England should look to the United States to revive its local economies

The corus steel works, Teesside, 2008. Image: Getty.

In his inauguration address, the recently-elected mayor of Pittsburgh pledged to bring “the best times of this city”. With an Attlee-esque vision, he pledged to eradicate hunger, to provide clean water, and to end homelessness.

In Denver, after the recession of the 1980s, the mayoralty had the tools to rework the city’s image and relentlessly focus on attracting young people. This included wider state reforms legalising weed and tighter regulation on air quality issues. Today the city’s population is one-third millennial.

And in Cincinnati, the mayor abolished the local planning department. Using seed funding – firstly from the local business committee, second from individual companies struggling to employ high-skilled people, and third from federal grant programmes – regenerated an entire neighbourhood.

To bring government’s industrial strategy to life, England’s mayors and county leaders need ideas and ambitions on a level with their American counterparts. Potholes and library closures are an important fixture of local politics, but the local state needs to be much more active on the issues that impact the local economy and people’s living standards.

One part of this is having more powers to get stuff done. Too often central and local inertia is a brake on growth and prosperity. To that end, city mayors and county leaders should have more say on where and when commercial and residential developments are built. They should be able to plan the transport system around economic demand. And government should allow places to raise taxation more freely to fund new infrastructure.

Devolution also needs to happen on a level playing field. It is unacceptable that government has provided six city-regions (seven, including London) with powerful mayoralties, while the rest of England has been left without. With so much energy devoted to negotiating the country’s future relationship with the EU, there is a danger ‘left behind’ places in non-metropolitan areas will remain neglected by the state.

Most immediately, though, places need to begin using their legislative capacity more fully. The unspoken truth of devolution debates is that the local state often has a lot of room to manoeuvre: it just chooses not to use it. For instance, since 2016, local authorities have had the power to establish development corporations, which enable a single focus on regenerating an area. Only a few have done so. Over half of local authorities don’t even have a local planning framework in place.

The local state can only do so much. A strategy here and intervention there may be dwarfed by the impact of Brexit – in November, the Chartered Institute of Procurement & Supply (CIPS) warned that 63 percent of EU companies planned to move parts of their supply chain out of the UK.

It can also do more harm than good. Amazon’s search for a second headquarters has resulted in an unedifying race to the bottom, with what Richard Florida has described as “a big, well-capitalised company taking advantage of cities and their taxpayers”.

Yet if England’s regional leaders don’t step up, or aren’t given at least a fighting chance of making things better, the industrial strategy risks becoming another well-intentioned policy fizzling to disappointment. The lesson of recent crises in the steel industry and, more distantly, the mining industry, is that places cannot rely on the intervention of government for their long-term economic sustainability.

In the early days of her premiership, the Prime Minister promised a different kind of state and a different kind of capitalism. The industrial strategy is its vehicle. Learning from the experience of American cities – a federal government in legislative deadlock, the votes and issues of the ‘left behind’ increasingly decisive – it is up to England’s regional leaders to take her vision forward.

Jack Airey is head of research at Localis. You can read the full report here.


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.