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Working from Home And the Future of Smart Cities

If you could always work remote, would you relocate to a smaller, quieter city?

Working from Home And the Future of Smart Cities
Remote workers relocate to mid-size cities Cemile Bingol/iStock 

Working from home is not a new concept. Yet, since March 2020 an increasing number of enterprises around the world --including giant tech companies such as Google, Facebook, and Twitter--  have announced their plans to continue granting employees the option of working remotely to anyone who wishes to do so, as nations keep on fighting the Covid-19 pandemic. 

Researchers and economists have found that the new working-from-home economy possesses challenges as well as benefits, bringing societal impacts caused by the massive transition to widespread remote work. The sudden increase of people working from home is visibly changing the face and soul of the cities, especially the large ones. 

In the United States, several mid-sized cities have expanded incentive programs aimed to attract remote workers looking to relocate. For decades, jobs and opportunities have been concentrated in large metropolises. For large cities, this has translated into an economy where spending is a non-stop activity no matter the budget or season.  

The disparate economy between urban large cities and smaller ones has been real across the globe. However, the potential for the expansion of remote work might change this, opening up the opportunity to economical spread, as well as to some other opportunities. 

For Stanford economist Nicolas Bloom, the new working-from-home global trend possesses challenges as well as benefits bringing societal impacts caused by the massive transition to widespread remote work.

Nicholas Bloom, who is the William D. Eberle Professor of Economics in Stanford's School of Humanities and Sciences and a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR), focuses on labor economics, management practices, and uncertainty.

How is this new global trend of remote work acceleration going to co-exist, influence, or alter the ongoing smart city developments and city infrastructure landscape?  

In How Working from Home Works Out, Nicholas Bloom offers policymakers and business leaders suggestions for making remote-work a permanent part of the labor landscape during this crucial transition into the future of work. For Bloom, the explosion of the remote work trend is not only showing effects at a societal level but also having an increasing impact in the growth of cities. 

"Growth of city centers is going to stall. During the pandemic, the overwhelming share of employees who shifted to telecommuting previously worked in offices in cities. I estimate that the loss of their physical presence slashed total daily spending at city center restaurants, bars, and shops by more than half," Bloom says. 

According to Bloom, this upsurge in working from home is largely here to stay. "I see a longer-run decline in city centers. The largest U.S. cities have seen incredible growth since the 1980s as younger, educated Americans have flocked into revitalized downtowns. But it looks like that trend will reverse in 2020 – with a flight of economic activity out of city centers."

The workforce movement out of city centers will create a boom for suburbs and rural areas. "Given the need for social distancing, the firms I talk to are typically thinking about halving the density of offices, which would lead to an increase in the overall demand for office space. But instead of building more office skyscrapers – which has been the dominant theme over the past 40 years – I predict that Covid-19 will dramatically shift the trend to industrial parks with low-rise buildings," says Nicholas Bloom.

Moreover, Bloom says that high-rises in cities face two massive challenges post-Covid. First, mass-transit – the subway, trains, and buses. "How can you get several million workers in and out of major cities like New York, London, or Tokyo every day with social distancing?"

Second, elevators. "Typically, before Covid, you could squeeze people into an elevator, with each person taking roughly four square feet of space. But if we enforce six feet of social distancing we need more like 100 square feet of space, cutting the capacity of elevators by over 90 percent, making it impossible for employees to reach their desks during rush hours." Indeed. And perhaps many have not yet realized about this. 

But the pandemic will not last forever! You may think. True. At some point, social distancing will no longer be needed. Although some, after becoming more conscious about the health risks that being too close to other human beings bring will perhaps continue to keep some distance. 

"My prediction, says Nicholas Bloom, "is that society will have become accustomed to social distancing. And given other recent near-miss pandemics like SARS, Ebola, MERS, and avian-flu, or the prior influenza pandemics of 1957-58 and 1968, firms and employees will fear the potential need to return to social distancing. So, I anticipate many firms will be reluctant to rapidly return to dense offices."

Nicholas Bloom's survey results revealed that employees reported a 25 percent drop in demand to work in high-rise offices in 2021, presumably after Covid-19.

"If I were a company right now planning the future of my office, I would be looking to the suburbs," Bloom concludes.

Perhaps, you work from home now as well. Perhaps you like living in the city where you live. Yet, if the opportunity arises, would you consider changing the city where you live right now and move to a place, say, more civilized? Or, perhaps a smarter city? 

The rise of smart cities: Changing the landscape in the age of working from home

Working from Home And the Future of Smart Cities
The global smart city market is projected to exceed $2.5 trillion by 2025. Source: DKosig/iStock 

The term smart city is not a new concept either. It was first coined in the late 20th century. A smart city combines the Internet of Things (IoT), mobile devices, software solutions, user interfaces (UI), and communication networks. 

There is a steady growth expected for the global smart city market. PricewaterhouseCoopers (PwC) expects a steady increase in smart city development around the world over the next few years. According to PwC, the total value of the global smart city market is projected to exceed $2.5 trillion by 2025.

For PwC, one of the most important and dynamic aspects of smart cities is the evolution of the roles and relationships between the key participants involved in envisioning and creating them --such as government bodies aiming to transform the lives, wellbeing, and safety of their citizens-- and private sector helping to realize these aspirations by means of building, managing, and funding digital urban infrastructure and digital services.

Yet, the evolution of smart cities requires more than just technology. It needs good relationships between key stakeholders who must partner in order to turn their vision into the connected, efficient, and all-around-the-clock citizen digital services; that is the promise of every smart city, or smart-city-to-be.  

With the rise of smart cities, changes in the landscape triggered by the current age of working from home will also see a transformation. 

A three-tier development model for smart cities

smart city, IoT, 5G
5G Network Wireless Systems enable the Internet of Things in smart cities. Source: AerialPerspective Works/iStock 

For PwC, the relationship between the two principal stakeholders is evolving along a three-tier continuum – reshaping how smart city digital infrastructure will be developed, financed, and delivered in the years and decades to come. The three-tier development model for smart cities proposed by PwC is as follows:

Tier one: Relies on traditional contracting structures between public entities and private sector providers, delivering services and infrastructure such as parking management system, public Wi-Fi.

Tier two: Facilitates the development and deployment of additional services on the base digital city infrastructure such as mobile transit payment card systems.

Tier three: Focuses on the development of a digital ecosystem in and around the city’s digital infrastructure, creating new products and services, businesses and government revenue opportunities. 

Yet, the question arises: With the uncertainty that the pandemic brought to the global economy, with masses of employees and companies morphing into a remote workforce in digital office environments, how much of the smart city model will remain the same, and how much will suffer inevitable transformation? Will the larger smart city model be quickly adopted by mid-size cities and smaller towns following the anticipated relocation trend? Only time will tell. 

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