What is it they say about economists? Oh yeah, they are people who are paid to make incorrect predictions about the economy. And now is perhaps the most unprecedented and difficult time to make predictions because there are many unknowns. These range from the implications of prolonged border closures to the risk of a second (or third) wave of the pandemic before a vaccine becomes available. Economists are predicting everything from U-shaped recoveries to prolonged L-shaped recoveries. The Economist itself put forth its “90% economy” thesis, as several sectors will not be able to contribute to GDP output anytime soon.
What’s my prediction about the Victoria economy? Well, I’m no economist (but I can still be wrong!). However, I am an economic development professional and this gives me a unique perspective on this region, including its diversity, its rural and urban spaces, its economic composition, and the entrepreneurs and consumers that make its economy function.
As you’ve already witnessed, the Victoria economy is hurting. While the government relief measures are helping, there’s still a long way back to normal. And normal will look different than before. Here are some potential new realities as we move into our region’s unpredictable economic future.
Decentralization of “Big Tech”
“Employees who prefer to work remotely can now do so indefinitely,” said a company-wide email to all Twitter employees on May 12.
Sure, big companies like Google and Facebook have been opening offices outside Silicon Valley for years, but there is no doubt that this pandemic will lead to a decentralization of the tech sector.
Why live in expensive cities like San Francisco if you no longer need to commute to the office? Mid-sized cities that offer a high quality of life and relative affordability will reap the rewards.
Further, what if there was a special place that could not only boast high quality of life, but also its success at handling the pandemic (one of the lowest death-rates anywhere in the western world)? I’m looking at you, British Columbia.
Don’t underestimate the new emphasis that tech talent and their families will place on healthcare, safety and good government. Even self-described “libertarians” are changing their minds about the role of government. The way that our province’s leaders across the political spectrum unified behind the experts still gives me goosebumps.
Companies like Canada’s Shopify already utilize our region for its remote workforce. But this is a huge opportunity to attract talented people to work both at our 900-plus tech companies and support our local economy by living here and working for Twitter, Google or other major-leaguers.
Hyper-Localism (With a Strong Link to Globalism)
You head out the door on your daily walk after a full day of working from home. You take a new shortcut that gets you to the neighbourhood village centre a few minutes faster. You pop into the barbershop to wave hello to your neighbour Jim who’s getting a trim. Next door is the bakery where you spot a batch of French bread in the window. Its enticing scent closes the deal: That will go well with tonight’s dinner!
The idea of the urban village is not new — our region is full of them. From Cook Street Village to Esquimalt Road to the heart of Sidney (Beacon Avenue), walkable centres rich with amenities will be our region’s saving grace. People who shift to remote work will replace their commute time with quality time and shift their gas money to the “freshly picked” aisle.
Hyper-localism will apply to other sectors as well. This pandemic has highlighted some of the vulnerabilities of global supply chains. Globalization itself is not going anywhere, but the opportunities to embrace local suppliers — from advanced manufacturers, to clothing retailers, and food and household goods sellers — should not be overlooked.
This plays a role of keeping this capacity in the marketplace for when it’s needed most, like say a global bidding war for personal protective equipment or a shortage of hand sanitizer.
One thing I worry about is if we’ve become too reliant at the household level for home delivery (particularly Amazon). I love technology as much as the next chap, but we need to realize how much value leaks out of our local economy for the sake of convenience. For every dollar spent at a locally-owned business 48 cents remains circulating in the economy. How much stays here from your Amazon purchase? Sorry to pester you, but our local businesses need that money here, and the Victoria economy needs local businesses.
Office Market Shifts to Mixed-Use
All of these trends above leave us with a big question: What happens to our robust office market?
While many companies will shift to remote work, others will still have some sort of office footprint (though it might be smaller and altered for flex scenarios). This will cause a shift in demand and capital toward more residential density across the region.
This is not necessarily a bad thing since our population will continue to grow in the context of diminishing land availability. Many urbanists are predicting that cities will actually shift towards increased density of people (despite 95 per cent of COVID-19 patients living in urban areas). This has been the pattern following every pandemic in history. Which for me is a relief. Cities are a more sustainable way of organizing humans.
The other trend that will come from this is the resurgence of co-working. In a May 15 Douglas online article, KWENCH’s Eva Ravenstein said their coworking members cannot wait to get back into their space in Rock Bay. Their main reason? Human connection and the increased mental health that comes with it.
A New (Inclusive) Economy
As The Conference Board of Canada pointed out recently, this pandemic has hit the part-time and low-wage earners overwhelmingly harder than full-time workers. Women account for two thirds of minimum wage earners. Indigenous populations, and other minorities such as LGBTQ+, immigrants and refugees, are typically in more vulnerable positions too.
This reality has led to some interesting conversations happening right now about universal basic income. This concept is probably years away, but I think many are warming to the idea since the economy isn’t actually about successful businesses (surprise!) — it’s actually more about successful customers. Only a customer creates a business. If they are unemployed, there is no economy.
Lastly, I need to emphasize the risk that this pandemic may make our city bland and antiseptic, which is the opposite of why most of us live in a city to begin with. To counter this, we need more art, music, vibrant public spaces, out-of-the-ordinary experiences — and we need to experience those things with others. As the University of Toronto’s Dr. Richard Florida said in a recent piece in Foreign Policy: “The crisis may provide a short window for our unaffordable, hypergentrified cities to reset and to re-energize their creative scenes.”
And our creative scene is hemorrhaging right now.
A New Model of Growth
Will anything I’ve stated about the Victoria economy really come to pass? The reality is that with all this speculation, there are still way more questions than answers.
But as former deputy mayor of New York Dan Doctoroff said: “Cities will come back stronger than ever after the pandemic. But when they do, it will be driven by a new model of growth that emphasizes inclusivity, sustainability, and economic opportunity.”
So perhaps the only question we can each ask right now is this: “As our city finds its new normal, what am I going to do to make it better than before?”
Dallas Gislason is Director of Economic Development for the South Island Prosperity Partnership. Over the last 15 years, his passion for regionalism, urbanism, inclusion and innovation has fueled some of the profession’s most interesting projects.
Continue Reading: Work-from-Home Economy May be Here to Stay