Is Sydney's future in the finance sector?

August 19, 2010 8:05 AM

Is Sydney's future in finance? If so, will there be a significant demand for more skyscrapers/offices with large floorplates than are already available or being built, to meet the needs of this growing sector?

One of the defenses put forward for the current plans to develop Barangaroo (background: 1, 2, 3, 4, 5) is that once the resources boom expires, the finance sector will be the driver of Sydney's (Australia's?) future prosperity, and that this necessitates the development of more large scale office stock. How true is this, or can you point me to any information that would help a layperson assess whether this claim is justified?

I've mentioned Barangaroo to give the question context, but it would be helpful if answers were restricted to that one point -- Sydney's future finance sector growth and office needs -- and sidestepped the Barangaroo controversy generally, as well as debate over whether it is government's role to influence/induce/incentivize/partake in developing that office stock if there is demand for it. (Thanks!)

posted by carnival of animals to Work & Money (2 answers total)

Before the resource boom Sydney was seen as a cul-de-sac in the banking world. Why would that change now? If anything I would be terrified of what happens once the boom ends. It is still a relatively small country that is quite isolated. The bulk of the banking industry is tied to resource extraction as well. The one small bright spot is fund management because of the superannuation schemes - but in reality that can only be so big. In the US the actual amount of space buy-side firms take up relative to sell-side firms is much much smaller.

Hasn't there been a big boom in commercial construction already?
posted by JPD at 8:35 AM on August 19, 2010

In 2006, the City of Sydney's survey identified floor space use by industry as follows:

* Nearly 63% of total employment within the CBD and Ultimo-Pyrmont is located within business establishments in the Finance, Business Services and Government, Administration and Defence industries
* The Communication Services industry experienced the greatest increase in business establishments, with a 46.3% increase.
* Within the CBD and Ultimo-Pyrmont, Business Services account for the greatest number of employees, the largest area of internal floor space and the greatest number of business establishments.

So yes, three levels of Government are likely looking to finance to grow and are planning more buildings for it to go into, but finance isn't the only consumer of office floor space in conditions of economic growth: telcos use heaps of it too.
As to whether this resources led economic growth is going to continue in the long term—as you say, outside the boundaries of your question.
posted by Fiasco da Gama at 2:26 PM on August 19, 2010