At Irish software company 3D Issue, employees work a four-day week. Paul McNulty, its founder, says the policy helps attract local talent. Since the pandemic began last year, the company, based in the north-west county of Donegal, about 140 miles from Dublin, is having to compete with the capital’s Big Tech groups for new hires.
Remote work has meant tech workers in regions such as Donegal have been able to apply for higher paying jobs with Twitter, Google and Microsoft — without having to relocate.
Meanwhile, they are being joined in rural Ireland by some formerly Dublin-based tech employees who are escaping the Irish capital’s rising property prices. It is a pattern Ireland’s government is keen to accelerate: it has just unveiled a plan to encourage a shift of people from major cities to the rest of the country that includes creating a network of more than 400 remote working hubs and tax breaks for individuals and companies that support homeworking.
What is happening to McNulty’s company is just one illustration of the complex interplay of post-pandemic factors that has left the world’s former office workers in a state of flux. In terms of where people may decide to end up in the long term, “we just don’t know yet”, says Lynda Gratton, a professor of management practice at London Business School. “Questions about ‘where I live’, these are big bets.”
As lockdowns ease, however, some of the landscape of the post-pandemic working world is starting to emerge — and the trends are clear. There has been no mass exodus from major hubs. Capitals such as London, Paris and Tokyo have experienced varying outflows over the past year. And often people who move opt to remain within the orbit of big cities.
Big cities are still attractive — and central living is now cheaper
London has always attracted Britons in their twenties and lost those in their thirties and forties. “I’m sceptical we’ll see a wholesale shift,” says Andrew Carter, chief executive of Centre for Cities, an urban policy think-tank. Many young people decamped to their parents’ homes or cheaper rentals outside the capital during lockdowns, but he says there is little data to indicate how permanent this will be.
Similarly, those selling up in 2020 and leaving London for other regions did not quite reach a 2016 peak, according to data from Hamptons, the estate agent. And of the 73,000 homes Londoners bought as new main homes outside the capital last year, 69 per cent were in the south of England — within easy commuting reach of the capital.
As the UK prepares to ease lockdown restrictions, people are returning to live in city centres to take advantage of reduced rents. According to analysis by property portal Rightmove for the BBC, renters are now searching for more in London’s central zones one and two, compared with greater demand in zone three in August.
A recent study by the London School of Economics on the pandemic and the housing market found that some of the largest price increases in 2020 compared with 2019 were for detached houses as close as possible to the centre of London, not remote locations.
“Cities, which were invented perhaps 12,500 years ago, have ‘survived’ countless natural catastrophes, epidemics or pandemics,” the study said. “While in the long term, say five to 10 years, some adaptations such as the use of Zoom or more working from home may stay, cities will recover from the Covid-19 pandemic — people will still want to live in cities.”
London has, though, lost a lot of foreign workers. About 700,000 foreign-born people left London last year because of the pandemic and Brexit, but Carter notes that should the UK exit the pandemic and vaccinate the population as planned, it could be perceived as a “safe haven” and attract more overseas workers.
In a recent study of more than 200,000 people across 190 countries, London remained the top city respondents were most willing to move to.
Overall, he says, “the option value of wait and see is massively underpriced at the minute”. He cites companies, in the banking industry in particular, that have “gone early” on reducing their real estate footprints. “I think some of those in 12 months, 24 months’ time, they’re going to regret that.”
Working near home (WNH) is the new WFH
Meanwhile, the biggest trend — and one that is going to grow as lockdowns ease — is “working near home”, where hyper-local workspaces serve residents who want to get out of the house but don’t want to commute into the centre of town.
Business First, a workspace provider, has nine office sites in towns around Manchester. Sarah Fretwell, its director, says during the pandemic “offices have been rented to meet this demand in the local areas where the employees are living”, with the group’s occupancy nearing 90 per cent.
Andrew Butler, managing director of IncSpaces, a flexible workspace provider, says “near home is where we see our marketplace”.
There is evidence of this trend in other cities too, such as New York, and is something larger co-working providers can take advantage of. WeWork, for example, is offering UK tenants more flexible terms, so employees can use the spaces most convenient to them.
More broadly in the US, commercial property experts say the footprint of post-pandemic offices will shrink by about 20 to 30 per cent. But companies are struggling to develop 10-year real estate plans to accommodate the shift. Most will probably try out new arrangements in a few markets, then measure the results.
“A distributed workforce is here to stay,” says Terence Kirk, an executive vice-president at Collier, who represents office tenants in Los Angeles.
Debra Moritz, head of strategic consulting for Chicago-based Cushman & Wakefield, estimates that the number of employees working entirely off-site will double from 5 per cent, while another 10 or 20 per cent will work in the office five days a week. The rest will split their time between home and office.
Smaller cities are attracting incomers
Some towns and cities, such as Miami, Florida, and Austin, Texas, offer tax credits, low interest rate loans and other economic incentives to encourage businesses to relocate.
In Europe, good transport infrastructure and the appetite for working from home has led to an uptick in people heading out of central Paris and Berlin for the long term. Some towns ramped up their marketing to attract those looking to make a permanent move.
In Germany, the pandemic has changed attitudes to homeworking. A poll of 500 companies by the Fraunhofer Institute for Industrial Engineering and the German Association for Human Resource Management found 90 per cent of them were open to offering their employees more options to work from home.
Angela Million, head of the city and regional planning department at Berlin’s Technical University, said towns such as Brandenburg on the Havel, about 70km west of Berlin, could emerge as winners, as well as similar midsized towns with solid infrastructure.
Couples with families have for some time been drifting away from Berlin to these areas, drawn by the better quality of life, excellent transport links and access to nature. Similar patterns are emerging in other large German cities, such as Hamburg and Hanover.
Matthias Günther, an economist at the Pestel Institute, says: “When you only have to go to the office twice a week, then you can really expand the radius of your flat search.”
In Donegal, as well as competing for talent for 3D Issue, McNulty says the competition for available local property has increased. A colleague, who is also a landlord, told him that he had “never seen anything like it”.
Even before the pandemic, the arrival of Parisians in Bordeaux was not always entirely appreciated. In 2019, stickers appeared around the city, reading “Parisian, go home”.
Further north, Fabrice Joubert, deputy director of Nantes-Saint Nazaire Development, an organisation aimed at attracting companies and talent from Paris to the two cities, says local companies have worried that Parisian companies might steal local high-skilled talent, although that has not happened.
About one in 10 Parisians abandoned the capital during the first lockdown, according to the French national statistics institute Insee, and only a small fraction — 4,000 out of 208,000 — have returned.
“There was a boom in departures,” says Kelly Simon, co-founder of Paris, je te quitte (Paris, I’m leaving you), an online site launched to help people relocate. A growing number of Parisians are also moving to smaller areas such as Tours and Orléans, says Lauren Pinel at Switch Up, a service helping companies relocate.
French regions increased their marketing efforts during the pandemic, says Simon. And experts note that companies have become more flexible in answering Parisians’ growing desire to live in more remote areas, with some companies even putting their decisions to open second offices or moving their headquarters to a vote.
In Japan, relocations have also largely concentrated in areas surrounding the capital. Coronavirus has given a push to those considering moving, but “people still want to be in areas that are within commuting distance to the office”, says Hiroshi Takahashi, chair of the Furusato Kaiki Shien Center, a non-profit organisation that supports people returning to their hometowns or moving to the countryside.
Culture
Work culture has long proved a sticking point in the adoption of homeworking in Japan. The pandemic has exposed the inefficiencies of traditional working life centred around presenteeism and long commutes.
Teleworking and satellite offices have taken off at forward-thinking corporations such as Fujitsu, the technology company. But change has been slower at smaller businesses that lack the infrastructure and managerial mindset.
Recent surveys show more than three-quarters of employees at Japanese companies have yet to adopt homeworking. However, some are betting that offices will shift to more flexible practices. Government figures show there have been more people moving out of Tokyo than those moving into the capital for almost every month since May last year, a phenomenon not seen since 2013.
Junko Okuyama, a 45-year-old employee at Palo Alto Networks, a cyber security company, was instructed to work from home last spring as Covid-19 cases were rising in Tokyo, so she moved to a house she had built near Karuizawa, a mountain resort about an hour and a half from Tokyo by bullet train. For nearly a year now, Okuyama has not visited her office or clients in Tokyo. “I can’t think about going back to the office again,” she says.
Whether people decide to move away from tier one cities or remain within close orbit, one positive aspect of working from or near home is that people “get much more connected to their neighbourhoods”, says LBS’s Gratton. “I’d love to see other cities build this up.”