Businesses need less office and retail space than ever. So what does this mean for cities?

Boarded up shops in Quebec City. Image: Getty.

As policymakers develop scenarios for Brexit, researchers speculate about its impact on knowledge-intensive business services. There is some suggestion that higher performing cities and regions will face significant structural changes.

Financial services in particular are expected to face up to £38bn in losses, putting over 65,000 jobs at risk. London is likely to see the back of large finance firms – or at least, sizable components of them – as they seek alternatives for their office functions. Indeed, Goldman Sachs has informed its employees of impending relocation, JP Morgan has purchased office space in Dublin’s docklands, and banks are considering geographical dispersion rather concentration at a specific location.

Depending on the type of business, some high-order service firms will behave differently. After all, depreciation of sterling against the euro can be an opportunity for firms seeking to take advantage of London’s relative affordability and its highly qualified labour. Still, it is difficult to predict how knowledge-intensive sectors will behave in aggregate.

Strategies other than relocation are feasible. Faced with economic uncertainty, knowledge-intensive businesses in the UK may accelerate the current trend of reducing office space, of encouraging employees to work from a variety of locations, and of employing them on short-term contracts or project-based work. Although this type of work arrangement has been steadily rising, it is only now beginning to affect the core workforce.

In Canada – also facing uncertainty as NAFTA is up-ended – companies are digitising work processes and virtualising workspace. The benefits are threefold: shifting to flexible workspaces can reduce real-estate costs; be attractive to millennial workers who balk at sitting in an office all day; and reduces tension between contractual and permanent staff, since the distinction cannot be read off their location in an office. While in Canada these shifts are usually portrayed as positive, a mark of keeping up with the times, the same changes can also reflect a grimmer reality.  

These changes have been made possible by the rise in mobile communication technologies. Whereas physical presence in an office has historically been key to communication, coordination and team monitoring, these ends can now be achieved without real-estate. Of course, offices – now places to meet rather than places to perform the substance of consulting, writing and analysing – remain necessary. But they can be down-sized, with workers performing many tasks at home, in cafés, in co-working spaces or on the move. This shifts the cost of workspace from employer to employee, without affecting the capacity to oversee, access information, communicate and coordinate.

What does this mean for UK cities? The extent to which such structural shifts could be beneficial or detrimental is dependent upon the ability of local governments to manage the situation.


This entails understanding the changes companies are making and thinking through their consequences: it is still assumed, by planners and in many urban bylaws and regulations, that buildings have specific uses, that economic activity occurs in specific neighbourhoods and clusters, and that this can be understood and regulated. But as increasing numbers of workers perform their economic activities across the city and along its transport networks, new concepts are needed to understand how the economy permeates cities, how ubiquitous economic activity can be coordinated with other city functions, such as housing, public space, transport, entertainment, and culture; and, crucially, how it can translate into revenue for local governments, who by-and-large rely on property taxes.

It’s worth noting that changes in the role of real-estate are also endemic in the retail sector, as shopping shifts on-line, and as many physical stores downsize or close. While top flight office and retail space may remain attractive as a symbolic façade, the ensuing surplus of Class B (older, less well located) facilities may kill off town-centres.

On the other hand, it could provide new settings within which artists and creators, evicted from their decaying nineteenth century industrial spaces (now transformed into expensive lofts), can engage in their imaginative and innovative pursuits. Other types of creative and knowledge work can also be encouraged to use this space collectively to counter isolation and precarity as they move from project to project.

Planners and policymakers should take stock of these changes – not merely reacting to them as they arise, but rethinking the assumptions that govern how they believe economic activity interacts with, and shapes, cities. Brexit and other fomenters of economic uncertainty exacerbate these trends, which reduce fixed costs for employers, but which also shift costs and uncertainty on to employees and cities.

But those who manage and study cities need to think through what these changes will mean for urban spaces. As the display, coordination and supervision functions enabled by real-estate – and, by extension, by city neighbourhoods – Increasingly transfer on-line, it’s worth asking: what roles do fixed locations now play in the knowledge economy?

Filipa Pajević is a PhD student at the School of Urban Planning, McGill University, researching the spatial underpinnings of mobile knowledge. She tweets as @filipouris. Richard Shearmur is currently director of the School, and has published extensively on the geography of innovation and on location in the urban economy.

 
 
 
 

How US planners experimented with “the iron hand of power” over colonial Manila

Manila in ruins, 1945. Image: Wikimedia Commons.

In 1904, Manila must have appeared to its new overlords a despairing prospect. Racked with poverty and disease, it was still recovering from years of war, epidemic and a fire that had left 8,000 homeless.

For architect Daniel Burnham, it was an opportunity to put to work the radical ideas he had dreamed of in America.

He was among those asking how America’s unprecedented wealth at the turn of the century could be reconciled with the lives of the country’s poorest. Like many, he admired the ideas of harmonised city-planning articulated in Edward Bellamy’s bestselling science-fiction Looking Backward (1888).

At the 1893 World’s Columbian Exposition in Chicago, Burnham constructed the “White City”. Built across 686 acres of parkland, boulevards, gardens and neoclassical structures rendered a spray-painted plaster vision of the future – all laid out to one comprehensive plan.

It was impressive – but implementing grand designs where people actually lived meant laborious negotiations with citizens, businessmen and politicians.

Instead, opportunity lay in America’s new overseas territories. As Daniel Immerwahr describes in How to Hide an Empire: A Short History of the Greater United States, “They functioned as laboratories, spaces for bold experimentation where ideas could be tried with practically no resistance, oversight, or consequences.”

An architect’s dream

The US had gone to war with Spain in 1898, taking advantage of an empire-wide insurrection. It ended up controlling the entire Philippines, along with Guam and Puerto Rico.

As a “territory”, the Philippines existed outside the protections of the constitution. Congress could impose any law, proclaimed the attorney general in 1901, “without asking the consent of the inhabitants, even against their consent and against their protest, as it has frequently done.”

Which is how Burnham, upon invitation by the Philippine’s new rulers, came to wield what the Architectural Record called “the iron hand of power” over Manila.

 Burnham’s plan for Manila. Click to expand.

Where Burnham’s Chicago plan was complex, took years and entailed collaboration with hundreds of citizens, Burnham spent six months on the Manila plan, and just six weeks in the Philippines. And with no voters to persuade, there seemed little reason to register Filipino input in his designs.

In 1905 Burnham submitted his Report on Improvement of Manila. It described filling the toxic moat of the Spanish fortress Intramuros and developing a rectangular street system modelled on Washington D.C., with diagonal arteries which even Chicago lacked.


Central to his plan was the city’s beautification through monumental buildings, waterfront improvements, and parks – “wholesome resorts” to “give proper means of recreation to every quarter of the city”

Burnham charged William E. Parsons as the omnipotent “Consultant Architect” to interpret his plan, who relished its authority over all public building as an “architect’s dream”. When concerned with the extent of his purview, he also chose to standardise a number of public buildings.

“I doubt if this method would bear fruit in our own city improvement plans, in which everything depends on slow moving legislative bodies,” reported the Architectural Record’s correspondent.

Despite Burnham’s colonial sentiments his biographer concluded his plan was “remarkable in its simplicity and its cognizance of Philippine conditions and traditions.”

His plans did not shy from asserting the colonial government’s authority, however. The Luneta, a favourite park, was to become the nuclei of government. The city’s avenues would converge there, for “every section of the Capitol City should look with deference toward the symbol of the Nation’s power.”

Unusual monumental possibilities

Burnham also worked on a summer palace for US administrators at Baguio, 150 miles north in the mountains. On land inhabited by Igorot people, Burnham saw an opening “to formulate my plans untrammelled by any but natural conditions”.

Baguio’s “unusual monumental possibilities” were facilitated by a road whose construction employed thousands, risking death from disease and falling off cliffs. Civic buildings would “dominate everything in sight” and a golf course would rival those of Scotland.

“Stingy towards the people and lavish towards itself,” griped La Vanguardia, the government “has no scruples nor remorse about wasting money which is not its own.”

As enthusiasm for US empire soured in the States, local power was relinquished to Filipinos. Parsons resigned in protest in 1914. He was replaced by Manila-born Juan Arellano, whose rebuke to imperialists was the mighty, neoclassical Legislative Building which hosted the elected Philippine Legislature. Arellano upheld Burnham’s plan, producing a beautified city bearing resemblance to Burnham’s White City.

But the Legislative Building, along with Burnham’s great edifices and almost everything else in Manila, was levelled as US troops recaptured it in 1945, this time ousting the Japanese in a brutal battle. “Block after bloody block was slowly mashed into an unrecognizable pulp”, recorded the 37th Infantry Division as they exercised their own “iron hand” over Manila.

American artillery had transformed Manila into ruins. “It was by far the most destructive event ever to take place on US soil,” writes Immerwahr, even if few soldiers realised they were liberating US nationals at the time. Burnham’s expansive vision was lost in the debris, and though some buildings were rebuilt a majority were replaced. Today, Manila’s pre-war architecture is remembered with fondness and nostalgia.