More space, less costs, and far greener: revitalizing city outskirts

Text: Lukas Götzelmann - EBS Universität für Wirtschaft und Recht

The lockdown measures in the wake of the corona pandemic have not only led to a conscious shift in consumption to online offers (see: Online food sales are on the verge of a breakthrough), but also triggered the largest home office project of our times. From service companies to educational establishments, numerous institutions have introduced new concepts of virtual collaboration and communication.

Now it remains to be proved and tested whether these measures can withstand conventional working methods in terms of their effectiveness. However, depending on these results and the duration of the pandemic, it is quite reasonable to expect that the crisis has already brought lasting changes in the behaviour of private households and companies and has definitely accelerated digitalization. So partially retaining the virtual working method even after the pandemic is very likely, as working from home has proved to be a real alternative for many professionals (see: Flexible workspaces become increasingly important, especially when close to residential areas). A recent study has found that for the American labour market around 37% of all occupations could also just as well be done from home. A similar pattern is likely to emerge in Germany due to the comparable share of service industry companies at around 70% of gross value added.

If more companies stay with mobile work opportunities even after the pandemic, this will mean more freedom of choice for the affected employees to find an appropriate place to live. Since the costs of commuting between home and work will be reduced if the employee is required to be only partially present at the employer's company location. At the same time, the relevance of having one's own office and working space and the need for additional living space are increasing, if more people decide to work from home. Both effects could boost the attractiveness of city outskirts and peripheral city locations due to the lower cost of land. Increasing online trade would also favour this development if supply and demand for more and more consumer products were no longer dependent on the location.

In addition to the city outskirts, smaller towns could also experience an upswing if the choice of location is less dependent on commuting costs for more and more professionals. A good example of this is the small town of Montabaur which has experienced an economic and demographic renaissance due to an ICE (high-speed train service) connection, built in 2002. Since then, the city observes net increases in migration and attracts new companies to settle there. What triggered the ICE connection for Montabaur could now also be a new pattern of work and consumption elsewhere.

Moreover, the current crisis is also likely to create an increased awareness of security, environment and housing needs. A relatively high population density, more travel, overcrowded underground and suburban trains, smaller residential units and a lack of green spaces represent a fundamental challenge and psychological test in the current situation, especially for the inhabitants of metropolitan areas. In less densely populated peripheral areas or small towns, on the other hand, the desire for more distance, nature and open space can usually be fulfilled much more easily and, in the long term, also with less costs involved. Therefore, reassessing household needs and the associated location factors seems very plausible.

To summarize: The current corona crisis could lead to permanent changes in behaviour and increased implementation of digital concepts, especially in the areas of consumption and work. In addition, an increasing preference for more security, open space and living space in the wake of the current pandemic is highly conceivable. In the long term, this would strengthen urban peripheries and decentralize urban development. Even a revitalization of smaller towns and cities does not seem out of the question if this means less time and money spent on commuting, as the example of Montabaur shows. This could open up many new opportunities for the real estate market, especially in the residential section. A good start would be to follow the motto "More space, less costs and far greener".