The Economic Future of the Central Activity Zone (CAZ) Phase 1: Office use trends and the CAZ ecosystem Report to the Greater London Authority (GLA)
6. COVID-19 has been incredibly damaging and requires urgent action Central London office workers have been slower to return than UK and international counterparts The pandemic has hit London, and the CAZ hard COVID-19 and the associated policy response has hit the CAZ harder than any other area of the UK. Even before the restrictions over the autumn and winter period of 2020, the recovery in footfall from the spring 2020 lockdown was slow. Central London has seen a slower return to work rate in offices than other UK and global cities, which is having a significant impact on the wider economy. Two of the CAZ’s great strengths have become weaknesses in the pandemic: a huge agglomeration of people, coupled with a wide labour market captured from widespread public transport use rates. This has manifested in significant job losses, with a loss of almost a quarter of a million workforce jobs in London between March and the end of 2020. This is the highest fall in the UK, and, it is of further significant concern that the largest falls were in the sectors that are among the most strategically important: professional, scientific and tech, alongside arts, culture and entertainment (GLA, 2020e). Of course, large sections of the economy are not working remotely. In the second week of January 2021, under lockdown conditions, 50% of adults travelled to work at least once, and 35% worked from home exclusively (ONS, 2021a). Working from home January 2021
is focussed on white-collar industries, and the CAZ’s reliance on those industries, as well as the reliance on hospitality and retail and inbound tourism, partly explains why it been more impacted than elsewhere in the UK. Furlough take-up has been higher in London than any other region in the UK, which has disproportionate negative impact on those on lower wages, intensifying the risk of growing wage inequality (GLA Economics, 2021b). Furthermore, during the summer of 2020 when restrictions were limited, London workers were less likely to visit the office than other global comparators, suggesting a relative inertia in returning postpandemic, possibly caused by longer travel distances, and (lack of) incentives to return on behalf of employers. This is explored in more detail on p.80. The result has been a ring of white-collar home workers in inner London, that substantially corresponds to the home location of CAZ workers, and a drop in footfall in key office districts mainly in the CAZ (see right), some of the economic activity associated with CAZ office workers has been taking place in the rest of London.
Decreases in worker visits have hit the CAZ harder than other locations July 2020 – November 2020 footfall percentage change, 7day rolling average* (Source: O2 people count 2019-2020 (obtained via Greater London Authority, January 2021)
Hamburg
22%
Berlin
19%
Barcelona
19%
0 days WFH 1-2 days
Madrid
26%
3-4
Paris
24%
5+
49%
London 0%
20%
40%
60%
80%
100%
Rate of return of London office workers (Source: Alphawise, Morgan Stanley, 2020) Office workers in London were much slower to return in July 2020, a period in which COVID-19 restrictions were at a low level across Europe. 55
