The Square Mile is a ghost town. It will stay that way
“PEOPLE ARE can’t wait to get back, ”says Catherine McGuinness of the City of London Corporation, the financial district’s municipal governing body. “There’s a real atmosphere of excitement – we had a few green shoots last summer, but now it’s a lot more real.” The Lord Mayor speaks of a growing light at the end of the tunnel.
Few places in the rich world have been more deeply affected by covid-19, as few depend so heavily on commuters. In 1857 Building news, an architecture journal, stated that “except for commercial purposes, the city can be said to be now uninhabited”. Today, less than 10,000 people settle in the Square Mile, although its pubs, restaurants and barbers were created to serve the 542,000 people who normally work in the area. By comparison, New York’s somewhat larger financial district has 64,000 residents and 307,000 daily workers.
The Square Mile is quiet even compared to other parts of central London. In the West End, the number of people leaving Oxford Circus tube station during the work week stands at 35% of the level at the start of March 2020, just before covid-19 hit. Bank station in the city is only 15% as busy as it used to be. The offices in the financial district are empty. CBRE, a major property manager, estimates the vacancy rate at 12.4%. The highest reached after the financial crisis was 9.4%.
The City of London Corporation has created a £ 50million ($ 70million) fund to help small businesses. He also announced his intention to build 1,500 new homes over the next decade. But his main stimulus plan is to promote the city as a business center and to get white-collar workers to come back.
Despite the success of the British vaccination program, it will be difficult. In New Zealand, almost a year after most pandemic restrictions were lifted, 62% of financial services workers say they work at least one day a week from home and 26% do not visit their offices at all . Three economists, José María Barrero, Nicholas Bloom and Steven Davis, studied American white collar workers. They estimate that employees paid between $ 100,000 and $ 150,000 will spend 35% of their working hours at home. Those who paid more than $ 150,000 (which is true for many financial services workers) will work from home 43% of the time – just over two days a week.
Although a few banks such as JP Morgan and Goldman Sachs are chasing employees into their offices, most businesses in London expect a mix of working from home and working in the office. But it will be difficult to implement. Nick South of the Boston Consulting Group points out that since few white-collar workers are on a single team, it’s difficult to establish rotas that allow both face-to-face collaboration and remote working. Employees may end up calling by default. And employee surveys regularly show that some people are extremely reluctant to return to the office. “You ignore these people at your peril,” says South.
One clue of the reaction of London’s financial services companies comes from the property market. Mat Oakley of Savills, a real estate agent, says 96% of the office space leased in the Square Mile so far in 2021 has been of quality Awhich means it is of high quality and built over the past ten years. The historical average is 65%. Companies seem to have concluded that in order to attract workers, they will need to provide them with a more luxurious environment.■
This article appeared in the Great Britain section of the print edition under the headline “A Quiet Place”