In the second in our series of essays on the New London Agenda, Professor Greg Clark CBE, Senior Advisor at NLA, takes a look at Central London’s need for reinvention.

Since the dim days of early 2020, the logic of city centre futures has been revised. The pandemic, and its attendant lockdowns, provided the catalyst for a big shift in working and consumption habits for people living in major cities with advanced economies, precisely by accelerating, or indeed generating, the switch towards hybrid working and online retail. These lockdowns also forced a surge in distance learning and remote medicine, as well as prompting an almost complete temporary halt in international tourism, students, and patterns of migration. The very things that fuel a place like Central London, were either forcibly prevented, or rapidly digitised.  

What became immediately clear was this major shock, driven by a public health emergency rather than a conscious shift in urban policies, would impact disproportionately on the city centres of developed nations, by radically revising demand for the established platforms of offices, retail facilities, hotels, and universities, and the amenities that were previously patronised by the office workers, shoppers, international tourists, students, and convention attendees. From sandwich bars and coffee shops to the city centre hairdressers, taxi drivers, and restaurateurs, the old CBD offer would not survive this change in demand profile, and, for the owners of big real estate a new, as yet unimagined, future would be required, with an unquantified repurposing and reinvestment bill attached.       

Three years later, we can start to see what the new city centre might look like. NLA hosted an expert roundtable on the Future of Central London in late 2022 where the focus was not on the short-term recovery of the CAZ, but on the longer-term opportunity that this post-pandemic cycle presents. A rich combination of senior executives from London and CAZ wide bodies participated, alongside place leaders from Central London’s Local Governments, Business Improvement Districts (BIDs), and Universities.   

We might summarise the path to the ‘new cyclel’ as having 5 elements. 1). the degree of return to leisure/hospitality/entertainment/culture, 2). the nature of return to office working, 3). the scale of return of international tourists, 4). the pattern of return of international students, and 5) the new patterns of (national and international) migration. 

What is clear from our roundtable discussion is that the return to leisure and culture has been in full flow for many months, with the new working patterns also causing concentration effects in terms of leisure activity on certain days and times, often now setting new records for Thursday night dining or Saturday shopping. 

The return to the office remains partial; Tuesdays, Wednesdays, and Thursdays are busy again and offices are being reconfigured for new working styles that incorporate and combine social interaction, fractional attendance, and hybrid working. Mondays are now starting to pick up significantly leading to what may look like a 4 day week in the longer term. and there is now a new agenda to ‘reinvent Fridays’ in office districts to serve new patterns of demand for enrichment. 

International tourists have returned in substantial numbers aided by London’s compelling offer, a warm invitation, a weak £GBP, and incentivised by Royal events. Despite punitive taxes (eg no VAT refunds) London is busy in tourist spots. University student numbers have now bounced back to pre-pandemic levels. What has also changed is that more academic staff are now working flexibly with about half the working week spent WFH. 

Despite the impact of both BREXIT and COVID London’s population continues to grow fuelled by migration, and there are expectations that wider drivers such as war in Ukraine, uncertainty in Hong Kong, and continued large numbers of asylum seekers, as well as set patterns of migration from commonwealth countries will continue to grow, due in some part to the pull of tight labour markets.

The word that therefore best describes the new realities and opportunities that are already visible in central London in early 2023 is rediscovery. 

After the pains and frustrations of lock downs and controls, there has been a steady surge in the appetite of people to re patronise the arts, culture, leisure, hospitality, and entertainment. Londoners and visitors still have appetite for the rich mix that the centre can offer, despite recent changes in the patterns of work, learning, and shopping. 

Indeed, it is already clear that some parts of Central London are benefiting from a ‘flight to quality’ dynamic that is driving demand for new offers, revised places, curated spaces, the treasures of the royal parks, free museums & galleries, and the deep DNA encoded in the very fabric of the city. The magic ingredient of city centres, the fear of missing out (FOMO), is back in play.

This surge sees the London Underground at near full capacity on certain evenings and at weekends. The Elizabeth Line has boosted the ridership that supports the new appetite, and Londoners are continuing a long-term shift away from car use in favour of active travel and public transport. With this revised demand has come an opportunity to remake places that better combine the city centre offer for the new hybrid lifestyles and the planetary imperative of decarbonisation.

The Remaking of Centre City

Indeed, a grand experiment is now in train to find ways of curating and animating key locations in central London despite the challenges of fragmented land and site ownership, cross border governance issues, and a new sequencing of the city that needs distinctive services at different times of day and days of the week. This is all about re-equipping for the rich experience that people simply can’t get online. It involves reconfiguration, new urban design, surprise and activation, as well as deliberate opening up of space and places that were previously closed.  There is a new agility in London’s built environment that encourages spontaneity. In all of this, the Local Governments, Business Improvement Districts, Anchor Institutions (such as Universities, Hospitals, Stations, and Arts Venues) and the Great Estates are to the fore. This is a reinvention process at play that is not simply driving a recovery, but rather remaking what the city centre is for.

There is no space in the digital world that can mirror or equivalate to the unique connections and experiences that a city centre offer. The deep social, commercial, professional, cultural, intellectual, and territorial connections of a city centre provide that unique combination of complexity, proximity, and possibility that make almost anything feasible, as long as the city is organised around what it can help make possible.     

Central London is already thinking in the new paradigm. In other countries we hear about the shift from the Central Business District to the Central Social or Experience Districts, but there is no reason why social connections and rich experience will not also fuel business success. Conversely, higher value-added sectors in the working economy fuel culture, leisure, retail and hospitality sectors.

Central London Forward has recently set out a new vision for the CAZ in the post pandemic cycle that has now begun. It sees that Central London can become a compelling and magnetic place, and platform, based on three inter-dependent and reinforcing ideas:  

The shift towards this vision will shape and drive decarbonisation in buildings, transport, and supply chains underpinned by cohesive place making and place animation. 

But in the context of this positive wave some deep threats and risks are revealed. There is the caustic challenge of the recession and industrial action now unfolding in the UK, the days of the week when some parts of the CAZ are still quiet, the costs of repurposing and repositioning buildings and places, and the degree to which the collaborative place leadership that is now emerging can be fully effective in steering the future. Can the soft power of place-based collaborative leadership prevail against the hard drivers of institutional self-interests? And beyond these immediate challenges lie five other critical concerns that must be addressed if this reinvention of central London is to succeed.  

The first is the economic risks that hybrid work brings to our economy. One reason that city centres in advanced economies succeed is because they produce agglomeration advantages that can’t be easily achieved elsewhere. The ‘crowding in’ of talent, investment, enterprises, and innovations creates a competitive advantage that increases productivity by linking, matching, and exchanging knowledge between the players in dynamic ways that goes back many centuries to the coffee houses that fomented modern London. 

The ability of city centres to both host leading sectors and to facilitate the interactions between such sectors is the key reason that central London has produced so many new jobs in the past 20 years. The interfaces and interactions between Finance, Professional Services, Media/Information, Creative Industries, Technology and R&D has produced completely new forms of enterprise and types of jobs and has supported the exchequer with deep tax revenues. 

The risk is that the wilful unbundling of these key interfaces would lead to deglomeration. It threatens future productivity and investment. It may be that many workers feel they are more individually productive by working more from home, but whether they are collectively more productive is the larger question. Because some of the economic benefits of agglomeration are generated over and above the firm level, it will be incumbent on policy makers to act as the long-term guardians of productivity growth. They can do this by pursuing policies to increase effective density further (for example by reducing journey times and associated costs such as overcrowding to and within Central London).

A second threat is competition. One version of this is to recognise that in this new cycle there are many more cities vying for primacy in the leading industries that Central London has hosted over the past 30 years. These cities are known competitors such as Paris, Berlin, Amsterdam, Frankfurt, and Dublin who have been encouraged by BREXIT to compete for London’s established niches in Finance, Services, Media, Tech, Life Sciences, and Creative Industries. These regional competitors are also augmented by established global rivals such as New York and Singapore. Another set are the faster growing cities with niche offers, such as Dubai, Tel Aviv, Shanghai, Sydney, and Toronto. Whilst no one of these might be in a position to overtake London, the risk is one of insidious decline; firstly, an erosion of rates of growth followed by a corrosion of scale, density and capacity to innovate and compete. Worryingly, decline by a thousand cuts is harder to tackle than a one off shock.

There is no surprise to learn that cities compete, but what is now clear is that this fresh cycle of competition is more fiercely aggressive than before BREXIT and COVID, and the competitors are much better organised, resourced, and financed than in the past. 

What makes this threat sharper is the realisation that virtual or hybrid lifestyles may not only undercut our long run productivity, but also represent another form of competition to our city centre amenities and clustered activity. As one of our leaders put it, the competition is both from other cities and from the appeal of staying at home.  

A third risk is the gaps in our knowledge and intelligence. To both understand how our city is evolving and to better evidence and explain the rich nature of our value creation, our eco-systems of exchange, and our population dynamics, we need better data gleaned from digitised systems in which we all share. There is a war for data as well as talent and we are not yet organised.

The fourth issue is the national policy frameworks and public investment regimes in the UK, that are stuck in a zero-sum confusion where it is assumed the UK can succeed without London’s success. Such binary formulations are not cognizant of the competitive challenge faced by London from other major cities. Unlike other European centres such Paris, Berlin, Madrid, or Amsterdam, London does not enjoy the unequivocal support of the UK Government in the ways these competitor cities do.

The fifth issue is inclusion. London’s last cycle demonstrated that that the city has not succeeded in addressing the inclusion challenge in housing, wages, health, education, or opportunity. The housing challenge represents an especially clear requirement for more effective intervention and policy. 

The more London succeeds economically the worse the housing affordability challenge becomes unless a better set of long-term interventions can be crafted. London has remarkably high volumes of social and council housing compared to many of its peers. It also has many areas where market generated residential property is unaffordable to the vast majority. We know that the city centre will not work if those in the “squeezed middle” cannot afford to live in it, and the acute challenges of key workers are made much worse by rampant house market inflation. Housing stops being the amenity we need it to be once it become largely a tradable asset for global capital. Better interventions are needed.

Central London is not just London’s core. It also houses much of what makes Britain, Britain. So, making the most of central London is a quest for the whole nation. 

These five risks create an important matrix against which to enrich and deepen our commitment to Central London’s future. Like all risks we can either use them to shape our proactive approach to the new cycle, or we wait for them to derail our shared endeavour.  What they point to this: the reconfiguration of Central London is not only a task of decarbonisation, place-making, and citizen activation. Essential those these are, they must be accompanied by a deeper framework of initiatives and interventions that help to reinvent the city centre in ways that prioritise both long-term value creation and deeper economic inclusion in ways that remake the contract with business and citizens, and pioneer a new kind of world city centre. That is the opportunity that is now ours to grasp.