On Remote Work, Markets Will Decide

Our cover story in this issue looks at the economics of cities and what the pandemic means for their future. How much reshuffling of businesses and residents will we see among cities, suburbs, and rural areas? The answer will have important implications for local economies.

Preferences will surely be quite varied. Some customers will value a return to in-person relationship building; others won't, having developed an appreciation of the efficiency of remote interactions. Some employers will want to bring their people back into the office, to invest in workplace intangibles like cultures, mentoring relationships, and collaboration. Others won't, perhaps believing they can operate comparably through technology, or putting more weight on potential rental cost savings. Some workers will want to return to the office and to business travel, valuing the resulting relationships and experiences. Others won't, placing more value on the lack of a commute and/or the flexibility of a somewhat less structured workday at home. And of course, there will be many gradations in these preferences.

This range of preferences makes forecasting difficult. Many are predicting the emergence of a new way of operating that combines remote and on-site activity, and indeed, most employers are exploring some version of this hybrid model. (I offered some thoughts about making this work in "The Future 'Hybrid' Office.") I think it would be more accurate, however, to call this a "holding-pattern hybrid": a placeholder for companies as they test what works in the marketplace.

That's because the geographic work options available in the post-pandemic world have to meet the market test. New models have the potential to redefine the basis of competition. Some will win and some won't. The answer may well differ by industry and customer segment. But, to date, most of these models have been tested only in an artificially constrained environment — one where all players were forced into being remote. Until the markets have their say when the environment becomes unconstrained, it's fair to say we won't know how the geographic reshuffling will play out.