Lendlease Annual Report 2022

20 Lendlease Annual Report 2022 The power of the city The benefits of urban life, disrupted by COVID, are being restored. Human interaction drives communities, culture and commerce. In last year's Annual Report, we highlighted the importance of cities. The past year has only reaffirmed our conviction. The value to society of ‘in person’ interaction underpins the dominant role that cities play in the global economy. This should come as no surprise given the thousands of years of evolution that rewarded human connection and collaboration. The pre-eminence of cities has not been undermined by successive waves of technology. In fact, technological change has enhanced knowledge that is best dispersed through close and personal interaction. History is marked with significant periodic plagues and pandemics, of which COVID is the most recent. Despite these and other challenges, including natural disasters and economic cycles, cities continue to rebound. Benefits of agglomeration The benefits of agglomeration remain as compelling today as they have ever been. The extensive social infrastructure and amenity that cities offer make them people magnets. Population density provides the scale to support the best educational institutions and healthcare facilities as well as cultural attractions and mass transit. The strong desire for social interaction and experience spurs vibrancy across the retail, tourism and hospitality sectors. Our gateway cities strategy is founded on the premise that the most desirable cities will continue to be the driving force of economic, social and cultural life. Resilient cities adapt COVID, declared a pandemic in early March 2020, has been the greatest global threat this century. The ensuing lockdowns and isolation threw the primary purpose of cities, that is interaction and collaboration, into disarray. This had significant ramifications for the way societies live, work and play. Nearly three years since the onset of the pandemic, cities are springing back to life. There is mounting evidence of a return to normality, or what may be described as the new normal, given an acceleration in some societal trends that were already well underway. How we live: Central city residential markets witnessed the fastest recovery of all sectors in terms of occupancy and rents. Approximately one per cent of residential properties are vacant across New York City, a record low. There are similar trends in inner parts of London with asking rents up 25 per cent from their low point. Inner city vacancy rates across the East Coast cities of Australia are at or below pre-COVID levels. How we play: The rebound in leisure and hospitality has been strong. Visitations across retail centres in our global gateway cities are trending towards 2019 levels and restaurant reservations are approximately 10 per cent above pre-COVID levels. Cultural and sporting events have returned with theatres playing to full houses and major sports taking place in front of capacity crowds. The recovery underway in international tourism is expected to further benefit gateway cities. How we work: The return to office lags most other aspects of global cities’ recovery from COVID. While mobility data is much improved, it remains markedly lower than prior to the pandemic. CBD workplace attendance is 10-30 per cent below pre-COVID levels across our gateway cities. We expect a gradual recovery to continue. For insight into shaping workplaces of the future, refer to page 25. 88% of the population in high income countries is expected to be residing in urban areas by 2050 1 . 1. Executive Outlook on Cities and Strategy 2030: Mykhnenko et al, University of Oxford, 2021. Top: Sydney: Artist's impression, Victoria Cross over station development. Opposite: Boston: Clippership Wharf.