Ch-ch-ch-ch-changes of the Pandemic and How To Adapt

No surprise, the COVID-19 pandemic has impacted pretty much all aspects of how we live. As the pandemic starts to recede (in the US anyway) the question is “which changes will stay with us in 2021 and beyond”? The evidence indicates that many of these changes were already in process before COVID hit and what the pandemic did was accelerate their adoption. However, in no way does this lessen the impact that they will have on society, business and our lifestyles going forward.

The lockdowns and isolation caused many of us to reflect on how we live our lives. YOLO (You Only Live Once) became one of the key drivers for the multitude of the changes that have already taken hold. Many people came to realize that you only get to do this once and decided to make lifestyle changes to insure that they get the most of their lives. This has been supported by the rise of remote/work-from-home options and record high levels of savings.

In a short blog like this I won’t be able to go into detail about each of the changes we’re experiencing, but I will share some initial insights on each. A deeper dive with the potential impact each will have on businesses and lifestyles will be provided in future posts.

Migration Away From Major Cities and the Coasts

The past year has seen a significant number of people move away from major cities such as New York, Los Angeles and Chicago. Meanwhile, new employment hubs like Austin, Dallas, Phoenix, Columbus and Nashville have experienced considerable population growth.We’re also seeing increased movement out of many major cities into nearby suburban and exurban areas. This trend began in 2014 but has greatly accelerated in the past year.

The financial capacity for this disruption has been driven in part by the skyrocketing levels of U.S. personal savings, which have grown to record levels during the pandemic. This has helped to generate a newfound ability for many people to purchase a home who previously couldn’t afford to. Another major factor is that these people are moving from the ultra expensive markets in the Northeast and the West Coast to more affordable locations in the South, West, and Midwest.

Younger people, primarily in the 25 to 34 age range, are leading this trend. Another key driver has been the rapid movement of immigrants to smaller cities such as Fayetteville, AK, Knoxville, TN,; Cedar Rapids, IA, Springfield, MO., and Fargo, ND. Most of these markets are areas with traditionally low concentrations of foreign-born populations. Racial minorities, too, are moving to Sunbelt boom towns, the South, and to smaller cities.

We know from past experience to never count out New York City, Chicago, etc. But for these cities to come all the way back, they will need to place a greater emphasis on creating an environment that is more livable, healthier, safer and friendlier to local businesses. This will require infrastructure spending and improvements in mass transit to allow for faster and easier commutes to their suburbs.

Employment

Many workers, now emboldened by fat bank accounts, have an increased appetite for job-related risk. While some are just changing jobs, others are starting their own business or stepping off the career treadmill altogether. A recent Microsoft survey found that more than 40 percent of workers globally are considering leaving their jobs this year.

This is causing a substantial power shift, where talented workers are now able to have more influence on where and how they work. Employees today have an unprecedented ability to negotiate these work/life balance issues with employers. Dissatisfied workers have more options than ever before.This will only make the talent crunch even tougher on companies.

To get ahead of this exodus, employers are trying to boost morale, prevent burnout, and offer new and innovative benefits. Many are offering work-from-home or hybrid options, extra time off, and even all expense paid vacations. However, while raises and time off may persuade some employees to stay put, for others the only solution will be radical change. Organizational stability will continue to be one of the biggest challenges for many companies going forward..

Shopping

This is another area where we’re seeing an acceleration of trends that have been under way for quite some time. During the pandemic, online shopping and BOPIS (Buy online, pick up in store) grew at a blistering pace. Conversely, traffic in regional shopping malls declined to record low levels. U.S. malls saw their real estate value plunge an average of 60%. Recent appraisals of 118 retail mall properties show a loss of a collective $4 billion in value compared to what they were appraised for in 2019. According to Compass Point Research & Trading only 50% of the country's 1,100 indoor malls have a good chance of staying open for the long haul.

The news on department stores is just as grim. These mainstays of convenience and indulgence had been hurting long before the pandemic turbocharged online shopping and drove a number of big-name retailers into bankruptcy. Close to 200 department store units have disappeared in the past year, and according to commercial real estate firm Green Street, 800 more, or almost half the country’s remaining mall-based locations, will shutter by the end of 2025.

Some malls have a better chance for survival than others. Those in prime locations tend to have fewer vacancies and could thrive in the coming years. They also feature stores that offer a robust omni-channel experience. However, those malls that were seeing decreasing foot traffic prior to the pandemic could likely be on their way out in the next several years. Some locations will be repurposed for residential purposes. Others could be converted to warehouses and distribution centers.

The past 16 months of living in the shadow of the pandemic has been a challenge and learning process for all of us. It has served as an accelerant to many changes that had started years earlier. While the overall impact of COVID has been horrific, many of the changes will end up to be positive. Hopefully we come out the other end stronger and more united as a country. Those who adapt and transform quickly to meet the changes will be better positioned to survive and thrive.

Coming in Part Two … long term changes in Travel, Entertainment, and Cities driven by the pandemic