Economic performance is integral to understanding the wellbeing of a neighbourhood, but the way we measure it needs to change. Here, we look at the way modern life is reshaping our economies, and how our data can keep up.
Economic prosperity is one of the central pillars in defining a great neighbourhood; providing opportunities for meaningful work, local investment and social connection. Access to local establishments and central hubs is critical to ensuring community engagement, with economically resilient neighbourhoods nurturing happier and healthier residents.
Economic prosperity is one of the three dimensions of Neighbourlytics’ Social Prosperity Standard, which we have explored in previous blog posts.
Neighbourhood economies are changing
You don’t have to look very far to see that local economies are changing. If you’ve visited your local high street lately, you’ve probably noticed some differences. Milk bars replaced with cafes, increasing vacancies and temporary pop-ups, or perhaps a rising dominance of chain stores over independent retail. This isn’t just a trend in online vs bricks and mortar outlets, we’re seeing a widespread shift from permanence towards transience. People are less settled, with a tendency to move around and have multiple jobs (often at the same time).
In light of these dramatic lifestyle changes, it’s time to change the way we measure the economic performance of our neighbourhoods too.
Measuring the new economy
Local economies are ecosystems and we need to measure them as such, rather than looking for correlations between their isolated parts. For example, successful main streets and town centres tend to be linked to public space activity, and local jobs have been shown to be connected with education. For neighbourhoods to foster innovation, it’s particularly important that there are links between jobs and other networking assets; such as bars and dining, cafes and parks.
We need to question whether determining retail requirements in terms of square meters floor area is still a logical measure, when the behaviours of different communities can vary so vastly, combined with the increase in online shopping and on-demand deliveries. Similarly, we should consider whether relying on spending and credit card data to determine neighbourhood success is still the most useful system, when the experience economy means people are drawn to areas for their communal spaces, free activities and socialising, as well as retail establishments.
To make things more complex, local economies are no longer as simple as identifying land-use. Here are three trends impacting local economic development in local neighbourhoods:
This model shifts the emphasis away from a straight-forward delivery of products and services to the delivery of memorable experience. As such, residents and visitors will assess areas based on something such as the atmosphere, rather than simply the product provided.
The increasing popularity of part-time, freelance and casual work means that occupations are far more fluid than in previous economy models. Working spaces have become more variant, with people working from home or communal office spaces, and resident’s livelihoods are built from a number of sources rather than a singular one.
The side hustle
Increased costs of living have driven people to seek alternative sources of income alongside a permanent job. Similar to the gig economy, this means working lives have become more variable, and multiple avenues of income need to be monitored for an accurate picture of the overall economy.
At Neighbourlytics, we can take all aspects of the working economy into account, not simply the spaces immediately visible. For example, our analysis of Greenfield developments around Australia showed a very high density of home-based businesses, all operating from what would otherwise appear as a standard residential neighbourhood. These are side hustles, local gigs as well as people performing full time (but flexible) work. Residential areas are increasingly becoming places of businesses, and our planning approaches haven’t caught up yet.
So how can we measure it?
Digital data provides an invaluable means of tracking this new, complex economy model. Here at Neighbourlytics, we can measure the entire economy ecosystem using the three main categories of Opportunity, Diversity and Engagement - offering a more accurate reflection of a neighbourhood’s economy than that provided by traditional methods.
How much opportunity is there in certain areas? This considers the full extent of assets in a neighbourhood that relate to the local economy. Each establishment provides an opportunity for residents to have social engagement and interaction, and a high engagement rate equates to happier residents.
How diverse is the offering? What’s the ratio of independent retail to chain stores? Do all the shops have the same opening hours? The more diversity in an area, the higher its value.
How engaged are people with the local economy? How long do they spend in local business and retail stores, and what do they engage with? We consider how users of the neighbourhood interact with and react to an area and the outlets within it, measured through their online engagement.