The Future of Cities

Below is an interesting article by the World Economic Forum about the future of cities post pandemic. While opinions may vary, it aligns with our way of thinking which is one of the reasons why we posted it. Cities and urban centres have always been the life blood of our existence. New York City, London England, Paris France, Toronto etc. This period will simply be a reset rather than a death knell for cities. This will provide opportunities for those seeking to purchase some “price adjusted” properties over the next few quarters. Could we then see the roaring 20’s of the 21 century? 🤷🏻‍♂️ This is a possibility given the likely pent up demand for human interaction, travel and the like. Check out our featured listings for luxury properties in Midtown Toronto. https://erikaandmark.ca/featured-listings/

The world of urban living and working may appear to be in flux, but its foundations are deep and secure. Contrary to some predictions made in the midst of this terrible pandemic, a dynamic and reimagined future is taking shape in which the world’s major cities will thrive, characterized by vibrant and distinctive office, cultural, retail and residential profiles.

But should we believe in this view when faced with global news footage of near-empty streets and shops and a reluctance to return to city centres?

Future historians will be tempted to ascribe the roots of all sorts of change to the year 2020, but many of the choices we make in reimagining the future of downtown living and working will be driven by trends that have been gathering momentum for far longer.

The rapidly growing global consensus around the extraordinary importance of sustainability has, for example, been further heightened by COVID-19 as it highlights the fragility of our planet and societies. Elsewhere, the Fourth Industrial Revolution has enabled this year’s massive shift to remote working. Another major driver of change, identified as a top priority by an increasing number of our clients, is the need to improve the human experience of the workplace.

So what, we might ask? All that has been thrown out of the window by this pandemic. Retail’s future is online, people don’t want to work in offices anymore and they’d like to move their homes out of city centres too. While that will be true for some, for very understandable reasons, it is far from being true for all.

JLL carried out some eye-opening global research in May, when lockdowns were in place across much of the world and when we might have expected the preference for remote living and working to be at its height. With 3,000 respondents across North America, Europe and Asia, our survey found most people have a strong affinity with the workplace and, once safe to do so, would like to return to working in the office, albeit with increased flexibility to work from home one or two days per week.

JLL Human Performance Survey, May 2020 JLL Human Performance Survey, May 2020Image: JLL

In fact, as this JLL global research piece on The Future of Office Demand suggests, post-pandemic demand for office space may not look so different from recent years. Instead, the way that space is used will change. Far lower occupancy levels will be offset by dedicating more space to each workstation with employees dividing their time between home working and the office. We will see even greater emphasis placed on creating the best possible human experience, with more focus on supporting learning and development, creativity and collaboration – the real reasons people and businesses want to work together.

How might that all look and feel? Larger offices will continue to evolve to support multiple workstyles and settings. Some may even feel like miniature urban centres, offering entertainment, education, food and fitness options, and overnight accommodation.

Urban allure for the young and creative

Drawn not just by better employment opportunities, but also by the allure and variety of metropolitan social and cultural scenes, we predict the long-term trend toward urbanization will continue over the next decade. Cities concentrate creative energies and foster innovation, providing expedited career development opportunities in the process. This, aligned with their vibrant cultural and social scenes, will continue to act as a magnet, particularly for the young. Cities will continue to offer higher quality and wider ranging healthcare provision compared with rural areas. The combination of these factors means people needing more space to live and work.

Projected urban and rural populations by 2050 Projected urban and rural populations by 2050Image: Our World in Data

In cities, the rapid rise in home working will see radical new approaches to apartment design, accommodating comfortable and productive home workspaces that do not intrude into bedrooms and sitting rooms. Companies may provide incentives or subsidies to help their employees kit out these spaces. Local community facilities, shared creative spaces and convenience retail will also evolve and flourish. Reliable, high-capacity internet connectivity will become essential.

In cities such as New York, London, Paris and Tokyo, we can expect massive new investment in public transport to provide more space, better air filtration and greater reliability. The old model of crowded commuter services will need a rethink. Solutions and money will be found for this, with governments prioritizing the employment and all-round benefits it provides even as public borrowing is stretched to record highs.

Destination retail, tourism and leisure will re-emerge strongly in the post-pandemic world, especially once transport systems can return to full capacity. This is unquestionably a tremendously difficult time for the hospitality and travel industries. Many more businesses are likely to fail, even where governments are providing substantial assistance. However, assuming we can avoid significant second waves and a vaccine is not beyond reach, people’s innate desire to socialize, enjoy culture and share experiences will eventually drive renewed growth. We already see the early indicators of that wherever lockdown conditions are eased.

Some areas of the economy – life sciences, logistics and online retail to give three examples – are coping well through the pandemic, with many businesses in these areas showing significant growth. From the real estate perspective, we expect that to continue and stimulate demand. Logistics space, science parks and transport hubs will all provide out-of-town employment and investment opportunities.

In many countries – the US and much of Europe included – we are likely to see a step back from “just in time” supply lines leading to more local manufacturing and warehousing of vital goods, food, PPE and medicines. Hospitals, care homes and assisted-living facilities will also be another major area of focus for real estate development and investment.

Shaping the future of real estate

The world will look different in the coming years; our cities and urban centres especially so. COVID-19 will hasten many of those changes, but the overriding trends and forces for change were already well established before this horrible disease gripped the world. Much about the way we live and work will be transformed. For most, hopefully, that will be an improvement and lead to more fulfilling and rewarding lives and careers.

While offices will evolve, they will remain the beating hearts of the central business districts in major cities across the globe, supporting a lively hinterland of retail, leisure and cultural attractions. This, in turn, will sustain the attractiveness of urban living.

This is an unprecedented opportunity for the real estate industry, which bears a great responsibility to make a success of all this. It is all about shaping the future of real estate for a better world.