Long after lockdowns have ended, people are still leaving cities for suburban areas in droves. What’s behind this shift, and what are the implications for businesses – and by extension, the property brokers who supply them with the space they need?

A new landmark report by IWG and ARUP reveals that migration from cities is booming. In the UK and USA, the overall rate of those leaving urban centres is now 59% higher than before the pandemic in 2020. Nearly 500,000 people are expected to leave US cities this year alone, with young adults, in particular, taking advantage of the ability to work from anywhere.

So what are the driving forces behind this suburban shift, and what are the business impacts that commercial property brokers need to consider in meeting the needs of their customers?

What’s behind the suburban shift?

IWG CEO Mark Dixon believes that the “remarkable and quite unprecedented” societal shift is driven primarily by three key factors: the Covid-19 pandemic, digitisation, and environmental concerns.

During the pandemic, lockdowns caused many to re-evaluate what they want from life. They realised that instead of spending hours each week commuting to their city centre office, they could spend more time with their friends and family or doing the things they enjoy. They became healthier, happier and less stressed. They saved a considerable amount of money, too.

Thanks to rapid digitisation, it's now easy for workers to meet, collaborate and do their jobs virtually. In fact, 48% of UK workers and 40% in the U.S. are already working in the hybrid model – sometimes in a local workspace, sometimes at home, and occasionally at head office.

And now workers expect the freedom to operate anywhere. According to IWG’s research, 88% say that flexible working arrangements are essential to a fulfilling professional life.

The suburban shift, however, is not just about employee wellbeing. Businesses can cut carbon emissions, save on the cost of maintaining large central offices, and boost productivity in a hybrid model—according to Stanford Economics Professor Nicholas Bloom, by as much as 3%.

What this means for commercial real estate

The migration away from cities is having a profound impact on property prices, particularly in suburban areas. In the US, the fastest price rises are occurring in places formerly seen as too distant for regular commuting to major urban centres. Meanwhile, in the UK, property prices are rising at a higher rate in the suburbs than in all but one city: London. Similar trends are being observed worldwide.

This surge in property prices isn't just due to people moving to these areas for a better quality of life – it's also a reflection of where businesses are looking to set up shop. After all, where workers go, their employers often follow. IWG has observed this trend firsthand with marked increases in demand for its flexspaces in suburban and rural locations. As well as affecting the property market, the shift is also having a transformative impact on local communities.

Benefits of the suburban shift

We've seen how the suburban shift benefits businesses and their employees. But it's also sparking a substantial economic revival in local communities.

The latest IWG and Arup report underscores this with data from the UK showing a 50% increase in footfall in small towns, suburbs and seaside communities since 2020. This trend is echoed in other countries, leading to increased local spending and a vibrant economic uplift in areas that were previously struggling.

Another IWG/Arup study revealed that, thanks to this rising footfall, rural and suburban economies in the U.S. could see an increase in local consumer spending by as much as $1.3 billion annually, with the UK experiencing an increase of £327 million.

As Mark Dixon puts it in the latest IWG study, "That’s very exciting. And it’s all down to hybrid working."

New opportunities

As the shift towards suburban and rural areas continues to pick up pace, commercial property brokers have a unique opportunity to help their clients adapt and thrive.

By partnering with IWG, they can unlock access to a global network of over 4,000 workspaces which can help their clients expand their reach and stay close to their employees and clients – no matter where they are. This leads to a happier and more productive workforce, and by extension, more satisfied clients for brokers.

Discover how an IWG partnership can make it easier to find the perfect suburban workspace solution for your clients.