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News release

Sydney

Sydney’s future city looks to Manhattan for its infrastructure growth model

The sharp rise in inner-city education and social infrastructure facilities in Manhattan may provide a template for the future trends in the Sydney CBD


​​​SYDNEY, 3 JUNE 2014 – With Sydney’s predicted population growth of 45.98 per cent  between now and 2036, social infrastructure in the city will be required to keep pace with demand. JLL’s latest Research report, Sydney CBD Office Conversions: Manhattan – a template for Sydney?, investigates this trend and considers the similarly-placed Manhattan in New York as a potential model.

According to the report, an increasing level of high-density living in the Sydney CBD and inner-city suburbs is bound to be accompanied by an increasing number of families with children.

“Considering the population growth forecast, there is a growing need for increased education and health care infrastructure that will cater for all cohorts of the expanding population,” said JLL’s Director of Residential Research, Rupa Ganguli.

A particular focus on Sydney’s educational infrastructure will be required, with the City of Sydney’s residents in the 0-17 age cohort expected to increase 80.6 per cent by 2036, according to the report.

The population anticipated from high-density residential developments in the City of Sydney will drive a number of changes in the area, with part of the City’s Community Strategic Plan, ‘Sustainable Sydney 2030’, aiming to ensure ‘every resident will be within walking distance to most local services including fresh food, childcare, health services and leisure, social, learning and cultural infrastructure’ .

Ms Ganguli said although metropolitan Sydney has experienced a residential undersupply since 2008, an expected pick-up in supply over 2014-15 should help reduce this net shortfall in housing stock and help bring the market into balance. These market conditions will also be applicable in the City of Sydney over the medium term and social infrastructure will then need to pick up to meet demand.

“Currently there are rising levels of offshore interest in the Sydney residential property market on both the supply and demand sides, with the conversion of office space to residential uses an emerging theme across Australia’s CBD markets – particularly in Sydney and Melbourne. Social infrastructure will eventually need to keep pace.

“The continuous growth in the population residing in the CBD will correspond with a higher cost of living, meaning that parents will need to work and will require Early Childhood Education and Care (ECEC). The ECEC sector will require substantial expansion to cater for the expected population, as it currently proves to be a critical issue for the City of Sydney,” said Ms Ganguli.

As at July 2013, there were 4,502 centre-based ECEC places available across 87 centres, and 195 family day care places. Overall the current shortfall of ECEC places is 3,104, and is projected to rise to 5,976 places by 2031 unless a substantial level of supply is forthcoming, which will require a combined effort from the private and public sector. 

JLL’s Market Research Analyst, Alison Spiteri, said Manhattan could provide a template for Sydney. “The 2008 economic recession resulted in a significant increase in Manhattan office vacancy rates, which opened the door for tenants outside of the financial, insurance, property and professional services sectors that traditionally dominated in the Manhattan market.” 

According to the report, the increase in vacancy rates combined with the decrease in effective rents appealed to the education sector tenants in particular, while the population in the under-14 age category doubled, in line with an almost doubling in the number of residential units to more than 27,800 in Lower Manhattan between 2000 and 2010.

“The growth in Manhattan’s residential population and the increased enrolment at educational institutions has fuelled the growth of the educational sector in the existing office market. With high vacancy rates, an ageing office stock, and a growing residential population, Sydney may be set to follow the Manhattan trend,” concluded Ms Spiteri.