Are We Creating Cities of Opportunity?

Global Director of Sustainability Tony Arnel, with Tetra Tech’s High Performance Buildings Group, discusses the livability of cities and how this translates to a greater investment in infrastructure and planning and building sustainable places.

Australia's four biggest cities—Sydney, Melbourne, Brisbane, and Perth—are predicted to double in size over the next 15 years.

How do we plan to connect the people in our cities when Infrastructure Australia predicts the annual cost of congestion alone will grow to AUD$53 billion (USD $36 billion) if we continue with our business-as-usual approach to transport infrastructure?

Cities that fail to embrace plans for infrastructure, such as subway systems, bus lines, and paths for walking and biking—the very things that will make our cities more environmentally sustainable—will also fail to attract people.

In our hyper-competitive, globalized marketplace, cities are enablers of innovation and economic growth. In fact, McKinsey has found just 600 cities will generate more than 60 percent of global growth to 2025.

Half of all global GDP in 2017 came from 380 cities in developed regions—and more than 20 percent of global GDP came from 190 cities in North America alone. However, McKinsey has found one third of these cities in developed markets will no longer make the top 600 by 2025.

By then, 136 new cities are expected to enter the top 600—all of them from the developing world, and most of them from China.

The center of the global economy is shifting south and east—ironically returning to where it was more than a millennium ago.

The most interesting insight into McKinsey’s statistics underscores the opportunity for Australia’s cities. Of these cities of opportunity, 577 are ‘middleweights’ with populations of between 150,000 and 10 million people and will contribute more than half of global growth in the next decade. So, a city doesn’t need to be a mega-metropolis to survive and thrive.

The most livable cities in the world, according to the Economist Intelligence Unit, tend to be “mid-sized cities in wealthier countries with a relatively low population density,” which is why London and New York fare poorly and why Melbourne consistently tops the table.

A city’s livability is increasingly important in a highly competitive globalized economy in which talent and capital is highly mobile. The cities that will succeed are able to attract young, highly-skilled workers, create hubs for innovation and entrepreneurship, and lure multinationals wanting competitive and attractive locations for global and regional headquarters.

Last year, real estate giant JLL published the New World of Cities report, which also argued that the size of a city no longer determines its success. Rather, a new breed of cities—small, agile, with a high quality of life and specialization in a limited number of global markets—is uniquely positioned to gain competitive advantage.

These cities tend to possess high-tech, innovation, or research capabilities, or are cultural, entertainment, and tourist hubs. They tend to have fewer problems with crime, pollution, congestion, high costs, or social inequality. Many are found high on the list of livable cities and are magnets for “footloose capital, companies, and talent.”

JLL’s report argues that as the global economic center of gravity shifts, it creates new opportunities for cities that were previously peripheral, like many of Australia’s state capitals. Brisbane and Melbourne are archetypal new world cities, the report finds, while Perth and Adelaide possess many of promising characteristics.

The ‘new world city’ model makes sense in Australia, because it enables our smaller cities to tap into growth throughout Asia and cultivate new economic opportunities post the mining boom. The ‘footloose’ nature of emerging industries, such as digital media, clean technology, and life sciences, mean new world cities can offer agile businesses great opportunities.

As the global economic center of gravity shifts, we are presented with new opportunities for cities that were previously peripheral—but it demands a greater emphasis on innovation and intellectual capital, more investment in infrastructure and planning, and a sharpened focus on building sustainable, prosperous, and inclusive places that people love to live in.