This is another area where the short-term impact of COVID-19 may look very different to how things will eventually pan out. As workplaces start to reopen with physical distancing measures in place, offices in the centre of major cities are the most problematic, often necessitating commutes on crowded public transit. Suburban or out-of-town locations where workers typically drive will be able to resume something approaching normal operations much more quickly.
But if offices become destinations to meet coworkers, get inspiration and exchange ideas, rather than just to sit at a desk, those in buzzy locations make more sense. If organizations don’t need as much space because people work remotely more often, they may choose not to cut their rent bill but to spend the same amount on a smaller, more characterful building in an amenity-rich central location – a much more attractive destination for employees than a featureless office park.
A shift to working fewer days in the office will benefit expensive central locations most, believes Tommy Craig, senior managing director at Hines in New York. “New York is a very challenging place to achieve good work-life balance because it’s extraordinarily expensive to live and raise a family. If you alter than paradigm and allow employees to work from home one or two days a week, the whole work-life balance shifts in the direction of something much more favourable. Commuting 40% less is a big deal, given how large New York is and the length of our commutes.”
Economic activity has strongly clustered in the US’ larger cities over the last 50 years, as employment has shifted from manufacturing to services. Professor Bill Kerr at Harvard Business School has studied the progress of its world-beating talent clusters such as Silicon Valley, which exert a powerful, self-perpetuating global pull for skills and capital. Will they continue to thrive in the post-pandemic world? “What made talent clusters so powerful is that ideas can jump from person to person – of course if germs and viruses are also jumping from person to person, that’s going to make them a lot less attractive,” he says. “This has always been a big challenge for places that were built around interaction and being in close proximity.” If we can get back to work within the next few months, he thinks talent clusters will be secure for some time to come. “But if the pandemic continues for several years, these cities are going to struggle and we may see a more systematic pullback from the clusters. It’s a question of how it plays out over the next year.”
Another impact of COVID-19 could be that companies split operations between several locations, potentially benefitted smaller centres. “A lot companies are going to be thinking about how they could make their workforce if not pandemic-proof, at least pandemic-resistant,” says Kerr. “Opening a second office might not have made sense historically, but may be something that younger companies should do at an earlier stage. We have celebrated density and packing people together, but that’s putting a lot of eggs in one basket.”