Months into a pandemic that has radically changed our ways of working and living in the city, the effects of the crisis have started to manifest themselves in real estate — an industry that invariably moves slower than others. The property sector will no doubt have to evolve in the post-Covid-19 world. We believe that, in addition to changes in offices and residential asset classes, key transformations will appear in an oft-overlooked area: the ground level of our cities.
Let us review the great experiment of smart working which began in spring 2020. Many observers have outlined extreme scenarios when predicting the legacy of this event, with some foreseeing the death of the office. However, there are good reasons to believe this should not and will not happen.
Researchers at the Massachusetts Institute of Technology (MIT) have analysed communication networks among students and faculty members, both before and during its first lockdown of 2020. Preliminary data seem to show that these networks are weakening while people work from home, as individuals tend to interact remotely with a smaller selection of peers and colleagues than in the physical office, where people naturally engage with many ‘weak ties’ and exchange ideas with broader groups of co-workers.
Living at the office
If the results above are verified, it confirms that shared workspaces are crucial for companies in fostering new ideas and consolidating a shared corporate culture. That said, it is fair to expect that a flexible working regime combining in-person and virtual interactions will remain in the long term, resulting in a decline in demand in overall workspaces.
The question, therefore, becomes what could happen to our homes if offices trend towards become smaller? One hypothesis is that demand for larger homes will grow, at least in part, to accommodate the needs of those who are trying to balance their professional and family lives: as the parents of young children have come to find out, this is far from simple.
In short, the futures of residential and office buildings are likely intertwined. On one hand, we will see a compensatory effect as the rising demand for the former helps offset the partial recession of the latter. On the other hand, perhaps more importantly, the division between professional and domestic environments is going to be upended even more. Instead of assigning a specific role to every room, it would make more sense to use the same physical space for multiple purposes. One consequence of this new approach will be calling into question the traditional logic of asset classes, which until now has been a pillar of the real estate sector.
Rebuilding from the ground up
There is another level of the urban landscape which will be crucial in determining our post-pandemic future: the spaces at ground level. These areas have traditionally been reserved for local retail networks; however, in recent years, they are increasingly being destabilised by urban transformation. Although a surge in the number of food and beverage businesses after the 2008 financial crisis contributed to a revival of the ground floor, these ventures are now among the most troubled by the Covid-19 retraction.
The ‘ground floor’ problem is widely felt in urban centres across the world. “Let’s think of the richness of Parisian urban life,” Jean-Louis Missika, deputy mayor of the French capital, recently told us. “It would never be possible without the myriad of commercial activities that fill the streets.” The move away from such a historical heritage would impoverish not only our economies, but our social and cultural foundations.
In other words, street-level lots will host critical challenges to the city of tomorrow. How can we reverse the crisis and turn it into an opportunity? One way is to emphasise the historic role of the lower floors as a public meeting space. While it is essential to use the space to support existing commercial activities, it can also be used differently: for instance, hosting new neighbourhood initiatives. For example, there are opportunities around accessible co-working spaces, ‘fab-labs’, non-profit associations, youth entrepreneurship hubs, urban agriculture and volunteering centres. Such strategies would make the ground floor an intermediary between each neighbourhood’s community and the whole city.
Across the EU, funding from the Union’s post-pandemic recovery plan can help implement these programmes. Local authorities can play an equally vital role in updating the regulatory framework, allowing greater flexibility on issues like the classification of the aforementioned asset classes. Such measures offer extra agility to public–private partnerships, paving the way for more society-benefitting collaborations to be born.
Over the past few years, we have supported and worked on several projects along these lines, albeit on a different scale. Their results have been met with widespread approval among both businesses and the public. Milan is following the path of ground-floor renovations as it redevelops its Porta Nuova and Mind neighbourhoods — projects in which we are involved in different capacities. It will prospectively go even further, from the historic Porta Romana to the various sites featured in C40 “Reinventing Cities” competition. As a forerunner in building the city of tomorrow, Milan is implementing positive changes that could resonate not only within Italy, but also internationally.
It is not only from the towering office skyscrapers that we can see the future of real estate and urban life. The ground floor, which animates our life on the streets, will be among the first places to understand and rebuild.
Carlo Ratti is a professor at MIT, director of the MIT Senseable City Lab and founder of Carlo Ratti Associati, an international design firm. Manfredi Catella, the chief executive officer of real estate company COIMA, also contributed.
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.