- The pandemic is prompting some level of migration from city centers to suburban and rural locations.
- However, a new report from Cushman & Wakefield suggests that there will not be a mass exodus of companies from urban cores.
- In the hybrid future, “employees will leverage multiple locations to optimize convenience, productivity, and wellbeing.”
There has been a lot of discussion about how the pandemic is creating permanent shifts in terms of where people will work and live in the future.
A recent report from Cushman & Wakefield argues that these discussions are “overstated or at least premature.”
While yes, overall mobility was up slightly during the pandemic, many people moved temporarily—they just left until the pandemic subsides. Below are some key figures presented by C&W:
- There was a 1% increase in the number of moves in 2020 compared to the prior two years.
- Two million people moved to a new county versus the two-year average of 1.8 million
- Temporary interstate moves increased in 2020 by 45%.
- The vast majority of 2020 moves were local (86% of moves stayed within the same county).
- Migration to mature and emerging suburbs increased by 40% in 2020.
People Moved… But Companies Didn’t
While some people moved, data shows that companies did not.
C&W found 78 large corporates that announced HQ moves; however, 68 of those are interstate. According to C&W, these moves will mean more for corporate governance than any large-scale permanent shifts on where people work and live. This is based on the fact that, “most companies are moving to markets where they already have a presence and are planning to expand or build to fit the new HQ requirements.”
C&W also found that gateway cities maintained roughly the same share of total leasing (~40%) as pre-pandemic levels. The data also shows that companies did not leave city centers, noting that central business districts accounted for around 40% of office leasing since the pandemic began in 2020.
So, Where Will People Live and Work in the Future?
Contrary to much of what is being said, “the data does not support a mass exodus of companies from urban cores and city centers.” Urban cores will continue to thrive in the future.
In fact, C&W predicts long-term growth in major markets, arguing that annual job growth will double in the coming decade in gateway markets. Proof of this is that office leasing activity has increased the most in gateway and gateway-adjacent markets this year (2021); with 43.4% of total leasing in Q1 2021.
People will continue to work in CBDs in the post-pandemic world, as they are a desirable location for companies to attract and retain talent. Much of the talent that moved away from city centers during the pandemic will likely return once health concerns are behind us—in the near future if vaccine rollout continues on track.
The main difference is that they won’t only work from offices in CBD areas.
Knowledge workers will have access to an ecosystem of workplaces. An ecosystem that includes headquarters, core office hubs, working from home, working near home, flexible workspaces, satellite offices, and on-demand third spaces.
In the hybrid future, “employees will leverage multiple locations to optimize convenience, productivity, and wellbeing.”
The Type of Space Matters
While people will continue to work and live in urban cores, there’s something to be said about space types.
“There has been a flight to quality as occupiers leverage office space to attract and retain in-demand, office talent. Between 2011 and 2019, 72% of net absorption was in Class A buildings.”
The focus on quality is likely to continue increasing in the post-pandemic world. Class A space accounts for 49% of US inventory, and yet it has only accounted for 43% of negative absorption rates since Q2 2020.
This means that quality of space will be more important moving forward. If companies want their employees to voluntarily come into the office, even if just a couple of days a week, they will need to provide space, services, and amenities that they cannot access anywhere else—be that home or third spaces.