We are living through an extraordinary period. With significant geopolitical, social and climate changes. As actors in the real estate transactional/investment market, we want to contribute some of our thoughts on the issues and potential opportunities facing our industry in current times. In this blog, we look at the built environment’s heartland – the city. Our urban spaces are facing a multitude of challenges. What does the future hold? Can lessons be learned from the hospitality industry?
Times are changing
The World Economic Forum estimates that, by 2050, 80% of people will live in cities and towns. As of last year, the figure was 55%. What a shift! Cities currently cover only 2% of the world’s land surface so will have to grow.
Despite their limited current physical footprint, activities in cities consume three-quarters of the planet’s material resources and they account for approximately three-quarters of the world's greenhouse gas emissions. Sustainability considerations in the growth of our cities are going to be key.
What people want and need from cities has also undoubtedly changed post-Covid. If you look at Central London, there has been a clear move towards it being more of a lifestyle location than a traditional work destination. For the first time, Saturdays are the busiest day of the week on the London underground. This lifestyle shift is reflected in cities across the country and indeed across Europe - Europe’s high-rise financial districts have been most affected by Covid-driven changes with vacancy rates rising. There are more office vacancies with occupiers demanding better buildings, with progressive ESG credentials, close to a variety of amenities such as shops and restaurants and better transport links.
Communities are changing too, people are living longer and doing more. Our cities need to provide for the whole demographic spectrum: students, young workers, families, empty nesters, the elderly and others who need assisted living.
How should cities grow and evolve?
How do we best structure developments and conceive public spaces in the next phase of the evolution of the city?
Growing cities need more housing (and more choice of housing formats to suit the range of demands and affordability across the demographic spectrum), remote working is increasing demand for greater amenities in areas previously providing only weekend or residential services. Traditional city centres need to reinvent themselves, becoming their own unique community.
The traditional model of a city with a single economic hub is ripe for change. This is evident in London now when comparing the City of London with the West End – the City is arguably primarily still a “business district” whereas footfall in the West End, which combines business with leisure and other industries, is much greater.
A more polycentric model with smaller decentralised hubs could work better for people and the environment – we’ve all heard of the 15 minute city by now - hubs that are more accessible, require less travel, are more of a community and have authentic local identities.
So, how does the traditional city centre evolve? Can that city centre office or outdated retail parade, now under-utilised, become a more vibrant space offering a range of uses for our future cities? For example, dedicated office space, some meeting/collaboration space, traditional hotel accommodation, extended stay accommodation for business travellers who are increasingly staying longer and blending business and leisure, living accommodation alongside statement retail and restaurant offerings.
This is where learnings and developments in the hospitality industry may help to inform the development of our future cities. There are several examples of innovative hospitality companies looking to offer the flexible use of space that will become a cornerstone of our cities. CitizenM, The Social Hub and others are creating engaging, sustainable spaces, which provide for multiple uses that can be accessed by a wide range of people according to their needs at a given time: workspace, meeting space, living space, social space and more.
Conversions of outdated city centre buildings to a wider range of uses is currently a niche trend, but buildings must become resilient and “re-usable”, as the cycle of demolishing and rebuilding is very damaging to the environment. So this adaptive re-use into multi-purpose and flexible spaces will be important. Planners, funders and investors will all have a key role to play in facilitating this development.
Our cities are growing because we are social creatures who need to congregate, socialise and collaborate and the hospitality industry has been catering for those needs since its inception. Perhaps leveraging innovations in the hospitality industry will help maximise the significant opportunity to build better, more sustainable, more inclusive cities. Whilst there are definitely challenges ahead, for all those in the real estate industry today, it is our privilege, and also our responsibility, to grasp that opportunity.