Donna Holmqvist, AICP/PP
Sailing Ahead - Planning Tools for Transformation
As we grasp the massive impacts of the Covid 19 pandemic on American communities, it is time to adjust our sails and chart the course for a sustainable recovery. Our social and economic existence has experienced a rapid move to remote work, online learning and virtual public engagement. The pandemic has boosted E-Commerce, impacted mobility and reduced government revenue.
It is imperative that governments recognize the major technological, economic and social transformations underway because they may be permanent. The emerging trends influencing our collective success are five-fold:
Work from Home (WFH). Approximately 40 percent of all jobs can be done remotely. The immediate shift to WFH, instigated by the pandemic, is allowing people greater flexibility and balance in their lives. Approximately 24 million working Americans have children living at home and estimates are that two thirds of economic activity in the pandemic is generated by WFH. However, the pandemic has segregated the labor force as follows: 42 percent remote workers, 33 percent out of work and 26 percent working on a job site.
Given the rapid pivot to WFH, remote work may become permanent. Such a shift will disperse economic activity, alter transportation demand and impact government revenues for the future. Economic activity may continue to decline in cities as spending power gravitates to different geographies as a result of prevalent remote work. Will we see a future where less than half the labor force commutes to a job location in an office building?
Millennial Clout. Millennials, ages 24 to 39 in 2020, outnumber Baby Boomers and the overtaking will accelerate, due to mortality. The largest Millennial cohort, turning 30 years of age in 2020, will exhibit lifestyle changes as family units form. With low interest rates, the appeal of home ownership may increase with the need for home offices, home exercise/yoga rooms and private outdoor open space.
In contrast, ten years from now, all Baby Boomers will be over age 65. At that point, 1 in every 5 Americans will be retirement age. The economic power of this demographic cohort will contract as the torch is fully passed to Millennials supporting the next generation of children, and our nation’s future labor force.
Millennials are more educated and more ethnically diverse than their Baby Boomer predecessors. They have been shaped by 9/11 and the Great Recession, contributing to an entrepreneurial spirit. Marriage is not essential to them and unmarried cohabitating parents account for about 35 percent of the population. In contrast, back in 1968, only 7 percent of parents living with a child were unmarried.
Millennial full adulthood heralds increased spending power and the potential to support real estate development, although this may occur to a greater degree outside of cities, as WFH and life balance is embraced. The need, and desire, to be located in a city could permanently diminish.
Future Mobility. Remote work, combined with a geographic shift in economic concentration, will impact transportation demand. Pre pandemic shifts toward ridesharing, car sharing and decreased vehicle ownership will give way to new technologies. Undoubtedly, emphasis on sustainability will unleash demand for electric vehicles (EV) as the technology advances to increase range. Other technology achievements, such as autonomous vehicles (AV), will also decrease the need for car ownership. Smart infrastructure for real time travel information, conveniently located EV charging stations and AV pickup/drop off areas will be critical components for future mobility. Enhanced individualized mobility choices will emerge with technological advances on the horizon.
E-Commerce Popularity. It is anticipated that 40 percent of all sales will be via e-commerce by 2025. As a result, 25 percent of all shopping malls could close in the next five years. Retailers with a digital framework are surging and among the top 10 are Target, Best Buy and Home Depot. The reverse logistics component of online shopping is a consideration, since 30 percent of transactions are returns.
By blending brick and mortar with online sales, Home Depot has seen a rise of 80 percent in online sales in 2020, with 60 percent of customers picking up orders at a store location. The brand has a plan to expand same day delivery and increase this service from 50 percent of the US population to 90 percent. This plan requires utilization of sites suitable for distribution via box truck and flatbed vehicles.
The pandemic created a burst of demand for online grocery sales with an increase of 9 percent in June over May 2020. Approximately 42 million Americans have used online grocery pick-up and delivery. A total of 39.5 million were active purchasers in March and this grew to 45.6 million in June 2020. In fact, Walmart now offers an express two hour delivery (with surcharge). Online grocery order and delivery has proved popular among those over age 60 in the pandemic. Online grocers such as Amazon Prime Pantry, Amazon Fresh, Instacart and Shipt are growing as a result of the demand.
Door Dash is launching a digital convenience store, known as DashMart. The facilities will carry 2,000 items across multiple categories, including ready made meals. The service aims for 30 minute delivery to draw market share away from Amazon, Walmart and Target. The expansion into convenience goods adds to the meal delivery services of Door Dash.
The outmigration from cities will generate a land use reallocation in different geographies to satisfy demand. Prevalent uses will be ghost kitchens, dark stores and fulfillment facilities.
Land Use Reallocation. In the US, there are 4.4 million hotel rooms, 4 billion sf of office, 8.5 billion sf of retail space and 116,000 shopping malls. Expanding E-Commerce, virtual meetings and WFH will drive a land use reallocation. Other uses such as movie theaters, impacted by the availability and selection of online entertainment, will continue to diminish in popularity. Health clubs may contract as members stay with online fitness subscriptions and home exercise equipment.
A massive land use reallocation appears to be dawning for hotel, office, retail and shopping mall space, hastened by the pandemic and technology. Given the fiscal implications of the technological, economic and social transformation underway, government needs to be proactive and promote policies for growth. Methods to foster development and redevelopment, generate efficiency and sustainability, and enhance community engagement need to be implemented. The planning toolbox for transformation includes the following actions to address the changes underway, and pivot for future success:
Planning Tools for Transformation
1. Optimize Land Use Regulations. Officials need to analyze land use patterns and assess whether existing zoning makes sense. Fulfillment centers, micro fulfillment, reverse (return) logistics facilities, ghost kitchens and dark stores are new uses likely to increase in demand. Communities should explore feasible redevelopment alternatives and rezoning for underutilized commercial space, business areas and shopping centers.
Municipally owned land should be analyzed for potential use. Future use could be facilitated via a sale of the property or a lease for a new use. The need for new or expanded recreation and open space facilities should also be evaluated.
Other uses, such as vertical farms, can be added to permitted uses in appropriate areas. This use can bring fresh, locally grown produce to the community, create jobs, and reduce transportation demand.
2. Address WFH & Demographics. Home based work and an aging segment of the population present opportunities to explore allowing accessory units for commercial and residential uses. Allowing accessory uses can enhance the stability already existing in an area and complement existing patterns of development. Existing land use regulations may benefit from greater flexibility. For example, are there areas of the community suitable for Accessory Commercial Units to promote live/work arrangements? Similarly, allowing Accessory Dwelling Units, where appropriate, can promote housing affordability for aging Baby Boomers so they remain part of the community.
3. Locate Renewable Energy Facilities. Governments can benefit from selecting potential sites for renewable energy in ground mounted and building mounted installations. There are six types of renewable energy (solar, wind, hydropower, geothermal, biomass and biofuel) that can be explored. Planning for EV charging stations should also be on the table. Potential windfalls from renewable energy facilities may counteract declining government revenues.
4. Implement Smart Technology. Smart infrastructure can be implemented to use the Internet of Things to collect data. The data is used to manage assets, resources and services efficiently. A smart system can monitor and manage transportation, utilities, water supply, waste, lighting and community services. The outcome is a reduction in government costs and consumption, thereby offsetting revenue decline.
5. Promote Public Engagement. Increasing the use of Virtual Public Involvement (VPI) to stoke citizen interface with government enhances informed decision making. Digital technology is a useful and effective means to communicate with the public. Remote technology allows greater public participation, easier engagement and a method to solicit public input on concepts and plans under consideration by government. Mobile apps, YouTube and Facebook Live can be seamlessly integrated with government operations to inform the public.
Social, economic and technological transformations are accelerating as a result of the pandemic. The changes underway impact all of us and call out for solutions. The planning toolbox for transformation enables government to plan for sustainable prosperity. Adjusting our collective sails to the winds of change is the blueprint for community progress and long term stability.