ULI MEMBER–ONLY CONTENT: In the closing session of the 2021 ULI Virtual Europe Conference in February, a panel considered the impact that the COVID-19 pandemic would have on cities in both the short term and the longer term. While the speakers acknowledged that, of course, the pandemic would have lasting effects, there also was a broad consensus that most urban areas will recover in due time.
Moderator Andrea Carpenter, director of Women Talk Real Estate, led the discussion by asking Joanne McNamara, executive vice president, Europe and Asia Pacific, at Oxford Properties Group, whether the pandemic had altered the lens through which she considered investments in cities. McNamara couldn’t deny that it had.
“It’s hard to say that it hasn’t changed because it certainly has,” she replied. “We’ve been focused on diversification, both globally and via different sectors within real estate for a long time. But I think the pandemic has accelerated the pace of that change, particularly into the alternative sectors, which are now very much mainstream.”
Josja van der Veer, @AmsterdamNL, George Hongchoy, Link Asset Management Limited, Lars Huber, @Hines, and— ULI Europe (@ULIEurope) February 10, 2021
Joanne McNamara, @Oxford Properties Group, discuss what is needed to tackle real estate’s structural challenges in a backdrop of challenging market conditions #ULIEuropeConf pic.twitter.com/tuKTmXpfW2
In particular, McNamara said that her company is very much focusing on logistics due to the huge rise in demand for e-commerce, something that had been supercharged by the pandemic. “Growth and resilience are key for us,” she said. “We’ve seen 10 years of e-commerce growth in a single year, which is going to require enormous volumes of new infrastructure.”
Working patterns would change as a result of the pandemic, McNamara added, but people would continue to move to cities, as they have in recent decades. “We still believe in urbanization,” she said. “Particularly in the U.K., there is a shortage of well-managed rental housing. And with people wanting flexibility around how they work and how they live, we feel that there’s going to be continued demand in that space for people to live and work in cities.”
Lars Huber, CEO of Hines Europe, agreed that cities would endure but that they would have to adapt to accommodate changed attitudes. “I think it’s the pandemic has really changed some aspects of people’s views on cities, but it has not fundamentally altered our judgment on the attractiveness of cities,” he said. “Cities will be very resilient; they’ll reinvent themselves and we will be part [of that].”
What’s more, Huber said, people still know that communities and businesses flourish best when people can interact face to face, adding that he had been inspired by many of the city case studies the conference had heard. “There is the fundamental benefit of face-to-face communication to fast transfer of knowledge, and chance encounters create large opportunities,” he said.
“Also, listening to the last 24 hours of the conference, it’s wonderful to hear the tales of cities and what we heard from Milan and Brussels and Eindhoven. It really shows the excitement about the future opportunities in cities. It shows that the energy that’s put behind advancing those cities and making them more attractive places to work. So, we continue to invest in cities.”
However, Huber added that different cities would take different amounts of time to recover from the pandemic and identified density as a key issue. “When we look at the resilience of cities and the differences between and within cities, we feel that short term that dense cities, like London, will probably suffer more,” he said.
“But then in the medium term, they will bounce back and recover much more strongly. So, cities will reinvent themselves and we will continue investing in them. But, of course, we look through a slightly different lens now, post-pandemic.”
Josja van der Veer, director, urban planning and sustainability, at the city of Amsterdam, concurred that her belief in the future prosperity of cities had not changed, but said that the pandemic had made some changes more urgent than they had been previously. “What we see is more concern on inequality and the access of certain parts of the city to healthy environments and to good education,” she said.
“And we really want to help raise the equality and the life chances of different parts of the city. What we also see is the importance of the accessibility to green areas. We really have to rethink the green design of the cities. We can also do more with, for instance, urban farming. Those kinds of notions became very evident these during this pandemic, and so I think you will see the community getting more involved in the future of their cities.”
In addition, van der Veer said, the city needed to adapt to an increasing desire to both live and work in a neighborhood, rather than commuting into a central business district (CBD) every day. “We also see, of course, the importance of working spaces—not only in the city centers, but also in neighborhoods.”
That struck a chord with George Hongchoy, chief executive officer at Link Asset Management. “It’s the same conversation we’ve been having about cities becoming more human centric,” he said, adding that the attractiveness of mixed-use assets and neighborhoods had been apparent for some time, with the pollution caused by everyone commuting into a CBD an increasingly important factor.
As an example, Hongchoy explained his thought process when he considers buying a shopping center. “I would like to invest in a shopping center that works seven days, which means Monday to Friday there are people who come to work and they will then have lunch there and maybe have a drink after work,” he said. “And then at the weekend it’s there for the family. If you don’t go to a community where there are opportunities for employment and living space, it is really difficult.”
However, he added that in an Asian context, greater thought was required on how to provide workspace in neighborhoods. “With working from home for Asian cities, I think one of the problems was that generally our homes, especially apartments, are very small,” he said.
“Imagine the last few months of having a couple both working from home and two children both studying from home and competing [for] bandwidth. We really need to figure out how to have space in the community for people to work and learn. I think COVID-19 has really forced us to think how we can implement some of these ideas.”