Downtown

The skyways of downtown Minneapolis bustle with people on a weekday. Fast through fine dining establishments cater to those seeking lunch alongside a range of retailers and services. In winter months, the skyway provides a welcome respite to the sometimes brutal conditions outside.

At least, that was the case until six months ago. Walk through the skyway system now and you’ll find a far more depressing scene: many of the restaurants and coffee shops remain closed, parts of the system are locked and many retail units are empty.

When the pandemic ends, and it will, if not as soon as some hope, will we return to our downtown offices and skyway habits? It increasingly seems to me that those who don’t need to, won’t. While work from home started out difficult for many, employees are adapting and learning that ‘home’ can be anywhere.

As companies embrace this and start to rethink what an office is for (or if it is even necessary), what are the gains and loses from this cultural shift?

Gains

The suburbs

If they’re working from home, people want more space and space is cheaper in the burbs. Similarly, prices of second homes are climbing as the well heeled grab a another place to work from.

ISPs/Tech firms

A lot of us have pretty lousy home internet connections on old WiFi routers. We’re all going to need more bandwidth and more tools to work remotely. That demand will push investment in infrastructure. Starlink can’t come quickly enough.

Grocers

If you’re at home, your easiest and cheapest lunch option is going to be in your fridge. That means more trips to the local grocery store, more ready meals sales and, no doubt, new offerings to get healthy lunches to busy employees.

Suburban bars and restaurants

Applebees has a future after all: after work drinks and meals are replaced by local meals with friends and family? Expect growth of higher end boutique bars and restaurants that replicate some of the downtown fancy locally. At a more deeper level, does work from home start to impact the social connections we make at work? Does it start to impact where we find our future partners?

The environment?

We all saw how air quality improved in March. More work from home = less commuting. And, at least for most of the USA, less commuting means far less car journeys. Somewhat offsetting this is a growth in car purchases by those who have to commute and don’t currently feel safe on public transport.

Another huge positive for the environment is the decline of business travel: managers can see the impact reduced travel is having on their budgets and can also see that productivity hasn’t suffered much. It seems very unlikely that we’ll make the same number of business trips as we once did having proven that Zoom works.

Utilities

Our August electricity bill was twice normal because the air conditioner was running a lot more. Come winter, we’ll be burning more gas to heat. Clearly heating and cooling individual dwellings is not as efficient as office space. Hopefully these losses don’t offset gains made in reduced commuting.

E-Government & E-Services

Much talked about, less implemented, the pandemic has forced many parts of government to go electronic. In many states you can now notarize using your PC. Doctors will now consult over Zoom. These changes, once made, won’t reverse. Just the DMV to go.

Losses

Office space

Why pay expensive downtown leases for space that is barely used? What becomes of all that space? Some companies will try and encourage their staff to come in, but I suspect many others will use work from anywhere as a retention and recruiting tool. The office space perhaps becomes somewhere to meet for collaboration: book some rooms and hot desks to kick a project off and then all head back home to execute.

What becomes of that office space? Some can be converted to residential units but this will take time and isn’t cheap. Higher density accomodation is good for the environment and can re-invigorate neighborhoods if done well. Hopefully that will be the case here.

Downtown shops, bars and restaurants

Until that shift to increased residential utilization occurs, downtown retail is going to suffer. The downtowns with strong arts and sports venues will provide some reasons to go downtown but even the biggest venue can’t replace the day to day traffic of office workers.

Business travel

Business and first class travel is immensely profitable for the airlines. Besides the class of travel, businesses are less price sensitive than consumers and tend to make expensive last minute arrangements. A permanent decline in this market will have less impact on the low cost consumer orientated airlines like Wizz and Ryanair but will be greatly felt by full service airlines.

How will the airlines respond? A key strategy will be to convince better off consumers to pay more. Expect great deals on long haul business class as well as a greater availability of premium coach products.

Public Transport

Less commuting means less demand for public transport by those best able to pay for it. This is a great loss: a well run public transport system is the backbone of many cities. Larger cities with high tourist volume will be best placed to keep their public transport funded. Smaller cities, where transport primarily serves locals, will struggle.

Greater subsidies will be required, which will be resented by those who no longer get benefit. Yet public transport plays a critical role in helping those on lower incomes get their jobs: jobs that typically cannot be done from home.

Parking ramps

The great blight of many an American downtown, the parking ramp, will see less business. Some will disappear. No great loss. Let’s convert them to parks.

The paperless office

How many decades has this been a dream? Work from home forces the issue. That’s not good news for paper and toner merchants. None of us are going to put big printers at home and we’re especially not going to spend our own money printing.

Ultimately, there’s a lot of positive change for society here. If we’re not burning time commuting, we’re being more productive: either in our work or with our families. That’s to be celebrated. But the social aspect of the office will be difficult to replicate. I’ve made some deep friendships with those I’ve worked and shared an after work drink with. I don’t want to lose that.