Urban Planning in a Post Covid-19 World

After a decade of watching North Americans come back to cities and urban cores after a half century of suburban growth, where do we see the next trends apply to the movement of people, jobs and business? Will the Covid-19 pandemic push people back to suburban communities out of a need for social distancing? Or will the design of a smarter urban core continue to draw people back to cities? What will become of the four main real estate products; residential, office, retail and industrial? A look at recent trends and those hit hardest can provide early clues to whats in store for the next cycle.

At the core of any urban planner’s model is housing, whether it be single family residential (SFR) or multifamily and mixed-use (apartments and condominiums). Over the past decade since the great recession of 2009, urban housing and the desire to move back to areas where live-work-play environments can be created with small carbon footprints and better community attractions have become increasingly attractive. More cities across the US and North American have developed or improved their public transportation to include better and cleaner busses, trains and light rail. Rail and bus stations have in turn created hubs for commercial and residential real estate alike, bringing people together in ways not seen in America since people began moving to city centers during the industrial revolution. With services provided close to home such as dining, retail, beauty, and technology, these new urban cores have achieved greater economic and experiential efficiency than any community developments to-date. Will Covid-19 drive people away from each other again, and back to the suburbs, bringing about the return of crowded freeways, dependencies on fossil fuels and limiting time allocation to families and communities?

Residential

Beginning with residential, it looks as if the answer is still not clear. Two competing theories can be surmised from the current situations. First, residential trends tend to move slower than commercial and industrial. People need more time to pick up and move their lives than businesses need to set up a new shop or move a warehouse. Over the past decade, the move from suburban single-family residences to urban apartments and condos moved at a fast yet steady pace, compared to housing trends in the past. Whether people continue to stay in their urban settings will depend on both long-term job prospects and short-term finances. Over 40 million Americans have lost their job since the beginning of the pandemic and many of these people living in new urban centers will not be able to afford to stay there if their jobs are lost. They may move back home with families or friends who remained in the suburban areas if they can no longer afford their mortgage or rent. However, if jobs in the urban areas are the first to return after the pandemic, these urban core areas could become even greater hubs than they are now.

The second theory is that after the pandemic, people will become weary of living so close to others and retreat to the suburban areas they came from out of fear of another pandemic or simply the painful memory of this past few months. New York City was hit especially hard because of the way people were crowded together with no way to avoid catching the virus from others that lived, worked or played in close proximity on a daily basis. Many of these people can understandably desire to live in an uncrowded, suburban area without the benefits or an urban core if it means safety from another pandemic experience. Just ask anyone living in Southern California, where the open beach neighborhoods have yet to record any significant Covid-19 damage. Time will tell, but if history is any guide, humans tend to have very short attention spans, and within a year or two, all could be forgotten (Look at Florida, have they forgotten already?).

Office

So now that everyone is working from home, with their dog on their lap and their coworkers on Zoom, will we ever go back to the low office vacancy rates with lavish tenant improvements we saw up until the pandemic? Perhaps we can find the answer in a few preliminary observations.

First, while most parents love their kids, they do not love having them around all the time. And especially for these children under five who need more attention than most, many struggle to balance childcare with full-time work duties. Once the pandemic is over, daycares will open back up. But if you are going to stay home and work all day, will the thought of paying such a high price for daycare make sense? This is an easily avoidable decision if you have an office to leave to. Part of the allure of a full-time job for many is the necessity to leave the house every day and work from a professional environment, away from family and other distractions, where you can be productive with other people working toward your same, shared goals.

This brings us to human connection. Instead of finding that working from home is so much more efficient (while we all had this thought at first), many will find that the inability to meet with others to complete a complicated task is ultimately damaging to the final product. Here, we may find that managers and employers lead the way back to physical office space to gain efficiencies and improve the final product of the goods and services they provide. So while this may take some time, especially as we get used to the idea of being in close proximity to others again at the completion of the pandemic, the return of the office should be a reality. The question is, will it come back as it was before, or will even more flock to the office in need of that human connection we have all been craving throughout the lockdown.

All of this comes on top of the fact that many studies show that without a structured office environment, many of us are working MORE than we used to, not less. However, we are most likely less productive at home. An interesting outcome to an unforeseen event.

Retail

The retail sector of our economy has taken the largest hit and will most likely take the longest to recover, if it even recovers at all. While salons, boutiques and restaurants begin to open back up, social distancing will continue to plague profits and the ability for many small businesses to stay open. Movie theaters may be a thing of the past and malls are facing a most uncertain future. The rise of ecommerce, from Amazon to Instacart has proved to us that we don’t need to leave our house for anything anymore. Just look at the increase in value of the big tech firms supplying us with goods delivered for proof. Retail must be redesigned to become attractive again, as its usefulness will no doubt be limited moving forward. This brings us to our final and biggest winner of the pandemic.

Industrial

Just because you can get it in the mail does not mean it came from nowhere. Our goods are manufactured, assembled and shipped from industrial real estate around the world. And while it’s true that people are purchasing far fewer luxury and high-end goods than before, core necessity goods such as household items, food, beauty, cleaning supplies, auto parts, technology and clothing are now being shipped directly to our homes at record rates. And while producers continue to require more and more industrial space to manufacture and assemble their products, distribution and fulfillment centers will be the asset class leading the industrial market into the next decade. To have products shipped to our door in less than 24 hours requires large industrial warehouses in every corner of the globe. The development of these assets will begin to create a market and communities of their own, as they require more and more employees to run them, thus bringing us full circle back to our first point.

Conclusion

Covid-19 will both change the way we live, work and play as well as expose and accelerate changes that were already in place before the pandemic hit. The move from suburbs to urban centers will continue, while being serviced at the same time by new suburban communities built around fulfillment centers, providing both rural and suburban communities as well as urban cities with the goods we used to purchase at brick and mortar locations including Target and Walmart and small local businesses. Services will continue to be required in retail storefront locations, but at a much lower rate of retail product than before. And the return to the office will once again confirm our desire to live, work and play in the hubs created around our lives and jobs.

1 comment

Comments are closed.