PIA SA Blog - Economic Development Considering Synergy Analysis and Tr

1st Dec 16

Australia, especially South Australia, is undergoing substantial structural change. It is important the state’s economic base be broadened and our population’s health and wellbeing enhanced for increased productivity and community cohesion.

Planners have a key role to play is the transformation process by being visionary. No one can predict the future but one can predict futures through the skill of scenario planning. This involves outcome directed strategic thinking, seeking to include in a strategy what is required to realise a preferred future.

In doing this we need to consider and promote the importance of:

  • Carrying out a Synergy analysis when planning new communities and renewing old neighbourhoods for a preferred future of economic development by drawing on and enhancing existing resources.
  • Recognising the value of Transport as a fundamental conduit for economic development in districts and neighbourhoods.

What is Synergy analysis? (1+1=4)

Synergy analysis has its origins in mergers and acquisitions. Here the concept of synergy is that the value and performance of two companies combined will be greater than the sum of the separate individual parts. The potential of synergy is examined during the merger and acquisition process. If the merger can create greater efficiencies or scale, then the result is referred to as a synergy merger.

Synergy analysis can be applied to neighbourhood development.  Developments that attract and retain users, tenants and residents over the long term do so by utilising the benefit of synergies in commercial, community, and residential uses.

Planning for a major site begins with determining what market support exists for alternative uses. However, market analysis provides only guidance about demand for certain types of land use.

Synergy is generated where an individual, company or organisation is voluntarily or in-voluntarily part of a group that uses network behaviour to create economic and social (community) benefits to the parties involved.

Synergy refers to a situation where the effect of two or more co-operating or combined bodies or functions is larger than the sum of each body or function. The concept of networks is strongly linked to the notion of synergy, however recognition of synergy raises the performance of a network through efficient and effective interaction.

As an example, educational facilities represent powerful anchors in the neighbourhood for the creation of an education oriented development. The co-location of these facilities provides synergies that will enhance the convenience and operational efficiencies of each, while deepening the educational and civic brand that is established in the neighbourhood.  Good examples of this are found in the many university towns in the US, such as Berkley in California.  An opportunity could exist in Adelaide on the existing RAH site once the new hospital is up and running.

Applying synergy analysis can attract significant investment, as the development options subsequently identified can sustain the land use over the long term.


Transport – a fundamental conduit for successful economic development

Australians place extreme importance on their home, neighbourhood and surrounding amenities. However, the valuing of one's home declines with the lack of amenity and available services close to the home such as reliable and frequent public transport.  One only needs to peruse the real estate advertisements to see the value placed on properties within close proximity to schools, transport and other community facilities.

Australians have historically been private car dependent when travelling to work, schools, shopping and recreational facilities.  More recently though, people have come to embrace the availability of good quality public transport, particularly train and tram, with increased use.  The tram extension in the Adelaide CBD and the redevelopment of Adelaide Oval and the footbridge are both good examples of this resurgence in the popularity of using public transport.

Tram service extended through the heart of Adelaide.

From an overall perspective, the availability of reliable and frequent public transport has enormous community benefits in economic, social and environmental terms and adds considerable monetary value to co-located residential, commercial and community uses. It also reduces the need to use private cars and is accessible to those who don’t drive, such as low income earners, teenagers and the frail and elderly.

Transport has the greatest impact on individuals’ opportunities and quality of life through the connection between home, work and the third place. Lengthy commuting time separates families and consumes time in non-productive travel.

The future trend will be for investors to favour developments that are infill projects near public transport corridors. They should be high-quality fine grain and walkable with a distinct focus on available work opportunities, retail and entertainment facilities for the residents. The developments should have pedestrian scale with streets offering pedestrian conductivity and an interesting street walking experience. They should also have activity to support the mixed-use and create variety for the residents and their transport options. Housing types will be smaller, adopt sustainability principles and connect with public transport.

Developed and written by the Economic Development Committee of South Australia in co-ordination with the PIA SA Division Committee.

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