The post-pandemic working world is taking shape

At Irish software company 3D Issue, employees work a four-day week. Paul McNulty, its founder, says the policy helps attract local talent. Since the pandemic began last year, the company, based in Donegal, is competing with Dublin's Big Tech groups for new hires.

Remote work has meant tech workers in regions such as Donegal have been able to apply for higher paying jobs with Twitter, Google and Microsoft – without having to relocate.

Meanwhile, they are being joined in rural Ireland by some formerly Dublin-based tech employees who are escaping the Irish capital's rising property prices.

It is a pattern the Government is keen to accelerate: earlier this year it unveiled a plan to encourage a shift of people from major cities to the rest of the State, which includes creating a network of more than 400 remote working hubs and tax breaks for individuals and companies that support homeworking.

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What is happening to McNulty's company is just one illustration of the complex interplay of post-pandemic factors that has left the world's former office workers in a state of flux. In terms of where people may decide to end up in the long term, "we just don't know yet", says Lynda Gratton, a professor of management practice at London Business School. "Questions about 'where I live', these are big bets."

Easing lockdowns

As lockdowns ease, however, some of the landscape of the post-pandemic working world is starting to emerge – and the trends are clear. There has been no mass exodus from major hubs. Capitals such as London, Paris and Tokyo have experienced varying outflows over the past year. And often people who move opt to remain within the orbit of big cities.

London, for instance, has always attracted Britons in their 20s and lost those in their 30s and 40s.

"I'm sceptical we'll see a wholesale shift," says Andrew Carter, chief executive of Centre for Cities, an urban policy think-tank. Many young people decamped to their parents' homes or cheaper rentals outside the capital during lockdowns, but he says there is little data to indicate how permanent this will be.

Similarly, those selling up in 2020 and leaving London for other regions did not quite reach a 2016 peak, according to data from Hamptons, the estate agent. And of the 73,000 homes Londoners bought as new main homes outside the capital last year, 69 per cent were in the south of England – within easy commuting reach of the capital.

And as the UK prepares to ease lockdown restrictions, people are returning to live in city centres to take advantage of reduced rents, according to analysis by property portal Rightmove for the BBC.

A recent study by the London School of Economics on the pandemic and the housing market found that some of the largest price increases in 2020 compared with 2019 were for detached houses as close as possible to the centre of London, not remote locations.

Working near home

Meanwhile, the biggest trend – and one that is going to grow as lockdowns ease – is “working near home”, where hyper-local workspaces serve residents who want to get out of the house but don’t want to commute into the centre of town.

Business First, a workspace provider, has nine office sites in towns around Manchester. Sarah Fretwell, its director, says during the pandemic "offices have been rented to meet this demand in the local areas where the employees are living", with the group's occupancy nearing 90 per cent.

Andrew Butler, managing director of IncSpaces, a flexible workspace provider, says "near home is where we see our marketplace".

There is evidence of this trend in other cities too, such as New York, and is something larger co-working providers can take advantage of. WeWork, for example, is offering UK tenants more flexible terms, so employees can use the spaces most convenient to them.

More broadly in the US, commercial property experts say the footprint of post-pandemic offices will shrink by about 20 to 30 per cent. But companies are struggling to develop 10-year real estate plans to accommodate the shift. Most will probably try out new arrangements in a few markets, then measure the results.

Distributed workforce

"A distributed workforce is here to stay," says Terence Kirk, an executive vice-president at Colliers, who represents office tenants in Los Angeles.

Debra Moritz, head of strategic consulting for Chicago-based Cushman & Wakefield, estimates that the number of employees working entirely off-site will double from 5 per cent, while another 10 or 20 per cent will work in the office five days a week. The rest will split their time between home and office.

In Europe, good transport infrastructure and the appetite for working from home have led to an uptick in people heading out of central Paris and Berlin for the long term. Some towns ramped up their marketing to attract those looking to make a permanent move.

Angela Million, head of the city and regional planning department at Berlin's Technical University, said towns such as Brandenburg on the Havel, about 70km west of Berlin, could emerge as winners, as well as similar midsized towns with solid infrastructure.

Couples with families have for some time been drifting away from Berlin to these areas, drawn by the better quality of life, excellent transport links and access to nature. Similar patterns are emerging in other large German cities, such as Hamburg and Hanover.

Matthias Günther, an economist at the Pestel Institute, says: "When you only have to go to the office twice a week, you can really expand the radius of your flat search."

In Donegal, as well as competing for talent for 3D Issue, McNulty says the competition for available local property has increased. A colleague, who is also a landlord, told him that he had “never seen anything like it”.

Whether people decide to move away from tier one cities or remain within close orbit, one positive aspect of working from or near home is that people “get much more connected to their neighbourhoods”, says London Business School’s Gratton. “I’d love to see other cities build this up.”

– Copyright The Financial Times Limited 2021