Morning briefing: “Granular detail” promised for sector-by-sector business plans

Good morning.

Boris Johnson will today chair a cabinet meeting to discuss the next steps during lockdown, and will this afternoon appear at his first daily Downing Street coronavirus briefing. Don’t expect fireworks: No 10 has briefed that Johnson will stay on message, reiterate the five tests the UK must pass before restrictions are eased, and warn of the danger of lifting measures too early.

But behind the scenes, preparations for post-lockdown life are accelerating: the Financial Times reports that ministers are drawing up industry-by-industry plans for how businesses can get back up and running, and that Business Secretary Alok Sharma will produce 10 papers setting out new industry rules in “granular detail” by the weekend. He is expected to advise businesses to restrict access to communal spaces, ensure staff wash their hands and use hand sanitiser, and allow office staff to continue to work from home.

One thing Boris Johnson will no doubt be asked about at this afternoon’s press conference is the government’s pledge to test 100,000 people a day by the end of the month (ie, today) – and ministers are finally admitting the target looks out of reach. Justice Secretary Robert Buckland said this morning that “it’s probable we won’t” hit the target, even though Professor John Newton, who is co-ordinating the government’s testing programme, said yesterday that he remained confident of fulfilling the pledge. At last count, 52,000 people were tested in a 24-hour period, although the figure appears to include nearly 20,000 retests. Testing capacity sits at 73,000 a day.

Global updates:

Germany: Chancellor Angela Merkel will today meet with state leaders to discuss the next steps for lifting the lockdown, including rules on religious services resuming. Germany’s viral reproduction rate – the number of people someone who catches coronavirus goes on to the infect – has crept back up to one. Any higher, and Germany may need to reinstate lockdown measures it previously eased.

France: The French economy shrank by 5.8 per cent in the first three months of 2020, the worst contraction since the Second World War. It follows a 0.1 per cent drop in GDP in the last quarter of 2019 and means that France – with two consecutive quarters of negative growth – is now officially in recession.

South Korea: The country recorded no new domestic cases in 24 hours. It is the first time that has happened since the virus peaked at the end of February.

US: President Donald Trump has accused China of doing “anything they can” to make him lose the 2020 presidential election, and said the coronavirus had “upset very badly” the prospect of a US trade deal with China.

Ireland: Taoiseach Leo Varadkar looks set to extend Ireland’s lockdown beyond 5 May, after he said that the rise in new cases, deaths, and hospital admissions was still too high to begin relaxing restrictions.

Japan: Prime Minister Shinzo Abe is expected to extend the country’s state of emergency for another month.

Read more on the New Statesman:

Can Boris Johnson resolve the conflict between lockdown hawks and doves as the economic crisis deepens?

Up to one in 17 care home residents may have died since the Covid-19 outbreak started. Why?

Covid-19 has caused a major spike in anti-Chinese and anti-Semitic hate speech

Americans are drinking bleach because of Trump – and still Republicans stand by him

Politicians must do more than simply listen to expert advice – they need to challenge it

How coronavirus turned medical research into a free-for-all

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.