Wholesome Cape Town CBD drives a healthy economy

By Time of article published Sep 27, 2012

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There are many factors that drive decisions about where to locate a corporate headquarters, or where to shift the focus of a commercial property portfolio. Primarily, though, the decision is driven by confidence in the future of a location.

In the story of Cape Town’s central business district (CBD), that confidence comes in the form of the R4.6 billion invested by businesses and developers over the past three years.

It’s a far cry from the late 1990s, when the CBD faced an exodus of business because of soaring crime rates, public spaces riddled with litter and illegally dumped waste, and buildings characterised by neglect. The result was plummeting commercial property values and consequently a steep drop in the municipal rate base.

In 1999, property owners and city officials came together to form the Cape Town Partnership, which was mandated to manage, develop and promote Cape Town’s CBD, reversing the decline and facilitating a more positive investment climate.

In November 2000, the Cape Town Partnership established the Central City Improvement District (CCID). This collaboration has since become an internationally acclaimed model of public-private partnership between property owners and businesses, supported by the city council.

The formation of the CCID was a significant event for Cape Town, because it was the first major local city to implement a fully constituted, legally bound improvement district covering the entire CBD.

The CCID’s mandate? To create and maintain a quality environment for people who live, work and visit the CBD. More than a decade later and with R290 million in CCID levies invested into the district, Cape Town’s CBD now stands as one of the cleanest, safest and best-governed in the country. Business owners and developers alike are bullish about our CBD as a world class city in which to invest capital.

But what shapes that economy? Partnerships and a relentless quest to build a quality urban business and leisure environment.

This month the CCID unveiled its inaugural edition of the State of Cape Town’s Central City Report 2012. The report puts the spotlight on the city’s CBD as a unique urban environment and a world class commercial centre that contributes 24.5 percent of business turnover in the larger Cape Town metro region.

The report is the result of a year-long research process to gather data that would demonstrate the CBD’s long-term economic viability, while highlighting the social, cultural and infrastructural aspects that make it a premier business destination. The concept of a CBD evokes visions of large buildings housing plush corporate offices. The central city has plenty of those, with over 32 percent of A-grade office space in Cape Town.

Smaller businesses in diverse sectors including architecture, information and communication technology and medical service professionals, and creative industries, are also significant economic producers. Within the CBD’s diverse economy are also 1 200 retailers who occupy 380 000m2 of retail space. Medical health and cosmetic services is the second-biggest sector after legal services, followed by the financial services and banking sector.

The expansion of the container terminal at the harbour edge of the CBD will double its cargo handling capacity to over 14 million units. Imports and exports include oil, vehicles, chemical products and grains, among many other products.

Each year, the central city hosts 90 percent of Cape Town’s international events and 75 percent of major local events. These events, which include business and leisure, generate a significant gross domestic product contribution in excess of R1.5bn. The central city holds 47 percent of the city’s bed space, making it an economic gateway for domestic and international visitors.

Our business survey reveals that 93 percent of businesses say they are likely to remain in the CBD, while close to 80 percent say they are happy to be based there. Most businesses (83 percent) say that the CBD is the safest in the country.

The key reason that brings the majority of people into the CBD is work (55.3 percent) followed by those who live in the CBD, a figure that shoots up from 5.6 percent during the day to 22.5 percent at night, while students and scholars make up 12.1 percent. We acknowledge that there is still work to be done as 51.8 percent of people feel that it is fairly easy to find parking in the CBD.

The full report sheds more light on all these figures but it does confirm the progress that we have made in the CBD, along with our partners. Catapulting the CBD from a no-go area to the dynamic, culturally rich urban space that it is also a world class economic hub is a success borne out of a targeted and inclusive development strategy, collaboration and a shared commitment towards development with our partners.

With over 300 000 people estimated to commute in and out of the central city each day, the effects of the CBD’s success will be felt in communities further afield than the CBD’s boundaries. The challenge, however, is to draw people in to the central city who both live and work in the area too.

While this report looks at the business and social factors driving the growth of the central city’s economy, future editions will look at the ongoing indicators of economic growth and its impact on everyone that uses the central city. These will evaluate the emerging financial district in the foreshore and the effects of the continuing investment being injected into that node.

It would be myopic to merely focus on the progress we have made and not acknowledge the challenges facing the CBD, such as chronic unemployment, geographic divisions and social underdevelopment. To achieve sustainable economic growth, we need to face these challenges head on. Subsequent editions will highlight the steps taken to address these issues, a process that will entail looking outside of the parameters of the central city for innovative and inclusive solutions.

We will continue to nurture our partnerships in the civil, private and public sectors in ensuring that the social and economic growth of the central city benefits everyone who chooses to make the CBD their chosen home, business or leisure destination.

n The results of the business and user surveys have been included in the inaugural State of Cape Town Central City Report 2012. Surveys were conducted by Sentinel Consulting.

Rob Kane is the chairman of the Central City Improvement District.

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