By Gary Sherwin | Special to the NB Indy
Are you sitting at home in your comfortable lounge pants reading this
If so, you may actually be living your future.
If the pandemic has proven anything, and unfortunately it has proven a lot, it is working at home is now perfectly acceptable and perhaps will be a permanent part of our lives.
But while the safety and security of a home environment is desirable now, it will likely bring a negative economic impact on many businesses that depend on employees in office buildings who lunch out and shop in the middle of the day.
According to a new study by the Stanford Institute for Economic Policy Research, 42 percent of employees are now working from home full time. In fact, twice as many people are working from home as at work.
Most striking is considering the gross domestic product based on these employee’s earnings, this enlarged group of home workers now accounts for more than two-thirds of U.S. economic activity, according to Stanford.
For urban downtowns, this is very bad news. People who remain in their suburban homes instead of coming to work will shrink the office space footprint in many buildings as well as make places who cater to these employees, like coffee stands, bars and restaurants, question their financial viability.
Coupled with the downturn in tourism, especially international guests, this makes downtown businesses, like in LA or New York, facing a very uncertain future.
City centers began to see huge growth beginning in the 1980’s as younger people flocked to loft apartments and revitalized downtowns. Stanford predicts this has all changed this year with New Yorkers especially seeing an increased exodus out of the city. Previously, density meant excitement. Now it means Covid-19 spread.
Here in Newport Beach, as people stay at home and away from their Newport Center office towers, that puts strain on places like Fashion Island and local restaurants. Also, making matters worse is the severe downturn in visitors, especially longer stay international guests, which has nearly vanished.
Fortunately, there is a large base of regional and nearby residents to fill some of the void, but there is no doubt an impact as fewer people are lunching out and checking out sales after work.
If the pandemic ends soon, and we hope it will, things may not entirely go back to where they were before the stay at home orders. Stanford expects that working days spent at home is expected to increase fourfold from pre-Covid19 levels, from 5 to 20 percent.
The study says the typical worker schedule is now working from home one to three days a week with the rest of the time in the office.
That makes for many empty offices these days.
But don’t think the business lunch is completely dead yet. Last week, I was at my favorite midday handout, Gulfstream in Corona del Mar, on two different days and both times the place was bustling.
Other power lunch spots are reporting good business too from both residents and office workers but the overall volume is definitely down. The Stanford study said that spending at retail and dining establishments near business centers has been cut in half since the pandemic began.
The salad bar at Whole Foods was a popular hangout for the crowd from PIMCO, who strolled across the street in their shirtsleeves or high heels, but new Covid-19 regulations changed that habit.
The longer-term question is whether companies shrink their office footprint in the future especially in high rent locations like ours. While having a corporate presence is a sign of legitimacy, many firms may opt to scale down knowing that most employees will only be there part time. The current recession may only accelerate that trend.
The good news is that Newport Beach is home to a number of white-collar businesses who chose to be here because of the prestigious address and proximity to quality business amenities. With the clean breezes and lack of urban density, it is seen as a healthy and safe destination to do business which will be the new standard for office workers.
So sure, working from home in your pajamas is nice but, in our case, it doesn’t replace ocean views or a stroll through Fashion Island at lunch.
Gary Sherwin is President and CEO of Newport Beach & Company, the destination marketing organization for the city of Newport Beach.
Visit https://www.visitnewportbeach.com and https://newportbeachandco.com/
