The Planet of Cities: Recovery, or Reinvention, for our cities?

Prof Greg Clark CBE FAcSS

As we begin 2023 the impact of the pandemic is still playing out in our cities world-wide. It has led to some big debates about the future of urban retail, offices, and transport systems. It has crafted new opportunities for suburbs, second, and third tier cities that are well connected. In some cases, it has even spurred a shift to ‘rural living combined with urban working’ underpinned by hybrid lifestyles and enabled by digital technologies.

?A widespread ‘sorting effect’ is in train. Sorting between cities that can adjust quickly and those that can’t, districts that can serve the new demand versus those that won’t easily make it. Smaller cities and towns that want a piece of new action must improve their competitive offer. For buildings that need to be repurposed or retrofitted, some can invest in the switch and others cannot. This is a whole cycle of multi-layered adjustments, not just a moment of change.???

As the global news has switched to wars, recessions, human rights, and the existential challenge of global warming, it is time to shift towards a different debate. Not about how our cities can recover from the pandemic, but about how we now need to reinvent them.?Reinvention, rather than recovery, allows us to see the opportunities occasioned by those deeper drivers from the pandemic.

Global post covid return to office: a North/South divide?

Let us firstly look at some data. I have two maps for you. Each covers 100 cities across the world.

Map 1 shows the global return to the office using October 2022 data. A simple blink at the data shows the global north covered in red and the global south, along with fast growing middle east countries, all in green. As previously discussed in this column, the factors that determine whether people are back in office are complex, and range from business sector mix and propensity for technology utilisation to regional housing conditions (and sizes).

?Map 1 (Source: Google Community Reports. Data as of 18th September 2022)

The nations with the highest (or most mature) level of urbanisation tend to have the sector mix and technology platforms that most adapt to hybrid working. But that does not mean that they are adapting in the same ways. In North America and Europe, smaller cities are recovering office demand faster than large cities (where commutes are longer). In the USA smaller cities have the fastest rates of new office construction. The underlying picture in Europe is one of a new fractional week, with the larger cities back to high occupancy 3 days per week, but much quieter on other days. In these regions, office working is now a smaller proportion of reasons to travel to city centres. The recovery in entertainment, hospitality, culture, and leisure has had a stronger attraction than commuting for work. These cities are making a shift towards experience, innovation, and habitat, rather than efficiency because technology use has changed the efficiency paradigm.

The office recovery is very fast in Middle East and ASEAN. Dubai is seeing a surge in office investment to accommodate finance and tech jobs and is benefitting from a switch of capital away from cities such as Moscow and Hong Kong where Geo-Politics are impacting. In India and the Philippines, office investment is being spurred by demand from Industrial Tech and BPO sectors. Recovery is gaining ground in Seoul and Taipei. Latin American cities are seeing rapid returns to office working, with the social dimension of the workplace being recognised and embraced.

Global return to public transport and travel: mixed patterns

On map 2 we can see the return to public transport with similar pattern in terms of geographies. Public transport is struggling to recover in North American cities. Workers continue to work from home (sometime relocated homes), work locally, or have shifted to commuting by car. Bus use is recovering faster than metro rail in major US cities, reflecting the pattern of busses being used more by people in lower skilled jobs that are not so easily done virtually.

Map 2 (Source: Google Community Reports. Data as of 18th September 2022)

In Europe, we see a mixed picture. Cities with highly efficient and integrated mass transit public transport systems are undergoing the fastest recovery. The rider experience of transport seems to matter more. Continued hybrid working in Scandinavian and British cities is slowing the return to public transport during the day-time peaks on some days (often Mondays and Fridays). Public transport is, however, being widely used at evenings and weekends to support the experience economy and leisure.

?The growth of the visitor economy in Middle East cities, combined with the return to office in both advanced and faster growing Asian cities, is seeing public transport patronage rapidly return. Australian cities have not yet recovered their pre-pandemic transport ridership, and there is continued evidence of increased car usage since COVID. Australian cities are adding much transport capacity and how the ridership responds will be hotly debated.

There are nuanced and complex local specificities that underpin all these broad trends. Specific geographic features such as housing patterns, travel times, and journey lengths have impacts. But key issues such as public trust in the cleanliness and reliability of transport and the overall rider experience have also become more critical. With offices, there are deep debates about how to create the right kinds of new offices for growing sectors and new ways of working. A major cycle of investment in new and retrofitted offices is now in train, and the competition is fierce. This is the reinvention cycle.

?There are different kinds of ‘recovery’ taking place across the 100 major cities of the world, and the regional variations are plain to see. This leads to three more general observations that might shape our thoughts.

?Hybridisation and agglomeration effects: competing forces?

?Firstly, there is no overall decline in the rates of urbanisation globally. The post-pandemic phase is seeing accelerated urbanisation in the fastest growing countries. Even in the most mature urban systems we are not seeing a de-urbanisation, but rather a new shape to urban systems driven by hybrid lifestyles. Cities are not being unbundled; urban populations are being more broadly distributed.??

?North America is struggling to find a new pattern. One that provides an optimum mix between the productivity of office, the sustainability of public transport, and the new worker preferences for individual choice over work patterns. At the heart of this is an intensifying debate. Do the new behaviours that make some employees more individually productive (by working remotely or hybrid) actually add up to a more productive firm, labour force, or economy overall?

?Big cities draw much of their competitive advantage from agglomeration effects. Large numbers of employers and employees enjoy the fruits of linking, matching, and learning through rapid flows of ideas and talent. These interactions are grounded in, and made possible by, proximity in large cities. This proximity spurs the growth of both specialisation and innovation.?

?How much of the agglomeration effect of cities is lost through the hybridisation of work? Can firms do anything to accept hybrid working, while also protecting agglomeration-led productivity? There will be variations by sectors, firms, and places.

This will be the big debate of the new cycle: with many employees seeking individual productivity, employers seeking collective productivity, and with massive implications for cities with high knowledge economies. When David Solomons (CEO of Goldmans Sachs) or the CEOs of other global knowledge firms say they want staff back in the office, they do so not to be punitive. They see the diminishing returns on long term productivity from virtual working, rather than short term efficiency.?

?At the same time, the rapid growth of cities in fast evolving economies of Middle East, ASEAN, India, and China means a new set of competitor locations for those knowledge intensive jobs. In these markets, cities are building for the new ways of working from scratch: a potentially important advantage.

?Secondly, redesigning offices, retrofitting them for new ways of working, and relocating into better offices, is not going to be a single occurrence, but a gradual one. Re-negotiating leases, retrofit and repurposing buildings, building new stock, and re-allocating space to flow through to the new formats will be ongoing for a decade. It is going to exciting to see all the new office concepts that emerge. To see how they facilitate workers who are physically present alongside those who are digitally connected, and how they optimise the investment made with new hybrid building formats. What work will these buildings do at weekends?

?Thirdly, the new mobility agendas in our cities are going to be an intriguing combination of active travel, affordable and good experience public transport, and EVs and demand-responsive offers. These will be combined with efforts to reduce the usage of high polluting vehicles and private cars and find new forms of revenue to support metropolitan transport systems. This agenda will play out over the next decade, as the imperative to decarbonise mobility is sequenced with the need to rebuild ridership and revenues on public transport, as new working practices mature.

?A fascinating period lies ahead.

?So perhaps now is the time to stop phrasing this process as a ‘recovery’, as if the sole issue is to redress the damage wrought by the pandemic, Instead, it is the time to focus more on the reinvention of our cities to serve new imperatives. This process will take a whole cycle and will be played out within a fast-changing global network of urban hubs, where 90% of people do not live in Europe or North America.??