Zoomshock. The buzzword used to describe the far-reaching economic impact of people working from home. Close to 30 per cent of people are estimated to have worked from home in Ireland during the pandemic in the most extraordinary relocation of economic activity we have ever seen.
The extent to which they continue to do so is one of the most vital economic issues we now face. The winners, if working from home sticks as a way of life – even for some of the week – will be Ireland’s suburbs and commuter towns. The early-morning exodus of tens of thousands will be smaller and so a lot more will be done, and a lot more spent, where people live. The losers will be officeland: our city centres.
Will the horsebox coffee outlets across suburbia still be there in late autumn and winter? Or will the gradual return to the office turn into something not far from the old normal?
Already many suburbs are buzzing. Office workers typically did much of their shopping and socialising where they worked – a shopping trip at lunchtime, a coffee, a drink after work, a trip to the gym, perhaps, or for a haircut. Now for many this activity is relocated to where they live. But will the horsebox coffee outlets across suburbia still be there in late autumn and winter? Or will the gradual return to the office turn into something not far from the old normal?
There is a lot at stake.
"The commute is a relatively new phenomenon," says Gerard Brady, chief economist at the Irish Business and Employers' Confederation (Ibec), who has studied the spatial impact of the pandemic. Thirty or 40 years ago people typically travelled only short distances to work, but urban sprawl in the meantime has condemned many to long commutes, particularly younger people.
‘Doughnut development’
“Are we looking at a return to the past where people tended to work and live in the same place?” Brady asks. “ If this does happen, it would be one of the biggest changes for many years in how we live as a society.” The suburbs and satellite towns would stand to be the big winners – and new strategies will be needed to support city centres.
It is not quite as simple as city centres losing and everywhere else winning. Walk through Dublin city centre now and you see big shopping streets like O’Connell Street, Henry Street and Grafton Street with reasonable numbers – and even a few tourists. But office areas such as the southeast inner city and the IFSC remain eerily quiet. Footfall on shopping streets, while well up on 2020, is still less than two-thirds that of pre-pandemic levels, according to data from the Dublin Town retailers’ group.
City-centre browsers are 'just gone', said one retail source, and retailers will have to work hard to attract them back, particularly given the rise of online shopping
Its chief executive, Richard Guiney, says that evening footfall remains particularly weak, even after dining resumed. The city centre retail sector remains nervous.
Transient shopping – the browsers – are “just gone”, said one retail source, and retailers will have to work hard on the “experience” to attract them back, particularly given the rise of online shopping. Higher-cost, bigger, more traditional stores may face particular challenges.
Up to now, Ireland has avoided the worst kind of "doughnut" development – a dilapidated core surrounded by more prosperous suburbs – seen in some US and UK cities, says Arnold Dillon, director of Retail Ireland. But city centres, especially Dublin, are now exposed.
Suburban retail centres are much busier than the city centre. Don Nugent, centre director of Dundrum Town Centre, says that following the reopening of indoor dining footfall is just 7 per cent below pre-pandemic levels. With spending per head up, he says turnover for many retailers is at or above pre-pandemic levels.
Rather than browsing, most people are coming on a spending “mission”, says Nugent, and so those who do arrive are buying.
While Dundrum is outperforming the average – total retail footfall is probably 15 per cent-plus below pre-pandemic levels nationally – its experience shows clearly how suburban centres are bouncing back more quickly.
Louis Copeland, who heads the eponymous menswear retailer, says he has seen the suburban buzz in activity where he lives in Churchtown, in Dublin's south suburbs. And his shop in nearby Dundrum has seen a significantly bigger recovery than his city centre stores.
Wedding business is giving a boost to all the stores, he says, but footfall is much stronger in Dundrum, even if the city centre is also benefiting from the “mission” shoppers who know what they want. And like most retailers, Copeland is selling much more online, with an integration of internet and bricks-and-mortar retail now seen as essential across the industry.
In the UK, researchers from the universities of Nottingham, Sheffield and Birmingham mapped the impact of the Zoomshock for the UK by looking at where people lived and where they worked. Office areas have been hardest hit. The City of London, for example, has only around 8,000 residents but, prior to the outbreak of Covid-19, received over half a million daily commuters.
If many do not return – or do so less frequently – it has a major impact for local services like restaurants, bars, hairdressers, gyms, creches and so on. If 50 per cent of office workers in an area in future decide to work at home for two days a week, then spending from the overall group falls 20 per cent. In turn, much of this spending will transfer to the suburbs and commuter towns.
We have already seen this happening in Ireland – the question is how much of it will stick.
Country homes
Angela Ruttledge, who own the Olive's Room restaurant in St Anne's Park, beside the north Dublin suburbs of Raheny and Clontarf, says the cafe has seen an influx of customers through the pandemic as people take a break in their work-from-home day, or bring children to the park. The safety of the outdoor park setting has also been vital, she says. The coffee previously bought between the train and work is now taken on a park bench.
She hopes at least some of this boost will hold and believes there is an onus on local councillors and planners to develop a viable plan for the area, including a mix of retail outlets – currently the range of offerings is limited – which could attract people no longer working each day in the city centre, or preferring to stay local to shop.
“The area needs a mix of activity,” she says, “to give it a chance to thrive”, as well as a realisation of the vital role local businesses play in supporting the community.
The flourishing of the suburban coffee and more recently restaurant trade is in direct contrast to the devastation facing many in the city centre. And the key question now is whether more retail activity will also move to the suburbs and commuter towns to take advantage of what may be a permanent shift.
There are indications that some of the change, at least, will remain, as many employees establish themselves out of town. Bridget Murphy, business development manager at Digital Office Centres which provides serviced office space, says there has been a surge in demand, particularly in its suburban location in Swords, in north Co Dublin, from companies wanting to hire desks for anything from two to 40 employees.
These are typically employees in company support services like HR and technology, she says, dealing with key functions and information and generally living locally. They would previously have worked in Dublin city centre, where headquarter offices are being downsized. A key factor, she says, is a reluctance among many people to sit on crowded public transport heading into the city centre. Many other workers in the same companies continue to work from home.
Some are betting on change being permanent. Marian Finnegan, managing director of Sherry FitzGerald estate agents, says the stand-out trend in the property market this year is the sale of country homes, which – while still a relatively small part of the market – is showing unprecedented levels of activity. Homes near the coast are in particular demand, with some people planning on a permanent relocation for remote working.
Elsewhere, Finnegan sees strong demand in the more upmarket Dublin suburban areas, particularly for properties over €800,000.
Zoomshock has not hit the incomes of many and savings accounts are bursting with cash.
Regional towns closest to major centres and with a traditional commuting population stand to benefit most, while gains for rural Ireland are smaller
It is suburbs and commuter towns relatively close to city centres, with good transport links and attractive centres where people want to spend part of their day, which will benefit most, according to Brady of Ibec. In a study of 177 regional towns, he found that the ones closest to major centres and with a traditional commuting population stand to benefit most, while gains for rural Ireland are smaller. In turn, this has implications for regional policy.
So much now hangs – for lifestyles and for Government policy – on whether the working-from-home trend sticks post-pandemic. Surveys show a majority of people favour a mix of working at home and in the office, though preferences vary. Many companies are tentatively planning hybrid models, offering a mix of in and out of the office. But in reality nobody knows how this will work.
A paper by the US National Bureau of Economic Research, titled Why Working from Home Will Stick, estimates, based on a survey of 30,000 Americans, that 20 per cent of full-time hours will be working from home after the pandemic, versus 5 per cent beforehand, an extraordinary level of change.
The paper identifies a range of reasons for why working from home will stick: the positive experience from the pandemic; lower stigma in relation to people staying home – previously seen as a bad career move; new technologies and lingering fears about crowded spaces in workplaces and on commutes.
Five-day commutes
In Ireland, it is hard to believe that we will go back to a future of five-day commutes. But a lot depends on how the numbers fall out. If most people are going to return to the office most of the time, then the Government should continue to support small city centre consumer businesses. But if office numbers are going to shrink, then it makes more sense to encourage more services and shops to relocate to suburban areas and commuter towns.
National planning is based on the old model of people working in city centres – and plans “denser” living close to city centres with good transport links. This is the so-called 15-Minute City. in which you can get anywhere quickly and where environmentally unfriendly car commutes are sharply reduced.
If people only have to be in the office, say, two days a week, what does this mean for where they want to live and for the massive investment planned in public transport?
“Will the national development plan out to 2030 now be overtaken by events, with its vision of ‘densification’ – living in smaller dwellings near the city centre?” asks Brady.
If people only have to be in the office, say, two days a week, what does this mean for where they want to live and for the massive investment planned in public transport? And how does it fit with the plan to cut carbon emissions from our car-driving habits?
Covid-19 has turned the economy upside down. And it is increasingly clear that the exit from the pandemic will see a long transition period. But the longer-term impact could be really significant. Ireland’s suburbs and commuter towns have sprinted away as the restrictions have lifted. Those who get it right look set to prosper because it is clear that our working patterns have been changed fundamentally by the pandemic.
By just how much is not yet clear. But as we get used to living with Covid-19 in some form, there is simply no going back to the way things were.
Read two views from suburbia:
Malahide: 'I don't know anywhere else you would get this sort of vibe' Churchtown: 'There's a buzz that mightn't have been there before'
