‘Rebirth of the suburbs’ brought on by hybrid working, says IWG

Suburbs, small towns and rural areas across the UK and US are booming as office workers shun the cities. Research from workspace giant IWG and Arup has found that economic activity away from city centres is on the rise, while it is stagnating in urban areas. IWG said it would add 1,000 locations globally over the next year to cater to this demand, with the majority in suburban and rural locations. In the UK, this will focus on towns such as Crewe, Taunton and Preston. Chief executive Mark Dixon said: “The findings of the report confirm that we are seeing a fundamental change in the geography of work, with significant opportunities for the economies and communities of towns and cities globally.” He added that hybrid working had inverted a former pattern of decline for towns. “Previously, smaller cities, towns and rural communities were facing an existential threat as many of their most energetic and economically active members were being shipped out to a city five days a week, returning only to rest before setting off again. Now, hybrid working is allowing easier access to the best talent, invigorating local economies and enriching communities. “Not only this, but it is set to change the role of cities forever. Places like New York and London, whose economies have been geared to meet the needs of millions of itinerant office workers, will need to evolve to become hubs for collaboration and entertainment.” According to IWG footfall data from the last year, the demand for workspaces outside of city centres has grown by 36%. It said its centres in suburban, town and rural locations had seen some of the largest increases in attendance, with Henley and Northampton doubling, Redhill up 83%, Bolton up 66%, and Oxford up 54%. Arup said it found “strong evidence” that suburbs and small towns have higher levels of economic activity than before 2020. While the most common move during the pandemic was from the city centre to the suburbs, many people left large cities altogether, opting for less expensive or smaller cities and towns, or the countryside. Arup associate director Matthew Dillon said: “We are now beginning to see the impacts of hybrid working in many sectors of the economy. Areas outside of larger cities also have an opportunity to benefit from new working patterns because property prices tend to be lower, and commuting distances now matter less, giving more incentive to live remotely and work hybridly. In these places, workers are commonly splitting their time between offices, workspaces and the home.” Both the US and UK are seeing the same migration trends away from city centres, the report said, with mobile phone data revealing that small towns, suburbs and seaside locations have seen footfall rise by 50%. Transactions at Pret a Manger stores in suburban areas, particularly in northern regions of England and Scotland, have increased to 130% of pre-pandemic levels. Spending in towns outside the traditional commuter belts has also risen, with East Lothian up 26% and Hastings up 10%, while spending in central London fell by 3%, as people began to work locally and cut their five-day commute into city centres. The report added that this shift is now being reflected in property prices, with the highest rises seen in places previously considered too far from urban centres to be commutable. The average price of a house in Greater Manchester increased by 34% between January 2020 and October 2022, equating to a near £60,000 rise. In Glasgow, the average house price rose by £40,000 in the same time period, an increase of 29%. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews