The world is rapidly urbanizing.
The United Nations estimates that sometime around 2008, half the world’s population was urban, for the first time in human history.
They estimate that by 2050 nearly two thirds of the world’s developing nation populations will be urban, while for the developed world, the figure will be a massive 86%.
Australia fits this picture perfectly: some 80% of our population already lives in our major cities and half live in the three largest.
But what’s not widely understood is that on both the global level and the Australian scale, this urban growth has been a suburban phenomenon.
This reality may come as a surprise to many and the cause might be in semantics.
The term ‘urban’ has fallen into common use to describe higher density, inner city areas, while ‘suburban’ has typically been used to describe outlying areas of predominantly low density development (primarily housing).
But when global statistics about urbanization are quoted, the meaning covers both inner and outer urban areas.
Suburban is, after all, a subset of ‘urban.’
According to the MIT Center forAdvanced Urbanism:
“While statistics demonstrate that the amount of the world population in metropolitan areas is rapidly increasing, rarely is it understood that the bulk of this growth occurs in the suburbanized peripheries of cities. Domestically, over 69% of all U.S. residents live in suburban areas; internationally, many other developed countries are predominately suburban, while many developing countries are rapidly suburbanizing as well… Suburbanization is a contemporary global phenomenon.”
The same is true for Australian cities.
In terms of where we urbanized Aussies call home, for the vast majority it is suburbia.
In Sydney for example, the proportion of people living within the prized 5 kilometre ring of the CBD is just 8%.
A further 16% live between 5 and 10 kilometres from the CBD, a third live between 10 and 20 kilometres from the CBD and 43% of people live beyond 20 kilometres from the CBD.
Those proportions are broadly the same for other major capitals.
Rates of growth are similarly skewed to suburbia: despite some high rates of intense growth in inner areas, the broader metropolitan framework of our major cities continues to carry the bulk of the population growth workload.
What comes as an even greater surprise to many is that the bulk of jobs in our large metro regions are also suburban by location.
The CBDs of Brisbane, Sydney and Melbourne account for 13%, 13% and 10% respectively of all jobs in their metropolitan areas.
Adding in city fringe areas lifts this proportion to 19%, 15% and 14% respectively.
This is an economic reality borne out by the Census but it doesn’t sit easily with much of our thinking about cities.
Our perceptions and prejudices are formed by a concentration of media and planning debate on inner city areas.
Impressive CBD skylines dominate news bulletins and vision of crowded commuters boarding mass transit lead us to conclude that this must be the norm for a majority of people.
The same is true of the United States.
A recent article by Demographia’s Wendell Cox, writing in Joel Kotkin’s New Geography showed that, based on US Census Data, the CBDs of 52 major metropolitan areas contained 9.1% of jobs, and the inner rings a further 9.8% of jobs.
“Early suburbs” (meaning those developed first in the history of urban growth) contained 44% of jobs while “later suburbs” and “exurbs” contained a further 37% of jobs.
And in terms of jobs growth for the same 52 US metro areas in the period 2010 to 2014, CBDs accounted for 12.6% of growth, the inner ring a further 6.8% while suburban and exurban areas combined to create 80.6% of jobs growth.
If the reality of suburbia is that it is the dominant housing and employment location for the majority of urbanites, it is also a reality that the changing economic landscape, enabled by rapid advances in technology, is going to continue to reshape both the suburban and inner urban landscape.
There will always be a role for central business districts as the seats of government or as headquarters of large professional corporates, as well as centres for civic cultural investment, but the growing service sector and growth in new industries might increasingly exploit more accessible, lower cost suburban locations.
There’s merit in this, as it may allow more people to live closer to their work, in more affordable locations.
It may also prove cheaper from an infrastructure point of view, especially if car sharing and ride sharing and driverless technology begins to liberate us from the twin burdens of congestion and exorbitantly costly mass transit solutions designed around centralised centres of work.
This “new suburbanism” presents all manner of opportunities for economic development, productivity growth and property development.
Identifying what those opportunities are and how to best capture them will require a new framework for thinking about what it means to be ‘urban’ and that thinking, I suspect, will increasingly turn to the suburban solution.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.