The post-pandemic city analysed by Savills IM

Tim Harrup

In its ‘Real Estate Outlook 2022’ publication, Savills Investment Management has a chapter entitled ‘Urban resilience for a Post-pandemic Recovery’. Author Andreas Trumpp (Head of Research Europe) explores the landscape, and recognizes the efforts being made by Brussels.

The deserted city centres and empty offices seen during the Covid-19 pandemic, he starts, quickly led to predictions of widespread de-urbanisation and even the end of the big city. The reality is more nuanced. The exodus from cities at the height of the pandemic was mostly caused by a combination of students leaving to study remotely and migrant workers going back to their home countries due to a lack of employment opportunities.

A city’s attractiveness for long-term real-estate investment is linked to whether people are inspired to live, work and play there. The pandemic has reinforced the importance of innovation. A strong knowledge economy underpinned by innovation can support commercial real estate. It’s a combination that will help reduce a city’s structural obsolescence and vulnerability to market cyclicality while increasing demand for office space and R&D laboratories.

Well functioning virtual infrastructure and efficient logistics networks have been indispensable throughout the pandemic. But the need for sustainable local connectivity in the form of cycling and walking has also taken the limelight, encouraged by new initiatives such as the ‘15-minute city’. European cities spent 1 billion Euros on Covid-related cycling measures in 2020, creating at least 1,000 km of cycle lanes as well as traffic-calming measures and car-free streets. Cities with strong cultural offerings are likely to benefit as tourism and leisure industries recover. The revival of a city is not usually spurred by business districts, but by the attraction of neighbouring entertainment quarters. Central business districts will need to be transformed into mixed-used neighbourhoods where work, life and leisure coexist. Brussels, for example, is planning to create a diverse neighbourhood with mixed functions and living space in its European quarter, which has traditionally been a mono-functional office district.

The pandemic has also highlighted the importance of mental health and of greater equality and inclusion. There is recognition of the growing need for urban public recreational areas, green spaces and other inspirational places to encourage better health through exercise and to allow the mind a break. The number and quality of cultural amenities and green spaces in a city are shown to have a direct correlation with demand for real estate.

Finally, Savills and Andreas Trumpp sum up like this: It is the people, skills and entrepreneurship that make up the labour market that will drive the recovery of cities, not the buildings. Cities have intense specialisation and benefit from agglomeration effects which attract talent and spur creativity. By contrast, more routine activities may disperse from cities in a post-pandemic world.