The future of the CBD – We have heard a lot about the future of the high street. However what about the future of our central business districts? How are they going to be affected by Covid?
After months where WFH was the default working pattern for the majority of office workers up and down the country, businesses are now starting to re-introduce WFTO (“working from the office”). However, most employers are looking to move towards a blended model which will involve a balance of home and office working. Some are bringing back only a proportion of their workforce. Others are bringing staff back into the office for only part of their working week. A proportion are even closing down offices entirely.
There has been much discussion about WFH v. WFTO and the effects of each on office workers and the businesses that employ them. However many, in the real estate industry and beyond, are now looking at how the change in working patterns will affect the areas in which those offices are located: in particular, central business districts (“CBDs”).
The financial performance of non-office business within CBDs and, in fact, the atmosphere and “buzz” of the CBDs has always been underpinned by the sheer numbers of people attending the offices around and within them across the working week. Whatever there was a demand for – refreshments, essential items, leisure shopping, gyms, dry-cleaning (to name but a few) – was catered for. But now demands have changed. Not just for the short, defined period of lockdown, but for an extended period – possibly forever. Not just because there are fewer people WFTO but also because WFTO itself has changed. There are fewer face-to-face meetings taking place – Zoom calls are now commonplace. People are more cautious of visiting shops and restaurants during lunchbreaks and around their diary commitments.
Areas that were a hive of activity from early on a Monday morning through to Friday evening now feel like it’s the weekend every day. But for businesses which relied on the trade that huge numbers of office workers created – the “Pret economy”; the retailers; the city-centre gyms – that’s a problem. Many pre-Covid businesses will not survive and that can’t fail to have a material impact on our CBDs. However in the longer term, putting aside the effects of any future restrictions, the number of office workers returning to the CBDs is likely to steadily increase. Creativity and innovation will result in new businesses serving the needs and demands of office workers. Existing businesses will evolve.
So what will our CBDs look like in six months; a year; five years? What does this mean for investors and occupiers? Where are the opportunities and what legislative, financial and governmental policy support is needed to seize them? There’s no single answer and opinions are going to be divided. Each CBD has its own personality; will face slightly different challenges; and will adapt differently. The CBDs which adapt most successfully will perhaps be those that take heed of an observation made by famous Cantabrigian Charles Darwin: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”