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.

 
 
 
 

Outdoor dining is a lifeline for restaurants, but cities don’t always make it easy

(Jamie McCarthy/Getty Images)

In downtown Toronto, café owners Toula and Peter Bekiaris were recently granted something to help them through the Covid-19 pandemic: a piece of the street outside their doors.

They got this space for their pastry and coffee shop, Filosophy, through a city-led initiative called CaféTO, created in response to the pandemic. The programme helps clusters of neighbouring restaurants want to set up outdoor patios on streets or sidewalks. As part of the initiative, Filosophy was able to expand from a two-seater bench out front to an eight-seat curbside patio, allowing it to welcome back patrons to a plot of the street separated from traffic by orange and black pylons.

“To have that little slice of pre-Covid feeling is rejuvenating for sure,” Toula Bekiaris says.


As the pandemic brings a generation of bars and restaurants to the brink of collapse, cities everywhere are seeing businesses spill out of their front doors and onto nearby sidewalks and streets. For many desperate small business owners, it’s their last best hope to claw back any business at all.

Bekiaris said the program brought her block back to life – but it also left her with a question. Toronto bylaws don’t normally make it easy for bars and restaurants to have sidewalk and curbside patios. She wondered, “My gosh, why are we not able to do this more regularly?”

Many cities have long had strict rules and steep fees that govern outdoor dining in public spaces. In places that were slow to adapt, or that haven’t adapted at all, this has caused tension for restaurant owners who are just trying to survive.

In Tel Aviv, for example, a schnitzel restaurant owner was filmed begging police to not issue him a ticket for having tables on the sidewalk outside of his shop. In New York City, businesses openly flouted rules that initially forbade outdoor eating and drinking. In the typically traffic-clogged Lima – the capital of Peru, one of the hardest-hit nations in the world for Covid – patios are scattered across sidewalks, but don’t have access to street space, which is still mainly centred around cars. “In the present-day context, the street has never been more important,” urban designer Mariana Alegre writes in a Peruvian newspaper.

As the terrasse aesthetic made famous by Paris and Montreal finds footing in cities that aren’t typically known for outdoor patronage, business owners and officials alike are finding that it’s not as simple as setting up some tables and chairs outside. The experiences of five different cities trying to embrace outdoor patios offer some useful lessons for understanding what can go wrong, and how it can be done right.

Vilnius


Vilnius was an early adopter of the outdoor dining trend. (Petras Malukas/AFP via Getty Images)

In April, the Lithuanian capital made global headlines for promising to allow bars and restaurants to use public space to set up a “giant outdoor café.”

“Plazas, squares, streets – nearby cafés will be allowed to set up outdoor tables free of charge this season,” Vilnius’s mayor Remigijus Šimašius said at the time.

There were good intentions behind the plan, but a report by nightlife consultancy VibeLab suggests the city didn’t quite pull it off. The Vilnius case study in the report says physical distancing was hard to maintain on narrow streets. There was a lack of government planning and communication. The city didn’t measure the economic impact of the initiative. Locals complained about street noise.

Mark Adam Harold, Vilnius’s night mayor and the founder of Vilnius Night Alliance, said in the VibeLab report that the “appearance of vibrancy in the streets of Vilnius led to a decrease in public support for the still-struggling hospitality sector, as people assumed the economic crisis was over.”

Still, the political will to do something radical – even if it meant mistakes were made in the process – can be a foreign concept in some places. Vilnius showed that change, often so slow in municipal politics, can happen fast in extenuating circumstances.

In July, Vilnius took it a step further, closing down some central streets to car traffic as a way to lure different kinds of people to the Old Town. “Cars cannot dominate the most sensitive and beautiful part of our city. Vilnius is choosing to be a city of the future now,” said Šimašius.  

New York City


New York City plans to bring back outdoor dining again in the spring of 2021. (Theo Wargo/Getty Images)

As soon as it was warm enough to eat and drink outside, New Yorkers were doing it. The empty streets and desolate sidewalks made it easy to claim a piece of pavement – prompting some to jump the gun on Phase 2 reopening. “I need every dollar I can get,” a Little Italy restaurant owner said, explaining his guerrilla patio to Eater back in June. “I’m hanging on by a shoestring here.”

Since those early pandemic days, New York City has moved to formalise outdoor dining, launching its Open Restaurants and Open Streets programmes. They allow establishments to set up sidewalk and curbside patios for patrons, and in some cases, even extend their restaurant’s real estate right across the street. The city says more than 9,000 businesses have signed up for Open Restaurants since June. It’s been such a success that the mayor’s office said it would do it again in the spring of 2021.

"In just two months, Open Restaurants has helped re-imagine our public spaces – bringing New Yorkers together to safely enjoy outdoor dining and helping to rescue a critical industry at the same time," said DOT Commissioner Polly Trottenberg in a news release announcing the 2021 extension.

Kristin Vincent is an owner of Sel Rrose, Home Sweet Home and Figure 19 in New York City, as well as a Sel Rrose location in Montauk. She says she already had a sidewalk patio permit for Sel Rrose in Manhattan’s Lower East Side prior to the pandemic, for which she pays approximately $25,000 annually, usually paid in three-month installments. When the last installment came due, the city waived payment.

Vincent says the city’s also been more lax about monitoring the sidewalk, which she has warmly welcomed. “They used to police outdoor seating – if you went an inch outside the zone of where you’re supposed to be, you’d get a ticket. If you stayed open for 10 minutes past when you were supposed to [close], you’d get a ticket. If neighbours were complaining that you’re outside, they’d pull your outdoor seating away. It was such an ‘honour’ to have outdoor seating,” she says.

Vincent sincerely hopes the city reconsiders its entire approach to outdoor seating even after the pandemic has ended – but she isn’t sure that’s realistic. While Home Sweet Home and Figure 19 have remained closed because of lack of outdoor space, she has had to manage a never-ending list of changing rules for the two Sel Rrose locations. Most recently, she’s had to contend with New York City’s ban on selling alcoholic drinks without food.

“Why can’t it just be drinks?” she asks. If the goal is to prevent the spread of Covid-19, she wonders why they’re still enforcing Prohibition-style rules on to-go drinks. Those little details add up, Vincent says, making it challenging for bars and restaurants to make money. Right now, the Lower East Side location is earning around 30% of the sales it made this time last year.

The nitpicking isn’t unique to New York City. At the Montauk location, she built an outdoor patio in preparation for opening only to be told it was in the wrong place. That said, that location is doing better (about 65% of sales) because the area is a phase ahead of the city, allowing for 50% indoor seating capacity.

She says allowing indoor seating will be critical to New York City bars and restaurants as summer turns to fall, and fall turns to winter. “We have to open inside – have to. We’ll even take 50%,” she says.

Montreal


Montreal reduced its usual fee for terrasse permits. (Eric Thomas/AFP via Getty Images)

Sergio Da Silva’s Montreal bar and music venue, Turbo Haüs, has been skating by on the thinnest of margins. The Latin Quarter business was closed for months, finally reopening as a terrasse-only bar in the second week of July. 

In terms of Covid measures, Montreal has pedestrianised key streets including St-Denis, where Turbo Haüs is located (for what it’s worth, it normally pedestrianises St-Denis during the summer). It also reduced the terrasse permit fee, and in Turbo Haüs’s case waived the $3,000–$4,000 it would have owed the city as reimbursement for the three metered parking spaces taken over by its mega-terrasse. But Da Silva still paid $2,000 to comply with the rest of the permitting process, including the $500 in permit fees he paid prior to the Covid discount.

Anecdotally, he says, it seems the city’s invitation to businesses to set up terrasses hasn’t been met with the kind of speed some businesses were hoping for. His neighbour across the street applied for a permit, and was still waiting even after Turbo Haüs opened. “The entire process just seemed more difficult than it was before,” he says.

It’s been a frustrating summer. It was supposed to be the bar’s time to squirrel away money for the quieter winter season. Instead, Da Silva says, he’s mostly just making enough to stay open right now. “This would have been a really, really good summer for us. We had everything in place to put a giant dent in all our debts, and we were looking forward to actually paying ourselves a livable sum. And then this kind of thing happened,” he says. He predicts this winter is when the thread that so many bars and restaurants are holding onto will finally snap.

“You should wait to see what it looks like in the winter slow season,” he says. “That's when a lot of places are actually going to be shutting down.”

Assuming most bars and restaurants won’t be able to operate at 50% or greater capacity in the winter, a small business rent forgiveness programme that gives money to tenants (rather than directly to landlords) may be the only way governments can prevent mass closures.

Tel Aviv


Tel Aviv's approach to outdoor dining left many restaurants wondering if they would be able to survive. (Jack Guez/AFP via Getty Images)

Tel Aviv’s outdoor patio story has emerged in fits and starts. In May, Israeli Prime Minister Benjamin Netanyahu told people to “Go out and have a good time”.

In early July, The Times of Israel published the video of the schnitzel restaurateur pleading with police not to fine him for having a couple of tables and chairs out on the sidewalk. “Business owners give this city culture, entertainment. There’s no work and I’m even fined! I have three kids to feed, where will I get the money from?” he cried.

Three days later, the Israeli metropolis published a news release saying it was sacrificing road space for on-street dining platforms in its trendy restaurant district, on Chayim Vital Street. The city also pedestrianised 11 streets, placing chairs and umbrellas in the new car-free zones to encourage people to use their new public space. The following day, the city gave restaurants only a few hours’ warning about an open-ended closure order, which many restaurateurs vowed to disobey. They won, but within the same month, 34 restaurants were fined for serving unmasked patrons.

The backlash Tel Aviv has received from the bar and restaurant industry has been deserved. The lack of clear guidelines, ever-changing rules and unavailability of aid and support has left many businesses in the lurch, wondering if they’ll ever be able to come back from Covid.

Toronto

In pre-Covid times, Harsh Chawla says his popular Indian restaurant Pukka would routinely turn around 250 seats on a normal Saturday. Now, in a summer without tourism, nor Toronto’s Summerlicious restaurant festival, nor indoor dining, his 24-seat curbside patio has been a saving grace. “I always say, anything better than zero is a win for us,” he says.

Chawla says he helped rally his neighbours around CaféTO’s proposal of shutting down on-street parking spaces in favor of dining nooks. He came up against worries that reduced parking would mean reduced business for them – a common concern that a growing body of research demonstrates is not actually true. Eventually his stretch of St. Clair Street West came to a compromise allowing for the conversion of some parking spots.

Trevor McIntyre, global director of placemaking at IBI Group, is a consultant on the CaféTO programme. He sees the lane and parking spot closures as big wins in a city that allocates an incredible amount of space to cars, even with mounting pedestrian and cyclist deaths. “We've slowed down traffic considerably – cars slow down, the whole pace slows down. You take away the on-street parking, and it encourages people to get out and walk. You start seeing higher volumes of people,” says McIntyre.

In this experiment, curbside patios and more heavily pedestrianised areas are driving more business to areas than parking does. Chawla likes the results.

“Hopefully we do this next year, and the year after, and the year after, because I think it gives us character to the street, it gives character to the neighbourhood,” says the restaurateur. “Our summers are so short-lived in Canada, in Toronto – so why not have more spaces outside so people can enjoy it?”

Tracey Lindeman is a freelance writer based in Ottawa.