prof greg clark beos conference september 2016, berlin · september 2016, berlin. the business of...

The BUSINESS of CITIES 1

Prof Greg Clark

BEOS conference

September 2016, Berlin


Globalisation and Competition:

The New World of Cities

Cities Research Center I 2015

Local Economic

Leadership


A critical moment for the future of cities

1980 2016 2080 2200

We are one

third of the

way through

a 100 year

cycle of

urbanisation.

At the end of

which global

population will

stabilise and

c.85% of

people will

live in cities...

..and the

system of

cities will be

established for

the next

century

So the decisions we make about our cities over the next

30 years are of critical importance

The BUSINESS of CITIES

Allow Cities to

SprawlBuild New Cities

(or Districts)

Densify Existing

Cities

3 fundamental options for global population growth

and urbanisation


The journey to good density


The new cycle for cities and

the global economy


The new mobility

Film

& TV

Investors

Institutions

Events and

Festivals

Innovators

Visitors

Research

Firms

7


Growth since 2000. Source: Brookings Global Metro Monitor (2015)


The New Silk Roads


Different types of Globalising Cities

11

Globalisation and Competition: The New World of Cities 8 JLL

Broad Types of Globalising Cities

Source: The Business of Cities, 2015

High quality of life

Specialised centres

Port & airport cities

Visitor destinations

Knowledge hub

Re-emerging capital cities

New gateway cities

New World Cities

Established World Cities

Emerging World Cities


NEW WORLD CITIES

EMERGING WORLD

CITIES

ESTABLISHED

WORLD CITIESLondon

New York

ParisTokyo

Hong Kong

Singapore

Shanghai

Beijing

Seoul

Toronto

Berlin

Santiago

Sao Paulo

Johannesburg

Moscow

Dubai

Dubai

Tel Aviv

Vancouver

Manchester

Auckland

Copenhagen

Vienna

Oslo

BostonBarcelona Miami

Cape Town

Brisbane

Sydney

Mumbai


Leadership imperatives for each type of city

13

13

Globalisation and Competition: The New World of Cities 34 JLL

Each city typology faces unique challengesStrategic imperatives for three different kinds of world city

Established World Cities Emerging World Cities New World Cities

Population Maintain population growth from international in-migration.

Implement a more managed approach to population growth and to rural migration.

Build an alliance around talent attraction.

Housing Boost new supply in housing markets and confront NIMBY-ist tendencies.

Provide attractive entry level housing effic

ient ly and qui ckl y

enough.

Monitor housing range and affordability to suit under 35s.

Inequality Address challenges of urban under-class.

Tackle polarisation of income and service access.

Ensure a strong focus on inclusive growth via skills development and mixed-use housing.

Sustainability Tackle climate change adaptation and resilience.

Reduce vulnerability to climate change, flo

odi ng, ear thquakes.

Active leadership on energy effic

iency and mi x, low pol lut ion,

green economy, resilience.

Land Undertake big redevelopment efforts to shift from old to new modes and recycle land effectively.

Rationalise land use and spatial governance to achieve coherent urban and metropolitan forms.

Agreed spatial strategy managed by lead agency. Ensure projects are investment ready.

Business framework

Maintain competitive business climate and tax regime and IP environment.

Improve productivity and business climate, especially legal and regulatory framework. Focus on transparency and confid

ence.

Improve information and co-ordination. Foster start-up growth.

Talent Maintain public support for openness, especially at national level.

Ensure openness to international talent, while fostering cosmopolitanism and multi-lingualism.

Gain visibility among international talent and entrepreneurs. Maintain affordability.

Infrastructure Undertake infrastructure modernisation, e.g. transport, water, waste, energy.

Tackle major infrastructure and basic housing defic

its

Enhance international air and port links, especially to growth markets. Focus on digital connectivity.

Economic development

Ensure affordability for new entrants in the emerging innovation economy.

Give suffici

ent suppor t to new entrants and emerging sectors.

Expert specialisation, innovation, digital and science. Leverage big events.

Brand and identity Maintain clear identity in highly competitive environment.

Establish identity and live up to brand promise.

Build a business and investor brand to complement its other stronger brands. Improve work-life balance.

Metro governance Promote networked and collaborative governance across the functional region.

Promote maturity of institutions, municipal governments’ capacity and tools.

A broader leadership platform, involving business, universities and civil society. Embrace the metropolitan agenda.

Inter-governmental relationships

Improve fisc

al ar rangeme nt s wi th national government.

Attain recognition of urban agenda and spatial economy by national government.

Build story from scratch and gain active support for internationalisation programme.

Source: The Business of Cities, 2015


The Big Drivers and

Disruptors


The key disruptors

15

AI

The Global War For Talent


and the demographic disruptors…

Millennials

16

Ageing populations


= Four new economies

1. Sharing Economy

2. Circular Economy

3. Experience Economy

4. Platform Economy

17



1. Sharing Economy

2. Circular Economy


4. Platform Economy

18



1. Sharing Economy

2. Circular Economy


4. Platform Economy

19

TO

FROM



1. Sharing Economy

2. Circular Economy


4. Platform Economy

20



1. Sharing Economy

2. Circular Economy


4. Platform Economy

21

TO

FROM


Cities and business: 6 key trends

2

2

Cities are Emerging Markets for

Businesses

Businesses are (Re)Urbanising

The Urbanisation of capital

The rise of Tradable Urban Services

Cities are Hubs of Business and Cluster

Innovation

Businesses rebranding and restructuring to

meet City goals


Re-urbanisation – in all its forms

23


Businesses are (Re)Urbanising

24

Why are businesses moving back to the city?

Demographics.

Lifestyle, and talent

preferences

Transport

and safety

and education

Improvements

Changing

Working

Practices

Sustainability

Concerns

Policy-driven

and market

incentives

(eg trade)

Technological

Advances

Opportunities

to collaborate


Cities, Technology, and Innovation


Cities are Hubs of Business Innovation

26

Cities as Test Markets

Diverse labour forces develop content which

translates across cultural barriers


Innovation economy space

27

Innovation

districts

e.g. Tech City,

East London

Innovation

corridors

Innovation

campuses

Innovation

Hubs

e.g. Washington DC

Digital Tech Corridor

e.g. Kista,

Stockholm

e.g. iHub,

Nairobi


Rise of Tradable Urban Services

28

City building as a tradable

economic cluster

Businesses meeting

urbanisation needs

Internationalisation

Paris: Water, Waste and

Energy to African cities

London: Architecture and

Urban Design Worldwide

Sydney: Engineering and

construction to Gulf cities


The Urbanisation of Capital

- Urban real estate growing in popularity with

major investors: commercial property

transactions totalled $1.2 trillion in 2015

- Seen as an important hedge against inflation,

a means of diversifying investments and

spreading risk.

- Global stock of institutional-grade real estate

will expand by more than 55% 2012 to 2020

(PWC).

- Traditional preference for ‘core’ real estate:

London, Paris, New York

- Now expanding horizons to a wider range of

cities in search of value:

- Gateway cities eg Mumbai, Jakarta,

Auckland, Seoul

- Secondary cities in safe national markets

e.g. Lyon, Berlin, Manchester

29

Sovereign Wealth Funds

Insurance Companies

Investment funds

Pension Funds

IFIs

Who wants a piece of the cities pie?


Real Estate in Future Cities

30

Greater integration of private and public

space

The drivers of

change are

pushing urban

fabric in 3

directions

simultaneously


New CBDs and innovation districts

31

Manhattan

Queens

Brooklyn

NEW

JERSEY

Bronx

Brooklyn Army Terminal

Industry City

Brooklyn Navy Yard

F-Train Corridor

NEW YORK

Applied Sciences Campus

Corporate Economy

1st Cycle Innovation Economy

2nd Cycle Innovation Economy

Silicon Alley

DUMBO


What do Innovative Companies need?

34

• Flexible terms for volatile business cycles

• De-segregated workspaces

• Specialised tech and equipment (energy,

broadband, labs, refrigeration)

• Collaborative learning culture

• Access to capital

• Social infrastructure

• Company size mix


How is the Real Estate sector responding?

35

• Workspace innovations

(short-term + long-term spaces,

modular structures, derelict re-fits)

• New kinds of adjoining commercial

space

• Incubation roles

• Partnership and co-financing

• ‘Guerrilla development’


The opportunities and

imperatives in the new

cycle


7 new formats in cities

i. Innovation space

ii. Micro Housing

iii. Super mixed use

iv. Transport hubs

v. Schools as anchors

vi. Intensified public space

vii.New generation of PPPs

37



i. Innovation space

ii. Micro Housing


iv. Transport hubs




38



i. Innovation space

ii. Micro Housing

iii.Super mixed use

iv. Transport hubs




39

PNP Plaza, Pittsburgh



i. Innovation space

ii. Micro Housing


iv.Transport hubs




40

Downtown

Miami

station plan



i. Innovation space

ii. Micro Housing


iv. Transport hubs




41

Oslo Cancer Cluster

Innovation Park



i. Innovation space

ii. Micro Housing


iv. Transport hubs




42



i. Innovation space

ii. Micro Housing


iv. Transport hubs




43

Public and private sector

roles are changing and

evolving

Public land

Taxes

Joint ventures

Investment instruments

Blended investments

Planning commissions

Design

Value capture

Land value

Master -planning


Who should do what?


Real Estate Operators Real Estate Investors Cities

Adopt ‘service provider’

mindset.

Look to second districts in

established cities as well

as second cities.

Adopt innovation economy

intelligence.

Prepare for continuous

adaptation

Understand innovation

districts and their

underpinnings.

Organise around anchor

institutions and assets

Align interests and build

transparency between

owners and users

Redefine and build more

‘core’ assets.

Consider total needs of

innovation districts

Provide hands-on

stewardship

Focus on total values and

revenues, rather than

rental multiples.

Put flexibility and

experimentation into land

use planning.

Learn from customised

environments (luxury

hotels, malls, airlines,

clubs)

Invest in the eco-system

and enterprises, not just

the RE.

Support transition to new

business models for

operators.

prof greg clark beos conference september 2016, berlin · september 2016, berlin. the business of...

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