How COVID-19 has Impacted the Future of Urban and Suburban Offices

The world before 2020 or the “Old Normal”
According to the Metropolitan Policy Program published in March 2015 by Brookings Institute, “The 2000s ushered in significant demographic and economic changes that have redrawn the map of economic opportunity in metropolitan America.” First, two economic downturns and the weak recoveries that followed them resulted in there being fewer jobs in 2010 than in 2000. As the job market declined, businesses and employees moved farther and farther outward within the nation’s largest metro areas. Almost every major metro area saw jobs shift away from the urban core during the 2000s toward the suburbs and beyond.¹

The advantages of suburban offices over urban locations
One reason for this movement was that suburban locations cost less for more space and had lower taxes. They were also located closer to the residential areas preferred by family-oriented millennials looking for affordable homes, better schools, and lower crime rates. This group also viewed long commutes to work as a definite deal breaker when it came to employment. And larger campuses allowed companies to attract and retain top employees with perks like a company gym, child care for employees, and free parking.

In addition, suburban campuses in secondary markets had another timely benefit. Many of these smaller cities are located in temperate climates, making them more comfortable to live and work in than northern cities as global warming becomes more extreme. Not surprisingly, these areas are experiencing a faster growth rate than larger markets such as New York and Chicago. In fact, since 2014 cities with milder climates have enjoyed a growth rate that’s more than 200 percent over that of gateway cities.

Yet urban offices still provide a special element of excitement
Richard Green, professor of public policy and economics at USC Price School of Public Policy, feels that city locations for corporate growth are a must. “The cities,” Green explains, “are where the people these companies want to recruit most want to live. It’s tough to build a great company online. People need to come together to get and forge a rich corporate culture.”

In a recent survey conducted by Eden Workplace, nine out of ten millennials said they wanted to return to downtown offices. Green feels this is because many put a high value on the lifestyle a city offers including access to restaurants, museums, and sporting events at the end of the day. Not to mention the opportunity to meet new friends and romantic partners.²

And when it comes to staff members who are starting their careers, Ann Duncan, Executive Vice President of the real estate service firm Savills, observes, “Now, more than ever, we realize that vibrancy in both work and personal life are essential to well-being. For younger cohorts, in-person interaction is crucial to both learning and career advancement, and younger workers are often less likely to have ideal working configurations at home.”³

All of these reasons may account for the popularity that downtown urban areas have enjoyed during the last few years even while the overall growth rate for metro areas has slowed.²

Then along came COVID-19
On January 9, 2020 the World Health Organization first announced that a mysterious coronavirus- related pneumonia had broken out in Wuhan, China. By January 20, cases were appearing in Thailand and Japan with the first American case occurring in Washington state. It was clear that transmission of this new virus was quick and would soon prove deadly. By February 2 global air travel was restricted. The next day the U.S. declared a public health emergency followed by the Centers for Disease Control identifying COVID-19 as a pandemic. On March 13 President Trump declared COVID-19 a national emergency. Six days later California became the first state to issue a stay at home order for non-essential workers. Other states soon followed this example and lockdowns, social distancing, and masking became the new normal.

By June 7, 2020 three million people around the world had been infected. In that month pharmaceutical companies first began testing vaccines. By August Covid was the third cause of death in U.S. and within weeks worldwide deaths were up to one million. By the beginning of 2021 vaccines were being given on an experimental basis and proved effective. But by then our way of life had irrevocably changed and those changes continued through 2021.

Perhaps the biggest change occurred not from the disease itself but from an attempt to reduce the chances of its transmission by closing down public places and paying people who worked in those places, emergency support. The result was a population who went from working together and interacting with customers to working in their homes while isolated from everyone other than family members. This change also necessitated communicating with their peers almost exclusively via electronics.

With the passage of a bill that gave $900 billion in COVID-19 aid at the end of 2020, workers who had previously been torn between earning a paycheck and risking becoming deathly ill could now stay at home and still pay their bills. Ambitious go-getters who had once prided themselves on arriving at the office by 8 A.M. were now able to do their work at home in their pajamas.

For many people, having all that time alone gave them a chance to consider what they wanted to do, who they wanted to work for, and how they wanted to live their lives. The answers didn’t necessarily lead them back to their old work place. Often it had them rethinking whether or not they wanted to change positions or even pursue a new profession altogether. Or, if they did want to continue on the same career path, they began to give more thought to how that career fitted in with the rest of their lives.

Reconfiguring what was
During the early months of 2020, businesses were trying to develop models that would enable them to function more or less as usual without having office workers on-site. This model wasn’t really new, of course. Many businesses had been allowing some workers to work from home part-time for years. But now the entire office was operating remotely with meetings taking place on the phone or via Zoom. Although working remotely began in response to COVID, it quickly became apparent that roughly 40% of jobs could be done just as effectively at home as on-site. This fact alone opened up a whole world of options for employers and employees. Employees found that working from home was less stressful because they were able to integrate their professional duties with their family responsibilities. Plus, the strain of long commutes on traffic-clogged expressways was eliminated.

When workers were allowed to go back to the office once things opened up, their interaction with colleagues had changed, too. For one thing, there was physical distance between them since everyone had to stay six feet away from everyone else. There were fewer options for out-of-the-office meetings as well, since many small restaurants had to closed their doors. And yet, meeting with peers in the same physical space did generate creativity, innovation, and a commitment to the company that working alone never could.

Predicting what is to be
In a way, COVID-19 and the changes our society has undergone in response to it, has given all of us a chance to consider new ways to work and live.

Here are some ideas from a number of experts on what they feel the future holds for businesses in urban and suburban areas. All seem to agree that cities are here to stay as are suburban campuses. And working remotely will continue long after COVID-19 is just another seasonal annoyance.

Edward Glaeser – Professor of Economics at Harvard University and author of The Survival of the City
“City centers will become more residential, cheaper, younger and scruffier. While some work from home is here to stay, most employees will continue to go into an office, most of the time. Face-to-face contact can fuel innovation, enable on-the-job learning and prevent work from feeling purely transactional. There will be a reduction in the demand for commercial space, which should lead to lower commercial rents and some conversion to residential uses.

The general trend to larger suburban homes over the last 40 years will continue and perhaps even accelerate. Some empty nesters will stick to the suburbs rather than re-urbanizing. Some parents with school-age children will speed up their move to the suburbs. Nonetheless, I see this as being a marginal change in the suburbs, not a great watershed.”

Brooks Rainwater – Senior Executive for The Center for City Solutions at the National League of Cities
“While the wholesale adoption of work-from-home policies by companies will not be uniformly undertaken, even a movement of 10% of the workforce from downtown business districts to remote offices will have a huge impact on city centers and neighborhoods throughout metro regions.
Regionalism will continue to grow in importance as cities, suburbs, and exurbs more fully recognize that they are intricately linked in good times and bad. Trends in suburbs toward mixed-use development, more walk-ability and increased transit connections were long established before the pandemic, and these trends will only proliferate and accelerate post-pandemic.”

MaryAnne Gilmartin – Founder and CEO of MAG Partners LP, a real estate development company
“Office workers are clamoring to feel the energy and collaboration they have missed the last year, but without giving up some of the newfound flexibility in their workdays. I think that this dynamic will be great for office buildings and dense commercial districts by forcing them to become more mixed-use — something that was happening even before COVID-19. A more flexible workweek will take the strain off the rush-hour crush and provide a great opportunity to adapt streets, parking and office structures to create more vibrancy. Existing districts should permanently cede more public space to outdoor dining, urban parks, and pedestrian and bike infrastructure. For office buildings themselves, lobbies should drop their boundaries and integrate into food and beverage operations, keeping the spaces activated from morning to night.

If we think of this as one ecosystem, then it won’t be surprising that suburbs and exurbs adapt in parallel with city centers. The biggest shift could be to more satellite offices and co-working locations. These won’t replace the corporate headquarters, but leading companies will seek them as supplements, so that a suburban parent could skip the commute one or two days a week while still working from a professional setting and be able to be home for baseball practice or the choir recital.”

Mitchell Moss – Director of the Rudin Center for Transportation, New York University
“Working remotely has surged since the pandemic struck, leading many to believe that the office is dead. Nothing could be further from the truth. The office of the future will emphasize those activities that require human contact: informal meetings and settings that foster the easy flow of ideas and feedback. But organizations must adapt to the rise of remote work by shifting to a three- or four-day office workweek, with an office environment that fosters human contact but without 50-square-foot work stations, and by investing in new systems to assure public health, such as advanced air ventilation, access to an abundance of outdoor settings, and office spaces that accommodate informal, spontaneous meetings.

We are witnessing the rise of the ‘supercommuter’ as workers choose where to live — based on their preferences in education, recreation or climate, rather than proximity to work. The second-home community is increasingly a first home in the 21st century.”

Mark Dotzour – A real estate economist who served for 18 years as the Chief Economist for the Real Estate Center at Texas A&M University
“My speculation is that in the post-COVID era there will be a lot of people still working in downtown office buildings. It’s possible that a hybrid work environment could develop, where people work at the office three days a week and work at home the other days. In this scenario, I don’t see significant reduction in demand for office space. The employees will still need the space they had. We are in the early stages of a grand social experiment to explore what these efforts might be. How might suburbs and exurbs be viewed as the pandemic fades into memory? The urgency to move for health concerns to the exurbs will lessen, but I see two reasons that would cause further movement away from the urban core. If working from home allows companies to attract the highest talent, then many companies could adopt the same policy. If violence and crime is allowed to proliferate in urban centers, then workers and businesses will leave. If people are allowed to work from home, then land-development opportunities may appear in smaller communities within a 60-minute drive of the central business district.”

¹Kneebone, Elizabeth and Holmes, Natalie, “The growing distance between people and jobs in metropolitan America” Metropolitan Policy Program by Brookings, March, 2015 https://www.brookings.edu/wp-content/uploads/2016/07/srvy_jobsproximity.pdf

²Smith, Daniel, “Why COVID-19 Won’t Make Downtown Office Buildings Obsolete, Future of Work”, University of Southern California, Spring, 2021,
https://www.newsbreak.com/news/2346900726559/why-COVID-19-won-t-make-downtown-office-buildings-obsolete

³Carey, Bill, “Post-COVID, the city center becomes public square (and survives), Market Watch, May, 2021
https://www.marketwatch.com/story/post-covid-the-city-center-becomes-public-square-and-survives-11618210678