The advance of big cities seems unstoppable. Nearly a million people are being added to the world’s major urban centres every week and demographers predict that by 2050, almost 70 per cent of the global population will live in a metropolis, compared to just over half today. But this trend may not be a foregone conclusion, as the digital evolution makes it increasingly possible to live and work away from the hurly burly of city life. Now, growing numbers of people are making that choice.

VIEWPOINT

The advance of big cities seems unstoppable. Nearly a million people are being added to the world’s major conurbations every week, an influx that the United Nations expects to continue until 2050. By then, demographers believe that close to 70 per cent of the global population will live in urban centres, up from just over half at present.

Cities not only gobble up a growing share of the world’s population; they are also the main drivers of economic growth, the principal centres of innovation and home to most of the world’s largest companies.

But cities’ increasing dominance may not be the foregone conclusion that so many forecasters assume. Advances in technology have the potential to reinvigorate smaller population centres and encourage people to consider different ways of life. 

Push and pull factors

“If you think about why cities are attractive places to live, it is a combination of superior career opportunities and a more vibrant range of stores, entertainment and restaurants,” says Monty Hamilton, chief executive of Rural Sourcing, a company that aims to bring greater professional opportunities to more modestly-sized towns. “Technological advances should help narrow the gap between megacities and smaller clusters.” 

In rich nations, technology has already started to chip away at the advantages of living in a megacity. “On a very basic level, it has become far easier for consumers to order a vast range of goods over the internet and get them delivered to more locations. You can also gain access to a far broader array of films and music online than ever before,” says Solomon Greene, a senior fellow at the Urban Institute in Washington, and former adviser to the US Department of Housing and Urban Development. 

Meanwhile, the cost of living in large urban centres has increased sharply, with rapid house price appreciation pushing ownership beyond the means of many middle-class families. 

In the UK, for example, the difference between average property prices in London and the rest of the country was less than £75,000 in 2001. Today, it is £275,000, the widest gap in recorded history, according to mortgage lender Nationwide. In percentage terms, London property commands a 152 per cent premium; before 1995, the gap was consistently less than 40 per cent.

 

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The urban

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A similar trend has been evident in megacities around the developed world, with property prices pulling away from surrounding areas. The determination of some less affluent residents to remain in urban centres has resulted in the emergence of micro apartments – diminutive dwellings for those who prioritise location above space. One developer, Pocket, has been producing 38- square-metre flats in central London for nurses, teachers and IT workers on incomes of between £30,000 and £71,000. New York and Stockholm have been considering similar developments. 

City exodus

But not all middle-to-low earners are willing to make this kind of space trade-off. Today, there are tentative signs that the large cities – though in many cases expanding their populations – are declining in relative size. In 2000, 49.5 per cent of the US population lived within 10 miles of a city centre. By 2010 that had fallen to 47.5 per cent. This may seem like a small shift but it represents six million fewer people living in urban centres. In Western Europe, the rate of growth for suburbs and commuter towns was almost twice that of the core cities between 2001 and 2007. London lost nearly 100,000 residents, while the greenbelt outside the city added 300,000.

Karen Harris, managing director of Bain’s Macro Trends group in New York, believes this could be just the start of a bigger trend. “People value variety in retail and eating but technology should make the high streets of smaller towns and even villages more varied,” she says. “Robotics and automation will enable prominent retail chains and restaurants to significantly reduce costs, making them profitable in less densely populated locations.” 

Harris suggests that an Apple store that currently needs a catchment area of two million could flourish in a population centre of just 200,000 by using service robots. And casual dining restaurants that currently require a staff of 25 will be able to cut back to as few as seven or eight.

Technology is enabling companies to scale down in other ways too. 3-D printing should allow companies to have miniature manufacturing centres closer to smaller communities. Meanwhile, drones have the potential to further reduce the cost of transporting goods to consumers in less populous areas. “With a richer and more diverse offering, it would become more attractive to live in smaller towns or villages,” Harris argues. “This could become self-reinforcing.” The result could be a bifurcation of population centres. 

“For knowledge-based fields, geographical clustering will remain highly important – whether this is Silicon Valley for technology or the City in London for finance. But for those outside these highly focused professions, and a little lower down the income scale, it will become ever more convenient to live outside ultra-pricey big cities. Megacities like New York could become the preserve of the top one per cent, as well as empty nesters and young singles,” she says.

Under this scenario, the suburbs would be the biggest losers, since they offer neither the thrills and excitement of the big city nor the bucolic charm of more rural commuter towns. 

Rise of the robot

The kind of technology that could make this vision a reality is now no longer science fiction. Take Hointer, a highly automated apparel retail store founded in Seattle by a former Amazon executive. Only one size of every item of clothing is on display, and anything a customer selects is delivered to the fitting room in the correct size by robots. Instead of paying at a checkout, customers simply scan the item on their phone, eliminating the need for cashiers. With such lean staffing levels and a relatively small physical footprint, stores based on this model could run at low cost and in small towns.

 At life insurance firm Aetna, 43 per cent of its 48,000 staff now telecommute in one form or another. This has resulted in a 15 to 25 per cent reduction in real estate costs”

In Japan, the Henn-na hotel chain is also trying to reduce its reliance on costly human staff. The hotel uses robots as receptionists, porters and concierge – enabling it to offer $80 a-night accommodation. 

If such technology was widely adopted, and improved, it could dramatically increase the range of facilities on offer in second-tier towns. Cities may also lose their near-monopoly on high-end employment too. Jacob Morgan, author of The Future of Work, believes that workers are gaining greater discretion over where they are based. 

“Telecommuting can be a win-win for companies and employees. Companies can cut back on expensive office space, equipment and amenities. Workers waste less time commuting and can, if they choose, live in places that offer a better quality of life,” he argues. 

At life insurance firm Aetna, 43 per cent of its 48,000 staff now telecommute in one form or another. This has resulted in a 15 to 25 per cent reduction in real estate costs and, in 2014 alone, trimmed the number of miles employees drove to work by 127 million. Xerox and Dell have also been making large-scale use of remote working. 

Tech transformation 

“Increasing internet speeds, global connectivity, video conferencing, the faster downloading of files, are all making companies more willing to place employees outside central locations,” Morgan says. “Artificial intelligence will also make it easier to forge relationships within large organisations without being physically present, giving employees guidance on who they should be collaborating with and why.” 

Atlanta-based Rural Sourcing was established to exploit precisely this confluence of interests. The firm’s roughly 300 software developers operate from towns of between 500,000 and 900,000 but in population work on projects for a range of Fortune 1,000 companies, including the likes of Coca-Cola.

“Operating from smaller towns enables us to charge companies 50 per cent less than they might otherwise pay staff in cities like New York or Chicago,” says Rural Sourcing’s Hamilton.​

Advances in technology have the potential to reinvigorate smaller population centres and encourage people to consider different ways of life”​

The advance of big cities seems unstoppable. Nearly a million people are being added to the world’s major conurbations every week, an influx that the United Nations expects to continue until 2050. By then, demographers believe that close to 70 per cent of the global population will live in urban centres, up from just over half at present.

Cities not only gobble up a growing share of the world’s population; they are also the main drivers of economic growth, the principal centres of innovation and home to most of the world’s largest companies.

But cities’ increasing dominance may not be the foregone conclusion that so many forecasters assume. Advances in technology have the potential to reinvigorate smaller population centres and encourage people to consider different ways of life. 

Push and pull factors

“If you think about why cities are attractive places to live, it is a combination of superior career opportunities and a more vibrant range of stores, entertainment and restaurants,” says Monty Hamilton, chief executive of Rural Sourcing, a company that aims to bring greater professional opportunities to more modestly-sized towns. “Technological advances should help narrow the gap between megacities and smaller clusters.” 

In rich nations, technology has already started to chip away at the advantages of living in a megacity. “On a very basic level, it has become far easier for consumers to order a vast range of goods over the internet and get them delivered to more locations. You can also gain access to a far broader array of films and music online than ever before,” says Solomon Greene, a senior fellow at the Urban Institute in Washington, and former adviser to the US Department of Housing and Urban Development. 

Meanwhile, the cost of living in large urban centres has increased sharply, with rapid house price appreciation pushing ownership beyond the means of many middle-class families. 

In the UK, for example, the difference between average property prices in London and the rest of the country was less than £75,000 in 2001. Today, it is £275,000, the widest gap in recorded history, according to mortgage lender Nationwide. In percentage terms, London property commands a 152 per cent premium; before 1995, the gap was consistently less than 40 per cent.​

Harris suggests that an Apple store that currently needs a catchment area of two million could flourish in a population centre of just 200,000 by using service robots. And casual dining restaurants that currently require a staff of 25 will be able to cut back to as few as seven or eight.

Technology is enabling companies to scale down in other ways too. 3-D printing should allow companies to have miniature manufacturing centres closer to smaller communities. Meanwhile, drones have the potential to further reduce the cost of transporting goods to consumers in less populous areas. “With a richer and more diverse offering, it would become more attractive to live in smaller towns or villages,” Harris argues. “This could become self-reinforcing.” The result could be a bifurcation of population centres. 

“For knowledge-based fields, geographical clustering will remain highly important – whether this is Silicon Valley for technology or the City in London for finance. But for those outside these highly focused professions, and a little lower down the income scale, it will become ever more convenient to live outside ultra-pricey big cities. Megacities like New York could become the preserve of the top one per cent, as well as empty nesters and young singles,” she says.

Under this scenario, the suburbs would be the biggest losers, since they offer neither the thrills and excitement of the big city nor the bucolic charm of more rural commuter towns.

Rise of the robot

The kind of technology that could make this vision a reality is now no longer science fiction. Take Hointer, a highly automated apparel retail store founded in Seattle by a former Amazon executive. Only one size of every item of clothing is on display, and anything a customer selects is delivered to the fitting room in the correct size by robots. Instead of paying at a checkout, customers simply scan the item on their phone, eliminating the need for cashiers. With such lean staffing levels and a relatively small physical footprint, stores based on this model could run at low cost and in small towns.​

“And our employees can enjoy a far higher standard of living than would be possible in a top-tier city. We have drawn back many people who were previously based in New York or Washington DC, feel they have checked that box and now want something different.” 

The firm has offices in Augusta (Georgia), Albuquerque (New Mexico) and Jonesboro (Arkansas), while its newly established office in Mobile (Alabama) was converted from a former Buick car dealership that had been vacant for a decade.

“We’ve created an environment with a similar feel to working in Silicon Valley – with 20-foot ceilings, exposed rafters, and football tables – where 120 technology geeks who all get excited about the next Star Wars movie can work together,” Hamilton says. “That spurs development. We have seen new apartment blocks and shops going up partly in response to our investment.”

Faint signs

So far, the revival of smaller towns and villages is at an early stage, and urban experts warn that such a transition has been forecast before and never fully materialised. “The death of distance was a very popular idea in the 1990s,” says Greene, at the Urban Institute. “It may still happen. But the signs are very faint; if anything, rich-nation big cities are getting smarter at offsetting the downsides of urban living.” 

Boston, for example, uses its citizens’ mobile phones to ensure that potholes are fixed rapidly; smart devices identify jolts when people are driving via an application called Street Bump. The app then automatically reports the offending pothole to the local authorities. New York has been winning praise by developing more pedestrian zones and popular meeting places – such as the Highline urban garden and walkway.

And a drift away from cities, if it were to happen, could be an ecological backward step, according to Professor Geoffrey West of the Santa Fe Institute, a former physicist who has turned to studying cities. “Cities are quite ecologically efficient. New York has the lowest carbon footprint per capita in the US,” he observes. West’s research suggests that as a city doubles in size, the size of the road network, the length of electric cables and the reach of sewer systems all fall by about 15 per cent per capita. “Cities can work like biological organisms – if you double the size of an organism, you only need 75 per cent of the energy to run it. Pound for pound, larger animals are more efficient than smaller ones.

“It is possible that technology will advance to the stage where the cities will matter less and humans will be able to accomplish just as much by collaborating electronically,” he says. “But we do not appear to be there yet.”

Even so, the development of robotics, artificial intelligence and 3-D printing can be expected to have a profound impact on human society. While top cities will probably continue to flourish, a renaissance could well be on the way for smaller towns and villages  

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A similar trend has been evident in megacities around the developed world, with property prices pulling away from surrounding areas. The determination of some less affluent residents to remain in urban centres has resulted in the emergence of micro apartments – diminutive dwellings for those who prioritise location above space. One developer, Pocket, has been producing 38- square-metre flats in central London for nurses, teachers and IT workers on incomes of between £30,000 and £71,000. New York and Stockholm have been considering similar developments. 

City exodus

But not all middle-to-low earners are willing to make this kind of space trade-off. Today, there are tentative signs that the large cities – though in many cases expanding their populations – are declining in relative size. In 2000, 49.5 per cent of the US population lived within 10 miles of a city centre. By 2010 that had fallen to 47.5 per cent. This may seem like a small shift but it represents six million fewer people living in urban centres. In Western Europe, the rate of growth for suburbs and commuter towns was almost twice that of the core cities between 2001 and 2007. London lost nearly 100,000 residents, while the greenbelt outside the city added 300,000.

Karen Harris, managing director of Bain’s Macro Trends group in New York, believes this could be just the start of a bigger trend. “People value variety in retail and eating but technology should make the high streets of smaller towns and even villages more varied,” she says. “Robotics and automation will enable prominent retail chains and restaurants to significantly reduce costs, making them profitable in less densely populated locations.” 

In Western Europe, the rate of growth for suburbs and commuter towns was almost twice that of the core cities between 2001 and 2007”​

Advances in technology have the potential to reinvigorate smaller population centres and encourage people to consider different ways of life”​

Advances in technology have the potential to reinvigorate smaller population centres and encourage people to consider different ways of life”​​

At life insurance firm Aetna, 43 per cent of its 48,000 staff now telecommute in one form or another. This has resulted in a 15 to 25 per cent reduction in real estate costs”​

Operating from smaller towns enables us to charge companies 50 per cent less than they might otherwise pay staff in cities like New York or Chicago”​

The advance of big cities seems unstoppable. Nearly a million people are being added to the world’s major urban centres every week and demographers predict that by 2050, almost 70 per cent of the global population will live in a metropolis, compared to just over half today. But this trend may not be a foregone conclusion, as the digital evolution makes it increasingly possible to live and work away from the hurly burly of city life. Now, growing numbers of people are making that choice.

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Bridgepoint  |  The Point  |  November 2016  |  Issue 30