Editor’s note: A new report issued Tuesday by the Kenan Institute of Private Enterprise at UNC-CH in partnership, with the North Carolina CEO Leadership Forum, examines seven significant ways in which the COVID-19 pandemic has reshaped the future. Here’s a look at one part of the report.

The Future on Cities

Urbanization has been a powerful force in the modern economy and much has been written on what appears to be growing economies of agglomeration.

However, the  pandemic has forced important experimentation. Some industries, particularly with workers in higher paying jobs requiring a college education — so-called “knowledge workers” – have learned that many such workers remain productive at home.

We have also learned that working from home is not a viable option for other jobs, especially for those designated as essential workers. This distinction carries socioeconomic implications, as 70 percent of essential workers do not hold a college degree and are more likely to have a household income of less than $40,000.

In addition, research suggests that even for many knowledge workers there exists a healthy balance between remote and traditional work.

This likely reflects benefits from things like the free flow of ideas and other “soft” aspects of relationships with coworkers.

Gains to at-home work are very industry- and job-specific, so while there will be a long-run increase in demand for at-home work, the
current environment is neither permanent nor optimal.

The pandemic will affect demand for retail space in two ways.

  • First, the trend away from brick-and-mortar retailing has accelerated. However, there will be a short-run bump in renovations that facilitate delivery, curbside pick-up and showroom/customer services.
  • Second, restaurant and entertainment spaces will eventually expand in square footage because of a change in preference toward less crowded spaces.

Demand for residential renovation and new home building was strong in July 2020, as more people needed the space to both work and live from home.

In July, existing home sales bounced back to pre-pandemic levels. Knowledge workers also want the amenities that come with living in or near a central business district (CBD) and those amenities will quickly return once the health crisis is over.

Because public transit is especially hard to make safe, commuters are shifting away from mass transit toward driving to work (and thus increased commute times).

Commuters will tend toward closer housing and even walking or other “personal transit” options (like bikes and scooters), especially as more cities have improved and increased pedestrian and biker pathways during pandemic lockdowns.

Outside of cities, demand is increasing for second homes that can serve as “escape pods” or part-time work-at-home locations.

The trend of families with school-age children leaving urban areas to be near relatives (often aging parents) will accelerate. Altogether, given countervailing forces on central cities, there will be less drastic net changes in the workplace and urban environments now that a vaccine is in sight. New opportunities in real estate will be outside dense urban areas and in new residential construction and renovation.