A recent survey shows that the UK is seeing a marked shift towards different ways of working. It’s a shift that is being mirrored worldwide and will have a profound effect on the market for household and office moving.
UK towns and cities will undergo an inevitable transformation as a result of COVID-19 with 68% of UK CEOs believing there will be an enduring 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’.
According to the survey:
- over three quarters of UK CEOs (86% v 78% globally) see a long-term shift towards remote collaboration; and
- three in four (77% v 76% globally) 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, according to Simon Hampton, PwC’s UK Real Assets Leader.
“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 lock-down 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. When you look at these retail shifts in tandem with our UK CEO responses - and in light of the worldwide test case for digital transformation and home working - it would be short-sighted of us to think it won’t result in different looking town centres and suburban areas in future. And this is certain to have larger real asset implications for the built environment with developers and investors needing to navigate this changing landscape.”
De-urbanisation and the impact on real estate industry and city centre
CEOs are divided about what role cities will play in the future with a third believing the shift towards de-urbanisation (away from urbanisation) is enduring with another third believing it is temporary.
Conversations with UK CEOs 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. Alongside the UK survey results, it’s clear that if people are working more flexibly, they are highly likely to reconsider 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.
James Pincus, Infrastructure Advisory M&A Leader added: “The CEO survey highlights potential changes that will have a significant knock-on effect not only on how we live in, work in and use our city centres, but on our fundamental infrastructure needs as, for example, in transport, commute routes shift and priorities change. The UK’s digital infrastructure landscape is critical to ensuring it truly meets the needs of a changing society, with any required investment delivered swiftly as we look to rebuild the economy. As we start to recover from COVID-19, we’re already finding that infrastructure stakeholders are looking to rebuild in a more resilient and sustainable way, and we’re currently seeing a significant investor appetite for businesses that will advance energy transition and decarbonisation.”
Angus Johnston, Real Estate Leader at PwC, concluded: “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.”