City life returns - slowly

The pandemic emptied cities: people are now returning – but for recreation rather than work

11 August 2021 James Pomeroy, Global Economist, HSBC

The pandemic hit the world’s biggest cities hard. Lockdowns closed offices, shops and leisure facilities. But as vaccines roll out and economies re-open, how is urban mobility changing? Data – from cafe sales to public-transport usage, restaurant bookings to rents– show which cities are returning to pre-pandemic activity and which are recovering more slowly.

The picture is mixed – not just among the cities, but also within them. Where the pandemic is still raging, urban mobility remains at very depressed levels. Elsewhere, some sense of normality is returning – though people’s behaviour is changing.

So in New York, while subway journeys are about half pre-pandemic levels, car usage is considerably higher, with congestion nearly back to the old levels. Road traffic is up in London too, with public transport usage down 40 per cent-60 per cent, and mapping shows people are walking more.

But while bookings for restaurants and bars are up, fewer than half of workers are back in offices. Coffee-shop sales in London’s financial districts have hardly picked up despite the full relaxation of restrictions, but in the suburbs, sales are strong as people working from home buy drinks or lunch.

New York’s recovery has been even slower – coffee sales at just over a third of pre-pandemic levels – but in Paris, where the government has encouraged the return to offices, sales have rebounded to over 70 per cent of pre-2020 levels. Hong Kong sales are back to 85 per cent of pre-pandemic levels.

Surveys suggest that most professionals would prefer to work remotely two or three days a week, so the chances of these numbers returning to ‘normal’ are unlikely, particularly during weekday rush hours.

However, while office workers aren’t coming back yet, leisure in cities is returning more quickly. Restaurant bookings have soared in most cities that have re-opened. Figures lag in London, New York and Toronto, where restrictions have only recently been eased, but they have picked up strongly in cities like Miami and Houston that eased restrictions much earlier.

This return may be good news for businesses that rely on footfall, but longer term, if cars replace public-transport usage, it will create funding challenges for transit authorities and exacerbate congestion and pollution.

But there are signs of people now returning to cities to live. Rents in New York are still nearly 10 per cent below January 2020 levels, but that have risen sharply in cities such as Atlanta, Miami and Chicago.

Rental demand is also rising quickly in UK cities as restrictions are eased, but remains down by nearly 10 per cent in London, with smaller falls in other major cities such as Leeds, Manchester and Edinburgh, whose attractiveness has been reduced by lockdowns.

Data show that many of the world’s biggest cities are not fully back to normal, particularly in Asia, where the virus is still rampant. But North American and European cities are coming back strongly.

One telling difference is the time spent at workplaces compared to recreation locations. Stockholm and Oslo were two of the world’s most remote-working-friendly cities pre-pandemic, but although retail and recreation activity is nearly back to old levels, workplace attendance has barely risen from COVID-19 lows.

First published 29th July 2021.

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