The Post-Pandemic City

The Post-Pandemic City

By: Abby Melone, President & CEO, Capital Analytics

It’s a truism in today’s hyper-connected world that people go where the jobs are, more so now than ever before. But what happens when your job suddenly can be done from anywhere?

 

The 19th century ushered in the first and second Industrial Revolutions that saw more and more people move to urban environments, precisely because that’s where the jobs were. In the United States, the rise of manufacturing opened a new world of employment possibilities, pushing people from the farm to the factory. It’s a push that in one way or another continued into the 20th and 21st centuries. The result is seen today in the population densities that cram big cities from coast to coast, border to border.

According to the United Nations’ World Urbanization Prospects report and the website Our World in Data, the world crossed over in 2007. That’s the fist year the number of people living in urban areas rose above the number living in rural areas (3.35 billion versus 3.33 billion). In the United States, around 82.3% of the population lives in urban areas, according to the World Bank. Growth trajectories project a steady increase in urbanization as far out as 2050. 

Today, the millennial generation is changing the character of urbanization by spearheading the live-work-play ethos. This generation prefers to skirt the traffic jams and live and play near where they work. The goal to have it all close by has given rise to the mixed-use building concept that puts everything – your living options, your entertainment choices and your shopping – all in one convenient location, which preferably, is near your workplace. 

It also means we are all living closer to each other in smaller and smaller spaces. That seemed to suit a lot of people just fine. Then the COVID-19 pandemic happened, and all of sudden, none of that seemed fine at all.

The pandemic resulted in shelter-in-place orders that forced people to live 24 hours a day in their homes while also working from their home offices, if they had one, or their kitchen tables if they didn’t. The very idea of needing to go somewhere else to do your job turned out to be not so much of a necessity after all. In just a few months, priorities appear to have shifted. Now, many of us seem to crave space, the great outdoors, and we seem to be split 50-50 on whether we want to continue working from home, wherever we choose that to be, or prefer an official office setting, mostly for the socializing.

There is little doubt that the world has changed as a result of the pandemic. Most experts are puzzling on whether that change will last and just what our cities will look like as a result. The fact is, though, that change was already in play before COVID-19 hit.

My company focuses on nine major U.S. markets like Orlando, Miami, Atlanta and Philadelphia. We talk to industry and political leaders to understand the issues their communities face to gauge the direction in which they are moving. Today, everyone is talking about the pandemic’s impact on the retail sector, for example. Yet, e-commerce was already a thing before COVID-19. In 2019, a record 9,800 stores were shuttered, according to a Bloomberg report, with 25,000 closures expected in 2020 due to the coronavirus impact, the report said, citing Coresight Research. Yes, that’s a devastating impact, but the pandemic really has only accelerated the pace of implementation. It pushed more people online immediately, but those people were likely headed there anyway.

Many of the leaders we have spoken with during the pandemic agree that retail and commercial real estate was already undergoing a slowdown as industrial space to accommodate last-mile delivery for the Amazons of the world was booming. Many expect this trend will continue.

More importantly, what the pandemic has done has caused a rethink of priorities among individuals and it is this impact that will likely shape the post-pandemic city. Living in lockdown awakened people to the “smallness” of their space, forced on them by a combination of convenience and higher and higher housing prices in big cities. The median listing price for a home in Miami-Dade, for example, was $465,050 in May compared to the average U.S. listing price of $329,950, according to the Federal Reserve Bank of St. Louis. Interestingly, population growth in Miami-Dade was already slowing as more people moved out, with escalating living costs among the factors. With the pandemic highlighting the risks of living so close together, will more people decide that farther away is not only cheaper, but safer?

Big city living will change in the post-pandemic world as social distancing forces “people places” like gyms and restaurants to accommodate lingering fears from the virus. Tens of thousands of small businesses have already closed down for good, clearly altering the very unique characteristics of cities that attracted people in the first place.

The biggest impact, however, will be on how – and where – jobs are done. Remote working is hear to stay in some form or another. Like the industrial revolutions of the 18th and 19th centuries, people will always go where the jobs are. For many, those jobs will now be done from home, which means that home can be virtually anywhere. It creates choice like never before, and this will dramatically alter the character, although not likely the course, of urbanization. That’s an important difference. 

Big cities have seen the ebbs and flows of population growth before and will likely see them again. Through it all, they have more often thrived than not. The post-pandemic city may look and feel a bit different – the way condo units are built, for example, may change to accommodate working from home, while adding elements like air filters to battle any future virus outbreak – and there may even be a greater push to the suburbs in the short term. Overall, however, continued urbanization likely will remain on the cards. If we’re lucky, there may just be a little more distance between all of us.

 

Miami Dominates in Innovative Coworking Real Estate

Miami Dominates in Innovative Coworking Real Estate

By: Sara Warden

2 min read NOVEMBER 2019 — The traditional office space is changing fast. Hot-desking came first, and now with more pressure to recruit highly skilled personnel, workers are increasingly able to command perks such as home office and telecommuting. According to Fundera, telecommuting has grown by 40% in the last five years and employers offering the benefit save around $44 billion per year in total. The drive to home office also created a new real estate niche – coworking spaces – and that niche is now driving real estate growth in Miami.

“Coworking tenants continued to dominate absorption activity in Miami for the second quarter in a row as they continue to lease significant footprints in buildings throughout the market. Out of the seven largest lease transactions year-to-date, five were coworking tenants, with WeWork leading the number of coworking companies,” said Donna Abood and Michael Fay, Principals and Managing Directors-Miami at Avison Young in an article written for Rebusiness Online.

According to a special report by Yardi Matrix, coworking spaces accounted for one-third of leases over the last 18 months. Miami comes in third in terms of metros with most shared space as a percentage of real estate stock, at 3.5% –behind only Manhattan and Brooklyn. In the last 10 months, Miami has added around 1.1 million square feet of coworking spaces.

But one of the most highly-leveraged companies in the coworking arena is WeWork, a company that underwent a failed IPO attempt in the last year and wiped out around 80% of its value in the process. The company stretched itself too far, playing the Amazon tactic of taking on huge losses to undercut and wipe out the competition, but without having Amazon’s clout.

Alan Patricof, chairman emeritus of venture capital firm Greycroft and an early backer of Apple, does not believe the coworking space is a bad idea, but rather that WeWork simply bit off more than it could chew. “If you want to be a publicly traded company, you should act like a public company,” Patricof said in an interview with TechCrunch in September, adding that the board members “were all seeing the pot at the end of the rainbow.”

But the global value of coworking spaces is estimated at $26 billion, with growth of 6% expected in the United States to 2022 and 13% elsewhere. Despite WeWork’s errors in judgement, the market is there for a $49 billion valued unicorn, and Miami offers huge opportunities to those investing in the right way. According to Pandwe Gibson, founder and president of EcoTech Visions, a coworking space for manufacturing businesses, these spaces need to be constantly offering the next new thing. 

“Entrepreneurs in America don’t just need a WeWork. They don’t just need a desk. Entrepreneurs want to make stuff,” she told Moguldom. The Miami-based startup has 52,000 square feet of space and approximately $3.2 million in public and private investment to scale the business, while it carries out its first raise.

It doesn’t stop with manufacturing space. ShareMD recently spent $33.15 million to purchase a building in South Miami and one in Coral Gables in which to set up co-working spaces for doctors. “Because of the demographics in Florida, we are aggressively trying to expand in the metropolitan areas,” said Easton & Associates Vice President Elliot LaBreche, representing ShareMD in the deal in an interview with The Real Deal.

The attraction of this concept is accessibility to a doctor without the pressure to sign new clients, LaBreche added. “If you have a doctor, and their primary practice is in Fort Lauderdale, but they have some patients in Miami and West Palm, but not enough patients to support their practice, they can join the ShareMD network and use our offices as satellite offices.”

 

To learn more about our interviewees, visit:

https://www.avisonyoung.com/

https://www.yardimatrix.com/

https://www.wework.com/en-GB

https://www.greycroft.com/

http://ecotechvisions.com/

https://wesharemd.com/

http://theeastongroup.com/about/

 

Invest: Miami speaks with Larry Rice, President, Johnson & Wales University-North Miami

How can the universities better connect academia with industry to better facilitate praxis?

Generally speaking, all higher education has a desire to create a balance between theory and practice, or praxis. We know that is how students learn best. From my perspective, that is a good refection of who we are at Johnson & Wales University (JWU). This is why we have been implementing project-based learning for some time now. Of course, the perfect combination is always aspirational, but it is our goal and where we want to be. For this, we have been investing our efforts in training our faculty members to better balance both. For example, if a faculty member is specialized in research and theory, we will train him or her to also implement practical problem-solving, and vice versa. We train our professionals who are specialized in practical cases to also give theory the importance it deserves so students can maximize their learning opportunities. JWU creates partnerships with industry. Our curriculum is designed in concert with industry, which serves as a great benefit to our students, as well as industry leaders seeking to hire top talent.

What efforts is JWU making to ensure diversity at the institution?

Diversity is not the end-game. It all begins with diversity. I believe that diversity becomes the foundation of any institution. We have created a campus environment that respects diversity in a high level. But I believe that hiring is just as important. It is not enough to say that we can bring in students who are reflective of a diverse environment. We have to be able to introduce them to individuals who provide that same level of variety. We also integrate diversity into our programs. A good example of this is every year we collaborate with the Multicultural Foodservice and Hospitality Alliance. Recently, the Wall Street Journal published a ranking of diversity in the country and JWU came in No. 1 in South Florida and No. 3 in the nation. This is a reflection of our commitment to welcoming a diverse mix of students and faculty.

Invest: Miami speaks with Larry Spring Jr., City Manager of North Miami and Executive Director of North Miami Community Redevelopment Agency

What incentives does North Miami offer to investors?

Through the North Miami Community Redevelopment Agency (NMCRA) we have a lot of incentive programs such as assistance for acquisition, buildout and renovation grants. Through the NMCRA we are able to help pay the county impact fees for businesses in North Miami. These figures can be high for some of these businesses and we are able to help them. One of our new programs with the NMCRA is tax rebates. We do it through a tax increment finance agreement where, if you bring your business and create a number of jobs, we will give you a rebate of a portion of the property taxes generated by the business.

How are cities such as North Miami setting a good example when it comes to combating crime?

We have seen a reduction in our crime over the past several years. Our police department engages in the community and tries to be responsive to get ahead in areas where we see potential issues. We have added a number of resource officers into downtown and into the 7th Ave. corridor. These officers will be on Segways so that they are accessible to the community. Their presence creates an air of safety, and they have been successful in stopping crimes. This then creates awareness. Crime has not been a great issue in our city.

What is your vision for North Miami?

My vision is to help internally with the things people don’t see, such as improving our processes and making it easy to do business. We can provide incentives, attract businesses and provide basic services, but we also need to attract big projects. We are working diligently to invite the world into our city. We want to embrace the past and keep the charm of what was North Miami, with new developments and businesses. You have the opportunity to live, work and play in our city. We are open for business.

Open for business

How the city of North Miami is attracting commercial interest to create positive growth

Smith Joseph Mayor – City of North Miami

 

What are the most important aspects of the North Miami comprehensive plan?

To me, the single biggest opportunity from the plan is the height increase that we have implemented as part of our North Miami downtown development campaign. The new height restrictions should encourage more development projects downtown as well as bring more activity to the area. Another aspect of the plan is that we are the first city to take on the leading role in dealing with the threat of rising sea levels. Global warming is a major concern and, as a city government, it is important to take the appropriate steps to address these concerns. As part of community planning and development, we have policies in place for existing construction and programs to pinpoint buildings that may be at risk if we should have any incident of sea-level rise. My vision is to have a city that is resilient and able to withstand any adverse weather or climate change that will cause damages. I’m very proud of the fact that we took the leading role after Miami-Dade County.

What are the city’s current strategies to continue to attract and retain businesses?

Attracting new business or having them join this community is one our highest priorities. As mayor, I started a campaign to bring businesses and tackle unemployment in our city. Our unemployment rate was at 9.8 percent. First, I made sure that the North Miami Community Redevelopment Agency (NMCRA) was extended. The NMCRA is key in attracting investment into the area, and it will benefit many of the small businesses planning to come to North Miami, even offering partial subsidies. The Solē Mia Local Preference Office (LPO) managed by Garth Solutions will be very important in increasing community involvement, not only for residents but also small businesses. The LPO offers free job training and scholarship opportunities to North Miami residents in addition to offering essential consulting services to local firms. These local businesses are part of the fabric of our city, so it’s important to look after them. We have to make sure that they stay in the city and become part of the economic machine.

What would you identify as the biggest areas where new businesses or investors can get involved?

We have several main corridors. The main one is 125th street, heading east to west. West Dixie Highway is an area that I would really like to see developed. We need to attract more investment into these areas, because there is so much potential, but the city cannot development it alone. We are trying to encourage public-private partnerships.