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Top Ways Data is Providing New Insights into Remote Work’s Influence on How People Live in Cities

If you visit New York City’s 4 World Trade Center, ride the elevator upstairs, you’ll behold a truly remarkable sight: barely anyone there. Taking over 16 floors of the massive office tower, Spotify is no longer requiring their staff to come to the workplace, and is allowing employees to work remotely from any state. MediaMath, an advertising tech business, has offices in the same building, but it will soon abandon the space, a decision sparked by its remote work protocols put in place during the pandemic. Many other companies are joining the remote-work fray, such as Twitter, Salesforce, Shopify and Square to name a few.

Additionally, Google is embracing a more hybrid model that will be increasingly common in workplaces for knowledge workers. In an email to the staff in December 2020, Sundar Pichai, chief executive of Google’s parent company Alphabet, said the company was experimenting with the idea of a “flexible work week,” once it’s safe to return to the office. Under the pilot plan, staff would be expected to work at least three days a week in the office for “collaboration days,” but can work from home the other days.

Welcome to the new workplace model of 2021 and beyond, which will drastically change how people move through and live in cities.

What the data tells us

As the 4 World Trade Center example reveals, empty office towers have become the norm in major metropolises across North America. Vacant office space in New York City reached its highest level in nearly 30 years in the first quarter of 2021, according to data from global real estate services firm Cushman & Wakefield. Its report shows that the office vacancy rate in Manhattan reached 16.3 percent at that point — its highest since 1994, and up from 11.3 percent a year ago.

These trends signal a shift in how we work, as some companies move away from the daily-in-the-office model to complete remote work or, more commonly, the hybrid format asking workers to come into the physical office only two or three times a week. Some businesses may even primarily use offices and conference rooms for weekly meetings or one-on-ones with new clients. Such a shift in workplace culture and environment has a ripple effect into transit, retail and where people decide to live. The same kinds of location amenities that people consider when deciding where to live are more important than ever before in workplace site selection, as employees are increasingly voting with their feet. For instance, if someone is only going into an office twice a week and spending the rest of their week working from home, they want to know how close their office will be to restaurants for lunch with colleagues and clients, parks and outdoor space to work in fresh air, shopping that may offer more than retail closer to home, and more. This mirrors and builds on the importance of location characteristics and amenities in their home searches.

Data is key in understanding these shifts in behaviors, revealing how users search for rentals and homes. Historically, the top three filters that were selected included transit as the number one, schools second and groceries third. Recently, groceries passed transit and became number one, which is a direct correlation to the pandemic forcing many people to work from home and how the importance of transit has diminished for them. After all, finding your local grocer near the next place you live has become more top-of-mind for those who are working from home. Living beside a subway or train station won’t be as critical for new renters or homebuyers than in years past.

These shifts may have caused so-called ‘24-hour cities’ such as New York City and Los Angeles to lose some of their attractiveness to both new and old residents, as more 18-hour cities begin to lure residents who want the amenities of urban life, but not the high real estate price tags that come with it. Robert Pozen, a senior lecturer at MIT and author of Remote Inc: How to Thrive at Work No Matter Where You Are, envisions a similar population bump in middle-sized cities that are less dense and within commuting distance of major U.S. cities. He sees Boise, Idaho and Indianapolis thriving because their density is much lower than other cities, while offering reduced commuter time to nearby hubs.

Second homes no longer just a secondary decision

Another trend emerging from the pandemic fallout is the surge in Americans buying second homes. A report from Redfin highlights the number of buyers who locked in mortgage rates for second homes increased to a record 128 percent year-over-year in March. While many may credit this jump to families’ need for more space, or the desire for a workspace separate from the primary home, the report points to rising home prices as a key indicator of this embrace for second homes.

Additionally, the recent recession has created an even greater divide between the extremely wealthy and low-income Americans. The soaring demand for vacation homes during the pandemic is a perfect example of their unequal financial footing, with some people buying second homes and others unable to buy their first.

According to the New York Times, the global pandemic has increased the prices of homes across the U.S. and Canada. For instance, nationwide across the U.S., the median sale price of an existing home was $313,000 in February 2021, up nearly 16 percent from 2020 when a 5 percent jump was considered healthy. Also, within the same period, homes sold in an average of 20 days – a massive shift from the 60 days that had previously been held as the industry standard.

Looking at Canadian real estate, PwC laid out several changes that will likely take place post-COVID. For example, some companies may investigate the potential of moving toward a hub-and-spoke model with suburban satellite offices. The report also predicts there to be a rise in demand for more spacious homes with areas for remote work. Developers and landlords, for example, are looking at amenities such as “Zoom rooms”, where residents can have more privacy for video calls and virtual meetings.

As for where people want to live, all signs point to a shift toward secondary and tertiary cities that still offer 18-hour amenities and a sense of place and lifestyle. While this key trend may have begun pre-pandemic, it was accelerated during the many workplace shutdowns in 2020. A slowdown in immigration also contributed to a decrease in urban residential growth.

So, what does this all mean for the future of cities? Home sales in urban centers may have softened during the more intense phases of the pandemic, but they now appear to have turned a corner. The mass-messaged hype of people “fleeing to the suburbs” didn’t pan out on a grand scale. But what experts did predict is a resurgence in activity in major cities, once vaccination rollouts were successful coast-to-coast and businesses welcomed back staffers, even if just for two days a week.

This time next year, when you next head up the elevator at 4 World Trade Center, the office space may look very different than it does today. And even if all the floors aren’t brimming with bustle and conversation, you’ll start to see a slow return to a new iteration of normalcy forging a path for cities and those who live within them post-COVID.

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