What:  The pandemic has already changed the role and perspectives of city centres. Many questions now remain on the permanence of such changes

Why it is important:  Historical department stores are often located in hypercentres. Should city centres change in terms of economic activity or demographics, they will have to adapt in terms of strategy, services and products. We have already seen within IADS members faring better in regions than in their historical flagships.

Capital cities used to have a central role in all major economies. For instance, the total daily salary bill for anyone working in central London was twice what it was in other boroughs in 2000, while on the 2000 – 2020 period jobs grew 40% in central Sydney than in the rest of the region.

However the pandemic has reverse the narrative and some research tries to quantify the changes (Survival of the city, Edward Glaeser, David Cutler, Harvard University Press, 2021) and, above all, to know if this is a permanent change or not.

Some data allow to have an idea of what is going on:

• In America, Britain, France and Japan, mobility in capital cities is now substantially lower than in the rest of the countries,
• Restaurant bookings are 9% lower in Toronto when compared to the pre-pandemic levels, while Canada is +8%,
• An estimated fifth of San Franciscan workers actually go to city centres offices.

What appears from the research is that as a whole, economic activity, instead of remaining overly super concentrated like it use to be, is now spreading more evenly outwards from the centre. This explains the paradox of rural areas not seeming to go through a population boom in parallel, of the fact that suburban stores are faring better than urban stores.

On the long-term, this has 2 consequences:

• Less workers and tourists in city centres would mean less employment for low-income and service workers (baristas, taxi drivers), who would then be facing the option of loosing their revenue if they stay in a lower traffic area, or relocate to more active regions, often in suburban ones,
• Less concentration might impact productivity and innovation, as remote working does not allow for the same kind of serendipity than having different competences and approaches concentrated in a same physical space.

The Economist talks about the notion of “cracked egg” with the central part now spreading like an egg in a pan. The pandemic will probably not destroy cities, but it is already changing them, with a higher probability that city centres will become more attractive for residents and local businesses, while larger companies will have every incentive to relocate in more vibrant regions.

The new economics of global cities