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  • Welcome to the heart of London.

  • Traditionally crowded with tourists, co-workers grabbing a pint at the pub,

  • students running to class, day-trippers heading to the West End, you name it.

  • But that picture of London has changed beyond recognition.

  • Now the streets are mostly empty, and the usual buzz is gone.

  • So, is this what the future looks like for big cities?

  • The Covid-19 pandemic has upended the rhythm of big cities and some of its consequences may be here to stay.

  • The rise of working from home is one example.

  • There is an increasing trend towards working from home,

  • I think our research is telling us historically it's been roughly one

  • to one and half days a week on average and we predict that will increase

  • roughly to around about two and half days per week into the future.

  • Not every industry offers the chance to work remotely, but those who have this option

  • are getting used to the benefits of not having to commute every day.

  • At least 16% of American employees want to work from home at least two days per week after the pandemic.

  • And in the U.K., 39% of the workforce said they want to continue working from home some of the time,

  • while nearly one in five don't want to return to the office at all.

  • This will inevitably bring changes to business districts filled with big blocks of offices.

  • Most of us will be spending less time here, and this means that there's probably no need

  • for as many restaurants and shops nearby.

  • How do you think big cities might change as a result of the pandemic?

  • I think it's right to expect some conversion of commercial into residential,

  • so to the extent that we see a drop-off in demand for commercial real estate,

  • I think we're going to see more robust demand for residential real estate.

  • Some industry experts agree that there will be less demand for retail spaces going forward.

  • In fact, more than 20,000 U.K stores may have closed in 2020, a far greater number than in previous years.

  • Once it's safe to be together again, we have seen a long-term trend in urban spaces,

  • from commercial spaces that sell goods to commercial spaces that sell experiences,

  • so the coffee shop replaces the toy store. That's, of course, likely to continue.

  • So, in a post-pandemic world, these shops might be transformed into spas, coffee shops, or even a Pilates studio.

  • It's not just about having fewer people in business districts. The pivot to online shopping,

  • another consequence of the pandemic, is also contributing to a different downtown.

  • If you look at previous pandemics, everyone afterwards went back to shops and restaurants.

  • But what pandemics and other shocks have done is accelerate changes that were previously underway,

  • and one of those is, of course, the shift to shopping online.

  • But will the demand to keep working from home, at least some of the time, lead to fewer offices too?

  • Over 90% of respondents in a U.K. survey said they expect

  • firms to scale back their office footprint over the next two years,

  • with around one in three forecasting a reduction of between 5% and 10%.

  • However, many employees, especially those with smaller homes,

  • or roles requiring them to interact with colleagues and clients,

  • are still keen to return to a space where they can socialize,

  • meaning that although firms might reduce their total office space, they will still need a physical presence.

  • The age of face-to-face contact is not over by any stretch of the imagination.

  • We also find it a great deal more fun to be together than we do alone.

  • So I believe very much that the office is not dead, although it will evolve, for sure,

  • but while the office is not dead it is surely more mobile than it has been in the past.

  • So it is surely, you know, easier to imagine picking up your start-up and moving it

  • away from Silicon Valley to Austin, Texas because you know that you can connect with

  • your former collaborators via Zoom, because you know you can connect with venture capitalists via Zoom.

  • And so this mobility means that all cities are in some sense at risk.

  • Some cities, especially those with abundant outdoor spaces, might gain from the shift towards working from home

  • and attract new businesses and citizens. Whereas other big urban areas,

  • where food and housing have traditionally been pricier, might become less attractive.

  • London's population is actually expected to decline this year for the first time in the 21st century,

  • as people look for bigger houses beyond the city limits,

  • migrants leave the capital, and fewer choose to relocate there.

  • In the United States, more than half of the 100 largest metropolitan areas

  • are seeing increased interest for housing in their suburbs, too.

  • There's also going to be a group of people for whom they don't move out,

  • but they do work from home, and they facilitate that by extending their current residences,

  • or building offices in the garden or whatever it might be.

  • I would expect that, you know, scrappy start-ups will continue to be attracted to dense urban areas.

  • Which means that the cities will look a little bit more like they did in the 70s.

  • They will be younger, they will be scruffier, they'll be a little bit more rough around the edges,

  • but there's still plenty to love about that as well.

  • Many surveys suggest that young professionals are the keenest to return to the office,

  • even if they don't want to lose the flexibility of working from home either.

  • These early career professionals often live in smaller places, with others,

  • and they value the opportunity of learning from their co-workers as they try to climb the corporate ladder.

  • So will the pandemic spell the end for big cities?

  • The way that cities operate and function will, I think, change and that will present challenges,

  • but I think there is this idea that the pandemic will spell the end of cities.

  • I think, however, that is overdone, that is probably going to prove to be wrong.

  • Cities have a way of enduring and adapting if you look through history,

  • and there's greater economic benefits of connectivity and closeness.

  • Hi everyone, thank you so much for watching.

  • The pandemic has been changing the big cities, but how has it changed yours?

  • Let us know in the comments section, and I will see you soon.

Welcome to the heart of London.

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B1 pandemic office home commercial working demand

Is this the end of the big city? | CNBC Reports

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    Summer posted on 2021/03/04
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