Zoomshock - The effects of working from home: How working from home will affect local neighbourhoods

12 Apr 2022

The pandemic led to a dramatic decrease in footfall for businesses which provide local services, such as restaurants, hairdressers, gyms, and retail shops. However, there was also a great deal of variation across locations in how severely these businesses were affected. During the first UK reopening, from July to November 2020, local service footfall in Nottingham was more than 40% below pre-pandemic levels, compared to 28% in the neighbouring suburban district of Broxtowe. Similarly, local service footfall was down more than 60% in Camden and Westminster, compared to less than 20% for Waltham Forest and Ealing.

A new study, to be presented at the annual conference of the Royal Economic Society, examines the role that remote working played in these geographic differences in footfall. The research is by the economists Gianni De Fraja (University of Nottingham), Jesse Matheson (University of Sheffield), and James Rockey (University of Birmingham).

The researchers develop a novel way to estimate how the jobs that can be done remotely (more than 30% of the total) are distributed across neighbourhoods in England and Wales. From this they can measure the “zoomshock”, the net change in the number of workers for each neighbourhood due to increased remote working. Neighbourhoods with a large number of office workers, relative to residential dwellings, will experience a decrease in footfall when workers work from home. In contrast, leafy residential neighbourhoods that are home to many potential remote workers will experience an increase in footfall.

The research examines three different channels through which remote working will affect local service footfall.

First, adding up the zoomshock across all neighbourhoods, some cities see a reduction in workers while others see an increase. This reflects the fact that many workers live in a city different from the city where they work. On average, cities experiencing a negative aggregate zoomshock, such as Leeds, see a decline in local service footfall that is 67% larger than locations which experience a positive aggregate zoomshock, such as Bromley.

Second, workers may use local services differently when they work from home than they do when working in the office. Coffee and lunches may be made in the kitchen rather than purchased from the local café. Indeed, the researchers find that the greater is a city’s remote working, the larger is its decrease in local service footfall.

Third, remote working moves workers from city centres, where local services are plentiful, to residential neighbourhoods, with relatively few local service businesses. This may lead to businesses in residential neighbourhoods being overwhelmed by the increase in footfall, unable to make up for the loss of business in city centres. Consistent with this, the research finds that when office workers are more concentrated in their residential locations, we see a larger decrease in a city’s total retail and hospitality footfall.

The findings have implications for the post-Covid recovery of local services in England and Wales. Changes in where we spend our working hours may offer a way for moribund high streets and less prosperous communities, outside traditional commuting zones, to “level-up’”. There may be a shift in demand for, and eventually the supply of, restaurants, cafes, and retail, away from city centres. A permanent increase in remote working could lead to more vibrant and liveable residential neighbourhoods.

Contact:

Jesse A Matheson

Email: j.matheson@sheffield.ac.uk

Notes to Editors:

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