On my optimism for cities
The Weekly Wrap Up (4/9/21)
With the rise of remote work, everyone and their mother have been talking about the decline of cities.
Companies like remote work so they can cut costs. People like remote work so they don’t have to commute. You’ve heard this already.
So, if we don’t have to work in an office anymore, this begs the question…
What’s the point of living in a big city?
In this article, I’m gonna stick my neck out for cities and their continued importance for both workers and companies. Not in the half-ass devil’s advocate kind of way, but in the “You should buy an apartment in San Francisco now” kind of way. And no, I’m not a licensed financial advisor.
Workers
The case against cities goes something like this: office workers came to cities for economic opportunity, and now that economic opportunity is being decoupled from cities, office workers don’t have much of a reason to stay. After all, cities are expensive, cramped, and aren’t all that pretty. In fact, they can be a bit shitty sometimes. Here’s something I came across on my walk to work a while back.
Poop and needles aside though, I still think that people will return to cities in droves after the pandemic because of one thing: relationships.
This is going to be more true than ever in a post-pandemic world. After being deprived of social interaction for an extended period of time, people aren’t going to continue sheltering-in-place in some beautiful, rural town in a state with no income tax. As a matter of fact, that’s the last thing I wanna do once this is all over.
We’re going to want to be around friends, family, and loved ones. We’ll want to go on dates in fancy restaurants or on bar-hopping escapades with old friends, and cities are undoubtedly the best place to do these things.
I don’t mean to say that cities are just going to experience a one-off, post-pandemic boost from people attempting to make up for lost time. People will always desire human connection and proximity to loved ones. And given the high population density of cities, they will usually be where many of your loved ones will be1.
In addition to cities’ sheer population density, nearby academic institutions will continue to provide cities with tremendous staying power. Take San Francisco.
Every year, there are tens of thousands of students graduating from one of the several universities around the San Francisco Bay Area. Even in a post-pandemic world, I guarantee that the majority of these graduates are going to want to live in San Francisco or some major city like New York or Chicago.
Sure, these recent grads could move to the suburbs or more rural areas, but city life caters really well to recent college grads, even without the need to go into the office. They allow you to go on a bar crawl with old friends on Friday night on Polk, grab brunch in the Mission District on Saturday morning, and catch a concert at Bill Graham later that day. And no, I don’t think ghost kitchens and Doordash are going to remove people’s desire to go out on weekends.
In short, if cities are going to lose their staying power, they’ll first need to lose their powerful hold on recent college graduates who provide cities with a large influx of workers every year.
Companies
Companies will always and everywhere be optimizing on profits, which is why remote work is so appealing for companies. Remote work allows companies to trim down on expensive office space while also lowering labor costs through increased hiring in cheaper cities.
However, cutting costs doesn’t necessarily mean that a company is operating optimally. In a post-Covid world, many companies, especially smaller ones, will find that the benefits of having an in-office work environment exceed the costs of office space and higher salaries.
While I agree that remote work has certainly been better than expected, in-office collaboration is still more effective than remote collaboration.
Here’s a random, non-exhaustive list of things that we still can’t do in a remote work environment: whiteboarding in a meeting room, ad-hoc conversations about the company over lunch, building relationships over happy hour drinks, seeing non-verbal social cues in meetings more effectively, etc.
Don’t get me wrong, I still think that we’ll have many more fully-remote companies post-Covid than we did pre-Covid. However, in a post-Covid world, I suspect that many companies, especially smaller startups that thrive on fast-iteration and collaboration, will find that the productivity gains from an in-office environment are well worth the increased costs. Expect commercial office space in cities to continue to be relevant, but mainly for smaller companies2.
Other thoughts on cities
I had some other thoughts on the future of cities that I wanted to jot down but didn’t wanna write a whole post on. Here they are.
Salary convergence across timezones: Labor markets were previously defined at the city-level. With the rise of remote work, salary bands for a role may eventually be defined by time-zone, which has replaced the city as the new boundary for the labor supply for remote workers. Expect governments to adjust timezone boundaries in order to optimize tax revenues.
An increase in weekday social activities: People are going to have more energy to grab dinner or drinks on a Wednesday night if they’ve just been working from home all day.
More time with parents and loved ones: I spent 4x more time at home with my parents in 2020 than I did in 2019. I suspect that trend to continue moving forward, as long as my role remains remote-friendly.
Anyways, those are my city takes. Let me know what you think, especially if you have different thoughts on where cities are going!
Other friends of mine disagree and think that friend groups and families will migrate en-masse to prettier destinations like Tahoe or Hawaii.
I have a friend who strongly disagrees with this take. He thinks remote work will be an extremely popular option for cash-strapped startups who no longer have to pay Bay Area salaries to hire talent. I don’t disagree that the cost-savings of remote work are huge, particularly for startups who are keen on trimming costs. I just think that the benefits of having an office for smaller startups exceed the costs. Granted, those benefits are a lot harder to quantify than your monthly rent bill, so I do think it’ll take smaller companies some time to realize how much of a competitive advantage in-office collaboration can be.