COVID-19 has emptied the commercial hearts of some of the world’s biggest cities. Here are five ways the pandemic may change global business districts.
The COVID-19 pandemic has not only changed the health outlook of millions of us, directly or indirectly. It’s disrupted how we live, interact and work. And the world’s largest business districts – from Manhattan in New York City to the City of London, Marunouchi in Tokyo, Dubai’s International Financial Centre and Paris La Défense – provide a concentrated view of what happens when long-term megatrends and immediate disruptions collide.
Before the lockdown, the 21 global business districts (GBDs) — in the world’s largest and most powerful business cities — cited in the Global Business District Attractiveness Report (pdf ) by EY and Urban Land Institute (ULI) were the main workplace for nearly 4.5 million people. Tens of millions saw these GBDs as their hometowns and as destinations to go for job interviews, visit clients, shop or dine, watch movies or their favorite sporting teams play.
These 21 GBDs cover a total of nearly 100 million square meters of office space. They are home to the global headquarters of about 20% of the Fortune Global 500, as well as many of their professional-services providers from consulting and audit firms to insurers, bankers, advertising agencies and media companies. Although they employ an average of 4.5% of the population in their respective metropolitan areas, these companies are some of the biggest players in the business world.
As of April 15, fourteen of these GBDs are in cities that have enforced full lockdowns,1 such as London, New York and Paris. This means two-thirds (3.5 million) of workers in GBDs have left, while restrictions are often enforced in the remaining seven GBDs. No one can be sure when the GBD workforce will return – the possibility of a gradual return to “normal” is still unknown, as is what “normal” will even be.
An uncertain future
Before the COVID-19 crisis hit, GBDs were accelerating efforts to attract more talent, new businesses and capital. We expect most of this competition will continue, though bound by new rules.
After the COVID-19 crisis, GBDs will need to adapt. The health and well-being of people will be paramount in offices and public spaces, and it seems certain social- and professional-distancing measures will carry on for months. New health precautions will continue for years, deeply impacting business and financial models for real estate. The sector will also face changes to the shape and supply of commercial real estate as companies seek to reduce costs in the recovery phase and accelerate the adoption of technology and of employees working from home.
The big question? In the new normal that emerges as the pandemic recedes, can GBDs convince all of their stakeholders – companies, employees, visitors, shoppers, inhabitants, investors and developers – that the business districts are still unique places to operate?
Here, we outline five main observations from long-term global megatrends and the lessons learned from the first four months of 2020. In short, we think the core of a GBD’s attractiveness formula may remain the same. International businesses, representing the vast majority of GBDs, will need to resume staff meetings, conduct strategic projects, and host clients and business partners. The talent war will remain as fierce as it was before.