity target.

This is well below the average proportion of the population living in areas with adequate street connectivity, for both high-income and middle-income country cities in the study.

Cities with a high percentage of their populations meeting or exceeding optimal thresholds for intersection density include Lisbon, Portugal (99 per cent), Bern, Switzerland (98 per cent) and Hong Kong (92 per cent). Low street connectivity makes it less convenient to walk to daily living destinations like shops, parks and schools.

Relative to the other cities in this international study – neighbourhoods in Sydney, Melbourne and Adelaide have low walkability overall.

Similar to previous Australian studies, we also found that access to walkable neighbourhoods is inequitably distributed across these three Australian cities. While expensive inner-city areas have better walkability – many middle and outer suburban areas are highly car dependent.

Australian cities also have inadequate access to frequently running public transport, to support walking.

We found that only 49 per cent of Melbourne’s population are within a 500 metres walking distance of public transport that’s serviced at least every 20 minutes, compared with 54 per cent in Adelaide and 58 per cent in Sydney.

By contrast, in Sao Paulo, Brazil 94 per cent of the population have nearby access to frequent public transport.

Inadequate city planning policies may be contributing to our car-centric built environments.

As part of The Lancet Global Health Series, I led a study to assess and compare the presence and quality of policy frameworks across the 25 cities. We found that Australian cities – like many of the other cities studied – don’t have sufficiently ambitious, evidence-based policies to promote healthy, active and sustainable cities.

For example, despite all the rhetoric supporting health and sustainability in our cities, Adelaide and Sydney don’t have policy requirements for minimum street connectivity, and Melbourne and Sydney have state government housing density targets that are too low to support walkability.

The Australian cities also lack measurable policy targets for providing pedestrian and cycling infrastructure, and Adelaide’s policy targets for walking and cycling participation are too low to optimise physical activity.

These policy limitations undermine efforts to increase physical activity through active transport, improve air quality and reduce greenhouse gas emissions.

To enhance health, Australian cities need evidence-informed, measurable and actionable city planning policies. Policies that are contrary to evidence need to be urgently revised and policy gaps must be filled.

Urban design and transport policies should include measurable targets that align with the optimal thresholds needed to achieve WHO’s physical activity targets. More research is also needed to establish optimal health-enhancing thresholds for other urban design and transport features to help guide policy development.

City planning policies and interventions also need to focus on reducing current inequities in access to walkable urban environments.

All levels of government need to work together, with the private and community sectors, to ensure integrated planning and delivery of the full suite of transport and urban design features needed for healthy and sustainable cities.

Policy makers could start by taking note of our Global Observatory of Healthy and Sustainable Cities – an international collaboration that shares the findings of The Lancet Global Health Series.

The Global Observatory hosts city reports and scorecards for all 25 cities in the study – including Melbourne, Adelaide and Sydney. These can be used to guide city planning to better support population health and achieve WHO’s physical activity targets. And more scorecards are planned.

The Global Observatory’s 1000 Cities Challenge invites interested researchers and policymakers to get involved in calculating indicators for their own city.

This article originally appeared in The University of Melbourne Pursuit. Read it here.

This research was led by the executive team of the Global Healthy and Sustainable City-Indicators Collaboration: Professor Billie Giles-Corti (RMIT University), Dr Melanie Lowe (University of Melbourne, Dr Geoff Boeing (University of Southern California), Professor Ester Cerin (Australian Catholic University, Dr Deborah Salvo (Washington University), Professor Erica Hinckson (Auckland University of Technology), Professor Jim Sallis (Australian Catholic University), Carl Higgs (RMIT University), Dr Deepti Adlakha (North Carolina State University), Professor Anne Vernez Moudon (University of Washington), Dr Jonathan Arundel (RMIT University), Dr Shiqin Lui (Northeastern University). Other contributors from the University of Melbourne include Professor Mark Stevenson and Thanh Ho.

What the experts are planning for obsolete office buildings

There is a rising focus on adaptive re-use in our major CBDs as owners look for ways to reimagine – rather than demolish – older office buildings to make our cities more dynamic.

CBRE provides thoughtful, forward-looking insight into real estate trends, strategies and opportunities around the world.

What are some of the solutions for ageing or obsolete office buildings? It’s a question being debated globally, as landlords and policymakers grapple with ways to create more 24/7 cities, solve for a chronic undersupply of housing and deal with the carbon emissions involved in new construction projects. 

Against this backdrop, a growing number of building owners - both in Australia and globally - are turning to adaptive re-use, choosing to repurpose existing buildings in favour of doing a knockdown rebuild. 

As Nathalie Palladitcheff, the Chief Executive Officer of Canadian real estate company Ivanhoé Cambridge, is known for saying, “The best building for the planet is the building that you don't build”.  

So, what is the potential in Australia? And what could some of the benefits be?  

Turning the old into new  

Replacing offices with apartments is one of the key areas being examined given the ongoing supply issues in our major cities. 

Design studio Hassell recently completed a comprehensive audit of the Melbourne CBD on behalf of the Property Council of Australia, identifying that 86 buildings are ripe for adaptive reuse and could create up to 12,000 new homes. 

Ingrid Bakker, the Principal and Commercial & Workplace Sector Lead at Hassell, says identifying buildings with the right scale and dimension to suit apartments is the key to ensuring adequate natural light and ventilation.  

And that magic number is 24. 

“You hear a lot of people saying you can't convert offices because the floor plates are too big and too deep, and you won't get enough natural light. And that's true, you can't with a lot of office buildings. But if a building is around 24 metres wide that’s perfect for two apartments complying with the Better Apartments Design Standards in Victoria or the Apartment Design Guide in New South Wales,” Bakker notes. 

“So, if you do two metres of balcony, nine metres of apartment, two metres of corridor, nine metres of the other apartment, and then the balcony again, you get this magic number of 24.” 

Before completing the Melbourne audit, Bakker says she initially thought there might be half a dozen suitable buildings, but a total of 86 were identified. 

Even discounting that some of these wouldn’t be workable projects, being too close to other buildings or not having enough access to natural light, and by just focusing on 40 of those 86 buildings, Hassell arrived at the conclusion that these could deliver 10,000 to 12,000 new CBD apartments. 

Notes Bakker, “That's when we started to understand the scale and potential and what that could do to the city to really add some life. The key to activating cities is having that 24/7 city and that passive surveillance that residential gives you to keep it safe.” 

It’s a conversation happening around the world, with Hassell talking to groups in Singapore, Brisbane, Sydney, Perth and San Francisco. 

“It depends on the planning conditions in each city. And some cities obviously allow more height or more density than others. And that's something that we're looking at as we move through the different locations to see whether this can work in different cities,” Bakker says. 

David Harding, the Executive Director of Business NSW, is a passionate advocate of adaptive reuse to help create 15-minute walkable cities. And not just by converting office towers to apartments but by considering a range of other uses 

“We need to bring all of the generations back into our cities. We need to have them pumping all the way through the weekend. We need to have people in the streets through the night in a safe kind of environment. And for that we need to have more mixed-use towers,” he says. 

“We're proposing from Business NSW, and we've been on this for a long time, that we just need to lift the planning regulations to allow invention, to allow innovation, to allow that reinvestment to come in and whether it's educational space, whether it's medical space, whether it's research space, whether it's advanced manufacturing, whether it's luxury housing or whether it's affordable housing for key workers, we need to look at them all.” 

That’s something that’s already happening in London, with some empty office space being converted into hotels, life sciences space and apartments.  

Zoe Bignell, head of CBRE's UK Development Advisory Business, says this is being driven by an ongoing occupier flight to quality, which is hastening obsolescence in a growing proportion of the London office market, as is the cost involved in transforming older commercial stock into better quality office space. 

However, she stresses that not all second-hand office space can be converted to an alternative use even where there is a willingness, and that planning considerations are critical. 

She points to the Central Activity Zones in London where the local planning authorities are endeavouring to protect employment uses. 

“There’s a concern that if the use flips from employment to residential, but the employment cycle comes back and there's more demand for offices, have they mitigated their ability to respond to that in the future. So there's this real conundrum around trying to expedite housing to deliver on that housing crisis, but also not be in a position where you have a future growth in employment in the future,” Bignell said. 

While she acknowledges that there’s not one easy solution, she believes it’s a case of balance. 

“We have some clusters of office space that work really well. We have regeneration sites in London where you can weave in commercial accommodation to help bring in that employment level necessity. My main theme at the moment in speaking to these regulatory bodies is that there's not a one size fits all approach to planning that's going to work. You need to be agile and respond to what developers and end users want. Because the most important thing here is not having buildings that are obsolete because that stymies your high street or your townscape.” 

Bakker has been involved in similar discussion with the City of Melbourne and the Victorian Department of Planning, who she says are keen to understand what needs to be done to unlock any potential issues or to get rid of hurdles. 

“They're open to discretion around some of the current planning codes and also to the apartment design guidelines and looking at each site for its merit. And we did a couple of examples to show what would happen if you complied with the current planning scheme and then what would happen if we had some discretion and we were able to demonstrate that you'd get much more efficiency, a better building, if you did have that discretion.” 

In addition to planning, Bakker believes being able to put a value on the value on the embodied carbon in older-style buildings – something that’s currently not possible – will be one of the critical ways to help accelerate adaptive reuse in our cities, incentivising developers that choose to reuse the existing carbon in a building. 

“I think until there's some kind of value put on the reuse of the structure we'll be in an uphill battle. A lot of the cities around the world have net zero ambitions, with Melbourne having a very aspirational target of net zero by 2040. We're not going to get there if we don't reuse the embodied carbon that we already have."  

Harding would meanwhile like to see a rezoning of major portions of our old-style CBDs into a new definition of mixed use.  

“We need to lift the lid on the innovation, let the investment come back in, let the creative people like Ingrid loose, with much less constraints in a world that needs to be much more nuanced, much more resilient and frankly bring a lot more colour to our towers.” 

This article was originally published on CBRE. Read it here.

TO BUILD MORE HOMES WE NEED CONFIDENCE IN BUILDING QUALITY

Dr Paulo Vaz-Serra is a Senior Lecturer in Construction Management at the Faculty of Architecture, Building and Planning at the University of Melbourne since 2014. He is a Civil Engineer and holds a master's degree in Construction and a PhD in Civil Engineering with a focus on knowledge management in construction companies and a postgraduate degree in entrepreneurship and innovation.

Australia plans to build an extra 1.2 million quality homes in five years, but we don’t have the people or regulatory processes to achieve this

By Dr Paulo Vaz-Serra, University of Melbourne

The federal government recently announced an ambitious plan to boost the Australian economy with an extra 1.2 million new houses in five years, including a $AU3 billion National Housing Infrastructure Facility. How the government intends to execute this plan within the current regulatory climate remains unclear.

The plan will require building an additional 240,000 new houses per year, which is double the current capacity to build houses – even more than double if looking at the reduced projection of only 173,000 for 2025.

With the current shortage of qualified professionals and construction companies, achieving this goal will be challenging for all stakeholders, especially the final buyers.

Rushing construction significantly increases the risks to quality.

In a time of uncertain material supply and a shortage of qualified labour, last-minute changes and shortcuts can lead to disastrous consequences for quality, safety and costs.

Given these circumstances, it is crucial we acknowledge the current quality issues in construction to prevent a million homeowners ending up dissatisfied with the quality of their newly built houses.

Building a house is a complex process that starts with good design and engaging highly qualified and competent individuals for construction.

REDUCING CONSTRUCTION TIMELINES INCREASES THE RISKS

Here in my home state of Victoria, I have doubts about the capacity of building surveyors to manage the increased work.

Building surveyors ensure compliance with regulations and are currently crucial to the construction process. Registration as a building surveyor requires a minimum of four years of training and some years of experience.

The City of Melbourne says there are insufficient building surveyors to meet even the existing workload.

This shortage has left tens of thousands of ‘orphaned building permits’ – permits without building surveyors attached – leaving people unable to live in their finished homes. So how does the government plan to cover the requirements for 1.2 million new builds?

This increase in buildings will also add to existing issues with inspections mandated by the Victorian Building Authority (VBA) – an authority facing criticism for its “appalling culture” and ability to effectively oversee the sector.

These mandatory inspections are limited to only three stages of the structural work: before placing a footing; before pouring an in-situ reinforced concrete element; and at the completion of the framework.

Fire and smoke-resistant elements are also checked during the construction process and on completion.

At the completion of all building works a final inspection is limited to checking compliance with regulations.

Inspectors have spoken out about pressure to overlook faults to meet unrealistic inspection targets set by the VBA. This has led to dramatic outcomes, including conducting inspections from the sidewalk.

WILL THE NEW BUILDS MEET QUALITY STANDARDS?

The current regulatory system employs the National Construction Code (NCC) to determine quality based on how a building performs, rather than solely on materials and processes.

If it functions, it is considered compliant.

For instance, if someone turns on a tap, water must flow, regardless of whether the shower was constructed according to the design and expectations of the owner. In addition, owners have to accept cracks in walls if less than one millimetre as authorities consider that some movement of footings is ‘normal’.

The Supreme Court recently ruled that a contractor did not need to comply with a VBA ‘direction to fix’ because the VBA inspectors failed to detect the faults before the certificate of final inspection was issued. The owners were left to deal with the problem themselves.

This clearly ineffective level of inspections prompted the City of Melbourne to propose that inspections should be managed by an independent authority.

WE CONTINUE TO LOSE DESIGN AND CONSTRUCTION KNOWLEDGE

The terms ‘builders’ and ‘contractors’ are now used interchangeably when historically they hold significant differences and carry different implications.

Builders referred to companies with internal competencies to perform all construction aspects, possessed in-house trades capabilities and employed foremen as site managers with expertise in various trades including carpentry, plumbing and electrical.

Contractors referred to contract administrators or what are now known as ’main contractors’, people responsible for managing subcontractors. They employ ‘project managers’ who often manage subcontractors across different trades, but they may have no expertise in any of these individual trades.

The industry has largely switched from using ‘builders’ to using ‘contractors’ as they are more cost-effective. But this has led to the loss of design and construction knowledge.

THE DISCONNECT BETWEEN DESIGN AND CONSTRUCTION

The Victoria Building Authority’s system currently assigns primary responsibility to tradespeople, empowering them to make decisions that often diverge from original plans. Architects and engineers are not required to be on-site and are seen as an unnecessary cost.

But this leaves initial design quality control in the hands of less qualified people.

This leads to situations where tradespeople alter complex design systems, including drainage in hydraulic engineering systems, based purely on their practical experience.

This can result in problems like leaks due to non-designed penetrations in external walls, but also aesthetically undesirable and quality-compromising outcomes, like pipes in front of facades and windows.

BUILDING REGULATIONS – A MISSED OPPORTUNITY

This year’s amendments to the Victorian Building Act 1993 were a missed opportunity for reform.

Despite calls for changes and to increase the accountability of building companies, more responsibility has instead been put in the hands of building surveyors.

Investment in proper building design and the accountability of those responsible for the management and execution of works is desperately needed to avoid a potential catastrophe that could endanger lives.

The 2021 Champlain Towers building collapse in Miami and the devastation wrought by the recent earthquakes in Türkiye and Morocco are tragic examples of how inadequate building approval processes can increase the severity of disasters.

According to the VBA webpage, in Victoria, we have nine types of ‘building practitioners’ (each with up to 30 different subtypes): building inspector, building inspector (pool), building surveyor, quantity surveyor, draftsperson, erector and supervisor of temporary structures, project manager, domestic builder and commercial builder.

For end-users, these terms are difficult to distinguish and their responsibilities are unclear.

A SOLUTION TO CLEAR UP THE CONFUSION

With increasing concerns about apartment quality in Victoria, the Parliament of Victoria launched an Inquiry into Apartment Design Standards.

This inquiry aimed to address the challenges within the architecture, engineering and construction industries and received 53 submissions, including one from me and my University of Melbourne colleagues Steven Richardson and Dr Andrew Martel.

Our proposed solution, based on practices in other countries around the world, is to enhance the minimum competencies of builders before they are granted licenses. You can read our submission and the transcript of our appearance before the parliamentary committee.

The responsibility for compliance with design when delivering construction must be on architects and engineers who have the qualifications and competencies to sign off final works.

Therefore, to start a construction company, the Business Licensing Authority must require that contractors demonstrate that they have architects and engineers who are individually liable and accountable on their behalf for the quality of the work that they will perform.

This will allow a proper balance between the business owners of the company, who are focussed on costs and time, and the designers, who focus on quality and the protection of users, as well as public safety during construction.

This transition would address the current situation where a main contractor, often referred to as a ‘project manager’, delivers the project but possesses minimal responsibility and technical qualifications.

Additionally, if ongoing accountability for the quality of works belongs to architects and engineers, this will necessitate clients reevaluating their procurement methods and no longer relying on a ‘design on the run’ building process.

This should ensure they understand the importance of a high-quality initial design that gives them confidence in the outcome of the build.

This article originally appeared in The University of Melbourne Pursuit. Read it here.

What’s in a view? Why sightlines in leading cities are so important

BY MARTIN CRABB, DON'T BLOCK THE ROCKS

Leading global cities protect their heritage views and sightlines, respecting the human scale of the city’s heritage and topography, cherishing the city as a landscape of natural features.

Earlier this year the final report of the NSW Legislative Council Select Committee on Barangaroo sightlines, made several recommendations.

Among these is that significant cultural and heritage value of the sightlines. The recommendations included that:

“The NSW government, in consultation with the Heritage Council of NSW, develop a view management strategy that effectively identifies and preserves sightlines in the Millers and Dawes Point precincts that are of significant cultural and heritage value to New South Wales, and ensures that these views are considered in the context of any major redevelopment project”.

In response NSW government committed to consulting with the community to develop a view management strategy:

“The government will ask the Department of Planning and Environment, including the Government Architect, to consider the development of a view management strategy that provides a framework for protection and consideration of significant views and sightlines when major redevelopment projects are proposed”.

Meanwhile, word on the street is the revised scheme for Central Barangaroo Modification 9 will be lodged before the year is out.

Following the public outcry against Mod 9, which sought to block views of the harbour and lower lying stars from the Sydney Observatory in the western sky, blocked harbour views from the Langham Hotel and dramatically impacted the heritage and tourism qualities of Millers Point and the Observatory Hill precinct, which Sydneysiders enjoy.

It would seem prudent that the revised proposal be only assessed once a view management strategy for Sydney is finalised and considered.

What is a view management strategy?

If you stand out in front of “Ye Olde Cheshire Cheese” public house (rebuilt in 1667) in London’s Fleet Street and look east, you will enjoy an uninterrupted view of St Paul’s Cathedral.

Lean forward and you can see the silhouette of 122 Leadenhall Street (“The Cheese Grater”), which owes its shape to obligation to protect this view.

The Act for the Rebuilding of the City of London, passed in February 1667 proposed that all new buildings had to be constructed of brick or stone against the future perils of fire. It also imposed a maximum number of storeys per house for a fixed number of abodes to eliminate overcrowding. The London Building Acts of 1888 and 1894 ruled that architects should not be allowed to build structures higher than 10 storeys to ensure the city’s finest landmarks were not obscured (and so fire crews could reach the upper levels).

London has grown upwards since then, but still has protected views that pinwheel around historic sites such Westminster (and “Big Ben”), the Tower of London and St Paul’s Cathedral.

These “sightlines” influence the volume and massing of new developments, defining the edges of clusters of towers and their dividing chasms. Formalised under the London View Management Framework, the City of London has sought to balance the heritage sense of place with the desire to add more high-rise office and residential building – a challenge faced by many developed cities.

A similar commitment to preserving London’s heritage with the development of “sightlines” was included in the 2004 London Plan, published by then mayor Ken Livingstone, and based around the aspects and panorama that include historical sites such as St Paul’s Cathedral, the Tower of London and Westminster Palace.

London is not alone; many great cities protect the views to and from their monuments.

By 1300, the population of Florence grew to over 100,000 people. A series of laws were enacted to encourage order and dignity, express a shared spirit of civic pride, and to make the city il più bello che si può (as beautiful as possible).

Towers were reduced to a uniform height and regulations were passed to dictate the appearance of buildings. Today, nothing is built taller than the Palazzo Vecchio, and all roofs must be made of terracotta tiles to maintain the roofscape when seen from adjoining hills and Piazzala Michelangelo.

Rome, admired for its topography and resulting views was perhaps the first intensively represented city – first in paintings, prints and postcards, and then in the photographs of tourists.

Sweeping views of St Peter’s Basilica and the winding Tiber were influential in re-imaginings of idealised classical landscapes. The height of buildings in Rome greatly affects the view of landmarks and the overall skyline. You can still sit at the top of one of the seven hills that made up ancient Rome and see the other six.

Restricting the height of construction in Paris has a long tradition that goes back to 1667 when an ordinance during the reign of Louis XIV limited the height of buildings with façades on streets to 16 metres. One major purpose of the ordinance, which was issued one year after the Great Fire of London, was to implement safety precautions.

Royal decrees by Louis XVI in the 1780s specified heights of buildings proportionate to the widths of the streets they overlooked for reasons of hygiene, safety and aesthetics.

If a street was less than 7.8 metres wide, for example, buildings could be no higher than 11.70 metres, with a maximum of 20 metres permitted on streets of the same width.

The tradition of proportion was continued into the next century and was particularly developed by Baron Haussmann, the Prefect under Napoleon III who gave the centre of Paris its distinctive large boulevards and uniform stone-cut façades with wrought iron balconies and decorative door and window pediments.

Haussmann dictated that all of these elements on any given building had to be uniform and broadened the practice of limiting the height of the building to even specifying how many floors it could have. Modern Paris has limited high rise development to the La Defence district, maintaining low rise development in the historic city centre and affording a view that includes the Eiffel Tower, the Arc de Triomphe, Sacre-Coeur, Notre Dame and the Pantheon.

In Vancouver, one of the worlds “most liveable cities”, protected views restrict development in what is already a constrained site: a peninsula surrounded by water.

The City of Vancouver protects spectacular ocean and mountain views while promoting density in the downtown area. The mountains behind the city skyline signify their connection to nature and align with their sustainability goals.

However, the downtown peninsula has limited land available for development because of its geographic boundaries. To reduce urban sprawl, the city considers higher buildings that don’t impact the protected view corridors.

In consultations with the community, the city identified several locations from which both residents and visitors can appreciate the uninterrupted views of the North Shore mountains, the Downtown skyline, and the surrounding water.  

Views of the water in Istanbul, Turkey’s largest metropolis, were important in Ottoman times to detect the approach of rival navies, and over the years open views of the Golden Horn and across the Bosphorus Strait have become traditional images of Istanbul.

St Petersburg in Russia has long been admired for its skyline – the only things punctuating above is flat elevation are steeples of churches. The level was set by the height of the winter palace, and broad, sweeping views across the river remain key to St Petersburg’s identity.

More recently, there was public concern about the “Manhattanisation” of the financial district of San Francisco that many people thought would damage the “city pattern”.

This was developed into a general plan passed into law in 1995, including the preservation of “major views whenever it is feasible, with special attention to the characteristic views of open space and water that reflect the natural setting of the city and give a colourful and refreshing contrast to man’s development.”

I was born in Arbroath – a small town on the east coast of Scotland that happens to be home to Arbroath Abbey – the final resting place of King William I (the Lion) (1165-1214), and the site of the signing of the Declaration of Arbroath (Scotland’s “Declaration of Independence”) in 1320.

The oculus or “O” of the abbey is an iconic landmark which used to guide ships at night which can be seen for miles around.

It was because of Arbroath’s aesthetic value, as well as its historical significance, that efforts began to be made not only to ensure its preservation, but also to improve its setting, from a remarkably early date.

As early as the 1830s King’s Architect Robert Reid was urging that surrounding properties should be acquired and demolished so that the abbey could be seen to better advantage.

Are protected views the best way to preserve the heritage of the city?

Visitors to Scotland may have also made the steep climb up the Royal Mile in Edinburgh, you can only wonder at the shape of the shoreline from Edinburgh’s Castle grounds. The 2006 Street View Study conducted by the City of Edinburgh Council noted some places were “fundamental” to the city, and key views were “precious” and even “sacrosanct” in providing a “sense of the city”.

Nine significant locations were then identified, with a series of views from multiple angles drawn on to the map and a calculation for the “sky space” around the sites to allow its view to remain unhindered. In addition, 22 landscape areas were highlighted for special consideration.

­­­­­­­­­­­­­­­­Much to its credit, the City of Sydney has developed just such an approach with its Central Sydney Planning Strategy, which states:

“There are a number of key views within Central Sydney, to and through parks and other well-utilised public spaces, that help define Sydney.

Examples of significant views include:

• Views toward Central Station clock tower; these are significant due to the towers’ historically physical prominence in the city’s landscape.

• Views along Martin Place: These are important due to Martin Place’s significant as a gathering place.

• Views to and from Observatory Hill: These are significant due to Observatory Hill’s strategic role in the city’s history, in milling, defence, communications, astronomy and time keeping. These functions have required the surrounding views and physical alignments to remain open. Observatory Hill’s physical prominence relative to city development should be maintained.

New development must be designed to make a positive contribution to the characteristics and composition of designated public views. These public views should be preserved and have priority over private views.”

What is a monument?

London architect Jules Lubbock in Proof of Evidence at the City of London Local Plan Inquiry, May 1987, stressed to the symbolic importance of a monument against the skyline:

In focusing more upon the symbolic aspect of the skyline we need to apprehend the strict meaning of the word “monument”.

A monument is a structure designed to warn, to instruct or to commemorate. The word derives from the Latin “monere” – to remind or to advise. Not all monuments, of course, are architectural, and certainly not all architecture is monumental. Just as street façades can act as monuments to a family, a firm or some other public institution, so the skyline can be regarded as the collective monument of a city, and in the case of a capital city, of the country as a whole.

The Acropolis at Athens, St Peter’s in Rome, the Kremlin in Moscow, the Eiffel Tower in Paris, midtown Manhattan in New York and both St Paul’s and Big Ben in London are, or were, some of the greatest examples”
Sydney, and by extension as its status as the first point of European settlement in Australia, has its monument – one that reminds us of early milling to feed to population (as Windmill Hill), defense against perceived threats of French invasion and/or Irish uprising (as Fort Phillip), signaling the arrival of ships from the other side of world (as Flagstaff Hill) and facilitating the setting of accurate time for navigation (as the Timeball and Sydney Observatory).

“Timeball and Observatory: On the 13th of September 1850, Captain King addressed the Colonial Secretary, with the following recommendations: The best locality… is Fort Phillip. From this the ball would be visible from all parts of the harbour.” Sydney Morning Herald, Friday 22 October 1852, Page 2

Chosen for its highest natural point in the harbour, its status as part of our skyline and identity is under threat from the looming Central Barangaroo development.

Views to and from this important site along with adjoining protected Millers Point and Dawes Point Heritage Precincts are our city’s equivalent of St Paul’s Cathedral, Palazzo Vecchio, Hermitage Palace, Eiffel Tower or Coliseum.

We must protect the sights to and from these places and resist the temptation to sell these iconic public views to private interests for a bag of silver.

This article was originally published on The Fifth Estate. Read it here.

Oliver's insights - has the RBA finished rate hikes?

Shane Oliver is the Chief Economist and Head of Investment Strategy at AMP. Shane joined AMP in 1984 and has extensive experience analysing economic and investment cycles and what current positioning means for the return potential for different asset classes.

Key points

- It’s likely that the RBA’s cash rate has peaked with numerous indicators pointing to slower economic growth and inflationary pressures easing.

- While the risk in the short term is still on the upside for rates or a delay to the start of rate cuts, our base case is that rates will be on hold until early next year ahead of rate cuts starting in the March quarter.

- Rate cuts through next year should help growth to stabilise and pick up from late 2024.

Introduction

At its September meeting the RBA left the cash rate on hold for the third meeting in a row at 4.1%. The pause in interest rates over the last three months comes after the biggest interest rate hiking cycle (of 400 basis points over 14 months) since the late 1980s. (While the 1988-89 rate hiking cycle was nearly double that seen since May last year, back then household debt to income ratios were about one third of current levels.)

This took the cash rate to 2012 levels and similarly for mortgage rates.

In leaving the cash rate on hold the RBA reiterated that interest rates have already been increased by 4%, higher rates are working to establish a “more sustainable balance between supply and demand”, uncertainty remains high and staying on hold provides further time to assess the outlook. The RBA also noted again that recent data is consistent with inflation returning to target in late 2025. So have we reached the peak in the cash rate? And what does this mean for the economy?

The case for the peak in rates

We were way too optimistic as to how far the RBA would raise the cash rate, but our view remains that the RBA has done more than enough to bring inflation back to target and so we are likely at the peak.

First, rate hikes impact the economy with a lag of a year or more. This is because it takes a while for the hikes to be passed through to borrowers and for them to adjust their spending and for this to impact companies and jobs. This time around the lag has likely been lengthened by savings buffers built up in the pandemic, the reopening boost, more than normal home borrowers locking in at 2% or so fixed mortgage rates in the pandemic and the highly competitive mortgage market which has meant that actual mortgage rates paid on outstanding mortgages have gone up by less than the cash rate. However, these protections are now wearing off.

The rate hikes since April last year mean that a variable rate borrower with a $600,000 mortgage will have seen around $1300 a month added to their mortgage payments. That’s an extra $15,700 a year. Even if the borrower has managed to get a 0.5% discount to their mortgage rate it would amount to an extra $13,300. Many of those on fixed rates are now starting to experience an even bigger increase (because fixed rates in 2020-21 fell to much lower levels than variable rates) in one jump. This has already seen housing debt interest payments as a share of household disposable income double from their lows. Once the rate hikes fully flow through it will likely go to a record high. This is a very big hit to household spending power.

Secondly, we are now seeing increasing evidence that rate hikes are biting:

• Real retail sales have fallen for three quarters in a row and are very weak on a per capita basis, ie adjusting for population growth.

• The ABS’ Household Spending Indicator suggests annual growth in nominal consumer spending has gone negative this quarter which suggests weakness in both goods and services.

Red portion of the ABS’ Household Spending Indicator line assumes spending remains at July level for August and September. Source: ABS, AMP

• A sharp slump in building approvals points to weak in-home building.

• Business investment plans as surveyed by the ABS for the current financial year are only up 7.1% on the same estimate made for the last financial year pointing to a deceleration in growth from the 15.9% rise seen in 2022-23. This is in nominal terms so the slowdown after allowing for inflation will be greater.

• GDP growth has slowed to a 1.6% pace in the last two quarters.

• Labour market indicators including job vacancies and hiring plans in surveys have started to cool and unemployment looks to have bottomed at 3.4% late last year.

• The June half profit reporting season saw less companies than normal report profits up on a year ago and far less than normal raise their dividends, suggesting a degree of caution.

Finally, while our Australian Inflation Indicator has picked up a bit with higher labour and raw material costs it continues to point to a further rapid fall in inflation.

Continuing to raise interest rates will only add to the already very high risk (at around 50%) of recession. At the very least the economy is likely to have slowed substantially by late this year with unemployment starting to rise faster than the RBA is allowing for. This will likely see inflation fall next year faster than the RBA expects. As a result, our base case is that the cash rate has peaked ahead of rate cuts starting in the March quarter next year which should help growth then stabilise and improve later next year.

Short term risks for rates are still on the upside though
In the short term, the risks are still skewed to a further increase in interest rates and or a delay in the start of rate cuts as: inflation is still too high; the labour market remains tight with upwards risks to wages flowing from higher minimum and award wage rises; productivity growth is very weak; and the rebound in home prices is partly offsetting the tightening impact of higher interest rates. Consistent with this the RBA retained its guidance that some further rate hikes may be required. Key to watch will be the global economy, household spending, inflation and the labour market.

While the near-term risks for interest rates are still on the upside those risks have declined though. Absent much stronger wages growth, a further drop in unemployment and/or a reversal of the downtrend in inflation, the RBA is expected to leave interest rates on hold for the rest of this year ahead of rate cuts next year. We are allowing for four rate cuts through 2024 as the economy and inflation slow further.

So soon-to-be Governor Bullock should get an easier run than Governor Lowe. Her main challenge may be trying to turn the economy back up.

This article was originally published on the AMP website. Read it here.

Think curbing overseas migration will end the housing crisis? It won’t – and we can’t afford to do it

Authors - Dr Dorina Pojani & Aude Bernard

Dr Dorina Pojani is an Associate Professor, Urban Planning School of Architecture, Design and Planning at the University of Queensland. Her research focuses on various aspects of the built environment, including urban design, transport, and housing - in both the Global North and South.

Aude Bernard is a demographer at the Queensland Centre for Population Research at the University of Queensland and Adjunct Research Fellow at Asian Demographic Research Institute at Shanghai University.

With the nation feeling the pressures of a housing crisis, some believe the Australian government needs to ease housing demand by limiting international migration.

To others, this sentiment comes across as xenophobic. They dismiss it outright, based on moral grounds. How can a nation of settlers, built on unceded Indigenous land, contemplate the notion of closing its borders to new migrants?

Leaving the moral arguments aside, it is worth looking at the data to find out if there is any merit to the idea of limiting housing demand by curbing migration – as opposed to increasing housing supply to make housing more affordable.

The evidence from pandemic-era data and longer-term migration and housing trends provides little support for the idea that curbing migration is a solution. And the future impacts on the economy and an ageing population would be costly for Australia, as the latest Intergenerational Report reminds us.

Why does Australia take in migrants?

First off, it is crucial to understand that Australia’s international migration program is not driven by charity. For a start, the percentage of humanitarian migrants is minuscule, about 10% of Australia’s permanent migrant intake. And, compared to other OECD countries, it is very difficult for migrants to bring family members, such as parents or siblings, to Australia.

Among non-refugees, younger and highly skilled migrants dominate the lot. They provide much-needed labour skills and sustain the economy. Migrants help Australia as much as Australia helps them achieve their life goals.

Clearly, limiting international migration is not a realistic policy option.

What’s the level of international migration?

The level of overseas migration is very high at present so, yes, migrants are contributing to housing demand in the short term.

However, this situation is only temporary. Much of it is so-called “recuperation migration” to make up for border closures that all but halted immigration during the pandemic. In 2020-21, Australia experienced a veritable exodus, with a net population loss of 85,000 people. Very few migrants were allowed in until late 2022.

The annual overseas migration intake is expected to peak at 400,000 people in 2022-23 before returning to 260,000 in 2024-25. This will be close to the long-term average before the pandemic. It will not fully make up for the lost population growth during the pandemic.

Housing supply is the long-term problem

The housing crisis has been decades in the making. Housing prices were on an upward trend while the annual overseas migration intake remained constant in the decade leading to COVID-19.

Tellingly, even as Australia lost population during the pandemic, the real estate industry estimates that “from September 2020 to April 2022, the nation experienced the sharpest recorded upswing in home values (28.6%)”.

This shows that factors other than migration have been at play.

Let’s look beyond international migration numbers and compare the net population growth to the housing supply. According to former senior Reserve Bank economist Tony Richards, the national dwelling stock stopped expanding in line with overall population growth in 2001. That’s also when the number of property investors began to increase.

Since 2001, the demand for housing has far exceeded the supply. The shortfall has been especially marked in the most populous states – New South Wales, Victoria and Queensland. By 2021, the national dwelling shortfall was more than 1.3 million units.

Is most population growth due to migrants?

Yes, but not by much. Until the COVID-19 pandemic, about 40% of population growth in Australia was through natural increase and 60% through international migration. Recuperation migration means migrants are contributing a bit more to the mix now.

Overall in Australia, the average number of children per woman reached a historical low of 1.58 in 2021. Birth rates among international migrants are similar to the national average. This is because migrants tend to be highly skilled, particularly in cities, and people in that group are more career-focused and have fewer children.

Low birth rates might be good news for those holding pro-extinctionist views. Others may see it as an economic disaster in the making.

However, the nation is recording about 300,000 births a year. This figure has been constant for a decade. Our population is youthful relative to other OECD countries, with a median age of 42. This means housing demand is not about to stop.

What about internal migration?

In some regions, like South-East Queensland, the internal migration of Australian residents is compounding the impact of immigration. This is not new.

The graph below shows data from 2021-22. At the time, Brisbane and its surroundings were particularly attractive as other states struggled to contain the pandemic.

But historic data from the 1980s onward show Queensland has long been a net population receiver. The state owes its longstanding popularity to its warmer climate and lower housing prices.

The recent spike in interstate migration to South-East Queensland combined with international migration to create a perfect storm. While Sydney’s and Melbourne’s housing markets have been notoriously unaffordable for a while, Brisbane is the latest arrival on the front lines of the housing affordability battle.

The bottom line

International migration contributes to the housing demand but it’s hardly the only, or even the main, cause of the housing crisis. The problem cannot be solved by curbing migration.

To make Australian housing affordable again, we need to increase housing supply in line with demand. We also need to stop inflationary investments in existing housing by abolishing tax rules such as negative gearing and capital gains tax.

This article is republished with permission from The Conversation. Read it here.

How do we get urban density ‘just right’? The Goldilocks quest for the ‘missing middle’

Elek Pafka is Senior Lecturer in Urban Planning and Urban Design at the Faculty of Architecture, Building and Planning - University of Melbourne. His research focuses on the relationship between material density, urban form and the intensity of urban life, as well as methods of mapping the 'pulse' of the city. He has participated in research on transit orientated development, functional mix and high-density living. He has co-edited the book Mapping Urbanities: Morphologies, Flows, Possibilities (2017, Routledge), and co-authored the Atlas of Informal Settlement (2023, Bloomsbury)

What would Goldilocks do if given the chance to pick the “just right” density for our cities? Depends who you ask.

Debates over densities in our cities divide between advocates of low-rise detached housing and supporters of higher-density towers. Both offer little diversity. In Australian cities, but also in North America, we see a clear contrast between ground-scraping suburbs and clusters of CBD skyscrapers.

The combination of these two patterns of development has produced largely car-dependent cities. Commute times are long and carbon emissions high. Options are limited for those who wish to live in a neighbourhood with corner shops, short walking distances to a local centre, communal green space and public parks.

Neighbourhoods like this are enabled by mid-rise (three to seven storeys), mid-density housing. This form of building has been dubbed the “missing middle”. Decades of planning for urban consolidation has made little difference – medium density is still missing in many of our cities.

Lack of clarity bedevils density debates

In debates about urban density, there’s often a confused mix of different conceptions and measures of density. For example, the widely used measure of dwellings per hectare conflates building and population densities, capturing neither with precision. Often such debates don’t consider basic distinctions such as those between building and population densities, residential and job densities, internal and external densities (inside and outside buildings), measured and perceived densities.

A census can easily capture residential night-time population densities. However, fluctuating daytime densities cannot be measured accurately. Building densities can be accurately measured as floor area ratio (FAR, the total floor area of buildings divided by the total site area) but this is rarely applied.

Metrics are often heavily biased by inconsistent reference areas. What spatial scales matter for which desired outcome is seldom questioned.

For example, a reference area of about 1 square kilometre is relevant for a walkable neighbourhood. Our perceptions of densities depend on the spatial reach of our senses, mostly up to 100 metres. These include the visual sense of enclosure, the diversity and quality of the public-private interfaces, street layouts, trees and other vegetation.

If experts are unable to accurately measure urban densities, how can we expect everyone else to understand?

Buzzwords don’t solve the problem

With confusions persisting, the stigmatisation of urban density, meaning for many “too dense”, persists. This tendency has been often countered through linguistic attempts to reframe the term.

For example, in Vancouver, Canada, the urbanist Brent Toderian has been calling for “density done well”. This term has been adopted in Melbourne too. Other terms include “Goldilocks density” – “not too high, not too low, but just right” – “optimal-quality density” and “EcoDenCity”.

But these are vaguely defined terms that can mean many things to different people. Our research shows that planning professionals in Melbourne associate “density done well” with neighbourhoods as different as North Perth, Western Australia, and Friedrichshain in Berlin. Their gross floor area ratios range from 0.7 to 4.3.

Put simply, “good” density is not limited to ratio of buildings to space. And it’s prone to change over time.

Getting density right depends on local contexts

The “missing middle” is sometimes exemplified by the three-to-seven-storey perimeter block. The block is formed by attached buildings aligned with the streets with a large communal courtyard in the middle. It’s common and well understood in Europe (Friedrichshain is an example above), but less so in Australia and North America.

David Sim describes this building type in detail in his book Soft City. He links it to nine quality criteria, including the diversity of buildings and open spaces.

Research testing these criteria for Melbourne shows only five larger pockets come close to meeting them, with floor area ratios of 0.6-0.7. These are inner-city suburbs built along tram lines and with diverse building types. Their buildings include two-storey terrace housing, three-storey walk-ups and occasionally taller apartments. None of these are perimeter blocks, which are largely absent in Australia.

We argue that well-meaning discourses about “good” densities risk masking divergent desires through linguistic tactics. Rather, we need a better understanding of the different conceptions and metrics of densities and how they relate to people’s everyday experiences. This will require increased urban density literacy, through formal and informal education, as well as public deliberation, so we can build cities as diverse as our societies.

Goldilocks confronted very simple challenges with very simple means. But cities are made of diverse people with different tastebuds. None would have to burn their tongue if they were more aware of the knowledge and tools we have at hand.

This was published on Architecture AU. Read it here.

Could Tasmania become Australia’s Finland and end Homelessness?

Rob Pradolin is a qualified engineer and has been active in the property industry for over 30 years, most recently as General Manager of Frasers Property Australia (formally Australand). He is the founder and Director of Housing All Australians, Board member of Summer Housing, and Salvation Army Housing. Rob was previously on the Board of Advisors for the Property Industry Foundation (Vic), past Board member of the Property Council of Australia (Vic), Residential Development Council, HIA (Vic), UDIA (Vic), Liveable Housing Australia and the Heritage Council of Victoria.

I am a capitalist! But it does not mean I do not care about vulnerable people.

In fact, there are many businesspeople in Australia that share the same value. This is why Housing All Australians was established as a private sector voice, looking at housing and homelessness through an economic and business lens.

Homelessness is the canary in the coal mine to a much more substantial issue throughout the housing continuum, which is currently playing out with unaffordable rentals and escalating house prices.

In July 2022, Housing All Australians published a report called "Give me Shelter," which quantified the long-term costs of undersupplying public, social, and affordable housing in Australia reaching an additional $25 billion per annum  by 2032 and growing.

The size of the housing problem confronting Australia was calculated by federal government actuaries as $290 billion and was presented in the 2021 Chris Leptos' review of the National Housing Finance and Investment Corporation (NHFIC).

So, why haven't we used this number to develop a long-term housing strategy that would create the essential housing infrastructure needed for a prosperous Australia? Why are governments so averse to setting meaningful and ambitious goals like this? The sheer magnitude of the problem, and the realistic solutions, intimidates politicians from all sides, making it seem too daunting and unattainable. As a result, we never take the first step. The can just gets kicked down the road and the problem gets worse, leaving an economic and social time bomb for future generations to face.

Governments at all levels are now realising we need to increase housing supply. But even if everyone agrees to do this today, it will take several years to bring new supply to the market, and decades for it to have real impact. That is why we need a national housing strategy with short, medium, and long term goals.

At Housing All Australians, we do not have all the solutions, however, together with our growing list of value aligned corporate partners, we are taking action in the following ways:

Short term:

Let’s make use of the vacant buildings that are waiting for their development approvals. This is not a long term solution, but an immediate way to use “existing infrastructure” while we build the homes our country needs. Currently, Housing All Australians has close to 150 rooms, in several empty buildings, in both Melbourne and Perth either completed or under refurbishment. There are 1000’s of empty buildings lying vacant across Australia that can be used as a short term solution, let alone some of the 1.3 million empty rooms across Australia that can also be used for short term shelter, while we build the new homes our country needs.

Medium term:

We have created our own affordable housing model that uses the NRAS governance principles to allow qualified people to apply for below market rents. As part of this model, we are developing a digital Affordable Housing Register with one of our value aligned corporate partners, PEXA, that will allow local government to monitor compliance of all stakeholders. The creation of this Register will unlock private sector capital to drive affordable housing.

Long Term:

If the figure of $290 billion seems overwhelming, and we can put aside our parochial sentiment, perhaps we can be bold and target to end homelessness in one state and use that as a pilot for Australia and measure the resulting benefits to help shape future housing policy. It is not impossible. What about Tasmania?

Tasmania is the only state that is about to have a Housing Strategy that acknowledges the solution rests in addressing the entire housing continuum.  Tasmania is already in a unique position as the government has committed to constructing 10,000 homes by 2032 while the public housing waiting list stands at around 4,500. No other state is in this position.

With the assistance of the federal government, ending homelessness in Tasmania is possible and could pave the way to examine and measure the economic and social benefits of ending homelessness. Tasmania already serves as a testing ground for various products in the business world, so why not test housing policies there?

However, it's crucial to understand that there are no quick fixes. Finland declared its ambitious goal of eradicating homelessness back in 2008 and is now well on its way to achieving it by 2027.

Australians are growing tired of the political games in Canberra and are yearning for real action. Let's be bold. Let's step outside our comfort zones. Let's establish an audacious goal that we can all support and give it our best shot. The only thing we have to lose is the future we want for our grandchildren.

Robert Pradolin

Founder and Director, Housing All Australians and a Board member of Homes Tasmania.

Bid-rigging is rife in Australian construction, but the process itself is partly to blame

Geoff Hanmer is an Adjunct Professor of Architecture at the University of Adelaide, an Honorary Professional Fellow at UTS and is also the Managing Director of ARINA, an architectural consultancy. He is an Architect and a writer on construction history.

Earlier this year the Federal Court found ARM Architecture and its then managing director Tony Allen were guilty of attempting to rig bids for a tender relating to a $250 million building project at Charles Darwin University.

The Court ordered ARM Architecture to pay a penalty of $900,000 and Mr Allen to pay $75,000.

In a public statement, Mr Allen said he had made

a very serious mistake by attempting to induce the other firms to engage in bid-rigging, and this has had serious consequences for me. I have lost my position, my reputation, and my involvement in a profession that I love.

Allen had sent an email to at least eight other architecture firms that were members of the Australian Institute of Architects Victorian Branch Large Practice Forum prior to the close of bids:

Our request to you is simple. Please do not submit a tender as we are relying very heavily on continuing with this project to keep our practice alive throughout the remainder of this strange and difficult COVID time.

He had followed it up with this second email:

We have received very positive responses from Architectus and JWA. We would greatly appreciate a short note from you to let us know of your intentions either way.`

The biggest fine for architects so far

Although colluding in bidding for contracts is rife in the construction industry and materials supply industries, this is the biggest fine so far for an individual professional services firm.

In Australia, the Australian Competition and Consumer Commission managed to successfully prosecute Cement Australia Pty Ltd in 2017 for anti-competitive practices resulting in a fine of $20.6 million.

And in the United Kingdom, so many construction firms were involved in massive bid-rigging scandals uncovered in 2008 and 2020, that the UK government had to warn its agencies not to blacklist them because it would “limit choice”.

Fees used to be fixed

In the supposedly more genteel design professions, submitting tenders for fees is relatively new. Until about 40 years ago, architects and engineers normally worked on a fixed-fee basis, and often made deals to divide work between them.

The Royal Institute of British Architects, founded in 1834, was set up primarily as a cartel to maintain a schedule of fees and prescribe educational standards for those who wanted to use the term “architect”.

Although fixed fees are likely to upset economists on principle, they have the advantage of not encouraging architects to shortcut their professional responsibilities in order to compete on price.

This might be why the law allows medical professionals, lawyers and pharmacists to set fees for their services. Few people would be tempted to select their surgeon on the basis of price.

Until about 1980, the Royal Australian Institute of Architects also attempted to fix fees. When the government gently pointed out that this was illegal under trade practices law, the Institute began a long, slow retreat and eventually stopped publishing a recommended fee scale, much to the chagrin of many members.

Competitive tendering is typically seen as the “gold standard” for getting value in construction, but tendering processes have become so onerous and convoluted that the costs of tendering in relation to the potential gains may now be reducing rather than enhancing competition.

This is especially significant for design consultants such as architects and engineers whose profitability is typically well below average for the industry.

Bidding processes convoluted

The Charles Darwin University project is a case in point. ARM was selected to design what was to be an “iconic” building, but documentation of the design was to be the subject of a second tender, which was the subject of ARM’s emails.

This two-stage process, devised by a project management firm, was self-defeating.

Charles Darwin University wanted a highly-awarded architect to deliver an iconic building, but much of the design ARM contributed has been lost.

The images of the new building, produced by another firm, do not resemble the original ARM design and are not the stuff architectural icons are made of.

The original Charles Darwin University design. ARM Architecture

ARM and Tony Allen have paid a very high price for their folly in asking other firms not to tender, but the project management firm that devised the expensive and ultimately unproductive double tender process has not been subject to any public scrutiny or criticism.

If we are going to have fee tenders, we need a transparent system with enforceable rules sufficient to stop public clients needlessly adding costs by wasteful convolutions, as happened with the Charles Darwin University double tender.

The updated Charles Darwin University design. CDU

Maybe there’s a better way

Alternatives should to be considered. It ought to be possible for the client to nominate a reasonable fee, and then select consultants who will accept the nominated fee based purely on their merit.

Another possibility is a two-envelope system, where the fee and the quality of submission are assessed separately, with the fee envelope only opened when an evaluation of the quality of submissions has taken place.

Other than that, we could do worse than revert to a fixed percentage fee and reap a huge saving in the effort, time and money put into selection processes. Free-market economists might like to think about how much competitive tenders actually cost.

This article was originally published on The Conversation. Read it here.

Inside the Opera House’s journey to 6 Star Green Star

Jarrod Reedie is the Assistant Editor of Architecture & Design's digital and physical publications. Since joining the masthead in 2021, the budding writer has penned a number of articles on defining residential, commercial, cultural and education projects both at home and abroad. Reedie was recently given exclusive access to Moreau Kusunoki and Genton's Powerhouse Parramatta project, recognised as the biggest cultural project to be built in Australia since the Sydney Opera House.

A couple of months ago we reported that the Sydney Opera House had received a 6 Star Green Star rating. An incredible achievement for all involved. 

Recognised as a paragon of sustainability across the globe, the Sydney Opera House’s journey has been decades in the making. The creation of the institution’s Environmental Sustainability Policy and subsequent Environmental Action Plan put them on the path, with a number of pioneering initiatives (more on that later) resulting in the certifications.

Working closely alongside the Green Building Council of Australia, the Opera House created a pilot performance tool, which sought to measure the performance of an existing building. The Opera House’s Environmental Sustainability Manager, Emma Bombonato (pictured below), explains.

We're looking at performance against ourselves rather than compared to another kind of cultural institution or performing arts venue. It's really important because it sets the trajectory,” she says.

“Four star Green Star was achieved, followed by Five Star Green Star three years later. Our big ambitious goal for our 50th year was to achieve a Six Star Green Star rating. 

“It laid the foundation for what we were looking for, but we had been working on it for over 10 years. So, in terms of us being able to get there, it's been a long time, but it's really been something that the whole organisation has known about and has been committed to since 2010.”

The Environmental Action Plan, or EAP for short, is broken up into a number of focus areas, including engagement and experience, building performance and community engagement. Eight hero goals are contained within the report, which is to do with the likes of building performance, energy consumption, water consumption, and increasing waste targets. Bombonato says the goals set were extremely ambitious, but each has been carried out.

“We wanted to achieve an 85 percent recycling rate, ensure all construction waste was diverted from landfill, eliminate single-use packaging, and embed sustainability in performances and outdoor events to align with international best practice. The objective is to achieve sustainable event management compliance with the international standard.”

2018 saw the Opera House reach carbon neutrality, with a major part of this certification attributed to the adoption of renewable energy. Despite the fact that you can’t exactly place solar panels on arguably the most recognisable building in the world, the Opera House team found a way.

“Renewables on-site are not a possibility for us, but we looked at a new model that was becoming more commonplace,” Bombonato continues.

“With the renewal of our electricity contract, we started thinking about the benefits in terms of reducing carbon emissions over time and contributing to New South Wales' transition to renewable energy. We've now procured 100 percent renewable energy, demonstrating that various models can achieve this goal.”

Arguably the most intriguing project that assisted in the achievement of 6 Star Green Star is the creation of an artificial reef at Bennelong Point (pictured above), which has boosted local ecosystems. Bombonato says she inherited the project when she joined the Opera House, but regards it as her favourite to date.

“We received a grant from the New South Wales Environmental Trust, collaborating with UTS. The project involved installing structures along the sea wall to create habitats, about 28 little pods in groups of three. They are designed to mitigate the decline in natural habitat caused by the artificial seawall," she explains.

"With that, in 2017, the reef structures were installed and over time, they became crusted with plant and materials like kelp, creating a habitat for juvenile fish species. Baseline surveying was done before installation, and post-installation surveys now show around eight additional species being surveyed around the site, proving the success of this type of project. 

“Recently, the white seahorse, an endangered species, was discovered on the site, making it a significant achievement for the project. It allows us to contribute to and create awareness for the marine environment in Sydney Harbour, which is our backyard and needs protection.”

Looking forward as opposed to back, Bombonato is focused on what comes next. The current EAP is due to finish at the end of 2023, with ARM Architecture’s recent refurbishment of the interior spaces  (pictured above) laying the platform for the future.

“From an environmental perspective, it's about ensuring that environmental sustainability and heritage conservation work together. We aim to retain and look after the heritage fabric while renewing the space to meet organisational and community needs,” Bombonato says of the ARM project.

“Now, we're looking at what's next and how we can integrate environmental and social sustainability goals more cohesively. Maintaining our Six Star Green Star is crucial, but we also aim to become climate positive by looking at electrification, fossil fuel-free options, circular economy, and contributing positively to nature and the environment. 

“We want to demonstrate leadership and inspire others to take action."

This article was originally published on the Architecture & Design website. Read it here.

Empty office spaces can be converted to residential buildings – but it won’t be affordable

Jenny Baker is a Licensed Professional Engineer (PE), a Certified Lighting Designer (LC), and a LEED Accredited Professional (LEED AP) with more than 10 years of industry experience as an electrical engineer and lighting designer. Jenny was honored with Consulting-Specifying Engineer Magazine’s “40 under 40” in 2015.

Since the COVID-19 pandemic began, more companies have offered remote work options for their employees, or have even switched to working entirely remotely – leaving empty office buildings a new fixture in many cities. In July 2023, Boston’s Planning and Development Agency announced a pilot program to offer incentives to building developers who convert office buildings to residential housing.

As engineers who study buildings, we wanted to know if these empty spaces could be converted to residential buildings, and what hurdles developers would face.

While converting office buildings to multi-family residential involves many considerations – including zoning codes, real estate values and structural issues – certain buildings may be good candidates for this type of conversion. Here’s what it would take to remodel these spaces.

Redefining space

First off, the building owners wouldn’t need to make any major structural changes to convert an office building to a residential building. Most office buildings are designed so that the tenants can easily build out the space to suit their needs. This means they can put up walls, take power where they need, and select finishes like flooring, paint and lighting.

With a conversion to multi-family residential, the shell and structural elements of the building would remain, while the building owners could add or move walls to create individual apartments. The costs for this interior remodeling would depend on the how fancy things like the countertops and light fixtures are.

But remodelers would also need to consider nonstructural building features, like windows. Windows determine the distribution of natural light in each residential unit. Narrower office buildings with more area along the perimeter – and therefore more opportunity for viewing windows – would transition more easily to residential than deep, rectangular-shaped office buildings. No one wants to live in a home with no daylight.

Electricity, fire alarm and telecommunications

Residential and commercial buildings have different electricity needs. Residential buildings have kitchen appliances that require lots of power, but office buildings use more computers, projectors and copy machines – meaning the electrical load would likely be about the same. Office and residential buildings also have similar power needs for lighting.

The electrical load from heating and air conditioning would depend on the type of systems used. While the main electrical service of an office building might be an OK size for a residential building, remodelers would need to add a subpanel to each residential unit. U.S. code requires that all residents have “ready access” to the circuit breakers or fuses supplying their unit.

Building owners would also need to add more fire alarm devices, since residential buildings have more rooms. They might need to revise the internet, telephone and cable systems, as well, to make sure each residential tenant has access to these services.

Though expensive, these electrical revisions are possible. The biggest hurdles would be adding the subpanels and metering to figure out how much each unit uses.

Heating, ventilation and air conditioning

While commercial buildings usually have centralized HVAC systems, residential buildings need separate HVAC systems and controls for each residential unit. That being said, mid-rise and high-rise apartment buildings often use a centralized HVAC system with variable air volume units in each zone. Variable air volume units work together with a central air handling unit that supplies a constant airflow. Each variable air volume unit then adjusts the air flow for its specific zone. Each smaller apartment would be a zone, but some larger apartments may need multiple zones.

Residential buildings typically have a smaller HVAC load than office buildings, meaning the existing HVAC system would be larger than needed for residential reuse. Oversized air conditioning systems often have humidity problems – add to that the fact that residential tenants create more humidity from showering, doing laundry and cooking. The way to mitigate humidity here is through additional exhaust fans. Variable air volume units would also help keep the extra humidity under control. Building owners would need to pay for these additions, as well as ductwork remodeling.

Plumbing and fire protection

In office buildings, most plumbing is centralized, often in the building’s core. For instance, bathrooms tend to be grouped together and located in the same spot on each floor. However, in residential buildings, plumbing is distributed throughout. Each unit typically has its own bathroom and kitchen, and each requires drinking water and sanitary sewer.

The biggest issues here would be the service sizes – or how large the pipes serving the building are – and the interior plumbing system. The service sizes for water and sewer in an office building may not be big enough for residential uses. This would depend on local codes and the number of plumbing fixtures. It’s likely that the pipe for a sewer utility connection would need to be larger for an apartment building than for an office building. Also, the interior plumbing system would need a remodel to serve each residential unit.

Reworking the plumbing for water should be possible. However, reworking the sanitary sewer system would be much more difficult, especially on upper floors. Gravity makes things run downhill, and longer horizontal pipes need more vertical drop to keep things flowing in the right direction. This remodel would require new plumbing chases – vertical cavities that pipes run in – to accommodate the sanitary sewer and vent piping needs. Adding these chases would likely require core drilling of floors. If the owner wanted to invest the money, it would be doable – but expensive.

The fire sprinkler system would likely need revisions once the new walls go up, but the size of the pipe bringing water to the sprinkler system should be pretty close to the right size.

New life for vacant buildings is doable but not easy

No one wants to see office buildings sitting vacant, as vacant buildings can diminish surrounding real estate values. Converting an office building to a multi-family residential occupancy is possible. It would, however, not be cheap.

But office buildings that are due for a remodel or upgrade anyway could be great candidates for this type of reinvention. If the building systems – HVAC, plumbing, electrical – are due for replacement, the project becomes more cost effective. With demand for rental units outpacing growth in new supply, and many cities like San Francisco and Boston offering incentives to convert, there is potential here. For someone with a creative vision and a building in the right location, this could be a successful and innovative project.

This article was originally published on The Conversation. Read it here.

Unlocking ‘smart density’: walking, riding and open space investments are the key

Gus Carfi is the Executive Chairman of Polar Enviro (previously known as SmarterLite Group), a Melbourne-based private group that is pioneering new generation Infrastructure Technology for Safety and the Environment. An incredible focus for Roads, Traffic Communications and Exit & Egress for Buildings / Facilities.

The future of density in Brisbane, Melbourne, Perth and Sydney is being discussed a lot these days. Communities are demanding governments address the lack of affordable housing, which is having real social, economic and environmental impacts.

Opposition to density and the mischievous positioning of it as only cramming people into high rise towers gets too much attention. However, as pointed out in recent articles in this publication, there is growing community understanding and support for a model of density that reduces pollution and improves health.

So, as we debate density from a housing perspective, we also need to talk about the importance of matching any increased density with better walking and riding infrastructure. This cannot be an afterthought; it has to be front and centre of planning changes being debated across the country. Otherwise, we risk ignoring some important lessons learnt from the COVID-19 pandemic, including people’s desire for outdoor activity.

Some commentators suggest momentum is building to fund, approve and rollout more walking and riding infrastructure. Yet the UN Environment Program’s call in 2016 for governments to spend 20 per cent of transport budgets on these measures are not front of mind in debates about density.

No country on the planet is spending that much but there are encouraging local and international developments worth noting. 

Many councils have ambitions to rollout more walking and riding infrastructure, for example, my hometown City of Melbourne has a plan for $7 million worth of bike lanes in the next 12 months. I hope that delays in approvals do not stymie these ambitions.

The French government has announced it will spend $4 billion to double bike lanes by 2030, including $821 million to subsidise the purchase and maintenance of bikes. The government is also changing road rules and training 850,00 young children to ride bikes.

More recently, the UK Department of Transport has been served with a first round of legal papers asking for a judicial review on recent cuts to spending on infrastructure to promote walking and riding and how these cuts can be justified given the UK government’s emission reduction targets.

The approach in France is a mix of carrots and sticks but the situation in the UK is a potential warning for governments who ignore the huge contribution that walking and riding can make to reduce emissions and positively shape the model of density people want.

What both have in common is the conclusion hundreds of millions of people who live in cities came to during COVID-19 lockdowns across the world: governments and communities cannot address climate change, reduce congestion, improve air quality and enjoy better physical and mental health without a smarter approach to density that includes significant investment in walking, riding and open space.

Like in most other cities around the world, how Australians now live, work, and play is changing. A coalition of groups, including the Heart Foundation, RACV, Bicycle Network, Municipal Association of Victoria, Victoria Walks and universities outlined what this meant in Victoria during the pandemic in their Streets are For Everyone Joint Statement. Similar findings were replicated across Australia.

Preferences for safer streets, neighbourhoods, bike paths, parks, and gardens are no fad. This version of smart density offers a model where we can sustain people, place and the planet. Our future depends on this, and lockdowns reinforced how uneconomic and unfair continued urban sprawl can be.

Walking, riding and open space projects are smaller, less complex, and more affordable compared with mega infrastructure projects that seem to get all the attention. The former require less specialist labour, equipment and materials. These projects can also increase the use of recycled content from waste streams like glass and other ways to improve their environmental performance.

No Australian capital city can claim to have the best model of density. It would be foolish to roll out a single model of density across the country but there are some common threads we can all learn from.

Models of density that either cram people into high rise towers with poor amenity and access to private and public spaces, or building further out on the fringes of our cities without adequate infrastructure and services do not work, as highlighted by the National Growth Areas Alliance among others.

Communities, governments and the business sector must come together to prioritise the policies and programs needed for better walking, riding and open space infrastructure. We’re running out of time to get density right, and this type of smart density will receive widespread community support.

Perhaps the best way to shift thinking is to stop calling walking, riding and open space infrastructure “soft infrastructure”. Instead, let’s all promote it as smart, hard infrastructure, the kind we need to handle climate change, affordable housing and other challenges.

Lockdowns were challenging but they showed city dwellers there is a more sustainable way to live, work and play. We also experienced first-hand a vision for what smarter density looks like.

So let’s get cracking and shift our collective focus to safer neighbourhoods and hubs where better walking, riding, public transport and open space are considered critical rather than as optional extras.

This article was originally posted on The Fifth Estate. Read it here.

Building houses in factories for the Commonwealth Games was meant to help the housing crisis. What now?

Louise Dorignon is a geographer and a Vice-Chancellor Postdoctoral Research Fellow at the Centre for Urban Research in the School of Global, RMIT University. She specialises in the production, lived experience and urban outcomes of apartment housing in Australia and Europe. Louise’s VC Fellowship project focuses on modular apartment prefabrication to analyse how it can enable the production of more sustainable and affordable homes and support everyday experiences of post-carbon housing.

Huge sporting events come with substantial public investment in housing. After Melbourne hosted the 1956 Olympics, about 600 houses in the athlete village became public housing in West Heidelberg. After Melbourne hosted the 2006 Commonwealth Games, the athlete village in Parkville was largely sold off, with 320 houses going to social housing.

Victoria’s now cancelled 2026 Commonwealth Games were meant to have the same effect in the state’s smaller cities. New dwellings were intended to help boost social and private housing supply amid the ongoing housing crisis. Ironically, the broader housing crisis may have contributed to the cancellation, as worker shortages and building material price spikes took their toll.

Importantly, half of these were to be prefabricated and modular buildings. This would speed up construction and demonstrate what’s now possible. While regions like Scotland now do almost all of their construction in factories, Australia is only just beginning.

So is cancellation of the games a blow for prefab construction in Australia? It’s a PR setback, given the attention it would have received. The state government has committed to building 1,300 new homes in the regions, the same number intended for the games. As yet, we don’t know if these will be prefab.

Building the prefab profile

Victoria agreed to host the games only last year. That gave very little lead time – the games will start in just two and a half years, assuming a new host is found. This rapid time frame was why Victoria’s government looked to prefab to provide the thousands of dwellings needed for officials, athletes and workers.

After the games, these houses in Victoria’s fast-growing host cities of Bendigo, Ballarat, Geelong and Shepparton were meant to boost social and affordable housing supply.

The plans were a welcome shot in the arm for Australia’s prefab industry, which was just 5% of new builds this year, though it’s expected to reach 10% by 2030. Scaling up the use of prefabrication will need government support and leadership.

Leading prefab jurisdictions like Scotland and Sweden have needed government support to get to where they are, with prefab accounting for 84%.

Why look to prefab homes at all?

Factories are a way of producing standardised products more cheaply. Bringing these techniques to bear on houses cuts costs, slashes waste by up to half, and can quickly boost housing supply. Waste can be cut by precise standardised measurements and the use of low-carbon materials like timber or hybrid steel-timber reduces environmental impact.

You might think prefab homes would all look the same or lack quality. But standardisation can often be high quality. When construction is done in a factory setting with a controlled environment, it can be easier to ensure it’s airtight, well insulated and meets standards.

Prefab factories can reduce the impact of weather on construction, though it does create another challenge – transporting the dwelling to the site.

It’s not just for single or double-storey buildings. More than 500 apartments were delivered to a vacant site in London using modular systems, which were then slotted into place to build Ten Degrees, the world’s tallest residential modular building to this date. The process cut embodied carbon by up to 40%, according to the building’s designers.

Boosting prefab without the games

In a recent report led by Master Builders Victoria, we examined how experiences of the Birmingham 2022 and Glasgow 2014 Commonwealth Games in the UK helped the construction industry innovate in areas like prefab housing.

Preparations for the Birmingham games faced the unprecedented challenge of the COVID pandemic. As a result, the planned athlete village was never used for athletes, and the units built eventually became private and social housing. Prefab techniques were used to build 430 apartments.

Even with the COVID challenge, these apartments were completed ahead of time. In contrast to traditional construction methods, there was more use of the local workforce.

Why isn’t Australia embracing these techniques?

Inertia. To make prefab housing mainstream in Australia will mean major changes to the way things are done at present. Our construction industry is not always able to take risks, which makes innovation challenging.

One way to get around this is to create the demand for these types of houses. In Victoria, the government’s pledge to still deliver the promised regional housing could be tied to prefabrication, to help deliver high quality, sustainable and affordable housing more quickly and begin reshaping the wider industry.

Even with the games gone, other pressures like the rental and housing crisis are only intensifying. Prefab could help here by offering more affordable and sustainable housing as an option, especially outside metropolitan areas where the cost of land makes up a smaller proportion of the cost of a house or as urban infill.

The games would have helped supercharge the prefab industry. But Australia has an urgent need for more housing. Prefab could help deliver this more cheaply and more sustainably.

This article was originally appeared on The Conversation. Read it here.

YIMBYs and NIMBYs unite! You can have both heritage protection and more housing

Dr James Lesh is a historian and Lecturer in Cultural Heritage and Museum Studies. His research explores the theory and practice of heritage conservation in the twentieth and twenty-first centuries. He has also published widely in Australian urban history. Before joining Deakin University, he had previous appointments at the University of Melbourne, University of Sydney, and King's College London

Heritage conservation has been blamed for making the housing crisis worse by standing in the way of new, higher-density housing. But protecting heritage and increasing housing should be complementary objectives. Heritage suffers when not enjoyed by our growing communities. Housing suffers when not shaped by our communal heritage.

YIMBYs and NIMBYs are usually on opposing sides of this debate. Yet what they agree on is the desirability of heritage areas. People in both the Not In My Back Yard and Yes In My Back Yard camps want to live in established suburbs, often in the inner city, with attractive historic urban landscapes.

Unfortunately, NIMBYs have exploited heritage loopholes to prevent development. There is a problem with how overly cautious practitioners and under-resourced authorities are applying heritage protections. So, YIMBYs wrongly blame heritage itself for housing issues.

Empirical evidence that heritage is a barrier to housing supply is practically non-existent. It’s not a talking point among housing experts. The real issues are urban policy, the tax system and housing supply.

In support of both heritage and housing

Heritage should be seen as part of the housing solution. Advocates for both heritage and housing can and have been allies.

In Victoria, for example, architect and politician Evan Walker introduced the first comprehensive local protections in the mid-1980s. He was ably supported by David Yencken, who had been the first chairman of the Australian Heritage Commission and a developer of innovative suburban housing. These city visionaries recognised that we could keep the best of the past and complement it with new, higher-density builds.

Heritage protections were created at a time when our historic neighbourhoods were at risk of widespread demolitions for inferior new buildings. High-rise towers threatened areas like The Rocks in Sydney and Carlton in Melbourne. A surge in ad-hoc redevelopment put valued homes at risk in suburbs such as Brisbane’s New Farm, North Adelaide and Perth’s Subiaco.

Our heritage suburbs were not desirable like today. We only have our fabulous cities of villages because people fought hard for heritage protections.

Heritage is about what we find significant. Eroding protections risks the social, physical and historic fabric of heritage neighbourhoods, the very reasons so many of us – including both YIMBYs and NIMBYs – want to live in them. These areas have vibrant high streets, excellent services such as schools and hospitals, and many transport options.

It’s notable, too, that the smaller block sizes in older suburbs already produce high levels of density by Australian standards. Their walkability and infrastructure also make them more liveable. This heritage of urban vitality is worth conserving and replicating.

We can build more housing in heritage areas

A more palatable and sustainable solution is to build well-designed homes, hapartments and townhouses in and around heritage areas. There are architects and developers who do this. It may be a case of adapting obsolete historical buildings or constructing new buildings on appropriate sites.

When done well, new builds and incremental change improve our historic urban landscapes. Good examples include Perth’s Northbridge, Melbourne’s Collingwood and Sydney’s Chippendale.

Importantly, the best-designed new homes respect local history, prevailing design forms and neighbourhood character. That is a great strength of heritage: it allows us to embrace the most significant and beautiful aspects of our existing built forms and social lives.

Heritage is not just about protecting grand monuments along Spring or Macquarie streets. It is also about everyday aspects of our suburbs: the sturdy stone street kerb, the intricate iron and lacework terrace, the worker’s timber cottage, the subdivided Federation home, the industrial warehouse turned apartment block and, of course, uplifting gardens, parks and trees.

The precincts, places and features that are heritage-protected reflect decades of community efforts. Today, residents still must have a right to have a say in planning and to see their heritage protected. Conservation is enshrined in planning and heritage legislation and widely supported by the community.

Overcoming barriers to densifying heritage areas

Authorities too often say “no” to appropriate housing in heritage areas. It happens for many reasons, though so-called NIMBYism is a factor.

Many local councils have also had funding for conservation cut, while federal and state leadership in urban heritage is minimal.

Some traditional approaches to conservation do tend to prevent rather than promote reasonable change to heritage places. This is also unsustainable: adapting existing buildings is good for the environment.

Many authorities lack the knowledge and resources to ensure new housing is consistent with heritage. We need to equip them with the innovative heritage approaches and creative design outlook they need to make better decisions. Planning and design panels with wide-ranging skills, including heritage, could work with communities to increase housing supply and choice where people want to live.

It’s essential to address the housing crisisc. More people should be able to enter the housing market and enjoy living in established suburbs. We have the heritage, planning and design tools to achieve both objectives.

Heritage strategies for increasing housing supply can include subdivision, adaptive reuse and infill development in and around heritage areas. It’s about designing the best housing for the specific context. Heritage policies should be reviewed and updated across Australia to support these kinds of outcomes.

The urban heritage of Australia’s cities is what makes them among the world’s most liveable. Heritage should not be about blocking housing, but rather about asking “how can we build housing better?”. Let’s embrace our urban past to shape our urban future.

This article was originally published via The Conversation. Read it here.

Designing with Country: Why leading developers are integrating it into their projects

Exploring the true potential and vital considerations of integrating Indigenous voices in commercial spaces.

CBRE provides thoughtful, forward-looking insight into real estate trends, strategies and opportunities around the world. Talking to key industry experts, CBRE explores the concept of Designing with Country. As a business, CBRE is committed to implementing DE&I strategies while increasing cultural diversity and awareness

It was only a decade ago that the notion of sitting down with a community group to discuss the integration of Indigenous voices into commercial spaces would be a rarity.  

Times are changing though, and the concept of Designing with Country is fast becoming a vital strategic component of today’s design and development process. It’s a movement which is both progressive and delicate, while placed at the forefront of some of Australia’s most prominent property developers today. The crucial question is: why?  

CBRE spoke with Troy Casey, Director of Blaklash; Cliff Winby, Vice President, Developments, at Brookfield Properties; Vy Nguyen, Executive Director Precinct Development, Property and Development NSW; and Justin Woodcock, CBRE’s National Director, Development & Infrastructure, Australia, to uncover the intricacies, benefits and challenges of Designing with Country.  

Defining success in Designing with Country 

Designing with Country in the property landscape entails the development of projects that have been integrated with Indigenous voices at the core. Its goal is to bring a deeper cultural connection between the land, the development and its people. More specifically, it aims to restore the balance between Indigenous, colonial and migrant histories through bold and sustainable design. 

The key to this concept? Intricate insight and guidance provided by First Nations communities as part of the greater design and development process.  

“It’s a new space and so many communities are still trying to understand what this means for them, their people, and what can actually be achieved,” explains Troy Casey, whose Aboriginal design agency specialises in First Nations Placemaking. 

“There has been a very sudden boom in the demand for this kind of input from our communities, with so many varied projects with a wide range of complexities, that sometimes I’m not sure if community always experience the benefits of their input on the projects. 

“Holistically though, I do think that Designing with Country provides a critical avenue for our people to gain agency over the shaping of Country, the continuation of culture, and a way to lift up and empower their communities. It just has to be done right.” 

For Brookfield Properties’ Cliff Winby, success in Designing with Country is about creating a place that everybody feels welcome to and is comfortable being in. 

“When it’s approached in the right way you get a more authentic interpretation of the place because you’re paying attention not just to contemporary heritage but to the full history of the site and responding to its unique character,” says Winby. 

In a 2022 Building Talks podcast exploring the convergence of Indigenous design and the built environment, Aboriginal advocate, academic and architect, Jefa Greenaway, provided his thoughts on the trajectory of Designing with Country. 

“Even in major metropolises like Melbourne and Sydney there are still remnants of that relationality to country, and as I often say, you can concrete over country, but country still remains, the story still remains,” he said. 

Greenaway also explained how he sees architecture as a means of cultural expression in order to make the invisible visible by drawing on the wisdom and knowledge that comes with 67,000 years of Indigenous history. One of his roles has been to integrate Indigenous elements into the design degree at the University of Melbourne, drawing on ndigenous knowledge and perspectives. 

“Importantly, we’re starting to normalise that understanding that there is a deep history we can actually engage with, and I think there’s a level of cultural pride that is starting to emanate now.” 

Support from Government and private sector  

Designing with Country has become an important focus area of the NSW Government and subsequently the industry in the last few years, according to CBRE’s National Director, Development & Infrastructure, Australia, Justin Woodcock. 

This movement follows the Government Architect NSW (GANSW) release of the March 2020 Designing with Country discussion paper and December 2020 Connecting with Country Draft Framework.  

“The draft Framework was prepared by First Nations members of the NSW public service, First Nations communities, and the GANSW, and is intended to inform planning, design, and delivery of built environment projects in NSW,” Woodcock says.  

“The ambition of this draft Framework is that those involved in planning, designing, and delivering built environment projects in NSW will commit to helping support the health and wellbeing of Country by valuing, respecting and being guided by Aboriginal people.”  

Fundamentally, Designing with Country provides an important platform for Government bodies and the private sector to engage with Aboriginal stakeholders, including the procurement of Aboriginal businesses to enable not just a genuine understanding of the land, but also the important values it brings to placemaking.  

Property and Development NSW, the central property agency for the NSW Government, echoes a similar sentiment. 

“We are proud to co-create some of our state’s incredible precincts into exceptional destinations, in collaboration with Aboriginal knowledge holders, government partners, community and stakeholders,” says Vy Nguyen, Executive Director Precinct Development, Property and Development NSW. 

“Our work comes with an enormous responsibility to ensure these future places consider and protect Country and First Nations culture, and tell the important stories of our past, for future generations. 

“We are applying a Country-centred approach to design, planning and development across our work on the Macquarie Street East, Parramatta North, and Coffs Harbour Jetty Foreshore precincts.”  

CBRE’s Development & Infrastructure team is working closely with PDNSW on both the Macquarie Street East and Parramatta North projects.  

“CBRE is able to ensure that Connecting with Country is successfully embedded in projects by understanding the requirements of the draft Framework and by undertaking meaningful and detailed consultation with First Nations people, listening to insights, and inviting opportunities for co-design inputs,” explains Woodcock.  

“Specifically, reviewing the draft Framework as an opportunity to add value, and not a requirement is an important step, which creates an opportunity for First Nations voices to provide input and value to a project. 

“It is imperative to ensure leading practice principles for engagement with Aboriginal stakeholders." 

To maximise the success and quality of Designing with Country projects, leading practice principles should be considered. These include: 

• Respect and cultural safety 

• Elevating the voices of Traditional Custodians 

• Continued conversations  

• Develop culturally responsive approaches 

• Acknowledge and protect Aboriginal culture 

Ultimately, whether it’s Government or private sector-led, the end goal is shared.  

“We are transforming precincts today, preserving them for future generations, to create thriving arts and culture experiences that honour our rich Aboriginal and modern history,” says Nguyen.  

Benefits of Designing with Country 

Identifying the long-term metrics on Designing with Country is still limited given its infancy across Australia. Nonetheless, current public consensus is already extremely positive. 

One The Esplanade sits perched on the edge of Perth's Swan River. It is a landmark Brookfield Properties commercial office development, which boasts over 57,000 square-metres of premium grade office space, retail, dining and amenity, private gym, onsite childcare and premium end of trip facilities. More importantly, it showcases the developer’s prowess in Designing with Country.   

“We’ve already had lots of positive feedback from the Perth community on the building and ground plane,” says Winby.  

“As the building occupancy increases, we’ll start to see people engage differently with the spaces and spend time in areas like the building’s heart around the Oculus tree, on the seats under the heritage listed Moreton Bay Fig and exploring the stunning public art. 

“We’re very proud of our public art process which brought the stories relating to the site to life in the creation of two incredible sculptural artworks, namely ‘Within, without’ and ‘Goodjal ba Ngoonii Koorndaam’. 

In addition to the public art pieces, other elements resulting from consultation and collaboration with the Whadjuk Noongar people include the selection of the Tuart tree for the Oculus, and the installation of bespoke furniture referencing ceremonial dancing legs on the corner of The Esplanade and Barrack Street. 

“As a result of this journey, everybody involved in the project has become a lot more aware of the opportunities available through the design and development stages to achieve a richer response to a site's heritage and connection to Country. 

“We’ve also been fortunate to have worked closely and deepened our relationship with the Whadjuk Noongar people, which has allowed us to build a good framework for the next project,” Winby says. 

Challenges of Designing with Country 

Designing with Country demands careful consideration, planning and execution. While its challenges are evident, the final result is what makes it worthwhile for innovative developers.  

Winby highlights what developers need to consider:  

• Time required to resolve the design:  
  “You’ve got a contractor that needs to start ordering and building things on a timeframe to get it done by a certain date. And you need to find time and space to engage in an authentic way. That is an ongoing focus for us – I wouldn’t say it was a challenge for us because we were fortunate to be working with people who understood that context and were keen to engage. But this is something that care always needs to be taken with.”
   

• Developing positive and respectful relationships: 
   “It’s so important to develop a positive respectful relationship. There will be things that are sought-after or concepts that someone might put forward as what they want to see happen - and it unfortunately just can’t happen for cost or practical reasons. You will see that sort of challenge and need to accept that you will need to have constructive conversations about what can and can’t be achieved while working together to find a mutually acceptable outcome. For these conversations to be successful, they must be approached from a perspective of deep mutual respect founded on a positive relationship of wanting to achieve a great outcome.” 
  

• Involving the right people:  
  “The people involved are crucial. That’s where the box-checking approach won’t work. You’ve got to get the right people talking to each other who trust each other. If you lose trust, the project can go off the rails resulting in an outcome that’s not what you’re looking for. Making sure you have the right people to engage with will bring you safely through the journey.”    

Casey notes that some incredible outcomes have been achieved in true authentic partnership with community. 

“We are seeing our people’s culture and values expressed on Country, we are seeing a beautiful, shared education process when industry and community comes together to create meaningful outcomes. Those are the times we hang on to. 

“In other instances, the dramatic demand and pressure that is being put on community to work in this space with people who perhaps aren’t always in the right place themselves to be doing this kind of work can have some fairly negative impacts on our people.  

“The difficulty is that we are talking about a serious societal issue, one that requires a great deal of personal effort to self-educate and shift thinking, but being delivered through the demands and speed of development. Unfortunately, those two things don’t always pair up well; it depends on the team. 

“We see the need for education before involvement. There are a lot of Reconciliation Action Plans out there that don’t seem to stimulate the education and reflection we need to create a culturally safe industry. The will is there and there are many excellent people who want to do their part to make change, we just need to step back a little and learn as people before we start acting as professionals on projects.” 

Quality of Designing with Country 

Addressing the quality of Designing with Country is important as it is almost impossible to regulate in traditional ways. Each project is tailored according to its environment, respective people, surroundings and end goal.  

For Brookfield Properties, this meant developing their own framework called the Cultural Safety Plan which provides a degree of structure and integrates cultural safety into different parts of their projects. 

“Our framework covered every stage of the design and through the development to weave this concept of “cultural safety” into the development, of which Designing with Country might be considered a subset.  

“It covered a range of activities, from cultural awareness training and incorporation of key material in subcontractor site inductions to give them awareness about the heritage of the site, through to cleansing ceremonies and review of the landscape design to ensure it responded to its place” says Winby.   

“I think it’s difficult to legislate or regulate as each site needs to be assessed on its merits. All you can really do is have a framework and use this to work out how best to respond to the project you’re working on.” 

In building these deeper working relationships, Casey adds that developers and designers should conduct some independent research before leaning on communities to teach them. 

“We only make up 3% of the population, after all. Cultural load is a huge issue at the moment, so the importance of self-education is critical before creating relationships that unfortunately often are really only based on work. It's about people first, not professionals.  

“It’s all about turning up. In your spare time go to the talks, go to the community events, reach out and contribute without expectation of return to the many social efforts of our people that really make an impact, before expecting to come together on a project. 

“Of course, there is no one right way to do this, but as a whole we need to always come back to the understanding that it's about Country, culture, and community first. And as a society, take on this journey as people first. 

“Something big we talk about is, how many project teams that have worked with community, ring up, and say: ‘Hey Aunty, remember that project we did together? Well, it's finished. Would you like to catch up and take a walk out on site to see how it all turned out?’ 

“A very small thing that really humanises the whole process, reminds us that it's not just a transaction, but a relationship."

Future of Designing with Country 

Given the gradual rise in Designing with Country, what does its future look like across Australia’s broader development pipeline?  

“I’d like to think the momentum is shifting in the right direction,” says Winby.  

“I think it will become more mainstream and I hope this results in places that are more welcoming and reflect their location and heritage. Ultimately it comes down to those relationships being established and built up over time.” 

Casey says that it’s hasn’t been long since Indigenous people have had the opportunity to access high-quality education in the built environment.  

“Those of us with industry experience are far and wide between. But those numbers are steadily increasing. One day, we would love to see these projects led by Indigenous peoples as industry professionals, in partnership with community. Rather than needing non-Indigenous people to speak for us.  

“It all comes back to the self-determination of our people to care for Country. To embed culture and values from within the industry rather than as a touch point from the outside. If we can all come together to see this happen, the impact of the projects on our communities and our society as a whole could be incredible. Imagine in every project, every town, you can see our culture, you can feel Country in every brick. 

“That’s our hope for the future.” 

This article was originally published on CBRE. Read it here.

Australian recession Q&A: Why the worry? What's the risk? And what would it mean for investors?

Shane Oliver is the Head of Investment Strategy and Chief Economist, AMP. Shane joined AMP in 1984 and has extensive experience analysing economic and investment cycles and what current positioning means for the return potential for different asset classes.  

Key points

- The risk of recession globally and in Australia has increased with ongoing central bank rate hikes.

- Signs of faster wages growth has seen the RBA turn more hawkish. The risk of recession here is now around 50%.

- Recession would mean higher unemployment, less job security & a likely further leg down in shares & home prices.

- By Feb we may need a Taylor Swift lift to help “shake it off”!

- Share market volatility is bad news but the best approach for most investors is to stick to a long-term strategy.

Introduction

The past few weeks have seen lots of talk again about a recession - particularly in Australia. This has been a recurring theme over the last year or so but has intensified lately. But what's driving it? How serious is the risk of recession? And what would it mean for Australians and investors?

But first what is a recession?

A recession is generally defined as a contraction in the level of economic activity. In some countries it’s technically defined as two or more quarters in a row of falling economic activity as measured by GDP but this measure can have its failings, e.g. if GDP falls 1% in one quarter, rises 0.1% the next next and then falls 1% it wouldn’t meet the technical definition of a recession but most would agree that it is. So, some like the US adopt a wider definition based around a period of contraction as measured by GDP and a range of other economic indicators including industrial production, income and employment.

Because Australia has strong population growth there been a focus on “per capita recession” which is where the economy still grows but at a lower rate than the population so GDP per person goes backwards. This is arguably more relevant for individual living standards. GDP per capita has already contracted in the March quarter and most, including the RBA and the Government, are forecasting at least a per capita recession.

Why the concern now?

The concern about recession has been rising with central bank interest rate hikes. The rise in interest rates is aimed at slowing inflation by slowing demand and hence economic activity. It does this by:

• increasing debt servicing costs for households (particularly those with mortgages) and businesses with debt, which reduces spending power;

• raising the cost of future borrowing which slows down home building and business investment;

• lowering asset values – for say shares and property – which results in less spending as people feel poorer via the “wealth effect”; and

• by pushing the currency higher than otherwise making it cheaper to bring in imports and reducing demand for exports.

Because central banks never know when they have raised interest rates enough to control inflation they often go too far – pushing the economy into recession. This was the case prior to recessions in Australia in the early 1980s and 1990s and in the US in the early 2000s and 2008.

We have been off the view that easing global inflationary pressures – as evident in improving supply and falling price pressures in various business surveys, etc – would have enabled central banks to have stopped raising interest rates by now. But central banks have gone further than we thought and remain hawkish. This includes the RBA which following signs of increasing upside risks to wages growth – particularly the higher than expected increase in minimum and award wages at a time of low productivity growth – appears to have become more hawkish and be giving less weight to keeping the economy on an “even keel”.

Why all the fuss about faster wages growth?

Everyone wants to see their wages grow faster than inflation. But when wages are simply chasing inflation higher as we saw in the 1970s it can lead to a wage price spiral which perpetuates high inflation as companies raise prices to maintain profits in response to stronger wages. As a result the second round response to the initial spike in inflation of catch up wage growth risks entrenching high inflation. Hence the more aggressive approach by central banks to guard against this. The Bank of England has gone down this path & the RBA appears to be doing the same.

But unemployment is low & shares are up 10% plus from 2022 lows so how can there be a recession?

It's true the Australian economy has been remarkably resilient despite a 4%, or 400 basis points, rise in the official cash rate and a doubling or more in mortgage rates. The economy is still growing, the roads are congested, restaurants seem full, travel has surged and unemployment is just 3.6%. However, this provides little comfort.

• Interest rate hikes normally impact with a lag of up to 12 months as its takes time for rate hikes to be passed through to borrowers, for borrowers to cut spending and for companies to cut their workforces.

• This time around the lag is likely longer thanks to massive pandemic fiscal stimulus which left many households with much higher than normal savings balances, the release of pent-up demand with reopening, 40% of home borrowers at record low fixed mortgage rates (compared to a norm of 15%) and a highly competitive mortgage market that has blunted the flow through of rate hikes.

This lag was evident in the late 1980s and early 1990s. Despite the RBA progressively hiking rates to 18% over 1988 and 1989 the unemployment rate kept falling prompting many to argue the economy was impervious. But then in late 1989 and early 1990 the lagged impact of rate hikes hit and the economy went into deep recession with the RBA having to rapidly reverse course. It was a classic case of the economy being ok until it’s not!

Of course, things were different back then with household debt to income ratios being one third current levels and very high inflation expectations resulting in much higher interest rates - but the lags are still relevant.

The protection provided households by fixed rates is now ending with borrowers seeing rates reset to levels two or three times what they were and at some point the saving buffers and the reopening boost will have been exhausted. And we are now seeing increasing evidence rate hikes are biting with falling real retail sales, falling building approvals, slowing business investment, slowing GDP growth, more negative corporate commentary, rising insolvencies and indications of a slowing jobs market.

So what's the risk of recession?

We have already revised our Australian GDP growth forecast down to just 0.7% for this financial year (compared to the RBA’s forecast for growth of 1.4%). But as a result of ongoing rate hikes, we see the risk of recession starting around late this year as now very high at about 50%. Consumer spending is almost certain to start going backwards later this year as the 4% plus cash rate will push debt servicing costs into record territory as a share of household income and on the RBA’s analysis 15% of households with a variable rate mortgage (about 1 million people) will be cash flow negative by year end at a 3.75% cash rate & we are now well beyond this.

The US Leading Index - which is comprised of economic indicators like building approvals that normally lead the economic cycle - has already fallen to levels normally associated with recession. In Australia though the Westpac/Melbourne Institute’s Leading Index has fallen but is not yet decisively at levels associated with recession. Which partly explains why we have put the risk of recession at 50% as opposed to more.

What will recession mean for Australians?

Many Australians have had no experience of recession as the last real recession ended over 30 years ago. The pandemic slump in 2020 was due to a mandated shutdown and incomes were protected by programs like Job Keeper so it’s not much guide to any future recession. A recession normally sees higher unemployment – the early 1980s and 1990s recessions saw a roughly 5 percentage point increase, less job security, a contraction in living standards and low levels of confidence. Most will still keep their jobs but they would experience less job security and wages bargaining power and lower levels of confidence. However, recessions eventually also mean lower inflation which would help alleviate cost of living pressures. Recessions often also lead to lower levels of immigration and less household formation which could take pressure off rents and home prices although declining home building won’t help.

What would be the impact on shares?

Historically recessions in Australia and the US have tended to be associated with bear markets in shares, ie, 20% or more falls, as recessions drive a slump in company profits. The next chart shows the Australian share market and falls in it against US recessions. A modifying factor is that share markets are still 8% or so down from their 2021/early 2022 highs so the risk of recession is arguably partly still factored into markets which may limit the extent of falls if a recession does eventuate.

What would be the impact on residential property?

Australian home prices have rebounded from their lows as a severe supply shortfall has dominated rising rates. However, a recession could drive another leg down in home prices as buyers back of, higher rates and higher unemployment push up distressed selling and recession drives reduced household formation. CoreLogic data shows a 9% fall in capital city property prices in the early 1980s recession with a 25% fall in Sydney, and a 6% fall in the early 1990s recession with a 10% fall in Sydney.

What about interest rates?

Recessions invariably drive sharp falls in interest rates as the RBA will cut rates in response to falling inflation and rising unemployment. While we are allowing for two more 0.25% rate hikes from the RBA in the next few months, we expect it to cut rates four times next year.

Implications for investors

While times like these can be stressful, for superannuation members and most investors the best approach is to stick to an appropriate long term investment strategy to take advantage of the rising long-term trend in share markets given the difficulty in trying to time short term swings.

This article was originally published on the AMP website. Read it here.