/ 1 April 2009

Hope for Johanna

Staff Photographer
Staff Photographer

The Johannesburg Development Agency goes where private property developers fear to tread — and then make those areas irresistible to investors, putting them at the top of the LED initiative heap, writes Phillip de Wet

In 2003 nearly half of all available office space in Newtown, in downtown Joburg, was vacant. Offices were going for R25 per square metre, if they could be filled at all. Five years and R200-million later the vacancy rate in Newtown is down to 16% — despite the development of a lot of new space — and the average rental charged has more than doubled.

That is a cold and rather heartless metric of the success of the Johannesburg Development Agency (JDA) in turning around the Newtown precinct, but then that is the type the agency uses in evaluating itself.

Visually it has helped transform Newtown into an area where large open spaces are filled with art and cunningly arranged lights create an inviting atmosphere at night. Socially it has drawn in creative communities that have made the area their base of operations. But that is merely a mechanism, not the end goal.

By spending R200-million, or half its budget over the past six years, on Newtown, the JDA wanted to prove that the area can be a vibrant place for commerce and entertainment, and an asset for the city. According to the numbers, it has more than succeeded.

So what?
The JDA is not technically involved in economic development or stimulus; it is a regeneration agency tasked with fixing underperforming areas of the city; areas that have either rapidly declined or have just never met their potential.

“We target catalytic investment projects,” says JDA chief executive Lael Bethlehem. “We build facilities or we upgrade infrastructure so that we can draw in other investors.”

While the JDA spends a lot of money on what can be spectacular projects, like the Mary Fitzgerald Square in Newtown, much its work is more prosaic — like replacing ageing and crumbling pavements in the inner city.

In Braamfontein, an area it counts as a particular success, the agency focused on streetlights and trees while the big private-sector corporations headquartered in the area built buildings and overhauled facades. On paper, Bethlehem says, that kind of work has a distinctly “so what” element to it, but that doesn’t make it any less important, because that is the starting point for all else.

“We come in and take ownership of the public spaces and regenerate those. We look after the basic services that are required from the city, and the moment we do it is amazing how quickly the private sector reacts. The city needs to show the leadership by fixing the infrastructure first, and then doing things that are inspiring, things that can change people’s minds about these spaces and shift static perceptions.”

A good example is public art installations, which also provide a convenient window on to some of the philosophical issues the agency struggles with. Public art, Bethlehem says, is one way to make people relook at an area they have mentally tagged as degenerate or unsafe, or just poor and dirty. It is also a useful way to show private developers that the city intends to beautify an area, which in turn can spur investment.

From a purely practical point of view the JDA loves large concrete sculptures, or embedded mosaic work. Such works are relatively easy to install and easy to maintain. But from a development point of view it would be best to have a large number of small pieces commissioned from individual emerging artists or cooperatives, to both spread the money and give such artists exposure and recognition. The large concrete works often win out.

One block at a time
The JDA and other urban redevelopment projects are examples of what could be termed very local economic development initiatives. Instead of focusing on a district or a community it works with a couple of city blocks at a time. Its methods, however, carry lessons that are just as applicable in rural areas.

For one, it spends a lot of time and energy on research, to ensure that it spends its small stash of catalytic cash wisely. It goes to great pains to identify unique characteristics of an area, what could be termed the unique value proposition, and exploiting that. It does not get involved in projects better left to the private sector, but merely ensures that the basic infrastructure exists, and then inspires private money to come in and do the rest.

“Where there has been a failure by the market we need to get the property market into a sustainable cycle. There are no easy victories in the inner city, there really aren’t, but some are at the tipping point for that sustainable cycle. In Braamfontein vacancies are now below 10%, so there is a need for new stock. That is an incentive to redevelop old buildings. In Newtown you almost can’t find a derelict building anymore. Across the inner city we are seeing even derelict building prices are creeping up as the stock decreases.”

Though the low-hanging fruit may have been picked, Bethlehem still sees massive demand for residential conversions of old commercial buildings in the inner city, for starters, and the developers are lining up. “In the lower-end residential space it will take more than a recession to slow the demand and the B and C grade office space, for that there is still huge demand,” she says.

What the JDA is more worried about are policy issues around housing and the rights of tenants. Cleaning out slum and hijacked buildings can be a slow and painful process, with a legal requirement to attempt to find housing for those displaced by a ­redevelopment.

It can start with a single building that is abandoned by an owner or hijacked. It takes just one slum to form what the JDA calls a sinkhole, a negative property cycle that can slowly draw down an entire neighbourhood. Neighbouring building owners start skimping on upkeep because their investment is declining and suddenly impossible to sell. When the equity in neighbouring building turns negative it gets abandoned in turn. Without structured intervention the rot can, in theory, just continue spreading, claiming a building every couple of years.

“There are plenty more areas that need work. On the periphery of the city centre there is a lot of potential that hasn’t been met, and our challenge is to get there before the economic growth of the city requires those spaces to be put back into maximum effective use.”

But that, says Bethlehem, was Jo’burg’s past. The future looks a lot like Newtown and ­Braamfontein.