As a result of the coronavirus pandemic, the world looks a lot different than it did previously. Social experiences are notably less common, and social distancing and face coverings have changed interactions. Likewise, many businesses and services are limited in scope with some remaining closed. But one of the most significant changes has involved employees working remotely from home. What began as a necessity to protect public and individual health is now being considered for other reasons. But will this new trend undermine the impact technologies were expected to have in creating smart city concepts? Does the rise of the “Come to Me” Economy mean the premature death of the “smart city”?
Recent surveys post COVID-19 indicate that 61 percent of the workforce are now working remotely from home. The majority of these workers only began doing so after pandemic precautions and restrictions were put in place. What is interesting, however, is that these same workers report an overall loss in productivity of 1 percent. And nearly half state they would like to continue working remotely from home. At the same time, employers are realizing how this trend could benefit them economically. But if this shift occurs, cities will experience major repercussions. In fact, it may mean the demise of many municipalities’ vision of becoming a truly smart city.
“Is [working at an office] really necessary? I’m thinking long and hard about it. Looking forward, are people going to want to crowd into offices?’’ – Diane M. Ramirez, Chief Executive of Halstead Property Company, New York
New Perspectives on Working Remotely from Home
Without question, social trends were already moving in a direction where working remotely from home was encouraged. But pandemic lockdowns have certainly accelerated this phenomenon. As this has evolved, major corporations are adapting their workflows and reconsidering their real estate situations. This is particularly evident in Manhattan where companies like Barclays, JP Morgan Chase, and Nielsen reassess their work dynamics. Certainly, New York real estate isn’t cheap. And given the current economic climate, this offers a key solution to help ease some of the financial pains.
From the employee perspective, working remotely from home also looks rather attractive. Especially in larger metropolitan areas, this would eliminate long commutes and some traffic issues. The prior solution had been to create a smart city where technological integration addressed these problems. But the demand for smart city solutions would be less with people videoconferencing and working at home. The flexibility remote work offers individuals in their lives is quite attractive to many people. And such arrangements could also open new options for families in where they reside. In other words, the urban push may not be quite as strong if these trends remain in place after COVID-19.
“If you got two and a half million people in Brooklyn, why is it rational or efficient for all those people to schlep into Manhattan and work every day? That’s how we used to do it yesterday. It’s not rational now.” – Jed Walentas, Principal at Two Trees Management
A Not-So-Good Thing for Municipalities
Not everyone is pleased with more and more people working remotely from home. In fact, if this shift occurs at a large scale, the impact in urban areas could be tremendous. Especially in places like Manhattan, large commercial towers with thousands of employees drive city life. This not only includes tax revenues from commercial tenants but also restaurant, retail, and public transit use. With more people working remotely from home, municipal revenues would decline. Ultimately, this might not only mean less of a focus on becoming a smart city but likewise fewer services also. As some have put it, there would be a reckoning within these urban areas.
Such effects are already being seen in some major urban centers. Three years ago, Sidewalk Labs, an Alphabet project, sought to partner with Toronto to create a smart city. The initial 12,000-acre project was to offer heated bike paths, awning-covered walkways, robotic delivery systems, and fully integrated transit systems. But recently, Sidewalk Labs pulled out of the smart city deal. In addition to pushback from some residents about privacy and surveillance concerns, costs became an issue. In addition to economic uncertainty related to COVID-19, concerns also involved Toronto’s ability to serve as a smart city partner. If Toronto experienced a decline in its commerce sector, its financial capacity in becoming a smart city would be compromised.
“It has become too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan we had developed together with Waterfront Toronto to build a truly inclusive, sustainable community.” – Dan Doctoroff, Chief Executive, Sidewalk Labs
Smart City Concepts Are Not Always Smart
The technology that could transform an urban environment into a smart city is both intriguing and exciting. Congestion could be effectively eliminated with greater traffic coordination and planning that a smart city offers. Likewise, many other urban amenities could be enhanced while reducing climate impact and improving sustainability. But one thing COVID-19 has shown us is that other solutions may exist. By working remotely from home, mass transit needs are less as is workspace requirements. This too has positive effects on the environment while also promoting more effective space planning.
In addition to these advantages, working remotely from home also offers attractive lifestyle changes and better use of one’s time. A smart city strives to enhance work-life balance, but it assumes urban living will be preferred. As more people realize the flexibility and benefits working remotely from home offers, this may no longer be the case. Fewer people will not only be commuting to urban areas for work but likewise more will live outside the city. And with less revenues targeting these urban environments, funding for smart city development will decline. Understanding this, the writing is on the urban wall. Working remotely from home will be the new norm when the coronavirus pandemic is over. And while smart city concepts will remain, they will definitely be placed on the back burner for now.
Stay tuned for an article examining the “Come to Me” Economy and how it will shape the future!