Restoring the core? Central city decline and transformation in the South

Highlights

• South Africa’s four major city centres have experienced tumultuous changes over the last 25 years.

• Their recent recovery is fragile, partial and dwarfed by new investment in outlying centres.

• Pioneering developers have converted redundant buildings into decent affordable rental housing.

• Public sector policies and practices have been disjointed and uneven in their effectiveness.

Abstract

Central cities are vibrant and productive places because of the dense concentration of people, firms and supporting facilities. Yet their dynamism can be undermined by congestion, social tensions and poor urban management. South Africa’s four major city centres experienced tumultuous changes during the transition from apartheid and the exodus of many property owners, investors and occupiers to the suburbs. Buildings decayed, infrastructure collapsed, public health and safety deteriorated, and governance was disrupted by unauthorised activities. Despite the general neglect, signs of recovery have emerged and gathered momentum in recent years. The revival is fragile, partial and patchy in most cases, and dwarfed by scale of new investment in outlying economic nodes. The paper uses a resilience framework to examine how enterprising organisations have spurred regeneration by identifying opportunities for the adaptive reuse of redundant buildings and public spaces for affordable housing and social amenities. It also compares the extent, character and causes of the rebound across the four cities, demonstrating elements of continuity (bounce-back resilience) and transformation (bounce-forward resilience) in each case. Cape Town is characterised more by continuity and Johannesburg more by decline and transformation, with Pretoria and Durban in between. City centre recovery is attributed to a combination of pioneering private and public sector actions, albeit disjointed and uneven in their effectiveness. The paper concludes that central cities are relatively open incubators of economic and social progress, but also cauldrons of competing interests which create many dilemmas for decision-makers to negotiate, and which require coordinated attention and determination to realise their potential.

Introduction

Central cities are special places within metropolitan regions that make a unique contribution to prosperity and cultural life. The dense clustering of diverse economic functions generates an array of valuable products and services as a result of intense human interaction, mutual learning and knowledge creation (Glaeser, 2011; Katz & Nowak, 2017; Storper, 2013). Many city centres also house research-intensive universities and government offices, along with historic buildings, galleries and museums which confer symbolic value and stoke the public imagination. Assorted restaurants, shops, hotels, bars, night clubs and other amenities enhance their vibrancy and popular appeal. They are relatively open and highly connected places, regionally, nationally and globally, because of scale economies in shared infrastructure, transport, telecommunications and specialised business, financial and consumer services. Many downtown precincts are surrounded by dense residential districts comprising tall apartment blocks. This compact urban form is an efficient spatial arrangement that promotes productivity through agglomeration economies and fosters environmental sustainability (OECD, 2012; Venables, 2015). It attracts mobile investment, youthful talent and tourism, and creates a powerful ecosystem that spurs growth, raises incomes and generates wealth and jobs. Contemporary global shifts appear to amplify these tendencies towards concentration by enlarging the contribution of knowledge, technology and innovation to economic progress (Scott, 2012; Storper, 2013). This “new geography of centrality” (Sassen, 2016) has contributed to the revitalisation of many central cities that were showing signs of malaise (Fuller & Romer, 2015; Serwicka & Swinney, 2016).

Yet these positive outcomes are far from inevitable because countervailing forces deter certain activities and population groups from central cities. Competition for well-located land and speculation inflate the price of commercial, retail and residential real estate. Private developers exploit the strong demand by constructing premium buildings and raising rentals. The prospect of asset appreciation has prompted investors in some cities to acquire properties as a store of value, even if they’re never actually occupied (Sassen, 2016; Williams, 2019). Unaffordable property and gentrification displace lower income households and routine activities that have less need or ability to pay for a central location (Florida, 2017; Ahlfedlt & Pietrostefani, 2018). This exclusionary process distributes different groups across space according to their economic power, resulting in social segregation and worse access to opportunities for the less-skilled. There are additional drawbacks of concentration (‘negative externalities’), including congestion, pollution, social tensions and safety hazards in crowded public spaces arising from crime and security risks. These may encourage firms to decentralise towards secondary centres in the suburbs and beyond, where circulation is easier, there is more space for expansion, and greater control over the surroundings. Many property developers favour greenfield projects anyway, because they tend to be more straightforward technically, encounter less social resistance and enable greater uplift in land values. A more dispersed, polycentric urban form may emerge over time, to the point where outlying nodes threaten the dominance of the central city and it begins to decay and decline, relatively and absolutely. Many central districts dominated by old building stock have suffered from the redirection of private investment flows towards new buildings in modern settings elsewhere. This is wasteful if costly physical assets and social infrastructure in the centre are under-utilised or abandoned and have to be reconstructed in the new locations.

Public policy is often vital to mediate the paradoxes of central cities and nurture their advantages. Government efforts are also important to ensure that a share of the enormous value created is captured for the broader public. Various actions may be necessary to prevent degeneration through physical obsolescence, deteriorating infrastructure and general stress on the environment. First, credible spatial planning frameworks and responsive regulations are needed to coordinate different uses of the land and manage building densities in the interests of functional efficiency. Common rules and technical standards reduce uncertainty for developers and give them confidence that the places in which they (re)invest will thrive because of the appropriate mixture of activities. Second, organising the maintenance and periodic renewal of basic public goods and services - energy, water, sanitation, etc. - is important to safeguard these functions without bottlenecks and breakdowns. Third, an efficient, integrated transport system is vital to ensure mobility, prevent gridlock, help firms to reach their customers, and enable workers to access central jobs from the wider region. Fourth, everyday management of the public realm ensures security, clean streets, walkability and other ‘hygiene’ factors that create a people-friendly environment that is open to all and enables diverse groups to mix and mingle. This exerts a positive influence on where people choose to work and relax, and where businesses choose to locate. Finally, a more direct public sector role in acquiring and assembling land, expropriating dilapidated buildings, initiating strategic renewal projects and mitigating financial risks facing the conversion and redevelopment of redundant buildings may be required where the private sector is holding back and reluctant to get involved because there are simpler, more lucrative opportunities elsewhere.

A fundamental question for urban policy in democratic societies is what to do about the exclusionary effects of the relentless rise in property prices resulting from successful growth and prosperity (Florida, 2017; Sassen, 2016; Wainwright, 2016)? Central cities are crucial generators of income and repositories of wealth, but also places of special significance for society given their position at the heart of regional networks and flows of information and resources. Marginalising ordinary working families at long distances from central workplaces can reinforce inequality and compound barriers to social mobility. A more inclusive approach to governing central places is to promote physical integration through greater land-use diversity, mixed-income neighbourhoods and well-located affordable housing. Can this integration of different groups and functions be pursued in a way that enriches the combination of activities in these places and spurs further investment and all-round development? Going against the grain of real estate markets and challenging economic interests may threaten property values and require astute political leadership and institutional capabilities to negotiate and deliver mutually-beneficial outcomes.

South Africa is an intriguing case because of the social and political imperative to integrate the segregated, sprawling structure of cities, given the history of racial discrimination and regimented land-use zoning. Under apartheid, the central cities had robust economies reserved for ‘white’ businesses, shopping and entertainment. Reasonably dense residential districts were constructed nearby for upper- and middle-income white households, such as Hillbrow (Johannesburg), Sunnyside (Pretoria), Sea Point (Cape Town) and Albert Park (Durban). Much larger black communities were dispossessed and evicted from other well-located neighbourhoods, such as Sophiatown (Johannesburg), Lady Selborne (Pretoria), District Six (Cape Town) and Cato Manor (Durban), and displaced to dormitory townships on the periphery. Working class people with jobs experienced long and arduous journeys to work on unreliable public transport. The affluent urban cores enjoyed reliable public services delivered by well-resourced municipalities, compared with the cash-strapped authorities responsible for the townships. Urban policy promoted elite prosperity, while the fragmented local government system reinforced social divisions and territorial separation (Harrison, Todes, & Watson, 2008). Black communities were effectively locked out of the benefits of job-rich locations and inner urban neighbourhoods with good schools, quality services and potent social networks.

The breakdown of the apartheid regime and the hiatus within government institutions during the 1980s and 1990s set in motion a sequence of unexpected and quite sudden events that had widespread and tumultuous consequences (Tomlinson et al., 2003). Many blacks moved into the central cities to seek access to jobs and other opportunities, reflecting growing defiance against influx controls and other hostile laws. There was something very positive about people claiming strategic spaces from which they were previously excluded. Yet, the proliferation of street hawkers, minibus taxis and hustlers of various kinds altered the character of these areas and shifted the perceptions of white businesses and residents, prompting a dramatic exodus to the suburbs (Bremner, 2000; Winkler, 2013; Rogerson & Rogerson, 2014). The disruption to municipal services and flouting of bylaws during the transition to a new local government system was another catalyst that eroded their attachment to the place (Bethlehem, 2013). Weak public institutions failed to recognise and capitalise on the opportunity created by tens of thousands of black households wanting to live and work in the CBDs, and instead contributed to the cycle of disinvestment and disorder. Many properties were simply abandoned as occupiers, owners and investors fled to decentralised nodes and security estates in the suburbs (Goga, 2003). These satellite centres depended on private road-based transport and their public spaces were closely controlled, giving them a more exclusive character and safer feel. They also required duplicate public infrastructure and they tended to extend and amplify the sprawling urban structure. Some of the vacant buildings left behind were invaded by squatters or hijacked by ‘slumlords’ (Tomlinson et al., 2003). The failure to pay public service charges caused the water and electricity supply to the buildings to be turned off, which created serious internal public health hazards that were aggravated by overcrowding and maintenance neglect.

The extent and timing of the disarray and disinvestment varied from city to city. Within a decade or so there were signs of renewal emerging, albeit tenuous and uneven. In many cases this reflected the spontaneous actions of low income households and small businesses taking advantage of the cheap space and establishing a more stable existence for themselves. In addition, enterprising developers recognised the pent-up demand for people to live closer to jobs and services, and identified opportunities to refurbish and convert run-down buildings into affordable housing, retailing, leisure or other uses. These facilities were often aimed at uncustomary markets and novel social groups, such as low paid workers, students, freelancers and young black professionals. Some remaining property owners began to tackle neighbourhood degradation by organising street cleaning, security services and landscaping in their precincts. The new metropolitan municipalities took initiatives to address the malaise, sometimes in partnership with property owners or organisations representing street traders and taxi owners. They tried to regain control of problematic buildings, create local improvement districts, upgrade the public realm and manage disorderly activities on the streets and pavements. National government created a financial incentive for central city property (re)development. These initiatives began to stimulate some visible improvements, renewed energy and investor interest in unexpected places. Over the last decade or so, this has gathered momentum to the extent that newspapers, magazines and books now refer to the revival and reinvigoration of areas once blighted by disinvestment, insecurity and squalor (e.g. Amato, 2018; Anderson, 2018a; Greve, 2014; Mahlaka, 2019; Steynberg, 2015; Tshandu, 2015).

The purpose of this monograph is to address three fundamental questions arising from this experience, which has been subject to surprisingly little systematic or comparative research. First, what is the extent of central city recovery and rehabilitation, both in relation to their previous position and compared with the growth of decentralised economic nodes. Prior accounts and popular commentaries have focused on the immediate situation within the CBDs and neglected to put the changes underway into a broader city-regional perspective. Yet the commercial success of the outlying nodes is not irrelevant and can’t be ignored. It is intimately linked to some of the outstanding challenges facing the city centres, and is responsible for further reinforcing uneven and divergent development within South African cities.

Second, what is the character and form of inner city revitalisation? To what extent has it been a simple turnaround in private investment and a restoration of previous conditions, or a secular shift towards a new, more accommodating urban trajectory offering a wider range of livelihoods and more inclusive lifestyles? This might include small flats in dense, multi-purpose precincts where different population groups can learn to live, work and socialise together, rather than traditional detached homes in segregated residential suburbs, security estates and sprawling townships?

Third, what has driven the apparent improvement in central city conditions? Has it been a spontaneous upswing in the property market following the earlier collapse in real estate prices and the disposal of surplus office stock (a ‘market-led’ process), or a more complicated reorientation shaped and supported by public sector actions, and framed by a broader social purpose (‘state-led’)?

The answers to these questions are important for the wider national quest to transcend deep-seated divisions and distortions in different domains of society by identifying more effective and enduring relationships between the state, private sector and civil society. Widespread unemployment and poverty make it crucial to shift the economy onto a faster and more inclusive growth trajectory, yet public-private sector relationships are often characterised by suspicion and mistrust. There are lessons emerging from the inner cities about the pursuit of common agendas and shared spaces to help counter pervasive tendencies towards social, physical and institutional separation. The analysis focuses on the four largest and by far the most important city centres in the country: Johannesburg, Cape Town, Pretoria and Durban.

The monograph uses the lens of resilience to frame these questions because it offers a new and useful way of thinking about urban decline and rejuvenation in a more unstable and uncertain world. The notion of resilience is intended to shed light on the extent and ways in which an entity or system is able to withstand and recover positively from a major disruption to its normal functioning or position (Martin, 2018). In particular, there is a helpful distinction between ‘engineering’ resilience (bounce-back) and ‘adaptive’ resilience (bounce-forward) (Davoudi, 2012; Martin, 2012; Pendall, Foster, & Cowell, 2010; Simmie & Martin, 2010). The revival of central cities from an engineering resilience standpoint would amount to a simple rebound or recovery following the shock of disinvestment and corporate flight. There would be new property investment to reinstate or replace derelict and decayed physical structures. These would accommodate established businesses and middle income households. However, there would be little progress in linking these opportunities to emerging enterprises and communities in greater need, thereby posing risks of replicating historic disparities and prolonging past injustices.

In contrast, an adaptive resilience perspective would imply city centres adjusting positively to the post-apartheid context and evolving into something more diverse economically and more uplifting socially. A process of reinvention and reconstruction might involve new and original forms of urban development that create more compact physical outcomes and benefit a broader spectrum of society, such as reconditioning old buildings for mixed-income housing and enabling informal livelihoods in public spaces. The notions of evolution and adaptation are consistent with the need to keep pace with ongoing changes in the wider society and environment, associated with urbanisation pressures or new climate hazards, for example. Higher density central city living could become increasingly important over time in comparison with suburban lifestyles because of road congestion, rising petrol prices and stressed budgets facing households and public infrastructure providers. Central cities occupied by youthful populations from diverse backgrounds and cultures could be emerging as incubators of more integrated communities and harbingers of a more tolerant and trustful society in the future.

Property developers constitute an important focus of the analysis as crucial agents of the urban system that create structures to accommodate and shape other activities. To what extent are they locked into conventional real estate practices, or have they embraced the new social order and taken risks with fresh approaches that allow for the adaptive reuse of resources and that promote novel social and economic outcomes? A distinction emerges in the analysis between larger property companies, many of which are part of major financial institutions or listed on the stock exchange, and smaller/medium-sized niche players. The former tend to follow a cautious, somewhat formulaic approach because of the imperative to achieve a minimum return on their investment in order to pay regular dividends to their shareholders. The latter seem willing and able to initiate more unusual and original projects because they can take a longer-term view, have greater discretion about what schemes to undertake and often possess intimate local knowledge of particular city centres enabling them to make better-informed judgements about their latent potential.

The other focus is on the role of municipalities as shapers and enablers of change in the way they regulate the built environment, deliver core services and intervene more directly in the property market. Have municipalities operated in traditional reactive, siloed and bureaucratic ways in an effort to impose order and control on the shifting character of the central cities, or have they been able to respond in more flexible and engaged ways to enable these places to be remade and refashioned in the light of the altered circumstances? In particular, have they had the vision, ambition, resources and capabilities to facilitate the reconstruction of CBDs into more inclusive and yet still productive places?

Of course, developers and municipalities do not act in isolation and their ultimate success is dependent on each other. Favourable outcomes also depend on the firms and households that occupy these spaces, the organisations that provide much of the funding for property investment, and the various tasks performed by national and provincial governments. The manner in which each of these actors and institutions subjectively perceive or represent the city centres can further influence the social and economic changes that take place. At a simple level, do these agents have confidence in the future of central cities as reasonably stable and settled places to invest and to conduct their activities? Beyond this, are CBDs envisioned as inclusive places for ordinary citizens to get ahead as well as safe havens for investors; as spaces for people to learn to live together as well as for working and production; as formal destinations offering secure lifestyles for the few or more open and accessible opportunities for the many? Reimagining and rebranding are important to distinguish how these established locations are repositioned in relation to their earlier identities and meanings.

The monograph draws on an extended period of personal observation of the four central cities, supplemented by several more specific sources of information and mixed methods of analysis. Extended interviews were undertaken with a group of 33 developers, municipal officials and other stakeholders from the four cities (listed in Appendix 1). This was supplemented by careful scrutiny of reports in the media and business press. Consistent property market data was also used to compare the investment performance of the centres over the last two decades. The paper’s original contribution is to provide a detailed and nuanced assessment of the extent and character of the changes that have occurred across the four central cities and to interpret their shifting fortunes through a resilience framework, focusing on the roles played by two influential groups of agents in the urban landscape - property developers and municipalities.