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How hybrid work is reshaping cities

Cities that can combine unique city center amenities with excellent residential options will be the most successful ones long-term.

How hybrid work is reshaping cities
[arinahabich /AdobeStock]

Even before Omicron put return-to-office plans in disarray yet again, it was clear that commuting habits have changed dramatically. But despite low office occupancy rates, cities are coming back faster than anyone expected, and they are showing strong resiliency and adaptation.

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Hybrid work has moved activity from center cities to residential neighborhoods. People may end up going to the office two days a week, but for the other five days, they want local restaurants, retail, entertainment, parks, services and amenities close by. In other words, when people work from home, they need a 10-minute neighborhood. The most successful businesses will adjust to that new reality by bringing their businesses to where the people are instead of waiting for people to come to them.

Now, we shouldn’t overstate the work from home phenomenon. Even now, most people are back at work. According to the Bureau of Labor Statistics, only 11.1% of employed workers worked remotely because of the pandemic in December 2021. The highly influential tech and media industry workers Zooming into their meetings are the exception rather than the rule.

And in many cases, that Zooming happens in a city—just in the residential neighborhoods.

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For instance, 1.8 million people commuted to work in pre-pandemic Manhattan every day. But 1.2 million of them came from the other four boroughs. Across the five boroughs, the net impact of suburban commuters on New York City’s daytime population is less than 10% of its 9 million daytime population. The activity of many of the rest of the people just shifted to their residential neighborhoods. Conversely, in cities like San Francisco, which had more than 100,000 people do the reverse commute from the city to other Bay Area counties (like Santa Clara and San Mateo in Silicon Valley) before the pandemic, “remote workers” added to the center city population.

The 10-minute neighborhood predated COVID, but pandemic-related working from home accelerated the trend. The proof is that even when people work from home, they stay in cities because they like living there. Anyone who lives in highly walkable urban residential areas can attest to their dynamic street life during the pandemic due to their restaurants, parks, and other amenities.

Ten-minute neighborhoods like Rittenhouse Square in Philadelphia or Near North Side Chicago were popular before the pandemic, and that popularity appears to be continuing. As we enter the new normal, rents and housing demand are increasing in many major cities like New York, Philadelphia, and Chicago.

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The net effect is that the overall activity in cities remains robust, but that activity and mobility are more distributed than they were before the pandemic.

To provide some data, in our out-of-home advertising business, we operate nearly two thousand ad-supported wi-fi kiosks across New York City. Based on third-party Geopath audit data, we see that the overall advertising impressions generated by our network is at more than 95% of pre-pandemic levels. However, the mix is different—units in more residential areas are often higher than pre-pandemic, but those in commercial areas are somewhat lower.

Eventually, all the non-work reasons to come to the center city—education, health care, live events, restaurants, shopping, night clubs, cultural institutions, museums, convention centers, and a slew of experiential entertainment options like escape rooms and themed dining—will ramp back up, and with it, the economic vitality of the city.

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Cities that can combine unique city center amenities with excellent residential options will be the most successful ones long-term. But all cities will have a new activity pattern, with a greater portion of activity in neighborhoods.

Businesses will need to adapt their distribution and marketing strategies to the new activity patterns. Many small retail locations will likely beat a few big retail locations. Coworking spaces might want to create many smaller locations. They may also face new competitors from quick-serve restaurants and coffee shops that can transition their space as work from anywhere locations. And new forms of fast grocery delivery services like JOKR and 1520 should do extremely well in highly distributed cities, as well as restaurant and QSR apps that allow residents to order food online, either for delivery or pickup in-store.

To stand out in these 10-minute neighborhoods, marketers will need to develop hyperlocal advertising targeted to specific neighborhoods. Creative will need to be relevant and contextual to the location in order to be effective. In a world where privacy limits digital media’s ability to target people by location, distributed out-of-home formats like kiosks, bus shelters, buses, and taxi toppers will be crucial in order to reach the distributed audiences.

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Businesses and marketers that crack the code on the new distributed audiences in cities will create a sustainable long-term strategic advantage. It is always easier to win new customers when new habits and behaviors are emerging. In the vibrant residential neighborhoods of our great cities, that time is now.


Chris Grosso is the CEO of Intersection, a leading out-of-home media and technology company focused on America’s largest cities.

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