MRT Jakarta CEO: Massive metro project will make the city more mobile, modern and sustainable

MRT Jakarta CEO: Massive metro project will make the city more mobile, modern and sustainable

There’s a lot happening in Jakarta, Indonesia’s most populous and—for the time being, at least—capital city. Jakarta, the city of nearly 11 million people on the island of Java, is sinking as much as ten inches per year due to the excessive extraction of groundwater because piped water is not readily available. The World Economic Forum says nearly all of North Jakarta could be under water by 2050. In 2019, Indonesian officials announced an ambitious plan to relocate the capital to Borneo, but that plan is on hold due to COVID-19. What’s not on hold is another ambitious plan: building the country’s first underground transit system to combat Jakarta’s notorious pollution and traffic congestion problems, which cost the city some 67.5 trillion IDR ($4.9 billion USD) annually, according to the Indonesian Ministry of National Development Planning. Construction of Jakarta’s Mass Rapid Transit (MRT) system began in 2013, but the first concept of a metro in Jakarta dates back to the 1980s. The first phase of the project finished in 2019 and has already exceeded its target of serving 65,000 passengers per day, says William Sabandar, Jakarta MRT’s CEO. VISION by Protiviti’s Editor-in-Chief Joe Kornik caught up with Sabandar to discuss the ambitious project that’s been nearly 45 years in the making and how it will impact Jakarta’s future.


ABOUT

William Sabandar
CEO
MRT Jakarta

A passionate professional enjoying 25 years of leadership roles in public and private sectors, in various development fields: transport infrastructure and system, regional development, disaster and crisis management, energy, forestry and climate change.

Kornik: I know this has been a very long-term project with lots of planning and multiple phases. Can you update us on where the project stands right now, what the timetables are and what’s next for the project?

Sabandar: The idea started back in 1985; then the first feasibility study came in the 1990s, we started the work in 2013 and completed the first phase in 2019. That phase consists of 16 kilometers in South Jakarta and opened in March 2019. Now we are in the second phase where we continue with another 12 kilometers in North Jakarta, with a plan to complete it some time in 2027. By 2027, Jakarta will consist of a north-south network of 28 kilometers. We are also preparing the implementation of the third phase, which runs 31 kilometers east to west. Construction on that phase is scheduled to launch next year and be completed sometime in 2029 or 2030. At the same time, we are preparing for the fourth phase: This is also in South Jakarta and is about 12 kilometers and scheduled to be completed in 2029. We have also begun planning the fifth phase, as well. So, that’s where we are right now.

Kornik: This is a very ambitious project. I wasn’t even aware there was a fifth phase scheduled…

Sabandar: Well, we haven't announced the fifth phase just yet, but we will soon. And then there’s also a sixth phase. After the north-south and east-west lines are complete, we will have the circle, the inner line and the outer loop line. Once completed, the metro will consist of 325 kilometers covering 10 lines serving some 30 million people in the Jakarta region by 2030. This is how the MRT will become the backbone of Jakarta. One of the things the MRT will bring to the city is a new landscape. Jakarta will move from a very centralized city to one that is serving entire areas being developed along the metro line. In Jakarta, the development has always followed the roads, but the MRT master plan is to develop new towns along the rail stations. We call this “transit-oriented development,” and it will change the landscape of Jakarta in the future.

Kornik: I know there are more than 2.5 million daily commuters in central Jakarta. Most rely on private vehicles, making Jakarta one of the most congested—and polluted—cities on the planet. Is this why this project is so crucial to not only the city of Jakarta but the entire region?

Sabandar: Before 2019, Jakarta was one of the most congested cities in the world, ranked No. 3 by the TomTom Traffic Index. After 2019, Jakarta moved to No. 10. And just last year, it moved all the way to No. 31. And, of course, congestion is related to pollution, which also has improved, although we are aware some of that could be due to COVID. But those congestion numbers demonstrate how the arrival of MRT and people starting to move to public transport have already had an impact. But this is not just because of the MRT alone; since 2019, we’ve started to integrate the MRT into existing public transport, including the bus rapid transport, the commuter rail lines and all the feeder systems. When we’re through, nearly all residents of Jakarta will be within 500 meters from public transport. I believe that if you want to create a good city, a modern city, you must create a good public transport system. If you create a reliable system, a clean system and a safe system, people will use it. And when you integrate it with the feeding systems, it creates almost an entirely new city.

Once completed, the metro will consist of 325 kilometers covering 10 lines serving some 30 million people in the Jakarta region by 2030.

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People sitting in Jakarta rail car

Kornik: As you say, this is an entirely new concept for Jakarta. Do you think it's enough to just build it or do you think there has to be some education to convince people to use it?

Sabandar: Very interesting that you ask that because yes, that was among our concerns: How do we change the culture of how people travel? We had some public transport and people just weren’t using it. But when we launched the first MRT line in 2019, we had many people riding it right from the start and it exceeded our initial ridership goals. I think people were happy that Indonesia finally had its own metro. For years, if we wanted to see this kind of modern transport, we’d have to go to Singapore. Also, the MRT in Jakarta set a new standard of service. We knew our on-time performance, for example, must be 100%. I told the team that you must give the extra mile of service to all the people; every single passenger gets treated with respect. There’s no rubbish on the trains or in the stations. And we have a very dedicated staff; they do not sit. Even I stand while on the train to set an example. We are creating a new culture of public transport that we never had before. You educate the community by showing evidence that public transport can lead to a more civilized life; this is how a modern city works.

Kornik: You touched on pollution briefly, and Jakarta’s track record has not always been great when it comes to the environment. I've heard you talk about how sustainability is key for all future projects. So, tell me a little bit about what the MRT can deliver in terms of sustainability and the environment?

Sabandar: It’s a big part of our mission; we changed our motto recently to highlight how the MRT is promoting mobility and ensuring sustainability, and we defined it as core to our long-term strategy for 2030. We have a sustainability committee that screens all the projects we do, and we started to also produce a sustainability report for the work that we do. We can already see from the evidence that Jakarta has less traffic. You can see blue skies now, and we used to only see smoke in Jakarta. Again, part of that is due to less travel during the pandemic, of course, but it started even before that. Sustainability, for me, is a practice that we do now for future generations to reduce congestion, to reduce emissions, and to reduce pollution.

Sustainability, for me, is a practice that we do now for future generations to reduce congestion, to reduce emissions, and to reduce pollution.

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Inside Bandaran station, Jakarta
Jakarta MRT Bundaran station.

Kornik: Let’s talk about the unique environmental challenges that are facing Jakarta. The city is sinking several inches a year due to groundwater that’s being removed by residents, illegally in most cases. I’m thinking that would present some unique challenges building a transit system?

Sabandar: Yes, for sure there are some challenges in terms of construction and tunneling, but we cannot afford not to build MRT. It’s vital for the region, so we just need to be more careful. We have the best technology, but it's more challenging, and it's more costly because we’re dealing with soft soil and sediment all over Jakarta. The experts are working on it, and we have some learnings from other places, such as Amsterdam. For me, this is not an issue because there is a population that needs MRT; it's just a matter of making sure we have the proper technology to be able to manage the environment correctly. There’s another challenge with building the second phase and that’s that the construction is happening in the north where a lot of Jakarta’s heritage sites are located. So, we are, for sure, also managing that very carefully.

Kornik: And because Jakarta is sinking, I know there’s been a lot of talk about moving the capital to Borneo. Assuming that plan goes through, what impact would that have on the MRT?

Sabandar: I think it’s a big opportunity. Jakarta is the largest city in the Southern Hemisphere. So, if the government decides to move the capital, I think it gives us the chance to redevelop Jakarta in a more sustainable way. The city has a lot of government buildings, which I think could be repurposed or turned into green areas. We could reposition Jakarta as a cultural city, a sustainable city and as the economic center of the region. I look at Australia, which has Sydney and Canberra, and the United States, which has New York and Washington, D.C., as examples. If it happens, I envision Jakarta’s future as an economic and cultural hub with less traffic, less pollution… and less politicians.  

Kornik: You just touched on it a bit, but paint a picture of Jakarta in 2030 or 2035, once the entire MRT project is complete. What will be the overall impact on the city, the region and its people?

Sabandar: The trajectory of Jakarta being a sustainable, modern and mobile city by 2030 is set. By that time, the structures of the MRT and its integration with public transport will be complete. Currently, only about 20% of Jakarta residents are using public transport; by 2030 we think that number will be more like 75%. So, I believe we are changing the landscape of mobility in Jakarta, and new urban regeneration projects along the line will create entirely new communities and a new vibrancy and culture for the city. So that is my vision of Jakarta’s future. That is the impact of the MRT.

75%

Currently, only about 20% of Jakarta residents are using public transport; by 2030 we think that number will be more like 75%.

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Skyscrapers circa 2030: What’s their place in the future city?

Skyscrapers circa 2030: What’s their place in the future city?

Verticality has always been a part of ancient, old and modern cities. The urban fabric of cities like London, New York and Shanghai has evolved with a different vertical form dominating the cityscape over time. The modern-day skyscraper shadows over cathedral spires and civic monuments that once took the crown in the cityscape. The skyscraper is a unique aspect of cities. And it is more than just a means to extract maximum profit, high density and efficiency from a small parcel of land in the city. The skyscraper has an inevitable cultural significance as a shaper of a city’s image, a landmark for urban dwellers and a marker of a specific era.

Over the last two decades, there has been a global boom in skyscraper construction. Eighty-seven of the world’s 100 tallest buildings today were all completed and opened since 2000, according to The Council on Tall Buildings and Urban Habitat. Of the top 10 tallest buildings, seven are located in Asia, two in the Middle East and one in New York City. Dubai’s Burj Khalifa, completed in 2010, is the world’s tallest building.

ABOUT

Sidra Ahmed
Ph.D. Researcher and Writer
University College London

Sidra Ahmed

Sidra Ahmed is a Ph.D. researcher and writer at University College London within the Department of Geography. She is currently researching the branding and everyday life of commercial London skyscrapers, including the impact of the pandemic on urban life through the lens of life in the London skyscraper.



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And even beyond this ranking of the world’s 100 supertalls, skyscraper construction has also been booming since the early 2000s in typically low-rise European cities including London, Barcelona, Paris and Milan. London has seen a crop of new skyscrapers being constructed over the last two decades which has included new, tall buildings known as much for their design as their unique names such as The Shard, The Gherkin and The Cheesegrater (Leadenhall Building). London’s context is specifically what my research is responding to and where this piece is launching from in thinking about the future of cities in 2030 and how skyscrapers are an important part of the conversation.

Before thinking about the end of this decade, it is worth thinking about where we are right now. Over the last 18 months, every realm of our lives as we once knew it has been dramatically transformed due to COVID-19. The year 2020 was like no other. We remained at home in line with government-led or self-imposed lockdowns. We abandoned our daily commutes, offices and coffee runs for working from home, video conference calls, and adjusting to a new “normal.” Skyscrapers, now mostly empty spaces sitting in and towering above the deserted city, were the least of our concerns.

But the pause enforced on our lives also provided moments for those in academia and the real estate industry to think about the future of the skyscraper. In many virtual conferences and talks, the future of the city has been discussed. I’ve had multiple conversations with key figures in and of the world of London property and skyscrapers. It is from these conversations and events that I am drawing on to present a series of possibilities for the future cultural significance of the skyscraper: a look at the end of this decade based on the tumultuous beginning, 2020. Skyscrapers, old and new, have a long life span. Their resilience and adaptability to change is not so much a question as it is a necessity. So, what will the cultural significance of the skyscraper be in 2030?

London has seen a crop of new skyscrapers being constructed over the last two decades which has included new, tall buildings known as much for their design as their unique names such as The Shard, The Gherkin and The Cheesegrater (Leadenhall Building).

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London skyscrapers
London skyscrapers at sunset

The 2030 skyscraper will be…

Like a phoenix rising from the ashes

Cities across the globe in 2020 were hauntingly empty. Whether it was Park Avenue, the City of London or Shanghai’s The Bund, gone were the tourists snapping away, the office workers zipping through, the congestion of cars and urban life as we knew it. A new kind of visual iconography emerged around the empty city due to the pause the pandemic had caused. Skyscrapers were part of this visual iconography not just as distraught empty spaces but as monumental landmarks. Be it the Empire State Building, The Shard or The Eiffel Tower, skyscrapers around the world lit up their spires in tribute to key workers fighting on the front line. My words here might have reminded you of what was going on in your city. How it felt to walk the streets. What was open, what was closed. What buildings were lit up like beacons. The skyscraper’s cultural significance is of a landmark playing a visual role in the story of the city.

In 2030, city skylines will have new skyscrapers. By 2025, the City of London will be home to 10 new, tall buildings. New York has multiple skyscrapers currently under construction, including The Spiral in the new Hudson Yards district, which will house vaccine maker Pfizer’s headquarters when it is completed in 2024. The emergence of new skyscrapers will again play a visual role in the story of cities.

Because of the time lag that comes with skyscraper construction, the timing of when these buildings are completed will be attached to the narrative of a post-pandemic city. A narrative that will focus on their emergence in relation to the city’s economic state, future confidence and resilience. In London, 22 Bishopsgate, the city’s newest and tallest building, was completed during the pandemic at the end of 2020. The building has been lauded as an indicator of post-pandemic demand for the office and of post-pandemic office quality.

Like working at home

Over the last year and a half, the office, the café, the restaurant and the gym have all been substituted into one space—home. A global shift to remote working has been a huge indicator of how remote working can be just as productive as working in the office. The work-from-home shift that the pandemic has prompted has raised huge questions about the future of the office. But the skyscraper office is not a thing of the past; it will be an evolved thing of the future. It will still be an important place for social contact and collaboration. But firms will have new ways of working and using their office space.

As cities have started to open up in recent months—despite new COVID variants emerging—many firms in London skyscrapers are piloting hybrid working models where the week is divided between home and office. The 2030 skyscraper office will survive if it is a quality place of work that prioritizes wellbeing, employee amenities and hybrid working to attract talent. London’s 22 Bishopsgate is preparing a whole host of amenities as it gets ready to fully open—10% of the 62-storey tower is shared space. This will include an “Active Commuter Park” with bike spaces, showers and lockers; a gym with London’s highest glass climbing wall; wellness space, event spaces, co-working space, food market, restaurant, bar and viewing gallery.

The 2030 skyscraper office will survive if it is a quality place of work that prioritizes wellbeing, employee amenities and hybrid working to attract talent. London’s 22 Bishopsgate is preparing a whole host of amenities as it gets ready to fully open — 10% of the 62-storey tower is shared space.

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Aerial cityscape of London with Tower Bridge in the center
London skyline with The Shard in the background

Healthy

Health will be embedded in people’s behavior as much as it will be in the skyscraper’s infrastructure. The daunting portrayal of the skyscraper in 2020 as unsafe because it is a high-density space that could enable mass infection transmission is simply not true. But that perception has kickstarted the conversation about future skyscraper construction. Future skyscraper design and architecture will need to incorporate amenities that help prioritize health. This will include increased ventilation, breakout spaces that bring in fresh air, and green spaces like sky parks or gardens. The Spiral, New York’s skyscraper set to debut next year, will have vertical gardens wrapping around it.

Enhanced cleaning and hygiene practices will be part and parcel of skyscraper life whether that is through technology or individual behavior. Entering the skyscraper, calling an elevator, getting to your floor and into your workspace may be a touchless and safe experience thanks to new engineering innovations. Schindler, a global engineering firm for elevators and escalators, is currently developing new technologies such as an ElevateMe app, where building users operate elevators from their phones or with touchless call buttons. Automatic UV air purifying systems will be used for the elevator itself.

Contentious

Despite these optimistic projections about the cultural significance of the skyscraper, issues of sustainability and climate change will continue to be attached to its image. On the upside, the 2030 skyscraper is likely to be on its way to becoming carbon neutral. New York’s Climate Mobilization Act will have likely reached its goal of cutting greenhouse gas emissions. As of 2019, 70% of New York City’s emissions were created by the built environment. By 2030, the Act aims for New York City’s 50,000 largest buildings to cut emissions down by 40%. Existing skyscrapers will undergo retrofitting to achieve energy efficiency as well as, to reflect my previous words, to be more attractive and “healthier” places to work.

The City of London’s 22 Bishopsgate has also championed the achievement of carbon reductions. The building has already met its embodied carbon (i.e., the building’s carbon footprint during construction) target reduction recommended by the London Energy Transformation Initiative (LETI) for a net zero building. 22 Bishopsgate will also install intelligent software systems where building users can see their energy consumption and be empowered to adopt sustainable behaviours. I have talked about the new skyscrapers that will be emerging over this decade and focused on their cultural significance, not on why they are emerging or whether they should be. But this topic of sustainability is an unchanged point of contention that will continue to be present in wider conversations beyond the skyscraper’s cultural value.

The skyscraper is one type of urban space that is home to offices, restaurants, retail, viewing galleries, lifts, lobbies, rooftops and shared spaces. Through the lens of the skyscraper, think about how urban spaces will change by 2030. New constructions will be emblematic of this decade that dealt with a pandemic and their visual significance will mark a time not just in the media or marketing but our personal memories. The future skyscraper will embody new ways of working and new ways of managing workspaces in the city. And it will continue to be contentious—admired for its presence in the urban fabric by some and simultaneously criticized for that presence by others.

40%

As of 2019, 70% of New York City’s emissions were created by the built environment. By 2030, the Act aims for New York City’s 50,000 largest buildings to cut emissions down by 40%.

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Australian mayors map out a post-COVID plan for the future of their cities

Australian mayors map out a post-COVID plan for the future of their cities

The way forward for Australia’s capital cities was on the docket at the Committee for Economic Development of Australia’s (CEDA) Lord Mayors’ Panel—The Future of Australian Cities, a virtual roundtable panel discussion among four Australian mayors, held earlier this year. The leaders of Sydney, Melbourne, Adelaide and Hobart focused on the future of their cities, and to some extent, all of Australia, post pandemic and beyond. The Committee for Economic Development of Australia (CEDA) hosted the panel earlier this year.

During the discussion, the mayors talked about emerging from COVID-19, lessons learned, and how their cities could forever be impacted. They also contemplated the way forward and the greatest challenges ahead for Australia’s capital cities.

“I know there's been a lot of talk about the demise of the city and the return to the suburbs because of the lockdown, but I think the demise of cities due to the pandemic has been greatly overstated,” says Clover Moore, Lord Mayor of Sydney. “I strongly believe that cities are going to remain the engine rooms of our economy, the centers of government, education, culture and entertainment.”

Moore is confident tourists will return and people will continue to come to Sydney and the other capital cities. “The reasons that Sydney was an attractive destination before the pandemic remain in place; Sydney continues to be a beautiful harbor city with a great climate and is a cultural and educational center. It is today and will continue to be well into the future.”

More than anything, Moore says, COVID-19 accelerated trends that were already occurring naturally in Sydney, including technological changes and changes to the nature of how and where people work. COVID sort of reinforced what was happening in the city already—people want to live near their jobs in neighborhoods that have a high level of amenities; they don’t want to be commuters traveling in from far-flung suburbs, she adds.

“We started to see these trends pre-pandemic, and we’ve been addressing them since way back in 2008 with our city and villages policy. We've invested in the quality of the parks and playgrounds, the recreation, the community facilities. We have leafy pedestrianized streets and people can walk or cycle to most local services and local employment and, of course, use public transport to connect to other parts of the metropolitan area,” Moore says. “We think it’s going to reinforce the policies we've been developing to make Sydney a place where people not only want to live but want to work.”

In Melbourne, Lord Mayor Sally Capp is bullish on the future but says the shakeout from COVID-19 in terms of the future of the city and the future of work is still to be determined. “We’ve certainly had a net fall in migration with more people moving into regional cities and choosing their lifestyle given that technology gives them the flexibility to do that.”

The rules have changed… and quickly. But even though Capp says she’s quite sure Melbourne will emerge from the pandemic in good shape, she’s not taking anything for granted and will stay laser focused on keeping the talent the city currently has as well as attracting new talent. Even at the height of COVID-19, Melbourne was busy approving some 800 planning applications worth some $2.3 billion (Australian) in both commercial and residential real estate. And Capp says city officials can play a significant role in what employment and economic opportunities will look like to help build sustainable communities going forward.

“Let's face it, it's not easy to replicate what we have in the capital cities, and particularly Melbourne,” Capp says. “So, building on those strong foundations is really important for the future of Melbourne, and working collaboratively with our regions, as we have done, will make sure that we all get the best benefit from the investments we’re making.”

CEDA, or the Committee for Economic Development of Australia, is an independent, membership-based think tank designed to identify policy issues that matter for Australia’s future and pursue solutions that deliver better economic and social outcomes for the greater good.

More than anything, COVID-19 accelerated trends that were already occurring naturally in Sydney, including technological changes and changes to the nature of how and where people work.

– Clover Moore, Lord Mayor of Sydney

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Pedestrianized bridge in Melbourne, Australia
Pedestrian and bike bridge in Melbourne, Australia

Investment

Investment, whether pre-, during or post-COVID-19, was a key theme that emerged during the discussion. The mayors were keenly aware of the power of the purse strings.

Adelaide Lord Mayor Sandy Verschoor says the city set up an economic development agency that’s led to a $500 million development in the Central Market, which is the city’s food district, and a $250 million development in North Adelaide intended to bring more businesses and more residents into the city itself. The North Adelaide development, she says, is designed to highlight the unique features of the city, specifically its 730 hectares of parklands—everything from forests and wetlands to heritage sites, sporting fields and playgrounds—that she says were so crucial during the darkest days of the pandemic.

“It was extraordinary to see how people connected with those open spaces,” Verschoor says. “And Australian cities offer lifestyles that other parts of the world just can't offer. We are incredibly livable cities, we are creative cities, and we are focused on the well-being of our citizens as something that we need to support.”

For all future development, Verschoor says Adelaide will continue to keep an eye on the overall well-being and lifestyle of its residents. “People are really rethinking what they want their lives to be, and I think that there's a lot of good reasons for people to both live in, and invest in, our capital cities.”

And that focus on lifestyle could provide an advantage for a smaller city like Hobart, says Lord Mayor Anna Reynolds. Recent data showed that Hobart had the lowest office vacancy of any Australian capital city in 2021. And it's still difficult to get commercial property because there is interest from a range of organizations to be based in Hobart.

“The pandemic, and its acceleration of technology adoption, has provided the opportunity for people to essentially be based anywhere… and maybe a smaller capital city becomes more attractive because of the lifestyle it provides,” Reynolds says. “As a city, we just have to make sure we’re ready for it.”

Housing

Another aspect all four mayors say they need to be focused on as they eye the future is affordable housing. “This really could turn out to be the burning-platform legacy and hopefully positive outcome story from the pandemic—that we finally, as a nation, come to terms with our housing crisis, and also the disparate needs of people looking for affordable housing in our cities,” Sydney’s Moore says.

“Sydney has had a very long-term plan of increasing affordable housing, and we have taken many actions to do that. But because Sydney residential real estate prices have become so expensive this is a big challenge for us,” Moore says. “But it's a high priority for us to continue to have people of all incomes being able to live and work in our city.”

In Melbourne, affordable housing is one of the key elements to the recovery and is central to how city officials plan for success in the future. “We are looking at how existing surplus accommodation can be made available for affordable housing, even social housing and subsidized housing,” Capp says. “One thing that could help bring Melbourne back is a plan around how we convert what might be empty commercial spaces to affordable housing. And we are also working on ways to accelerate affordable housing across our inner cities. So, these are all good examples of planks in the recovery and finding a way forward.”

Verschoor says all the mayors have been working—both individually and collectively—on housing and homelessness strategies for quite some time, lobbying at both the federal and state levels. But the pandemic put the issue on the front burner like never before.

“In terms of our own city, again, we had an extraordinary number of development applications and approvals that have gone through for a lot of those mixed-use developments,” Verschoor days. “And where there is mixed use, we have ensured, particularly of the things that we are investing in, that we have affordable housing.”

It's also important to be able to keep essential workers—hospital staff, university employees and students, police officers and firefighters—in the city. “These are the people we want to be able to continue to live in our city; and they want to live in the city, so we’re trying to make it as easy as possible for them to do so.”

Australian cities offer lifestyles that other parts of the world just can't offer. We are incredibly livable cities, we are creative cities, and we are focused on the well-being of our citizens as something that we need to support.

– Sandy Verschoor, Lord Mayor of Adelaide

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Affordable housing building
Newly constructed affordable housing

Climate

The learnings from COVID-19, particularly the coordinated and rapid response that was often required across federal, state and local governments, could serve as a catalyst for another huge challenge that’s facing not only Australia but the planet. Sydney’s Moore says for many years, Australia’s state and federal governments failed to address what she considers Australia’s biggest challenge—climate change.

“I think we can take the learnings from COVID and apply them to addressing climate change, which is overwhelmingly our biggest challenge we have to face for the future,” says Moore. “And I think the learning we took away is that collaboration had to happen; we simply had no choice. We can take those lessons from COVID and start to address climate, too. I think that's what we should all be putting our minds to right now.”

The biggest environmental threat in Hobart, Reynolds says, are the catastrophic bushfires, so it’s quite different from the pandemic in one sense. However, the rapid response, and the need for financial resilience, is very much the same. “Cash flow is a challenge for smaller capital cities. I think the financial sustainability of cities and making sure we're ready for shocks and extreme circumstances is the biggest lesson we can take out of this,” Reynolds says. “As we've seen with this pandemic, there are things that will happen that you just can't predict. So, I think making sure that there is enough support available for people to be able to cope in unpredictable and uncertain times is key.”

Echoing Reynolds comments, Adelaide’s Verschoor says: “I think one of the big lessons for us was that our business continuity plans were for emergency events, which are contained within a timeframe; a fire or flood or losing power, but they weren't designed to be ongoing for months and months,” she says. “There's been a really big rethink about how everything works together, and what we need to put in place if we're going to be facing ongoing and maybe even global interruptions that will inevitably come with climate change.”

Moore says Sydney’s biggest priority has been addressing climate as part of its Sustainable Sydney 2030 strategy. “We made a commitment to get our emissions down by 70% by 2030. And just last year, we partnered with three regional areas to purchase renewable energy from them,” Moore says. “Sydney is now powered by 100% renewable electricity, and it's based on energy coming from those wind and solar farms in regional areas.”

Given the accelerating climate change that’s happening across Australia, Moore says that the “COVID collaboration” will continue to be a key strategy in Australia’s future. The interaction with regional areas that were devastated by bushfires was an opportunity for Sydney to be able to support those regional communities by sending emergency workers and others to assist.

“I think what we will see in the future is greater collaboration, not only from different levels of government, but also that interaction between city and regional local governments,” Moore says. “I don’t think there’s any question that we realize we’re all in this together.”

100%

Sydney is now powered by 100% renewable electricity, and it's based on energy coming from those wind and solar farms in regional areas.

– Clover Moore, Lord Mayor of Sydney

Clover Moore is an Australian politician. She has been the Lord Mayor of the City of Sydney since 2004 and is currently the longest serving Lord Mayor of Sydney since the creation of the City of Sydney in 1842.

Clover Moore
Lord Mayor of Sydney
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Sally Anne Capp is the 104th lord mayor of Melbourne, elected on 18 May 2018 and sworn in on 24 May 2018. Sally is the first directly-elected female Lord Mayor of the City of Melbourne. She was the first woman to hold the post of Agent-General for Victoria in the UK, Europe and Israel. She has also served as the CEO for the Committee for Melbourne.

Sally Capp
Lord Mayor of Melbourne
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Sandra Maaike Jayne Verschoor is the Lord Mayor of Adelaide in South Australia since 12 November 2018. Prior to this, she was Deputy Lord Mayor and a General Manager at the City of Adelaide.

Sandy Verschoor
Lord Mayor of Adelaide
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Anna Reynolds was elected Lord Mayor of Hobart in November 2018, the third woman to be elected into the role. First elected as an Alderman to the City of Hobart in 2014, she was Chairperson of the Parks and Recreation Committee during her first term.

Anna Reynolds
Lord Mayor of Hobart
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Flying taxis and digital twin cities

Flying taxis and digital twin cities

Petra Hurtado is the Research Director at the American Planning Association (APA), heading APA’s research programs and foresight practice, where she’s responsible for expanding a future-focused research agenda and advancing planning practices that assist communities in navigating change. Her areas of expertise and research include urban sustainability, smart cities, emerging technologies, nature-based solutions, and environmental psychology. Hurtado sat down with VISION by Protiviti’s Editor-in-Chief Joe Kornik to discuss where she sees cities heading in 2030 and beyond.


ABOUT

Petra Hurtado
Research Director
American Planning Association

Petra Hurtado is the Research Director at the American Planning Association (APA), heading APA’s research programs and foresight practice, where she’s responsible for expanding a future-focused research agenda and advancing planning practices that assist communities in navigating change.

Kornik:  I’ve read quite bit about how the pandemic was maybe the beginning of the end of cities. Are cities in real trouble?

Hurtado: I know there’s been a lot of talk about that how this is the end of the city, because now people can just move wherever they want, and work remotely, and how cities haven’t been able to adjust quickly enough. But, you know, there’s more to cities than just work and job availability. Cities have been around for a long time, and they’ve gone through many pandemics, and many changes because of pandemics, and they’ve survived—and thrived. There’s a reason people like to live in cities: They want a sense of community; and they want to be a part of the experience of a city. Often, it’s an experience you can’t find elsewhere. So, I think cities will adjust and will be just fine post-COVID. 

Kornik: Do you view COVID as a reset? Do you think they will be vastly different places when we get back to “normal”?

Hurtado: You know, to be honest, I hope they are different. It would be stupid, frankly, if we went back to the way they used to be because we’ve became aware of deficiencies in cities because of COVID. We have an opportunity to make some big changes. COVID highlighted many of the inequalities not everyone might have been aware of—people of color, for instance, were more negatively impacted by the pandemic. Their neighborhoods are often close to heavy industry and highways where the air is already polluted, which leads to conditions like asthma. Obesity rates tend to be higher because of the lack of healthy food options; and these are all planning issues that became more in focus because of COVID. We also saw how transportation behavior changed, especially during the lockdowns. We saw that it’s possible to mitigate climate change by reducing greenhouse gas emissions. For the longest time, there was the assumption that behavior could never change, but COVID showed us it could. That’s one bright spot from the pandemic.

Kornik: Has COVID helped open planners’ eyes or have planners known these things all along? 

Hurtado: It’s probably a mix of both. I think we’ve tried to resolve a lot of the challenges with the same tools that created them, which is never a good approach. One of the APA’s roles is to research emerging trends and try to verify them with data to make sure some aspect is not just the latest fad or just something the media is talking about, but really verifying which trends will have high impacts in the future, which will result in disruption.

Kornik: What are some of those trends and disruptors you’re seeing right now?

Hurtado: One is drone technology and what that could mean for moving things—and people—around cities. Amazon and other delivery services are already piloting drone deliveries, but now we’re also talking about passenger transportation—flying taxis. This is a topic that has been discussed since the 1960s, and there was always this momentum where we thought it was going to happen and then it didn’t. OK, with the drone technology we currently have, this time it’s going to happen, for sure. We’re confident it’ll be here by 2028. Asia and Europe are far along on this; the UK is currently building its first “verti port” (vertical port) for flying taxis and Germany is going to roll one out next year. The U.S. is also trying to figure this out. The World Economic Forum is currently working on a blueprint with the city of Los Angeles on urban air mobility, and they have created the first set of policy recommendations, where things like safety, costs, noise pollution and verti port locations are being assessed. Planners need to be ahead of the policy. We need to embrace that disruption—use it to our advantage even. The emergence of Uber and Lyft disrupted cities to some extent and that’s not even a big innovation. Well, how much will air taxis disrupt cities? Probably a great deal. And speaking of Uber and Lyft, they are both in this air taxi space, as well.

I know there’s been a lot of talk about that how this is the end of the city, because now people can just move wherever they want, and work remotely, and how cities haven’t been able to adjust quickly enough.

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Flying taxi hovering above helipad in urban city
Unmanned passenger drone, 3D rendering

Kornik: That’s interesting. And it gets me thinking about urban mobility in general. When you look out to 2030 and beyond, will new technologies be able to serve mobility needs or will we still be relying on the same subway systems we’ve used for 115 years in New York City, for instance?

Hurtado: That’s a good question, and there’s a lot of uncertainty right now. Obviously, public transportation was hit really hard in this pandemic. A lot of that is really a question of political will, which obviously with the new administration in the U.S. there’s hope that public transit will be at the top of the infrastructure priority list. We also shouldn’t assume that when new technologies roll out that everything else goes away. In 2030, we definitely will still have many of the same trains, buses and subways. And people will still have their personal cars. The integration of these new technologies into everyday life is a process and is going to take a while. Another question is around cost and affordability. What about the people who can’t afford to use an autonomous vehicle or a flying taxi? My hope is that some of these new technologies will be able to close some gaps that we have in our transportation system. I think cities missed out on that opportunity with Uber and Lyft, which didn’t really help close the gap for neighborhoods without access to public transit. But most of these new technologies are being developed by the private sector so there’s not a lot that’s “public” about them. My guess is there will just be more options in the transportation system.

Kornik: How does AI (Artificial Intelligence) and all this newly available data factor in? Can it be used effectively by planners?

Hurtado: Yes, Big Data is here and there’s lots of real-time data available and that obviously can help to make the planning profession more agile, which it needs right now. Cities, in general, have not been very nimble—until COVID. Cities were able to adjust quickly. Shared streets, pop-up bike lanes and the restaurant seating on the street was all possible because of the emergency orders in the cities. Through the regular planning processes that would have probably taken years. That tells us something about planning and the lack of agility in planning. So, access to real-time data that can be processed with artificial intelligence can make planning more agile in a changing world. However, we need to be aware that there are going to be data gaps. We need to figure out how can we close these data gaps and how can we plan for the individuals in our communities who may not be represented in that data for several reasons. Yes, most people have smartphones nowadays, but some people still don’t, and some don’t have credit cards. These people can’t call an Uber and can’t use a shared bike. Many elderly people, for instance, don’t have—or don’t know how to use—a smartphone. So, we need to mind the gaps, I’d say. That’s incredibly crucial as we move forward with all this data. The technology can’t get too far ahead of the people.

In 2030, we definitely will still have many of the same trains, buses and subways. And people will still have their personal cars. The integration of these new technologies into everyday life is a process and is going to take a while.

Image
Server room with bright colored lights
Data center

Kornik: What are some other ways planners can use big data?

Hurtado: We can measure how people move around cities, for example. That data is being used to make decisions about urban planning. There’s this whole idea around what we call “digital twin” cities. Planners can work with real-time data, create a twin of a city and then use that to experiment and try things out before it would ever get implemented. There are some big tech companies developing this technology and the conventional wisdom is that by 2025, lots of communities will be working with digital twins. Creating a digital version of Chicago with all the relevant data, for instance, would give planners access to information and the ability to experiment on the impacts of policy changes. If we build this road, how will that impact our greenhouse gas emissions. That level of experimentation hasn’t been available to planners before now and it will drastically alter the way city planning is done, and cities themselves, over the next several years.

Kornik: Will cities be better places to live in 2030 and beyond?

Hurtado: All the developments we’ve just talked about becoming a reality are going to disrupt cities tremendously… things like autonomous vehicles and flying taxis and digital twins, you name it. But I also think there are so many dynamic things happening right now that you don’t even have to go that far out to envision the changes coming. Look at all the discussions we’re having around people and equity right now; well, urban planning contributed to these inequalities that we’re seeing today in cities. It would be great if we learned from some of those mistakes. So, if I could make one wish it would be that planning would lead to more equitable cities in 2030 and beyond.

There’s this whole idea around what we call “digital twin” cities. Planners can work with real-time data, create a twin of a city and then use that to experiment and try things out before it would ever get implemented.

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Global cities desperately need new leadership models

Global cities desperately need new leadership models

The choice is ours: Will we have successful cities or human extinction?


The world’s population centres are the critical places in the future of our planet. Where people settle, and how they live with the planet, will define the ultimate endgame in the story of human life. Will we spoil our habitat or remake it?

Whether we think of such cities as consumption markets, infrastructure hubs, innovation ecosystems, decision-making centres, sharing platforms or visitor destinations does not really matter. They are all these things—and much more. We have come to call them “cities” because they serve and seek to empower citizens, but this word is now so overused, and sometimes so contentious, that it may just be better to think of them as population centres: places where people are concentrated. In the quest to avoid human extinction, such places are ontologically important. 

On this planet, there are some 10,000 cities where we humans make our home, according to Cities in the World, European Commission and OECD. Meanwhile, the United Nations World Population Projection says we are on the road to 9 billion city dwellers by 2080. Currently, about 600 cities drive our global economy and fuel our national treasuries, 200 cities are the centres of national policy and law making, and 100 cities are the hubs of corporate enterprise.

Anyone who wants to argue against the idea of an urban world needs to articulate the alternative. How would you distribute and service 9 billion souls without using cities as the primary platforms? What are the environmental and social consequences of alternative models?

We know, from all the amassed science of success, that leadership is critical to how countries and companies survive and thrive. We read books about national heroes and about great corporate leaders. But less frequently do we focus on how population centres are led and guided by wise people and what the leadership imperative is for a place that is not a nation and not a business venture. The leadership of cities is a niche discussion.

In our post-pandemic, climate-alarmed world, city leadership is just about to become the most important job on the planet. The next 50 years will be a great reckoning, and it has already started. Can we equip our cities to avoid the extinction of our species?

ABOUT

Greg Clark
Group Advisor, Future Cities
HSBC Group

Greg Clark is Group Advisor, Future Cities & New Industries, at HSBC Group, where he focuses on future urbanization, mobility, digital transformation, sustainable development and impact investing. He is also Chair of the Connected Places Catapult; a board member of Transport for London and the London LEP; a visiting professor on Cities and Innovation at the University of Strathclyde in Glasgow; and an honorary professor of Urban Innovation and Policy at London’s University College. Clark is a Global Fellow at the Urban Land Institute. He supports leaders on strategic futures in more than 300 cities worldwide. He also advises global firms on the investment and enterprise opportunities of an urbanizing world. Clark is the author of 10 books. He is cities expert on the BBC World Service series My Perfect City, host of the Connected Places Podcast, and author of monthly column hosted by RICS called The Planet of Cities. Clark writes here in a personal capacity.

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Aerial view of Barcelona, Spain
Birdseye view of Barcelona, Spain

Three ideas should drive our quest:

Cities are seriously underpowered

Most of our cities are subjected to an inadequate version of democratic government that leaves them with the wrong municipal geographies, insufficient financial resources, weak policy frameworks, short-term mandates and overly dominant national governments that do not understand the interactions of different forces locally, in a given place. National governments recognize the opportunity of a century of urbanization but are largely unwilling to couple it with the decentralisation of power it requires. So, cities are orphaned by nation states.

Place leadership is a collective task

Public bodies, civic groups, asset owners, investors and businesses must work together with citizens to shape choices and frame change together. Cities are both a means to optimise the interplay of different changes such as in energy, transport, environment and public health, and also a platform for collective behaviour change amongst citizens and businesses. Cities can motivate and inspire the changes we need because they enable and require sharing of the same place for multiple purposes by large numbers. Place-based leadership can induce innovation.

Soft power is therefore essential for cities to succeed

Cities need to be convening platforms for innovation and joint endeavour. They cannot achieve the changes required without building and driving coalitions. The more collaboration, the easier the big reforms that build greater formal competence are acquired. Well-orchestrated soft power leads to reforms that generate hard power. 

National governments recognize the opportunity of a century of urbanization but are largely unwilling to couple it with the decentralisation of power it requires. So, cities are orphaned by nation states.

Image
Aerial view of Shanghai, China cityscape
Shanghai Financial District Seen from High Building, China, East Asia

We can already see a new generation of city leadership platform types beginning to emerge in multiple locations:

Over the past 20 years, Manchester, UK, has steadily built a grand coalition of nine neighbouring municipalities working together with universities, investors and businesses committed to a place-leadership agenda that has enabled delegation of new authority, the acquisition of new financial powers, and creation of a new leadership structures in a “combined authority” for the city region.

The Greater Sydney Commission is a new kind of city regional leadership platform where civic leaders are selected for their expertise to shape a long-term agenda beyond the short-term mandates and political cycles but accountable to, and influential upon, them.

Barcelona Global has been established as a coalition of corporations, institutions, entrepreneurs, academics, skilled migrants and investors who want to help shape the Barcelona of 2050. The coalition is working at the spaces within and between the formal levels of government: municipal, state, national, and EU levels of formal governance.

In China, the emergence of the great city clusters in the megaregions of The Greater Bay Area, Yangtze River Delta and Jing-Jin-Ji regions shows a new scale for subnational leadership to oversee and coordinate networks of interdependent cities.

In Colombia, we observe proactive citizen leadership in Medellín and civic-minded business leadership in Bogotá fostering new tools and platforms for place leadership to emerge.

As we emerge from a global pandemic, the quest for effective city leadership is more important than ever. New models of shared leadership are finally arriving, but is it too late? We need these models, as well as other innovative ideas and approaches, to become the fabric of our global urban infrastructure to have successful cities. Our collective future depends on it.

As we emerge from a global pandemic, the quest for effective city leadership is more important than ever. 

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NY Comptroller: If COVID can’t kill a city, can it make it stronger?

NY Comptroller: If COVID can’t kill a city, can it make it stronger?

Thomas DiNapoli is the 54th Comptroller of New York, a cabinet officer of the state of New York and head of the New York state government's Department of Audit and Control. As Comptroller, DiNapoli is the State’s chief fiscal officer ensuring that state and local governments use taxpayer money effectively and efficiently to promote the common good. Employing more than 2,700 people, the office’s responsibilities include serving as sole trustee of the $254.8 billion New York State Common Retirement Fund, one of the largest institutional investors in the world; administering the New York State and Local Retirement System for more than one million public employees and more than 3,000 employers; administering the State’s approximately $16.7 billion payroll and overseeing the fiscal affairs of local governments, including New York City. In 1972, DiNapoli became the first 18-year-old in New York state to hold public office when he was elected a trustee on the Mineola Board of Education. In 2007, DiNapoli was elected State Comptroller. He was re-elected Comptroller by New York’s voters in 2010, 2014 and 2018. Joe Kornik, VISION by Protiviti’s Editor-in-Chief, sat down with DiNapoli in May to discuss New York City’s future.


ABOUT

Thomas DiNapoli
New York State Comptroller

Thomas DiNapoli is the 54th Comptroller of New York, a cabinet officer of the State of New York and head of the New York state government's Department of Audit and Control.

Kornik: I’d like to start talking about how COVID-19—and the economic crisis it’s caused—has the potential to alter a city’s finances for a long time. Now that we’re nearing the end, how’d we do?

DiNapoli: Well, I certainly think compared to where we were a year ago, we've done much better than any of us could have imagined at the time. When you think of the depths of the economic fallout from COVID and the severe job loss, it was devastating from an economic point of view. And New York City was the first and the hardest hit of the U.S. metropolitan areas. We experienced a severe spike in unemployment and a severe drop in sales tax revenue, and I think everybody was expecting the worst. So here we are about halfway through 2021 and we’ve seen the picture improve in terms of unemployment and sales tax revenue, but we’re certainly not back to pre-pandemic levels. The big game changer for the city was the support that came from the federal government and the American Rescue Plan Act of 2021. The change in the presidency, the change in the Congress and certainly Chuck Schumer as Senate Majority Leader were all big factors helping lead the city through the crisis: We’re actually on target to end the year with a surplus. That doesn't mean there still aren’t major concerns, but it’s a much better picture from where we thought we’d be a year ago.

Kornik: Honestly, that’s more optimistic than I expected. It seems like there are so many headwinds in terms of lost tax revenue, unemployment, real estate and other factors to consider.

DiNapoli: You know the employment numbers are still going to be off and revenue numbers are going to be off, and the property tax loss is significant—the city's projecting the highest drop in property tax collections in its history. And we’re concerned that may continue well into the future. In terms of real estate, that depends a lot on how business moves forward with bringing people back to the office. There's still a lot of uncertainty, but one of the bright spots has been the resilience of financial services. When the markets tanked in March of 2020, everybody thought Wall Street was going to tank, too. But it didn’t; bonuses were up, and that has helped maintain an important part of the city's revenue. So, that’s been a big key to financial stability. I’m optimistic. I was in Manhattan recently and there's more street traffic than I've seen in many months, and people seem to be returning to work and the office. And maybe we’re starting to get some day-trippers? I don't think we’re getting very much overseas tourism yet, but we’re all watching tourism because it’s so vital to the city’s overall economy. But even as Broadway starts to reopen and restaurants continue to come back with the help of federal support, the pace of the recovery is so important to the future of the city’s finances. So, we’re keeping a close eye on all of this. We’ve done a series of reports on the retail sector, the restaurant sector, the hospitality sector, the tourism sector and the forecasts are still way off. But if this recovery is slower than anticipated, we could be dealing with a lot of tough choices sooner rather than later.

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Busy street in Manhattan, New York
Busy street in Manhattan,

Kornik: What can the city and state do to help speed the recovery?

DiNapoli: We think about that every day. One thing that’s key, I think, is safety. People have to feel safe; people have to feel comfortable living their daily lives. We need to begin talking about a full recovery. And New York is sort of unique in that a big part of feeling safe is about public transit. We need people to want to use the trains, subways and the buses again and that’s going to be a challenge. People need to have easy ways to get to work. And if people aren't using public transportation, then we can also add the MTA to the list of financial concerns, too. So, we’re really encouraging people, even if it's not on a five-day-a-week basis, to come back to the office. And I know this is something a lot of companies are grappling with—we’re grappling with it in Albany. So, to your specific question about what we can do: We need to keep reminding everybody of the importance of being vaccinated; we need to continue to support businesses that have been struggling; we need to give people an assurance that steps are being taken to ensure the streets are safe; and we need to let people know that the mass transit system is viable and safe, as well. Government has a big role to play, but the business community also has a role to play, as does the nonprofit sector and labor, all big employment sectors in the city. Everyone should be stressing the importance of not giving up on New York; it's in everyone’s shared interest to continue to be positively bullish about the city’s future.

Kornik: It seems there’s some short-term stability. If you take a longer view, say five years out, when those federal dollars have long dried up, what’s your view on the long-term implications of the pandemic on New York?

DiNapoli: For me, I would say the concern is on a shorter horizon. The federal money will be spent down sooner rather than later so the concern is more immediate than a five-year window. We’re already seeing signs of a slower recovery than we’d like. A significant part of new revenue is higher income taxes, but COVID created a remote working environment where people, especially upper-income people, are leaving the city and state to work from second homes. The big question is: Will they come back? A small percentage of upper-income people pay a much larger percentage of the income taxes so there will be a diminishing return to raising taxes… especially on people who can vote with their feet by moving out of New York City. I think it's too soon to tell; so that's one concern. Then there’s the real estate market that I alluded to earlier. If property values go down, that will impact property tax revenue. That’s a huge concern. But some of the recent reports I've seen around real estate are positive. There's already a little bit of a bounce. Look, New York City has been counted out many times before, and it’s always shown tremendous resilience. I would never bet against New York City.

Everyone should be stressing the importance of not giving up on New York; it's in everyone’s shared interest to continue to be positively bullish about the city’s future.

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Mass transit (train) in New York City
Mass transit in New York

Kornik: I know some of the biggest challenges are imminent, but if you were to focus a little farther out—maybe even something the next Comptroller will have on his or her plate a decade from now—what comes to mind?

DiNapoli: Well, first I would point out that I still have many years to go to beat Arthur Levitt’s run of 24 years of being New York Comptroller. A decade from now, I could still be Comptroller… now, I’m not announcing anything, I assure you. But if we’re looking a decade out, one of the key dynamics is, will New York City still be a place that attracts young, talented people—in the arts, or technology or the financial sector? And, even pre-pandemic, there's always been a concern about the out-migration of established upper-income New Yorkers, but I think we probably need to focus more on the migration of some of those younger talented people who are on the verge of launching their careers and perhaps settling down and raising a family in the city but because of this pandemic, we might have lost some of them. So, if we want New York to continue to be a vibrant, wonderful place 10 years from now, we've got to make sure we're focusing on that next generation. So that really speaks to some of those factors I was talking about earlier, safety and employment. Businesses will need to adapt to a new reality, even if that means a hybrid model of remote and in-person work—they need to be mindful of how younger people want to work. I do think if we address some of those broader issues, and if we focus on the next generation and make sure we're not losing them, I think the city has the potential to be stronger than ever in 2030. Look, New York has come through many crises over the years, including a pandemic, by the way. And history says we always end up better, not worse.

Kornik: Do you suspect that will happen again?

DiNapoli: Right after 9/11, there was nothing going on downtown. Now, lower Manhattan is humming in terms of business activity, but it's also become a residential community. Much more so than it ever was pre-9/11. It’s better than it was. And I think when we look back on this time a decade from now, there will be lessons learned and things about New York City that are better than they were pre-COVID. I'm very positive about what New York will be 10 years from now. And while it’s always difficult to look that far out, our history as a city says, almost without fail, that we’re better than we were the decade before. So, I have every reason to think that we’ll look back on this time as a big turning point to a better New York City.

Joe Kornik is Director of Brand Publishing and Editor-in-Chief of VISION by Protiviti, a content resource focused on the future of global megatrends and how they’ll impact business, industries, communities and people in 2030 and beyond. Joe is an experienced editor, writer, moderator, speaker and brand builder. Prior to leading VISION by Protiviti, Joe was the Publisher and Editor-in-Chief of Consulting magazine. Previously, he was chief editor of several professional services publications at Bloomberg BNA, the Nielsen Company and Reed Elsevier. He holds a degree in Journalism/English from James Madison University.

Joe Kornik
Editor-in-Chief, VISION by Protiviti
View bio

I'm very positive about what New York will be 10 years from now. And while it’s always difficult to look that far out, our history as a city says, almost without fail, that we’re better than we were the decade before.

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CEO panel: Africa’s predicted population boom a boon for urban real estate

CEO panel: Africa’s predicted population boom a boon for urban real estate

Africa just may be the planet’s sleeping giant... at least from a demographic standpoint. Consider that Africa is undergoing, and will continue to undergo for the foreseeable future, a population boom that will alter the course of the continent over the next fifty years. The growth that’s happening in sub-Saharan Africa should make it the second largest region of the world by 2030 when it’s expected to have some 2 billion people, almost double what it is today, according to the United Nations. By 2050, that number is expected to top 3 billion, accounting for nearly a third of all people on Earth. There will be people—lots of people–and they’ll be born into a very different Africa. Advances in medical technologies and infrastructure, although not where they need to be just yet, will only help to accelerate Africa’s emerging market status. To discuss the continent’s opportunities, Joe Kornik, VISION by Protiviti’s Editor-in-Chief, sat down with three real estate CEOs in Africa—Steve Brookes, CEO of Balwin Properties; Bronwyn Knight, CEO and Co-Founder of Grit Real Estate Income Group; and Greg Pearson, CEO of Gateway Real Estate Africa—to discuss the future of the continent, its cities and its people. The panel discussion took place in July 2021.


Kornik: The African economy and real estate market was humming pre-pandemic, particularly in Nigeria, Kenya and South Africa. As we begin to emerge from COVID, where is the market now and how optimistic are you about its future?

Knight: I think people tend to paint Africa with a broad brush but there are 56 countries in Africa, all with different governments and different agendas. So, we need to keep that in mind. What we’ve seen is that different governments behaved differently during COVID, and different sectors and asset classes also have performed differently. With our portfolio we are exposed to 14 African countries and because we are so well diversified, it’s been interesting to see what’s done well and what’s struggled. With all these lockdowns it’s obviously been dismal performance from a hospitality perspective, but as we’re seeing borders reopen, we’re also seeing people eager to get back to travel and tourism, so that’s been encouraging. The other sector that we’ve seen struggle a bit is retail. But again, it’s been very country-specific–we own a very large asset in Casablanca. Morocco, like Europe, went through an exceptionally hard lockdown so it’s still off. But countries like Mozambique, Kenya and Ghana have been extremely resilient. Ghana opened up relatively quickly with a vaccination program, way ahead of any of the other African geographies, so Ghana has done quite well. It varies greatly.

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Street market in the city of Fez, Morocco
Shops in the Medina streets of Fez, Morocco

Brookes: Balwin operates exclusively in South Africa, and it’s a really turbulent environment right now. We have three classes of brands: our green brand, which caters to emerging markets; our classic brand, and our high-end signature brand. In this environment, we’ve found that it’s been smart to focus on the green brand and sort of cater to that emerging market segment: the people coming out of the townships that have just gotten jobs and are starting their lifecycle. Our ability to be nimble and adapt quickly to market conditions has been a big key for us during this time. I also have a passion for green development, and we’re about to explode with a whole bunch of new green initiatives. We’re finding an incredible amount of good will, especially on the financial side where we’re finding we can borrow more money than we need. That’s a very good thing in a developing country like South Africa. We have tremendous confidence in South Africa, but it’s never going to be easy. Infrastructure remains a big challenge all across the country, but the market is there. Residential real estate and demand for our portfolio is strong, specifically in South Africa’s metropolitan areas of Pretoria, Johannesburg, Cape Town and Durban.

Pearson: Outside of South Africa, real estate was one of the first things that was negatively affected by the pandemic, and as Bronwyn [Knight] mentioned, retail was hit especially hard. Fortunately, we found that because of the track record we had across the continent, a lot of the multinational companies that had been trying to do things on their own came to us for expertise. So, we found that we had more development opportunities than we had previously, especially global firms looking for solutions across the continent. Part of our market is in data center development and there was so much demand for data and connectivity as people were trying to work from home during the pandemic. In places like Nigeria, where you’ve got close to 200 million people, the existing infrastructure of the country just couldn’t handle it. We’ve rolled out data centers in Nigeria and Kenya and are looking at Ghana. Another big part of our business has been focused on consolidating American embassies, which wanted to centralize during COVID. We’ve landed five of our biggest embassy contracts over the last 24 months. And then the last one, probably not surprisingly, is medical. Africa has always lacked good medical facilities outside of South Africa, and maybe Egypt and Morocco. We partnered with the Indian-based medical group Artemis, and together we have built hospitals and facilities across the continent. So, if you’re still looking at real estate as “buy a piece of land, build a building and get tenants,” well, that market is gone, at least for now. It will probably come back in two years or so, but we’re focused on creating real estate solutions across Africa. And in the last 24 months we’ve almost doubled the size of our development business.

We have tremendous confidence in South Africa, but it’s never going to be easy. Infrastructure remains a big challenge all across the country, but the market is there. 

– Steve Brooks, CEO, Balwin Properties

More than half of the projected increase in the global population up to 2050 will be concentrated in just nine countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Indonesia, Nigeria, Pakistan, the United Republic of Tanzania, and the United States of America.

Source: World Population Prospects 2019, United Nations Department of Economic and Social Affairs.

 

Kornik: That’s interesting, Greg. It sounds like all of you have sort of been forced to pivot your portfolio, or at least your strategy since the start of the pandemic. How has COVID impacted your business and its future?

Knight: Diversification is key. Our approach is that we don’t want to be more than 25% exposed to any one geography. We have exposure all over Africa, and we’re actually working with Greg on both the American embassies and medical facilities projects across Africa. When American embassies come to us, being in 14 countries makes us more viable. Same goes for healthcare: We are building facilities and like Greg said, the idea is to roll those out across Africa. The pandemic has made clear Africa’s lack of healthcare facilities, and governments across the continent are looking to us to bring in partners, like Artemis, to help develop those facilities.

Brookes: There are a couple of things that are absolutely critical to success as I look to the future; fundamentals that we need to get right. One is infrastructure. I am fanatical about infrastructure. I believe if we have the infrastructure, people will come. Infrastructure is critical for South Africa. We have backbone infrastructure in what we call our four nodes: Johannesburg; Pretoria; the Western Cape, which, in my opinion, is the most beautiful place in the world; and Durban, where we are exploding–we have about 12,000 apartments under construction. There are other nodes, but in those other places the infrastructure is a massive problem. Second is urban and community planning where we, as developers, really get to exert our influence into the community to help make an impact. That’s critical to our future success. And finally, the last thing that’s critical for us is lifestyle. I mentioned Durban; that’s a lifestyle place. And we’re really focused on lifestyle in our designs. For instance, we develop properties around lagoons so residents can have a place for watersports, or just a place to walk in the evenings surrounded by nature. That’s what we’re trying to create with our residential properties; that’s where the future is going; so that’s where we’re going.

Pearson: So just to add on to what Steve is saying… one of the big opportunities that we see on the continent is residential real estate, and Steve’s right when he says we need infrastructure investments, not just in South Africa but everywhere. And we need them both in and around cities. One trend that I think is going to be big is this idea of new “suburban cities” being created on the outskirts of larger cities. There are a lot of developments where you will drive along a dirty, bumpy road to get to something of significance, so there’s this gap between the city and the real estate development. We’re finding that it’s worthwhile for us to invest in the infrastructure in between; we’re bringing water to the area; we’re bringing data and communications; we’re bringing power in through green resources and upgrading local energy systems. And once that infrastructure goes in it’s crazy how quickly everything else follows. A perfect example is in Kenya where you’ve got 2,500 families now living on the outskirts of Nairobi, which was considered a long way out two years ago but not anymore. These developments on the outskirts of cities look and feel like cities; there’s new office buildings going up, there’s public parks, there’s schools being built. In the end, we’re creating these suburbs, and we see this as a big market opportunity right now and into the future.

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Nairobi, Kenya cityscape
Aerial view of Nairobi, Kenya

Kornik: So, my last question is around the demographics and potential of Africa. The population boom that’s happening in sub-Saharan Africa will make it the second largest region of the world in a decade. Talk to me about Africa, its growth and its cities in 2030 and beyond.

Knight: I think we can confidently say that Africa is the last frontier of growth because of coming population growth. There are so few opportunities for growth left across developed markets that investment has to come to Africa, and we see ourselves as a gateway into the continent. We see huge opportunities in Morocco, Kenya and Ghana, for instance. In these places, we have good relationships and good partners. If you look at our portfolio today, it includes Exxon and Halliburton, companies that are very resilient to emerging markets. The middle market is growing and will continue to grow, and the need for both retail and residential product is strong because of this up-and-coming, highly educated population emerging in Africa. That’s really where I see the opportunity going in the years to come. We sit with a portfolio that’s just under R900 billion (South African Rand); can we triple this in the next couple of years? Absolutely. And it’s by no means coming from just the growth on the continent; it must come from outside Africa. And I don’t think, even in my lifetime, that I’ll touch the tip of the iceberg of opportunity in Africa.

Brookes: Bronwyn’s a hard act to act to follow, and I agree with everything she just said. But there’s one fundamental point that we haven’t discussed and that’s the idea of education. I believe Africa needs massive education reform. You drive past our schools and the sports fields are unusable, the grass is a meter high. I think we all understand education is not just about reading books; it’s about so much more of the complete experience. And when I see the lack of investment… I mean, are you kidding me? I think we have a long way to go; the level of education in Africa compared to other continents is extremely low. If we want to compete on the world stage, to me, that’s the next big frontier for Africa.

Pearson: I agree with Steve that education will be paramount. To look at it a little bit differently, I think we need more industrialists in Africa. That’s going to create the long-term opportunity. We need people to come in and change the way that we look at Africa with regards to GDP. If you look at the logistics across our continent, it’s almost non-existent. To get product we need in Ethiopia, sometimes it takes us as much as three months to ship it from South Africa because there is little to no rail and the road infrastructure is so bad. I think one point to be considered is the influence that China is having on Africa. Many people are not happy about it because they are taking a lot of our resources out of Africa, but they’re also providing a lot of infrastructure. Ports, rails and roads are being built because of the Chinese. They are one of the only foreign investors that we have here in Africa, and they are putting billions into infrastructure we all need for our businesses to succeed across the continent. Our long-term future and prospects are great, but we need that outside investment to keep coming into the continent. If that happens, as Bronwyn alluded, I think there’s too much opportunity in Africa for all three of us to realize in our lifetimes.

I believe Africa needs massive education reform. I think we have a long way to go; the level of education in Africa compared to other continents is extremely low. If we want to compete on the world stage, to me, that’s the next big frontier for Africa.

– Steve Brooks, CEO, Balwin Properties

Bronwyn Knight is CEO and co-founder of Mauritius-based Grit Real Estate Income Group, the largest pan-African-focused real estate group with a primary listing on the main market of the London Stock Exchange. Knight has substantial corporate finance and deal making experience. As co-founder and non-executive director of Grit she played a significant role in the listing and conversion of the Group to its current pan-African focus, underpinned by dollar-based leases. She assumed the executive leadership position in May 2016, and under her leadership, Grit grew from a portfolio of two assets valued at US $140 million in 2014 to 54 investments and assets totaling US $850 million.

Bronwyn Knight
CEO, Grit Real Estate Income Group
View bio

Steve Brookes is CEO and founder of Balwin Properties Limited in Johannesburg, South Africa, a specialist, niche, national large-scale, residential property developer focused on the development and sale of sectional-title apartments as well as surrounding infrastructure in the mid to upper market segment. Brookes is also the chairman of the Balwin Foundation, a nonprofit company established in 2016 by Balwin Properties and aimed at making a social difference in the education, training and funding landscape. Brookes is also passionate about environmentally responsible building practices and is the driving force behind Balwin’s approach to minimizing its environmental impact by achieving green building ratings at its developments.

Steve Brookes
CEO, Balwin Properties
View bio

Greg Pearson is CEO of Mauritius-based Gateway Real Estate Africa, founded in 2018 to take advantage of the need for bespoke corporate accommodation on the African continent outside of South Africa. Prior to GREA, he co-founded Grit Real Estate Income Group and has been instrumental in sustaining its rapid growth since inception in 2014. Greg’s expertise includes development management, cost planning, procurement, time management and traditional project management of major engineering and building projects. He has successfully completed a series of developments across the office, retail, leisure, education and healthcare sectors and has experience in over 40 African countries.

Greg Pearson
CEO and Co-founder of GREA
View bio
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Pent-up demand in the U.S. lifts commercial real estate short-term

Pent-up demand in the U.S. lifts commercial real estate short-term

As we begin to emerge from the pandemic, it seems that what happens in the real estate sector, specifically the commercial real estate sector, will go a long way to determining how quickly cities recover financially. The pandemic accelerated perhaps two trends in terms of commercial real estate. One, offices in cities’  business districts sat basically empty for 18 months, and a lot of those tenants are evaluating how they’ll work in the future and how office space—specifically downtown office space—will factor into that. Two, the retail sector was changing prepandemic, but the explosion in online commerce during the pandemic may have altered brick-and-mortar shopping in a significant way. Given the pandemic, it’s not surprising that the commercial real estate sector was down some 1.5% in revenue from 2015 to 2020, but the forecast gets better from there. IBISWorld, in its latest Commercial Real Estate in the U.S. report, is forecasting a relatively flat 2021 commercial real estate market at $890 billion but is predicting growth of 4.8% in 2022, 9.8% in 2023 and 4.3% in 2024. It says the market will eventually hit about $1.15 trillion in revenue by 2026, a 25% jump over the next five years. Jon Critelli, Managing Director with Protiviti and an expert on the real estate market, sat down with Joe Kornik, Editor-in-Chief of VISION by Protiviti, to discuss the U.S. commercial real estate sector and how it’ll impact the future of cities.


ABOUT

Jon Critelli
Managing Director
Protiviti

Jon Critelli is a Managing Director at Protiviti and leads Protiviti's Capital Projects Consulting practice, which specializes in providing operational and project based consulting services to clients across all industries. Jon is a Project Management Professional (PMP), Certified Internal Auditor (CIA), Certified Construction Auditor (CCA), and Construction Controls Professional (CCP).

Kornik: Jon, thanks for joining me today. Given all that’s gone on with the sector during COVID, those numbers from the IBISWorld commercial real estate report sound pretty optimistic to me. What do you make of them?

Critelli: On the surface, these numbers seem optimistic, but the reality is mixed when you consider what makes up the commercial real estate market. While traditional, high-end office space may be in less demand, especially in densely populated urban areas, other segments such as industrial, retail and hospitality could grow. There is a generally accepted idea that brick-and-mortar retail stores will be in less demand, but recent studies are showing that consumers are trending toward multichannel shopping experiences where they move seamlessly between online and in-person shopping. Industrial segments will also likely continue to grow, based on increased demand and need for distribution and logistics hubs, along with data centers and other technology infrastructure that is supported through commercial real estate.

Kornik: That nearly 10% revenue spike in 2023 sounds exciting for the sector. Do you think that’s a matter of pent-up demand and projects that were put on hold pre-COVID returning? Or new projects and post-COVID optimism?

Critelli: I think it’s likely a combination of both but probably leaning toward the resumption of projects that were put on hold pre-COVID now coming back online or being greenlighted. New, nonresidential construction starts are actually down 5% year-to-date, so I think it’s probably a reflection of a resumption of projects that were placed on hold or were already strategically planned for. I also think revenue generated from facilities management, facilities operations and facilities optimization servicers, especially in the industrial segment, will follow the new construction through 2022, peak in 2023 and then begin to level off beyond 2023.

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Downtown financial district
Highrise buildings in Chicago

Kornik: What do you think will be the key factors that will contribute to a recovery? Or more simply: What needs to go right, and what could go wrong? What indicators should we focus on?

Critelli: It may seem obvious, but we have to continue to move past COVID restrictions and bring people back to gathering. We have seen that lockdowns haven’t necessarily stopped economic growth; it’s just changed some of the traditional drivers and placed more of a focus on location optimization, facilities optimization, and increased demand for industrial and high-tech tenants. In terms of indicators to watch, I’d keep an eye on inflation, interest rates and unemployment, as they seem to be the key indicators linked to demand for commercial real estate transactions.

Kornik: When you look at the segments, three-quarters of the market’s current revenue comes from office (29.4%), retail (24%), and municipal and institutional space (20.5%). Given what we know about how office and retail were impacted by the pandemic, do you envision those percentages holding as the market develops through 2026?

Critelli: Following along some of the previous themes, I think you’ll see this mix shift away from office and rebalance toward retail and municipal, as well as institutional revenue. There will be a large shift toward municipal and institutional revenue—especially related to healthcare expansion, upgrades and management. Schools will also see increased investment as children return to classrooms, and many municipalities have already raised or are in the process of raising funds for these purposes through public bonds, which will further drive revenue. I also think you’ll see a shift in revenue toward multifamily housing as investors look to develop and operate apartment buildings and complexes—especially if mortgage rates rise and residential housing inventory remains low. This will only accelerate multifamily commercial real estate activity.

Kornik: According to the report, about half the current revenue comes from construction, and about 20% comes from commercial leasing. Again, when you look forward, how do you suspect construction and commercial leasing will factor into the overall market?

Critelli: I think construction will continue to slow, especially as new, nonresidential construction starts to decline. This may be buoyed a bit by construction activity in municipal and institutional segments, but it won’t be enough to offset construction decline in other segments. Commercial leasing will likely remain steady and typically follows rental rates, which are driven by business growth and consumer spending, and both of these are showing positive signs of continued rebound and sustained improvement.

We have seen that lockdowns haven’t necessarily stopped economic growth; it’s just changed some of the traditional drivers and placed more of a focus on location optimization, facilities optimization, and increased demand for industrial and high-tech tenants.

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Skyscraper construction
Skyscraper construction in New York

Kornik: How about from a geographic standpoint? The IBISWorld report has the U.S. Southeast leading the way, with the West and Mid-Atlantic being close behind. As you look out, do you see anything happening from a geographic standpoint that could be significant?

Critelli: I see a potential trend related to movement away from the Mid-Atlantic and West regions in the U.S. Economic activity follows population movement, and domestic migration trends are starting to demonstrate that people are moving away from New York, Illinois, California, New Jersey and Michigan and moving to Florida, Texas, North Carolina and Arizona. This trend has been occurring since 2010 and was further accelerated by local restrictions and the reduced need to live where you work during COVID. These migration trends will likely shift revenues across the regions over the next five years until the population starts to “resettle” in the post-COVID environment.

Kornik: We’ve mainly talked about the next five years, but I’m curious to hear your thoughts about the commercial real estate sector in the U.S. longer-term—say, 2030 or even beyond. How bullish are you on the sector overall, and what could that mean for U.S. cities over the next decade?

Critelli: I think revenue will continue to increase but at a very modest or more traditional 1% to 2% per year. There will also be demand for services related to property management, property transactions, and property development or redevelopment. I think construction will slow from pre-2020 levels, but again, spending in the municipal and institutional segment—some driven by government investment—will also support this growth through 2030. I’m optimistic that the market will remain steady, but don’t expect any exponential growth beyond 2022 and 2023, and even some of those estimates put out by IBISWorld seem a bit too optimistic to me.

I’m optimistic that the market will remain steady, but don’t expect any exponential growth beyond 2022 and 2023, and even some of those estimates put out by IBISWorld seem a bit too optimistic to me.

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