How Yorkshire's towns and city centres could be at risk of being 'hollowed out'

Business and political leaders have been urged to ensure that town and city centres in Yorkshire are not “hollowed out” and left to slip into a sharper decline after witnessing an exodus of workers due to the coronavirus pandemic.

The crisis caused by the virus has had a devastating impact on the nation’s economy with hundreds of thousands of jobs already lost and consumer spending dramatically undermined.

Many employees are continuing to work from home in the wake of the lockdown, leaving offices empty and prompting grave concerns for the future of city and town centres across the country.

KPMG UK’s head of property, construction and building products for the North, Giles Taylor, warned businesses are in “unchartered waters”, with most likely to look to reduce office space after successfully moving to home-working.

Mr Taylor confirmed many companies are beginning to rethink the traditional models of working and it is clear some will look to reduce their office space.

He added: “Nobody wants to see our region’s town and city centres hollowed out. To ensure they remain vibrant and successful, the business community will need to work closely with civic leaders on strategies that enable a more flexible working world, without damaging Yorkshire’s retail and leisure industries.”

A majority of businesses have signalled their intention to return to offices, with 63 per cent of organisations in Yorkshire already heading back to the workplace, according to the Hays UK recruitment consultancy.

In the next three months, 16 per cent of employers in Yorkshire expect their workforce to be fully working in the office, 22 per cent expect staff to be fully remote and 59 per cent expect a mix of remote and in the office working.

However, Britain this week collapsed into its largest recession on record after the lockdown sparked a 20.4 per cent contraction between April and June in the biggest slump of any major global economy.

It also emerged this week that 730,000 workers have been removed from the payrolls of British companies since March when the lockdown began.

Before the pandemic, hospitality provided 210,000 jobs in Yorkshire and equated to eight per cent of regional employment, according to the trade body, UK Hospitality.

Its chief executive, Kate Nicholls, said: “Hospitality is hugely important to Yorkshire’s economy.

“A major blow to hospitality in the area would be significant damage to the local economy.”

Skipton Building Society, which usually has 1,500 employees operating out of its headquarters, currently only has 200 staff at the office at any given time. Its CEO David Cutter said the firm envisages that number will increase to 350 by the autumn.

The Federation of Small Businesses has called on councils in Yorkshire and the North of England to distribute £1.5bn of funds to small businesses in a “fast and timely manner”.

The FSB’s chairman, Mike Cherry, said: “In all areas where offices remain closed, those firms nearest continue to suffer, and those locations faced with localised lockdowns face an uphill struggle for survival.”

Labour has urged the Government to redeploy funding from its business grants programme rather than clawing it back “prematurely” from local authorities, as part of a Hospitality and High Streets Fightback Fund.

Call for UK’s real estate sector to alter and adapt

The real estate sector will need to drastically change and shift away from “feudal and archaic systems and thinking” as a result of the coronavirus pandemic, according to a leading property expert.

The nation’s economy has been decimated by the virus, with the UK this week plunged into the worst recession on record.

Major businesses and small independent traders have had to overhaul their working practices to survive the outbreak, with employees given an unprecedented opportunity to work from home during the lockdown.

Chris Kane, who was responsible for helping the BBC move to Salford, believes the Covid-19 outbreak will be a catalyst for a different approach to the leasing system going forward.

He said: “Although I’m a long- standing chartered surveyor, my industry doesn’t understand its customers. It doesn’t operate at all in the 21st century. It’s bound by feudal and archaic systems and thinking.

“If you think of the label landlord and tenant – they are from the Middle Ages. Many will be struggling to pay rent quarterly in advance. Nobody pays things in advance now.

“The real estate sector is the last major part of the economy which has not been subject to disruption. Covid-19 has come along and given it a mother and a father of a challenge.”

Rents in Yorkshire are predicted to fall sharply across the office and retail sectors in the year ahead.

The Royal Institution of Chartered Surveyors’ UK commercial market survey showed that 93 per cent of respondents envisage businesses scaling back their office footprint over the next two years as people move to home working. However, 64 per cent feel offices will increasingly move out to the suburbs.

Despite this, prime office rents in Leeds grew 6.7 per cent in the first half of the year and now stand at £32 per sq ft, according to research from Savills.

Mr Kane said he believes businesses could adopt more localised offices in places such as the suburbs where their staff are already located. This way staff members can be closer to their family and do a couple of days at the office while working the rest of the week from home.

Mr Kane said: “The real estate and facilities management industry needs to move away from treating buildings as just assets and towards providing space as a service.”

The huge impact that coronavirus has had on the economy was laid bare this week when figures from the Office for National Statistics on Wednesday showed 730,000 workers have been removed from the payrolls of British companies since March when the lockdown began.

Chancellor Rishi Sunak admitted the latest figures “confirm that hard times are here”.

But predictions by some that Covid-19 will lead to the end of the office are overblown, according to Mr Kane, the former vice-president of international corporate real estate for The Walt Disney Company.

“We’re not going to see the death of the office,” he said.

Well-known companies such as Twitter made headlines when they announced that their staff would be allowed to work from home.

But Mr Kane said they are “certain companies at certain points in their respective life-cycles”.

“It’s not a one-size fits,” he said, and claimed property firms will simply have to adapt and change, deploying office space in a more efficient way.

A part of the sector likely to see continued growth is flexible office space.

Mr Kane predicted in his upcoming book, Where is My Office?, which was written pre-coronavirus, that flexible office space would account for 50 per cent of the market.

He said: “Businesses will not want to have long-term commitments.

“The smart businesses will be thinking about a distributed workforce strategy where they can employ people on a very different basis.”

Where is my Office?: Reimagining the Workplace for the 21st Century by Chris Kane is published on October 15 2020 by Bloomsbury Business.

‘I had to stop and dry my tears before I came in – I didn’t want the staff to see them’

In 2009, Alex Galantino decided to bring a little taste of the coffee culture that defines his home country to the heart of Leeds. After opting to leave a career in IT following a major health scare, Mr Galantino launched his cafe business with inspiration from Milan.

La Bottega Milanese quickly found a loyal following as Britain was beginning to wake up to the idea of good quality coffee.

However, that dream of bringing a slice of Milan has seen Mr Galantino face one of the most testing periods of his business life.

Heading into the coronavirus pandemic, La Bottega Milanese had two shops and 22 employees. However, following the outbreak, the business had to shut its branch at The Light, and staff numbers had to be culled to just seven.

Mr Galantino said: “It was very emotional. The day that we closed, I was around the corner with tears in my eyes. I had to stop and dry them before I came in because I didn’t want the staff to see it.

“It hit me. It wasn’t emotion as such, it was nerves. After all, this the business was just being taken away from me through no fault of my own.”

When it reopened its remaining shop in Bond Court, in the middle of Leeds’s business district, La Bottega was confronted with a situation that had shifted dramatically. All office workers had disappeared, and the once well-frequented coffee shop was marooned amidst a host of empty high-rise blocks.

Footfall from the offices is “everything” for the business, says Mr Galantino. “We feed off the offices – it’s that simple”.

A short walk away through the city centre, Mad Frans bar and restaurant is in an even bigger predicament.

The restaurant is based at the up-and-coming Wellington Place development. About 6,000 public servants were set to move into the new HMRC building next door.

Owner Ryan Fraser said: “Business is heavily influenced, Monday to Friday, by office workers. That is our trade.

“Monday to Friday, there is no other trade. It is just purely the workers at Wellington Place, down Wellington Street and also Whitehall Road.”

The restaurant has been reduced to operating at just the weekend as a result of businesses working from home. Staff are now pinning their hopes on office footfall picking up in September as schools reopen.

Mr Fraser added: “It’s very scary. We even contemplated whether we would reopen because of where we are based. We are not in what I would call the city centre loop.”

It makes attracting passing trade difficult as people do not frequent that particular area of the city centre without a need to be there.

There is also the additional cost of implementing social distancing, which also restricts how many people Mad Frans can serve at the weekends.

Despite signing a 12-year lease just last year, Mr Fraser admitted he could be forced to start contemplating closing permanently.

He believes his business could continue to the beginning of November as things stand by just opening at the weekends.

“If it gets to that point then it’s a case of is it worthy of carrying on, which is the big question,” he says.

In the centre of York stands a regeneration project that uses recycled shipping containers to develop business space for start-ups and small businesses.

Spark:York was a vibrant mix of food, retail and community space until the pandemic. Since then it has been operating at a reduced capacity.

It too has seen a drop in office footfall, but tourist trade has helped offset that to a degree in recent weeks, with the development benefitting from its open air environment.

Spark:York co-founder Tom McKenzie said: “In terms of that heavy footfall from office traffic, that is still obviously reduced.

“A lot of the larger firms in York have not invited their staff back into the office and I don’t see that happening any time soon.”

The site is, however, seeing an upturn in people either on furlough or working from home coming to spend lunchtimes there.

Not having the office traffic for a prolonged period would be “extremely damaging”, according to Mr McKenzie, but the Eat Out to Help Out scheme is providing additional footfall in the interim.

It is also likely to see independent businesses reliant on office footfall becoming more innovative.

Back at Bond Court, Mr Galantino, a pragmatic businessman, is continuing to be proactive. He has plans to split his team during the winter flu season.

A concept that he is toying with is having a more office-orientated environment where business people work from.

“There is an opportunity there to slightly pivot,” he said. “Rather than becoming a coffee shop that is used as an office, it’s an office that is used as a coffee shop.”

September will be a key month for businesses such as La Bottega Milanese.

Mr Galantino said: “What I’m hearing from the office managers and office agents in the city is that they are absolutely not going to come back until at least September, and even then it’s going to be 25 per cent.

“How can you go back if you’ve got children at home and nurseries are closed? There are people who just can’t go back.”

There is growing anecdotal evidence that cafes and restaurants in the suburbs have been the beneficiaries of office closures.

“The coffee shops in the suburbs are now thriving,” Mr Galantino said. “We are now also seeing evidence of very interesting and quirky shared office concepts opening in suburbs like Headingley.”

Mr Galantino has been asked if he would consider a switch to the suburbs.

But he said: “What I’m passionate about is the urban dynamics. We have opened this coffee shop because I’m from Milan city centre.

“I will try till the last day to come up with a different concept and stay in the thick of it.”

Whatever the long-term future holds for businesses serving office districts, a meaningful return to workplaces cannot come soon enough for them.

Home working: ‘We’ve closed the office and productivity has increased’

The shift away from a traditional office environment may have seemed unthinkable for many businesses just six months ago.

However, the coronavirus pandemic has changed the dynamic of the business world and My Management Accountant is among the companies that have opted to do away with offices.

The Huddersfield-based accountancy has 10 employees and was established by Martin Bown in 2011. The firm took its first office space in 2013.

Mr Bown said the business decided to drop its space in the town centre for several reasons and added: “We’re a cloud-based business anyway. Moving to working out of the office wasn’t a challenge.

“Productivity hasn’t dropped. If anything, it has improved. Team morale has improved as well. On that basis I thought there’s no need for us to be driving to a physical office.