The Tipping Point

Millions of Americans migrating out of cities was a major trend in 2020 when COVID-19 pushed worried citizens out of the crammed, disease centers of NYC, Chicago, Boston, San Francisco, and other highly populated areas. Although this trend has quickly reversed, the question stands: ‘Why live in the big city anymore?’. In previous years, the appeal of job opportunities and big-name firms were the easy answer, not to mention the endless social opportunities pre-COVID. Post-COVID, however, the answer is no longer that simple. The ability to work from home has opened up the opportunity to work from wherever you want in the world. Whether that be the heart of NYC or the middle of the woods in Alaska, as long as you have wifi you can get the job done, right? 

There is no disagreement that Zoom and the virtual workplace have changed the way we operate for good. The remote life that was forced upon the workforce has been, unsurprisingly, received very well, and there is immense desire for it to stay; a recent survey of Americans suggests that “just 3% of white-collar workers want to move back to a full work week”(Shaw 2022). On top of that, Gen-z members who are just entering the workforce have trialed the remote experience and are now accustomed to it, expecting firms to accommodate accordingly. This desire derives from a range of benefits, such as eliminating commutes, increasing time to spend with family, and the general comfort of working from home. White-collar workers are demanding it stays, at the very least in a hybrid form—a flexible schedule with days designated for virtual attendance and others for in-person.  

Beyond the emergence of Zoom, companies like Facebook, Google, Samsung and even the New York Times have been making investments in Virtual Reality (VR) to improve the work-from-home experience . Their investments into VR technology has led to a hyper-realistic virtual working environment. From sitting around a table and seeing your coworker’s avatars to writing and erasing on virtual white boards, the virtual office is more like a professional playground. 

In tandem with established companies moving towards a hybrid work week, a “survey of 450 founders in July 2021 found that 91% of early stage startups are starting out partially or fully hybrid.”(Bannon 2021) The founders stated they see great benefit in starting off their ventures with a hybrid schedule so they can attract any and all types of workers. It would be detrimental to not allow for virtual working because many high level employees might turn away to other firms offering such a luxury. With each new company adaptation, the more permanent the hybrid work schedule appears. Take Meta (formerly Facebook), they just announced they plan to accept remote work indefinitely. Coming from such a dominating force, other companies are likely to follow suit.

Following the shift to remote work is the realization that city living has many f faults that the virtual workplaces can remedy. The obvious: cities are expensive. A lot of young workers end up living in cramped apartments fighting to get to work in a cramped city and now during a time where being cramped could spell pandemic with a capital COVID. Similarly, employers, too, are looking to move out of the big city. Many companies are moving to small, on-the-rise areas such as Austin, TX or Denver, CO. Of course this migration is mainly due to high taxes, but the point remains: workers will follow the march out of big cities. There has already been a flock of millennials in the workforce who have moved and will continue to do so. 

A 2018 survey found that “80% of Americans lived in urban areas but only 12% of Americans admitted to wanting a home in a big city” (Ingraham 2018). Post-COVID, the 56% of Americans who would rather have lived in rural areas or a small city can finally do just that of the virtual workplace and the movement of companies to rural areas. We are entering a world where it is possible to live in your dream home a mile from the beach and still show up to meetings, present projects, and put in your 40 hours. Yet a big question is still left unanswered: where does that leave the physical office and those who supply it? 

In the wake of the pandemic there has been speculation on whether commercial real estate will sustain its growth rate pre-pandemic. What the numbers suggest is that commercial buildings will not take a hit, but will shift in response to the preferences of companies. An article from Forbes gathered that “whereas in pre-Covid-19 days, some businesses were looking for spaces with gyms, lounge areas and meeting rooms, the demand now is for indoor air quality, touchless technologies and appropriate distancing between office cubicles”(Robb 2021). The answer to commercial real estate's future post-pandemic, it seems, is to reconfigure spaces to allow employees the in-person socialization they desire while satisfying those who want to work from home. This may mean bedlam for older office buildings, which will need to adapt or else grow obsolete in light of great demand for safety-centric offices. 

For companies that accommodate fully remote workers, it is now a truth that, as a worker, you no longer have to move to find work—work can find you. ‘Labor markets’ used to be synonymous with “the big city”, but that is no longer a cut and dry definition. In the new era of the virtual workplace, a growing amount of job opportunities have no geography to them. “A survey by Global Workplace Analytics found that 97 percent of North American office employees worked from home for more than one day per week, even though 67 percent had not participated in remote work previously.” The dramatic switch to online work has allowed firms the possibility to hire employees from Arizona, Idaho, California, and Maine, while maintaining a central office in Florida. The necessity for living in these dense urban areas is declining as the labor market is adapting to allow work conducted virtually. 

Further support of the shuffle out of urban areas is the benefits it may have on our economy. In the study of over-/under-urbanization- research on the optimal level of urbanization- it is theorized that the prime concentration of urban areas is not in a few very large cities, as we have now, but dispersed between many smaller-sized cities. This has been determined based on the share of the economic pie between urban areas. If concentrated only in NYC and Boston, then an imbalance is created resulting in disproportionate control over political power, economic investment, and labor share, which may slow the American economy as a whole. What’s more, studies find that  “due to chronic underinvestment in infrastructure and housing, many cities are doing a poor job of keeping pace with the flow of new arrivals, eroding the quality of life for everyone” (Ingraham 2018). It may be a stretch to claim big cities can’t support the inflow of citizens, but it is certainly a claim based in fact. 

The desired benefits of moving out of the big city are clearly financially as well. “If you're selling a metropolitan home,” Ingraham writes, “you may also receive enough proceeds to make an all-cash purchase on a house in rural areas that have cheaper living. Consequently, that will eliminate your mortgage payment completely. And property taxes? In rural areas they’re typically a small fraction of those assessed in urban and suburban communities.”(Ingraham 2018) In no way do I mean to glorify the move to rural areas, but the monetary benefit of moving stands as another reason people are at least window shopping the move to smaller cities and rural areas. 

The social cost is something that I feel is holding back movement out of big cities. An extensive network of friends, great places to eat, stores to shop, and a sea of single people are all things to weigh when leaving the city. There are certainly costs of working away from your office as well, like losing that intimate social connection you have with your working team or your boss. Many employers want to support the virtual experience, but the fear of missing the connection that coworkers had pre-COVID is looming overhead. 

Balance should be the focus of businesses in this unprecedented time. For now, there is no argument that industries will adapt to the new desire for physical office spaces curtailed to social distancing practices and virtual-friendly areas. The hybrid-work schedule will be in full effect. And companies or emerging startups have guaranteed that in conjunction with workers’ demand for it. All in all, the future of the work environment looks adventurous, flexible, and most importantly, virtual. 

References

Bannon, M. T. (2021, December 8). 7 future of work predictions for 2022. Forbes. Retrieved April 25, 2022, from https://www.forbes.com/sites/marenbannon/2021/12/08/7-future-of-work-predictions-for-2022/?sh=6e85da2b5d5a 

Ingraham, C. (2018, December 19). Americans say there's not much appeal to big-city living. Why do so many of us live there? The Washington Post. Retrieved April 25, 2022, from https://www.washingtonpost.com/business/2018/12/18/americans-say-theres-not-much-appeal-big-city-living-why-do-so-many-us-live-there/ 

Robb, B. H. (2021, February 8). Council post: How the pandemic continues to affect the commercial real estate market. Forbes. Retrieved April 25, 2022, from https://www.forbes.com/sites/forbesrealestatecouncil/2021/02/09/how-the-pandemic-continues-to-affect-the-commercial-real-estate-market/?sh=2b9425603af3 

Shaw, W. (2022). Just 3% of White Collar Workers Want A Full Office Return. Bloomberg.com. Retrieved April 25, 2022, from https://www.bloomberg.com/news/articles/2022-02-14/just-3-of-white-collar-workers-want-a-full-office-return