UK towns and cities will undergo an inevitable transformation as a result of Covid-19 with 68% of CEOs believing there will be a long-term shift towards low density office usage and 35% expecting a similar move towards de-urbanisation according to PwC’s latest CEO survey.
The CEO pulse survey looks at how business leaders have responded to the recent pandemic. Against a backdrop where major organisations and retailers are considering repurposing or closing properties within their portfolios, the survey reflects how changes in how we live and work will impact the business models of construction, infrastructure, real estate and housing organisations as they respond to this ‘new norm’.
The survey found that over three quarters of UK CEOs (86% v 78% globally) see a long term shift towards remote collaboration, and three in four (77%) predict an enduring shift from traditional human labour to automation.
The results suggest that the consequences of home working are starting to fundamentally filter into long term thinking about existing office accommodation models. Simon Hampton, PwC’s UK real assets leader, said: “Prior to the pandemic, we were already noticing a significant shift in the way people choose to consume – physical retail assets versus online, served via logistics warehousing for example – but with lockdown, this home delivery trend has swiftly accelerated into food and perishable items with a new, often more elderly, buyer group joining the younger, tech-savvy generation.”
CEOs are divided about what role cities will play in the future with a third believing the shift towards de-urbanisation is set for the long-term with another third believing it to represent a more temporary shift. The responses also suggest that a new hybrid model is emerging, with work being ‘something people do rather than a place to go to’. The survey shows that one in four CEOs (24%) are already prioritising digital adoption as well as making their workforces more flexible and smaller, a move that will enable them to be leaner and more agile.
This shift is backed up by real estate reports, which report a dramatic increase in house buyer enquiries outside London, with many considering how working more flexibility may affect their commute time and whether they can get more space and house affordability by moving further away from the cities in which they currently work. If this trend is repeated across other major cities, when coupled with a decline in physical retail, there is an opportunity for regions to become more in focus than ever and could form a major incentive to repurpose and transform ‘local’ working and living.
Angus Johnston, real estate leader at PwC, said: “Our CEO survey highlights the many challenges facing the office, retail and even hotel sectors as they navigate this ‘new norm’. It remains to be seen whether office landlords and tenants can find new, more flexible models that make significant low density space available on a basis that works commercially for both parties whilst retaining a strong city centre bias.
“And while retailers need to adjust their business models in response to shifts in high street footfall, similarly how hoteliers react to a structural shift in the business traveller market will be a key challenge that is also likely to influence the future of our urban landscape.”
Culled from CIR Magazine