COVID-19 pandemic leads to escape from the city to the suburbs

The pandemic has triggered some profound reassessments of what people may value in the future.

The long commute to work, once considered a major drawback, may no longer be a key issue when deciding where to live.

Suburbia is experiencing something of a resurgence as CBDs are drained of life.

Those people who would normally be riding the lift up 20 floors to their office after grabbing lunch from the cafe downstairs are now discovering what their local shopping strip has to offer as they work from home.

While the recession has flattened many areas of the Australian economy, some suburban businesses have noticed there are more people around on weekdays.

“Spending data shows that COVID has been a disaster for the CBDs but led to a renaissance in the suburbs, where cafes and shops are filling up with workers working from home,” says economist Andrew Charlton, who founded AlphaBeta, which is now part of global consulting giant Accenture.

Data prepared for the ABC by AlphaBeta and credit agency Illion show that spending in cafes in local government areas close to Sydney’s CBD is down as much as 7 per cent, while many outer suburbs have registered increases well above 10 per cent.

Data from AlphaBeta and Illion shows spending at Melbourne CBD cafes has plunged during the pandemic.
Data from AlphaBeta and Illion shows spending at Melbourne CBD cafes has plunged during the pandemic.(ABC News)

In Melbourne, spending in the city council area has collapsed by 26 per cent, while some suburban areas have registered strong increases despite the harsh lockdowns.

Terry Rawnsley, the principle of consultants SGS Economics and Planning, has analysed the change in spending patterns triggered by COVID.

Economist Terry Rawnsley stands outside his house in Melbourne.
Economist Terry Rawnsley has been working from his Melbourne home since March.(ABC News: Rudy De Santis)

His Melbourne CBD office has been deserted since March and he is working from home.

The stage four lockdowns have imposed tougher restrictions on his movements, but before that he was doing what people all over the country are doing: spending more money at nearby cafes and the local supermarket.

But it is not just cafes and supermarkets giving suburban life a boost, according to Mr Rawnsley.

Arkan Yousif opened his bakery a month ago in Sydney’s southern suburbs opposite a train station, thinking he would get the commuter rush hour customers.

But the trains are almost empty.

“Almost every second customer will come in and go, ‘Oh you’ve opened up through COVID. Why did you do that?’ But they still come in and buy something from us,” Mr Yousif said.

Arkan Yousif stands in his bakery holding coffee saucers.
Arkan Yousif just opened his bakery in Sutherland about a month ago.(ABC News: John Gunn)

He expected to be throwing out a lot of food in the first few weeks, but business has come from an unexpected source — the army of people who no longer trek to the city.

SGS Economics estimates that at least $250 million in spending on incidentals such as coffees, lunches and alcohol has been diverted from the Melbourne CBD to the suburbs since March.

In Sydney that figure may be as high as $400 million.

Tale of two cafes

Dean Wooding and Jodie Foster have been on both sides of that equation.

Five years ago they followed their passions for design and coffee and opened a shop in Sydney’s CBD.

Jodie Foster and Dean Wooding sit outside their cafe at Bondi.
Jodie Foster and Dean Wooding sit outside their cafe at Bondi, in Sydney’s east.(Supplied: Jiwon Kim Works)

Earlier this year they opened a second store in the eastern beachside suburb of Bondi.

“It was an opportunity that we just took and went for it and backed ourselves. And here we are five years later, two shops,” Mr Wooding said.

But turnover has plunged at their CBD store.

Dean and Jodie said people in Sydney were spooked by events in Victoria and there was a reluctance to return to the CBD.

Their newer Bondi cafe is helping keep the business afloat.

“It’s definitely helped us get through the last six months because without Bondi we wouldn’t have made it,” Ms Foster said.

Weekends used to be busier than weekdays at Bondi, but now every day is similar.

Dean and Jodie remain optimistic, and their decision to expand into the suburbs looks like a smart move, but there’s no room for complacency.

“There’s an element of still being quite nervous about the future because of COVID,” Jodie said.

Renters move out

A woman poses for a photo.
Eliza Owen said lower costs and more space are some of the benefits of being further from the CBD.(Supplied: CoreLogic)

The trend is just as noticeable in rents for houses and units in the east coast capital cities.

While rents have been falling in many parts of the country, the further away from the CBD, the more resilient the rental values.

According to property researchers CoreLogic, COVID-19 has had a very specific impact on rental markets.

Restrictions on immigration have had a major impact on driving down inner-city rents because newcomers typically rent close to the CBD.

These areas also have a higher incidence of renters working in hospitality, tourism and the arts, where job losses have been highest.

“Potentially there is some drawcard away from the city when we see that outer suburban rental markets tend to be cheaper, they tend to be lower density and, of course, with the normalisation of remote work through the pandemic that’s meant that proximity to the CBD hasn’t been as important in housing decisions,” CoreLogic head of research Eliza Owen said.

When the pandemic ends, the question will be whether the old habit of the daily commute into big central offices will die harder than many people think.