After more than a year of lockdown restrictions, words like “recovery” are thick in the air. Indeed, the Bank of England is forecasting annual growth of 7.25 per cent, the fastest rate since 1941; positive news, but it is not the most digestible statistic for much of Britain’s population. The most important benchmarks are ones that mean something in the world around us, such as the number of passengers on a train or the closure of a local shop.
Bloomberg Businessweek has tried to use a more tangible measure: the Pret Index. This uses weekly sales figures from the chain’s London stores to show how the UK is recovering from “its worst recession in three centuries”. Just as for many it is not Christmas until the Coca-Cola advert comes out, there will be scores of office workers for whom a return to normality will be served in a trusty Pret a Manger bag.
Currently, sales in the City of London stand at just 39 per cent of their pre-Covid base. “If sandwich sales are any guide,” Bloomberg says, “London’s bankers, corporate lawyers and asset managers are taking their time returning to offices.” This is an interesting insight and corresponds with what we are seeing elsewhere, but it does not tell the full story. It works on the assumption that recovery means a return to pre-pandemic behaviours when the past year has seen a huge shift in the way we live our lives.
For instance, we know many businesses do not plan to return all staff to the office full time. Instead, employers are considering a hybrid model that integrates remote working with using the office to facilitate meetings and collaboration. This is not the “old normal”, but for many it will be significantly better.
If we are going to understand how London and other cities are recovering, understanding how the Soup of the Day is selling is one element, but there’s clearly more. Avison Young’s UK Cities Recovery Index (UKCRI) monitors activity and uses data across sectors that reflect different aspects of city life: commercial activity, hotels and leisure, mobility, residential, retail, and the return to office. This allows us to accurately build a holistic picture of our post-lockdown economy, in almost real time.
By analysing our cities as frequently and holistically as possible, we can see how they are evolving. For instance, the UKCRI very clearly showed that when people could go back to the cities last year, they did. We saw two peaks of 75 and 76 in the Return to Office index, corresponding with increased freedom between lockdowns, and have already surpassed that level now, reaching 81.5, with further restrictions set to be eased on Monday.
The future of our cities appears brighter when we take this holistic view. Our economic forecasting model, based on data from the UKCRI has frequently outperformed consensus over the last year, and paints a positive picture for economic growth over the coming year. This bodes well for both cities and sandwich sales.
Of course, the future of London and other cities is by no means assured. In order to revitalise our cities, we must rethink what attracts people as they adjust to life post-pandemic. Occupiers will expect more from offices than just rows of desks, and landlords will need to create dynamic spaces that reflect changing working patterns. Equally, we will see a greater shift to experience, engagement and customer sharing initiatives in retail.
And whilst we can track economic recovery, we must also understand that recovery does not mean revert. The long-term vitality of our cities is dependent on how they can adapt to the changes that the pandemic has thrust upon us, rather than holding on to pre-Covid success markers. After all, if the last year has taught us anything, it is that there is much more to life than a posh cheese sandwich.