An inner city renaissance

  • The post-COVID-19 world will see an increase in distance-working.
  • But not everyone can or wants to work from home. Offices will remain but there will be less demand for them.
  • Surplus CBD office space can be converted to residential use, with multiple benefits

It always feels silly to intentionally position yourself in the middle of consensus. If the consensus is right, you are not adding any value; if it is wrong, you end up feeling that you didn’t do your research properly and chose the easy option. Yet sometimes consensus can lead you to further thoughts.

One current consensus is that in the post-COVID-19 world, there will be a greater acceptance of distance working. This is probably right. In some of my previous positions, while working from home could occasionally be accommodated, it was usually seen as unusual, a once-off and generally granted somewhat grudgingly. This is now likely to change, with much greater demand for and higher acceptance of distance-working. The benefits are well-known — less risk of contagion, time not wasted on long commutes, better work-life balance, etc. So are some of the drawbacks — the lack of physical human interaction, the drawbacks still affecting video-conferencing in terms of reading body language, commanding attention and so on. Some of these can no doubt be overcome in the future. For instance, the boom in videoconferencing will almost certainly sooner or later lead to a demand for three-dimensional viewing or conferencing by hologram.*

In truth, working from home merely means reverting to the pattern throughout most of human history. While there always have been some workplaces away from home (government departments, temples, theatres?), most people always lived at least within walking distance of their work-place, whether in the village, on the farm or above the shop. Large-scale long-distance separation between home and workplace requires large-scale mass transport, something that really only came into being with omnibuses in France and Britain in the 1820s, some decades later followed by railways (above and below ground), trams and so on.

But there are other drawbacks with distance-working. Not everyone has space at home where they can work in relative quiet; not all jobs can be done from a distance; and some people need or want the physical interaction. 

Meanwhile, there are concerns for large service sectors that have grown up to service central business districts, city areas that are full of workers in the day who need to be fed, dressed, cleaned (their clothes, anyway), exercised and so on, but where nobody spends the night. The City of London is but one, though possibly extreme, example of such an area, with fewer than 10,000 inhabitants by night and more than 500,000 workers by day. 

Offices are unlikely to disappear completely. There will always be a need for somewhere to interact, and even companies with large numbers of distance-workers will want them to come regularly or at least occasionally to the office. For one thing, there are events that cannot be done by video-link, however advanced.

Even so, the demand for office space will almost certainly shrink over the medium term. But this need not spell the end of. On the contrary, it could trigger an inner city renaissance. Surplus office space could be converted into residential property instead. This would have a number of benefits:

Cities and city centres are generally expensive to live in, notably for younger people at the beginning of their careers. Converting office space to housing would increase the supply of living space and would bring down real estate prices.

Increasing inner city residential space would also potentially have an environmental benefit since it would mean less commuting.

Governments in most countries are keen to revive economic growth after the pandemic, but are not always clear about how to do it. A large-scale program to boost living in city centres would be one way, which carries immediate and tangible benefits (and is attractive to voters).

But above all, changing the mix of city centres towards a greater share of housing could also revive and revitalise the city centres that may now be threatened by the de-population. This is not just a pipe dream — some major cities that are already reasonably mixed (New York for instance, or Boston or Stockholm) show that it is possible to integrate living and working with a good environment for both.

Gabriel Stein 

gabriel@gabrielstein.com 

P.S. Over the summer, we are likely to see broad money growth slow. This is already occurring in the United States and in China. But this is short-term measures (e.g., three-month annualised rates). that is to be expected. However, year-on-year broad money growth will remain strong at least into Q2 2021. I will comment again on money in late August/early September when we have summer data from more economies.

*I have been a science fiction fan for about fifty years. Sf writers do not foretell the future. But sometimes they get it reasonably right anyway. Currently, I am finding it highly enjoyable to re-read three stories:

The Naked Sun by the great Isaac Asimov, portrays a world where humans have grown so isolationist that they meet in person (“seeing”) as little as possible, preferring instead to interact by video link (“viewing”). The planet’s scientists are working on abolishing physical contact for pro-creation, thus doing away with the last need for seeing.

The Moon Moth by my favourite author Jack Vance takes place in a society where everyone wears a face-mask (and where your mask indicates your status!) and no-one would dream of appearing bare-faced.

Finally, Marune: Alastor 933, also by Vance, describes a culture where eating is considered so vulgar that it is only done in private, but, if for some reason you have to partake in company, you do so behind a face screen. Maybe something for the restaurant industry to ponder, although preferably transparent screens in our case?