Why Face-to-Face Still Matters: The Persistent Power of Cities in the Post-Pandemic Era 9781529216028

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WHY FACE-TO-FACE STILL MATTERS THE PERSISTENT POWER OF CITIES IN THE POST-PANDEMIC ERA

JONATHAN READES AND MARTIN CROOKSTON COVID-19 COLLECTION

18/02/2021 12:12:39

“A persuasive reminder of why cities will continue to thrive in a digital world – they enable people to share knowledge and experiences, to work together and to innovate through face-to-face contact.” Andrew Carter, Centre for Cities “With rich interview material, this book offers a stimulating entrée into a necessary debate about identifying and sustaining economically crucial kinds of personal interaction – despite AI, COVID-19 and all!” Ian Gordon, London School of Economics and Political Science “With superb timing, Reades and Crookston navigate a future for our cities by drawing on a rich understanding of their past. A luminous must-read for all concerned with the continuing vitality and potential of our cities.” Jackie Sadek, UK Regeneration “This lively book is a timely and perceptive celebration of the virtues of face-to-face interaction, the value of cities in bringing people together, and the role of technology in strengthening and augmenting those relationships.” Richard Brown, Centre for London “The authors share Peter Hall’s unwavering optimism that cities have the capacity to reinvent themselves in times of crisis. Technological developments in ICT have reinforced, not diminished, the importance of cities. Yet, written at the time of the COVID-19 pandemic crisis, the book is a wake-up call that the resilience of all cities rests on the health and wellbeing of physically clustered but mobile people in an increasingly interconnected urban world.” Kathy Pain, Henley Business School, University of Reading

WHY FACE-TO-FACE STILL MATTERS The Persistent Power of Cities in the Post-Pandemic Era Jonathan Reades and Martin Crookston

First published in Great Britain in 2021 by Bristol University Press University of Bristol 1-9 Old Park Hill Bristol BS2 8BB UK t: +44 (0)117 954 5940 e: [email protected] Details of international sales and distribution partners are available at bristoluniversitypress.co.uk © Bristol University Press 2021 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 978-1-5292-1599-1 hardcover ISBN 978-1-5292-1600-4 paperback ISBN 978-1-5292-1601-1 ePub ISBN 978-1-5292-1602-8 ePdf The right of Jonathan Reades and Martin Crookston to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved: no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of Bristol University Press. Every reasonable effort has been made to obtain permission to reproduce copyrighted material. If, however, anyone knows of an oversight, please contact the publisher. The statements and opinions contained within this publication are solely those of the authors and not of the University of Bristol or Bristol University Press. The University of Bristol and Bristol University Press disclaim responsibility for any injury to persons or property resulting from any material published in this publication. Bristol University Press works to counter discrimination on grounds of gender, race, disability, age and sexuality. Cover design: Liam Roberts Front cover image: Liam Roberts Maps produced using QGIS (2020), an Open Source Geospatial Foundation Project. Bristol University Press uses environmentally responsible print partners. Printed in Great Britain by CMP, Poole

Contents Acknowledgements vi 1 2 3 4 5 6 7 8

The Story So Far Moving Stuff Around Making Markets Doing Deals Talking Shop Let’s Talk: Face-to-Face Interaction Now What, Then, for 21st-Century Places? And in the End …

Notes Image Credits Index

1 9 37 65 91 121 161 217 225 239 241

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Acknowledgements On a professional level, we’d like to thank our sadly-departed friend Professor Sir Peter Hall for introducing us all those years ago, though we’re sure that he never imagined – given his prodigious output – that it would take this long for his efforts t o b ear f ruit. We a lso want t o gratefully acknowledge some 40 anonymous Londoners, all of them with busy schedules and pressing deadlines, who took the time to speak to us about their work both before and during the pandemic, as well as those acquaintances who have shared stories and anecdotes over the years that have ended up in this book. On a personal level, we can only marvel that our partners, Judy and Johanna, never ceased in their support for this endeavour, even though any such wise individuals would have necessarily had their doubts that this labour would every see the light of day. And, finally, our thanks to Jo Morton, our indefatigable editor, and to Denys, Assiduous Reader and Scourge of Misplaced Punctuation, whose feedback helped to sharpen this work in its final stages.

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The Story So Far We witness today enormous displacements of economic forces, migrations of capital and human labor such as no other age has ever seen. We observe that certain regions rapidly grow poor in human beings and capital, while others become saturated. We see in metropolitan centers great masses conglomerate, seemingly without end. Alfred Weber, Theory of the Location of Industries, 19091

In the beginning That this book exists is a testament to the power of face-to-face (F2F), and the fact that, for work of a certain complexity, meetings can accomplish things that no amount of phone calls, friendly emails, and plans to collaborate via Dropbox can. That this book was finished is a testament to the power of communications technology to substitute for F2F when we need get things done without meeting up at all. The rest of this book is about unpicking that apparent contradiction. We started on this journey nearly eight years ago – although the ideas, we felt, were timeless – but we finished it as the UK emerged from its first lockdown, a process that ‘stress-tested’ our ideas, sometimes almost to destruction, but also brought some of them into much sharper focus by providing us with a chance to go back to our interviewees for their experiences and intuitions about the future. At the root of it all, though, remains the shared interest in the fact that although we are both devotees of modern mobile technology, we’ve been struck by the extent to which place – and the opportunities that it presents for meeting up in person, be it in a boardroom or a bar, to talk shop – still matters to work in the 21st century.

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Reports of my death are greatly exaggerated This is a book about cities, and people in cities. It can be difficult to remember just how dire the situation for cities – and especially those built on the Anglo-American model – was in the 1970s when the headline ‘Ford to City: Drop Dead’ dominated the New York news and some cheeky estate agents advertised on a billboard ‘Will the Last Person to Leave Seattle Please Turn Out the Lights?’. Across the Atlantic, London seemed in terminal decline: its population had fallen far below the highwater mark of 8.5 million set in 1939, and rioting in deprived inner-city areas dominated the British press. In the COVID-19 era, decline seems once again on the cards: estate agents (realtors, for those of you raised in North America) are reporting early signs of a rush for the exits by the mobile upper-middle class. Demand for suburban-style housing has surged, particularly for houses with large gardens and access to the great Figure 1.1: The end of the city? New York, 1975

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outdoors, while a shared pad in Hackney or Williamsburg looks rather less enticing. But in the years between, our most global cities – New York, London, Paris … – became playgrounds of consumption that are, increasingly, the preserve of a moneyed elite, while the poor are ever more impoverished or suburbanized. New York’s crime rate is the envy of any American city, and in January of 2015 the population of London surpassed the 1939 total,2 with no signs of a slowdown. And it’s a similar story elsewhere, with the oft-repeated mantra of the United Nations (UN) that more than 50 per cent of humanity now lives in urbanized areas.3 This is, of course, partly a story about changing preferences: of people deciding that there was something about cities that they valued, be it the economic opportunity, the diversity, or the (then) good deals on property and the public transit options. At the same time, however, the spread of mobile telecommunications breathed life into the ‘death of distance’ hypothesis and, at least for politicians and captains of industry, the anywhere-anytime nature of work was supposed to erase the dominance of these historical centres of trade and industry. So, the rise and rise of cities in the early 21st century presents something of a paradox: weren’t we all supposed to be telecommuting from the countryside by now? Wasn’t distance, well, dead? And weren’t our cities supposed to have died with it? Clearly, there is another story here and, as we will argue in this book, it is partly about the rising complexities and costs of coordinating a global trade in all manner of goods and services; it is partly about the fact that, increasingly, the most valuable thing that we trade in is knowledge itself and that still seems to prefer frequent, direct contact between human beings; and it is also about the infrastructure of telecommunications and mobility that supports all of this. We think that the story so far is about flexibility, not freedom, and that the technological transformations of the past 20 years – working from home, free international calling, video-conferencing, and smartphones, to name just a few of the most obvious – seem likely to reinforce the dominance of ‘World Cities’ such as London, New York and Shanghai, but that there are also opportunities for secondary and tertiary cities to reinvent themselves if they think carefully about their connections to the global hubs and what they can bring to the table. There are no easy answers. Not every town with an historic centre is a new SoHo (or Soho), nor – for reasons that we hope to make clear – is it likely to attract global finance or foster a world-class group of artists. But saying that ‘it won’t be easy’ is not the same as suggesting that it’s impossible and the hope is that this book will give you food for thought – as a businessperson, a mayor, a policy-maker, or a concerned member of

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the public – and tools with which to think about the future for your town, city, region, or mega-city. If you never make it past this introductory chapter, just remember this: each region faces its own challenges, there is no one answer, and there is no easy answer.

The problem of perspective This is a book that seeks to look behind the apparent contradictions. We think that the problem is principally one of perspective: we are so easily seduced by the visions of technologists that we fail to see the more mundane changes to daily life, and we are so focused on ‘the now’ that we fail to heed the lessons from history. That is why, whether it is Michael Porter’s ‘clusters and the new economics of competition’4 or Richard Florida’s ‘technology, talent and tolerance’,5 the search is always on for the next silver bullet that will ‘solve’ a city’s decline or ‘future-proof ’ it against tomorrow’s threats. The advice offered by planning and economic consultancies is often framed in terms of industrial location – that is, in terms of where businesses choose to build and maintain offices and factories, and ultimately about what cities and regions can do to attract and retain them. But the longer history of industrial location theory is often lost on the road to city hall and, in the pursuit of employment growth, the focus often shifts from identifying what firms need, to giving firms what they want – which is how we end up with expensive tax abatements, land assembly through the exercise of eminent domain and compulsory purchase, and ‘light touch’ regulatory regimes, none of which seem to make much of a difference in the long run. London and New York are still the places ‘to be a part of it’. Blackpool retains the dubious distinction of having more deprived neighbourhoods than any other city in Britain,6 and Flint, Michigan, has long been one of the USA’s poorest towns.7 Our argument is that there are structural forces in play that individuals and governments need to understand in order to avoid the very worst of the ruins that haunt the post-industrial landscape. We believe that it is worth framing our thinking in terms of ‘centrality’ – that some places occupy privileged places within larger networks – an idea that is both very much of its moment thanks to network science, and also possessed of a long and controversial history thanks to its connections to the German geographer, and wartime planner, Walter Christaller.8 However, linking the world that we live in now to the longer history of location theory serves to highlight the extent to which ‘the more things change, the more they stay the same’.

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We also think that the COVID-19 pandemic tweaks, but does not fundamentally disrupt the power of places, and of urban places in particular. What we believe – and hope to convince you of – is that the pandemic has moved the goalposts but not changed the game: technologies like Zoom have been around for some time and no one was so immediately convinced of the alternatives that we stopped having face-to-face meetings. What has happened is that a lot of inertia – we are creatures of habit, after all – was swept away by the necessity of doing things differently, and businesses have seen that a lot of their workers don’t need to be in the office every day in order to get things done. Quite aside from the continuing risk associated with F2F at the moment, we think that the pandemic has forced a rethink about why, how and when these types of encounters will happen, but we will still need, and want, to meet up.

Face-to-face: change and continuity Across this book we will home in repeatedly on the vital role that faceto-face contact plays in the life of cities. It’s always been an essential part of what cities can offer, but it’s also always in flux: people and businesses are continually having to respond to new economic or social pressures, and they are also responding within a wider and wider range of communication possibilities, as the reach of digital technologies extends and deepens. So ‘F2F’, and what it means for business and culture, is constantly changing too; we aim to explain how, despite these changes, it will remain at the heart of urban life. We will necessarily look in more detail at the implications of the 2020 coronavirus pandemic for how cities will work in the future, and explore how players across a range of industries have experienced living under lockdown and what they now expect. Our own view is that the pandemic and lockdowns are an accelerant to already existing trends, but do not create new realities: they may be the petrol, but they are not the fire. Our intention is not to provide answers or recipes, but to provide ways of reasoning about what answers – for your own town or city – might look like. Economists would call it ‘identifying your comparative advantage’, but there’s no equation to be solved that will magically cure what ails those cities that are still in deep trouble, or that now find themselves in newly deepened waters. To be clear, this book is indebted to economists past and present – and it leans heavily on what they call ‘transaction cost theory’ – but it is not an economic textbook: there will be no formulae or ‘from equation 3 it clearly follows that …’. In our approach we are going back to the roots of economic geography, when works were intended to

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be read by both the academic and the layperson, and we want to continue in the vein established by our late friend and mentor, Professor Sir Peter Hall, of writing for a wider audience from an historical perspective. We would also invite you to disagree with our analysis: we hope that this book will stimulate critical thought, and prompt you to ask the difficult questions that need to be asked on all sides – corporate, civic, academic and institutional – when the big decisions about the future are being taken.

Structure of the book The book is organized in a kind of pyramid: we start with the basics of infrastructure (Chapter 2) and how it unlevels the playing field, making distant places ‘close’ and nearby places ‘far away’. We then move on to the factors guiding industries to select actual locations from among the enormous range of possible ones (Chapter 3), and how the nature of an individual firm’s activities influence this choice (Chapter 4). We turn next to people and the ways in which their needs for accessing information and exchanging knowledge shape neighbourhoods and their roles (Chapter 5), and focus on how real people frame their decisions (Chapter 6). And we conclude with our own thoughts on the present and possible futures, not only of ‘World Cities’ but also of the cities and towns that make up our complex urban world (Chapters 7 and 8). So, Chapter 2 is titled Moving Stuff Around: how do infrastructure networks, both singly and in combination, create a ‘surface’ across which choices are made. Computer and telecommunications networks, with their potential to reach into all sectors of the economy and society, are obviously a focus for this section, but so too are transportation and other, less glamorous, networks. The ongoing growth in demand for power, logistics and mobility infrastructures suggests that these are the true conditioners of access to markets, which are the subject of Chapter 3, Making Markets. Chapter 4 turns the focus to the where and who of Doing Deals: how do businesses as decision-making entities make choices about which locations are more (or less) desirable for a new shop, office or plant? Given the sea changes of the past 40 years, why do firms still pay almost any price for the ‘right’ location? What are the underlying reasons why the stratospheric rents of Mayfair or Midtown Manhattan haven’t driven more companies to the cheaper – if not more cheerful – towns of Watford or White Plains? In particular, it relates that to the perception and the reality that even in a digital age, many of them still can’t or daren’t operate without face-to-face contact.

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This last dimension – contact – brings us to the people themselves. Because whilst it’s important to analyse firms and their business decisions, things are changing fast. We have been struck by how, more than ever before, it’s the decisions and choices of individuals which are driving key sectors of the modern economy. Flat hierarchies, freelancing, social networks … compared with a generation ago, young workers’ life chances and choices are less about ‘the company’ and more about ‘my gameplan’. So: what role does personal choice, and the cumulative impact of each individual choice within a firm, play in the ad-trade in Soho or the artworld in SoHo? We believe that the key issue here is the role of face-toface interaction in the transfer of complex, uncertain knowledge in work and non-work contexts. Chapter 5, Talking Shop, will contend that the extent to which this is important varies by industry and, consequently, so too do the locational stresses. But we should highlight here that it is not simply the case that Drucker’s ‘knowledge workers’9 depend on face-to-face meetings while craftspeople or autoworkers do not; every type of work entails different types of interaction, all of them more or less amenable to replacement by information and telecommunications technologies. Chapter 6, Let’s Talk, looks at how these ideas play out in practice, incorporating the results of some 40 interviews with junior and senior staff across a range of knowledge-intensive industries about their day-to-day practices and whether, or how, ICT (Information and Communications Technology) is changing these as well their own perspectives on location. The chapter’s final section, ‘Was this the future?’, reports on a follow-up survey of our original interviewees, during a global pandemic that very much put to the test our assumptions and arguments. With lockdowns and ‘social distancing’ as the ‘new normal’, and many workers furloughed or forced to work from home indefinitely, was this the moment that we’d discover that F2F wasn’t quite so important as we and our interviewees had thought? We wanted to understand both the immediate effects in their sector and what it meant to be without face-to-face interaction, as well as what they judged to be the likely longer-term impacts on how business would be done in future. We wrap up with some final thoughts in Chapter 7, What, Then, for 21st-Century Places?, and Chapter 8, And in the End. We look at what ICT, accessibility changes and the post-industrial economy will mean, mainly for Western metro areas. Where do we think F2F will still be key? And where will it not? What are the implications for developers and investors? And for policy-makers: what might they to do to shape, accelerate or restrain these trends? Or is it actually a case of the much more challenging (for politicians at least) ‘don’t just do something – stand

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there!’? We will try to bring this all together with thoughts on what the experience of living through a pandemic means for the future. So, this is a book about why F2F is still special, but also about why we can get a lot more done over Zoom, Teams, Skype, FaceTime … when the need arises and discover that we could have been using it a whole lot more before. Cometh the hour, cometh the Zoom session. Ultimately, we aim to tell a clear and – we hope – convincing story about the continuing vitality and potential of cities in the 21st century, starting, in Chapter 2, with the essential underpinning of the networks which move all our ‘stuff’ around.

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Moving Stuff Around The technology is important because without it, there would be nothing. Yet what is really crucial, as before in history, is not the basic infrastructure, but what that infrastructure enables. Peter Hall, Cities in Civilization, 19981

Life on the network If the 21st century has a dominant metaphor, it is the network. Network ways of thinking now pervade science to an extraordinary extent: it is how brain researchers envision our grey matter, how public health officials think about the spread of Ebola or COVID-19, how ecologists think about ecosystems, how we think about computers and devices, as well as how we think about society itself. Of course, in popular culture ‘networking’ used to mean little more than having after-work drinks but, thanks to the rise of always-on, internet-enabled devices and the social media that they have enabled, we can now – at the click of a button – search our own social networks for long-lost friends (Facebook) or someone able to make a key business introduction (LinkedIn), or stay abreast of breaking news (Twitter). But there is not just one network for moving ‘stuff’ around, there are many: air, rail, road, sewerage and power, not to mention fixed and mobile … These overlapping, complementary and competing systems form the substrate upon which economic life grows but, as it grows, the infrastructure responds: strengthening links here, pruning them there. When was the last time it struck you how miraculous it is that you can check local traffic before you get up from the breakfast table, use real-time services to time your departure from the house so that you arrive at the

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bus stop just before the airport express service arrives, pass through a toll plaza as if you have a magic wand, and then fly anywhere in the world, with your primary concern – pre-coronavirus – being the length of the queue to have your passport checked? We are adjusting very quickly to devices and services that would have seemed miraculous even 20 years ago. But let’s take a step back from the radical and ongoing changes to what we carry in our pockets and purses. Have a look out the window and chances are that you will be staring at some kind of network for moving physical ‘stuff’ – people or products – around. These other networks are much less ‘sexy’, and seem to change at a much slower rate than our phones and ‘phablets’, but they are no less important! Let’s remember too that this digital omnipresence does not mean that the personal touch has been relegated to second place, but if we start with the networks then it will be easier to see what is, and is not, changing in the role of face-to-face contact.

‘This time it’s different’ What makes the telecommunications networks seem different from all of those other networks is that they can carry anything that can be encoded digitally: lines from a sonnet, our partner’s voice, our children’s faces, massive data sets, even designs for printing out new parts. This adaptability and instantaneity appears so dramatically different from the more mundane advances of, say, tarmac or the jet engine that, from our privileged position in the early years of the 21st  century we tend to think – like thousands of investors and pundits before us – that ‘this time it’s different’. We spent 60 years waiting for the videophone, from the demo that had visitors talking at the 1964 World’s Fair, only to take it almost completely for granted – to the point of being irritated by choppy video or poor sound quality – when it finally arrived in the form of Skype. And FaceTime. And Teams. And Zoom. And other services now long-gone. To rub salt in AT&T’s wound, now that all these choices are here, they are not just cheap, they’re basically free except when we want to connect to one of those boring old, regulated legacy networks. If you were born as late as the 1980s, did you ever think that, within 25 years, you’d be able to access the internet wirelessly almost anywhere in the world using a powerful computer the size of your hand? When we look at it this way, where’s the transformation in the networks that move ‘stuff’ around? Where’s that flying car we were promised?

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Would you settle for a flying bus instead? Perhaps one branded EasyJet or Southwest, JetBlue or Ryanair? We may not have KITT (David Hasselhoff’s AI TransAm), but it’s increasingly obvious that some sort of self-driving car is parked just around the corner. So just because our own cars don’t yet drive themselves or fly us from A to B, it doesn’t mean we shouldn’t recognize that there have been some pretty radical changes in transport recently, both in the networks themselves, and in how they are used. ICT is, of course, the enabler of these changes, but you’ll note that their primary application has been in making it easier to move stuff around, not to save us from having to move it around at all. We keep thinking that digital telecommunications is somehow different from everything that came before. The seeming ‘placelessness’ of data – everywhere, and nowhere – looks to be a big contrast to the ‘grounded’ way that everything was before. And this, we suspect, is one of the reasons that the ‘death of distance’ is an idea that refuses to die. In the age of ‘big data’, we tend to forget that the massive growth of the airline network is driven by our persistent preference to ‘acquire’ data the old-fashioned way: in person, and face-to-face. So, this chapter looks at the networks for transport and information – how they’ve changed, how they’re changing and what this means for what we do and where we do it. What we hope to do in this chapter is to show you why the information revolution is perhaps less dramatic than you think, and why all those planes, trains, and automobiles are a lot more exciting than you think. But in order to do that, we need to look a lot more carefully at what our infrastructure networks actually do and how we can put the physical and informational aspects of all networks into some kind of a relationship to their social and economic functions. We tend to forget that even wireless networks have a physical structure – what experts term a ‘topology’ – that affects where and when they can offer their services. Or, to put it another way: why do you get great 4G reception and free Wi-Fi in New York City, but not those rural areas where you need it a whole lot more?

A quick look back First, though, some historical perspective. We’ve written as if all of these ideas about the importance of transport networks in relation to communications are new, but we could look a long way back and still see the impact of these networks on the growth of towns and cities.

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In fact, the urbanist Jane Jacobs argued that the earliest towns arose out of people’s need for somewhere convenient to meet and trade ‘stuff’ because each group had access to different natural resources.2 You wouldn’t want to arrive with your haul of onyx only to find that you’d just missed the fur traders, so someone might see an advantage in hanging around to act as a middleman for these trades. Before you know it, you’ve got the makings of a small town built on top of long-distance transportation and trading networks. It’s a pretty controversial theory that turns conventional economic thinking on its head – and for which the archaeological record is uncertain at best – but it certainly helps to shift your perspective. Let’s run the clock forward a bit and focus on the Neolithic settlements that have been found around the British Isles. From our 21st-century standpoint a place like Skara Brae, on the Orkney Isles just off the tip of

Figure 2.1: Neolithic hub: Skara Brae, Orkney Isles

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Scotland, is pretty remote: who’d be crazy enough to travel there by sea when it’s slow, hard-going and often quite dangerous? But you need to flip all of that around in your head: imagine impenetrable, old-growth forest full of large predators and people of doubtful friendliness; and then compare that to an ocean full of fish across which you can (if you’re lucky) travel in a straight line between A and B. Suddenly the ‘attraction surface’ of nodes (towns, though not yet cities) and links (routes between them) is inverted and we can see why a place like Orkney is more of a cosmopolitan crossroads than a backwater.3

Why finance and shipping go together The story of the next few thousand years is really the story of road and water networks in a mix of competition and mutual reinforcement. From Greek boats to Roman roads – it doesn’t seem to particularly matter if trade or military needs came first – towns that sat at a crossroads or confluence seem to have had a competitive advantage over those that merely controlled access to resources. Those that, like London or Paris, were places where multiple road and river networks intersected had an additional advantage: they grew as entrepôt towns4 – trans-shipment points – that traded not only in essential commodities but also in news about those commodities. Faraway events with the capacity to affect local and global demand would give Jane Jacobs’ ‘middlemen’ yet another reason to stick around in those early towns. It is far from coincidental that Fleet Street and the City of London5 sat next to the now-vanished docks of the Pool of London. Nor is it by chance that Wall Street sits so close to the confluence of the East and Hudson rivers – ‘the finest harbour in the Atlantic world’.6 When news travelled by horse and boat, to be ‘central’ was to be as close to those boats as possible so as to have access to, and be able to act on, marketmaking data first. There’s a map in the Library of Congress, from the early days of the telegraph in America, that nicely highlights the ways in which some places became central not only for the trade in goods, but also for the trade in information: it shows telegraph cables radiating from Lower Manhattan like a spider’s web. Wall Street sits at the centre of this web, but there is a departing steamer ‘headed for Liverpool’ transmitting that knowledge (and those commodities) into global relationships. For much of human history it was ships that carried both the latest commodities and the breaking news of the day.

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Figure 2.2: Transatlantic trades: in goods and information

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The arrival of rail Jump forward again to, say, the middle of the 19th century and we witness the rise of the railway, which had the chattering classes gasping in disbelief at the Rain, Steam and Speed of their fast-changing countryside. Some people thought that the high speeds of Britain’s new steam trains would leave passengers short of breath or even unconscious and, as the Liverpool Courier excitedly reported of the Rocket at the Rainhill trials in October 1829, ‘It actually made one giddy to look at it, and filled thousands with lively fears for the safety of the individuals who were on it, and who seemed not to run along the earth, but to fly, as it were, “on the wings of the wind”’.7 The early success of the Liverpool and Manchester line demonstrated that there was demand for a way to move people and freight between the factories of Manchester and the docks in Liverpool quickly and easily. The perceived demand to connect each and every town in Britain stimulated what the Victorians, whose new middle classes were passionate investors, would come to call ‘Railway Mania’ – itself a ‘rehash’ of the ‘Canal Mania’ of the 1790s – and the building of 10,000 km of new rail links before the inevitable bust. In 1845–46 alone, Parliament received 560 railway bills, and passed 270 of them. The crusty old Scots advocate Lord Cockburn observed that “From Edinburgh to Inverness the whole people are mad about railways. The country is an asylum of railway lunatics.”8

Dawn of the open road On into the first half of the 20th century and it is the story of cars and trucks, and their freeways and motorways, spreading rapidly across the countryside and filling in around the existing rail and canal networks. Unlike Railway Mania, these were huge state investment programmes, urged by public actors: ‘the inadequacy of the roads of this Country to meet modern motor traffic is well known. … We feel that the present trunk roads policy of the Government … must now be superseded by the planning of a new system of national motorways’, thundered the Clyde Valley Regional Plan in 1949.9 The model was the USA, where interwar turnpikes were knitted together post-war into the national interstate network via billions of federal dollars.

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Rail and canal networks always required large populations to make them viable, but high-quality roads – as opposed to the dirt-tracks that had pretty much been humanity’s lot since the fall of Rome – brought with them an entirely new kind of ubiquitous and flexible mode of transport. All this public money created huge private opportunities, and with them the freedom of the ‘open road’ – its weird excitement celebrated in a thousand songs like Taj Mahal’s hymn to trucking on I-70, Six Days on the Road: ‘I was pullin’ out of Pittsburgh and headin’ down the Eastern Seaboard / Got my diesel wound up and she’s rollin’ like she never did before …’.10 What makes the road network, and the highway network in particular, so different from its ‘competitors’ is that the cost of adding a new link or a new node – an intersection – is relatively modest. While not overlooking the amount of money invested in the interstates, autobahns and motorways, they are networks that can be fairly quickly reconfigured, upgraded, redesigned and filled in to respond to growing demand. Roadworks may be an ongoing annoyance of modern life, but the traffic usually keeps on moving; try saying the same about track work on Britain’s East and West Coast mainlines, or about New York’s L train.

Towards the open skies And so into the air: the launch of the Boeing  707 in the late 1950s heralded the dawn of the ‘Jet Age’ and of mass high-speed international movement for millions. Travel that was once the preserve of film stars and titans of industry – the original ‘jet set’ – quickly became the province of package holidaymakers and multinational businesses. But as our planes got bigger and faster, they also gained increasingly specific and extensive technical requirements, including ever-longer runways and two-level jetways … And it’s not just a case of ‘if you build it they will come’, as the operators of Ciudad Real Airport, 160  km south of Madrid, discovered at a cost of €1.1 billion,11 because geography still matters in the era of point-to-point airlines. No matter how lovely the airport, you still need to be close to a major population and business centre; in fact, you (ideally) need to be positioned near several major markets to attract and retain operators. Global businesses – with the notable exception of logistics and manufacturing – may no longer take into account the location of ports or overland routes to faraway cities, but they do pay a great deal of attention to where the global hubs are. One academic suggested that we’re seeing the rise of the aerotropolis12 – the city built around an airport

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– but you need only to look at the amount of money invested by the United Arab Emirates (UAE) in building its own airline network to see that this is hardly a straightforward proposition. The aerotropolis is not just about planes and logistics, it is also about F2F and making it easy for a globally mobile elite to fly in and out for meetings. The clustering of office buildings and office parks around Heathrow, Schiphol, Paris-Charles de Gaulle, and so on, is not coincidence.

Virtually free? And then networks went digital. Enabled by the combination of technologies from micro-miniaturization to mobile telephony and hypertext, and with the internet at its core, the information revolution swept across society and the economy. This was the fastest change yet: a 1990 dictionary13 doesn’t have the word ‘internet’ in it; a 2000 almanac14 devotes a whole page of careful explanation to it; and now you don’t need to tell anybody. Those ten years saw the information networks break out from the academic and defence worlds to the whole of society, creating the e-world we now inhabit. These changes didn’t come from nowhere, of course: ICT services were already seen as a big deal by the 1980s when they were being applied as an improvement to firms’ internal operations. However, at that time we were still dealing with ‘islands of automation’ and little outward linkage. The breakout began, and began to be noticed, about 20 years ago; in 1995, a major US government study tentatively remarked that ‘… recently, a number of firms have begun offering merchants software that will allow customers to make online credit-card purchases via the Internet’.15 Sounds like it just might work, eh? Now, the ubiquity of ICT makes it difficult to remember life without it, or to distinguish the component parts that helped to create our e-world. ICT also makes it hard to think in terms of ‘central’ places, because the network now seems to be always on and always accessible no matter where we are! In the tech sector people now talk about computing being ‘ubiquitous’ or ‘pervasive’ – literally, everywhere. If, like an ever-larger proportion of humanity, you live in a city or its immediate surroundings then you probably have a choice of high-speed Internet Service Provider and you increasingly treat network-enabled applications as an extension of daily life for everything from arriving at the bus stop just in time to finding a mate. The same is not, however, true in rural locations. Travelling to the countryside can sometimes feel like travelling back in time: 4G services

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disappear; 3G becomes patchy; you might even find yourself dependent on satellite ‘broadband’! People who advocated the ‘death of cities’ in the early, heady days of the first dot.com boom failed to distinguish between the ‘pipes’ – fibre, copper, 3G/4G/WiLAN and so on – that carry the data, and the services built on top of those pipes. In principle, internet-enabled services can be provided anywhere and you can run a teleconference from deepest, darkest Dorset, but in practice the aggregation of demand – and ability to pay – is greatest in cities, as is the historical legacy of interconnections with other networks. London and New York are connected by multiple fibre-optic cables, each capable of carrying gigabits upon gigabits of data per second, and each capable of handling as much – or more – data than the cables connecting up all of Africa. In February 2012, a single ship dragging its anchor off Mombasa cut off the internet to six countries, something that would be unthinkable for cities in Europe or America, let alone countries! The divergence between the place-lessness of electronic services and the place-fulness of the supporting infrastructure is how we can finally get to grips with the fact that ICT can change both everything and nothing. It depends on where you are standing: the middle of a large city is definitely the best place to think that you can stop worrying about location.

Why it’s not so different (yet) We aren’t suggesting that the era of ‘ICT in everything’ has had no effect on the movement of information, and how and where it is processed; the effects have, of course, been dramatic. But in thinking that this is all somehow radically new, we may fail to see the ways in which it could also be seen as just a continuation of the telegraph and telephone revolutions that preceded it. We didn’t need to wait for the internet to happen for us to experience the magnitude of the psychological, social and economic impact of not having to be next to someone to talk to them. There’s a good reason that Tom Standage cheekily named his book16 on the telegraph age ‘The Victorian Internet’ and it’s why we should have been a lot better at predicting that the bandwidth mania of the late 1990s, when fibre-optic cable was being laid across continents far in excess of demand, would end in tears just like those earlier manias. But the point is not that there’s nothing new under the sun; rather, we want you to think about how radical all of these infrastructural transformations actually were. By treating ICT networks as ‘different’ – even the term ‘high-tech’ sets up an opposition with those boring ‘lowtech’ air and rail networks – we risk failing to see that all we’re really

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talking about are waves of technological change which have an impact on networks of mobility and communications selectively, differentially and incompletely. Being able to move 1s and 0s around at near-lightspeed doesn’t stop us having to move other ‘stuff’ around. So, the mobile phone and laptop don’t – and, we hope to convince you, won’t – replace our need for travel, but they can make taking the train more attractive than driving because we can ‘get a little work done’ on the way up to Edinburgh or down to DC. Of course, even here, technological and social change can move the ‘decision boundary’: it’s been argued that (shared) Autonomous Vehicles (AVs) will be a boon for the environment because they move about more efficiently than human-driven ones. But consider the fact – and the evidence already collected from crashes during early trials – that fully autonomous cars would also no longer require us to focus on the road and risk a fine for fiddling with our phones. If AVs, especially in conjunction with pandemic illnesses that make public transport riskier, reduce the perceived costs of travelling by car, then they could well raise our tolerance for long commutes or drives. So, instead of reducing emissions, they could end up increasing vehicle miles and encouraging people to ditch public transit! Indeed, historically it would seem that every technology-driven increase in our awareness of the wider world – and its many sights and products – has led to increase in network flows: we are travelling and shipping more ‘stuff’ to our front door more than ever before. The corollary of the UK’s growing taste for e-commerce (online retail up from 12.5 per cent of all sales in 2012 to 16.3 per cent in 2017) is a steady increase in parcel traffic: nearly 2 billion items were delivered in the UK domestic market in 2017–18, up 11 per cent on 2016–17.17 That’s an average of 75 items per household per year.18 That’s a lot of vans to go with all that placeless ICT.

What we talk about when we talk about networks Like any scientific discipline, the language of networks has a specialist vocabulary that can be a bit daunting at first. The basic building blocks of networks are ‘nodes’ and ‘links’: in a social network you are a node, your friend is a node, and the relationship between you is a link. On a rail network, each station is a node and the tracks that connect them are a link. On a mobile network, each connected device – phone, laptop or sensor – is a node, and links are created every time two or more devices communicate  … You can probably see how this way of viewing the overlapping web of technologies in which we’re all enmeshed might quite

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naturally shift our attention from singular individuals and places to the nature and structure of relationships between them.

Centrality and cost Of course, not all nodes are equally connected. Some people have lots of friends, and some have very few. Some stations are at the far end of a rural line with two trains a day, and some are called Grand Central or London St Pancras or Berlin Hbf. There’s also a term to describe these hyperconnected nodes: they have ‘high centrality’ because, when you look at how you can get from A to B, you find that many of your potential routes pass through these nodes. In other words, from these highly connected urban nodes you can quickly reach a lot more of the network than you can from one of those marginal rural nodes. But this is the point where our fascination with social networks – and the data that they generate – gets in the way of a deeper understanding of why place still matters. Sure, your friend is pretty popular (it has even been shown that, statistically, your friends are probably more popular than you!19) and has ‘high centrality’ on Facebook, but he or she doesn’t have to transmit actual ‘stuff’ on your behalf and there’s no cost to those friendships. You might have 500 or more friends on Facebook, but you probably only interact with many of them around key life events such as weddings, breakups and the arrival of children … So, even if someone appears to be ‘central’ on a graph of relationships, many of them may be surprisingly peripheral to your day-to-day existence. Transport networks, however, are different: every new node or link implies a real, and constantly increasing, outlay on construction and maintenance. You don’t build a rail link between two cities and then decide not to run trains on it, nor do you build a hub airport and then mothball it, unless you’ve made a serious error of planning. What the successful great rail interchanges – such as King’s Cross, the Gare du Nord, or Grand Central – and the key global airport nodes – JFK, LAX, Heathrow, Schiphol, Singapore and so on – have in common is that their high centrality means that you invariably have to use them. The economics of hub airports are fairly well-understood: they allow airlines to aggregate demand from many smaller places so as to put enough bums on seats as to make it viable to serve them. So, centrality directly affects the cost of getting from A to B via C. In fact, without ‘C’, travelling between A and B by plane might be impossible … unless you have your own!

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Thinking more deeply about networks None of this is to say that cost, in the sense of price, is the single variable that explains everything. The term that economists often use is ‘utility’, and while that is partly about price, it is also about things like convenience, comfort, speed, reliability and even pleasure. Some of these can be measured and treated ‘rationally’ – we’d probably all love to fly business class if we could, but most of us just can’t afford to do so – but some will play out at a more instinctual level – do you love your car or do you hate driving? – and so on. We could spend a lot of time talking about what utility really means for economists, but the point of this section is to get you to stop and think about just how many trade-offs we each make, unconsciously, when we choose this time to visit the client in person instead of just picking up the phone. Both have a ‘cost’, and we don’t just mean the direct, monetary one. The key idea is that determining the ‘cost’ of using a particular network is a complex process, subject to a range of important and, often, subjective factors. Our choices will be a sophisticated (even if unstated and sometimes irrational) evaluation of the characteristics required and of the trade-offs between them. We look at some of the components in turn.

Speed When it comes to networks, speed is what we notice most. Would you willingly go back to the days of dial-up modems or horse and carriage? Most obviously, air travel allows passengers and freight to be moved halfway around the world in under 24 hours; but below about 1,000 km, the question of speed starts to get a little more complicated: planes are still the fastest way to get from A to B, but A and B are often 10 or 20 km outside town because people don’t like airports near their homes. So, for travel from city centre to city centre, high-speed rail suddenly starts to look ‘faster’ because of the time saved on checking in, waiting for your luggage to appear, and travelling to and from the airport. Eurostar estimated that by 2015 they were carrying over 75 per cent of the London–Paris and London–Brussels traffic.20 The more cynical person might think that airports have been getting nicer over the past few years in order to extract more money from your wallet, but we suspect that it’s mainly to try to help you to forget that you’re going nowhere fast most of the time.

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Bandwidth Telecoms, of course, are effectively instantaneous. Emails and phone calls arrive as soon as you send them (well, mostly), and mobile technology means that there is not even a wait to communicate with those who are away from their desk at the moment. This kind of speed dazzles us, but just because a network is fast doesn’t mean that you can push a lot of data across it. Bandwidth is, technically, the (data) capacity of a network over some arbitrary period of time and, as fans of the ‘sneakernet’ are fond of pointing out, you can transfer a DVD-quality film (about 5 Gb) on a 1 Mbps broadband connection in about 11 hours, or you can copy it to a recordable DVD and walk it round to your mate’s place in under an hour. So, the bandwidth of the second option is substantial – effectively 11 Mbps – since the entire film is delivered in under an hour. Many of the largest generators of ‘big data’ – CERN and the radio telescopes – often still rely on tape archives for storing and moving data that doesn’t need to be instantly accessible. Recently, the first ever image of a black hole was produced by radio telescopes from around the world working in tandem to create a virtual telescope with the effective resolution of a planet-sized mirror. The petabytes’-worth21 of data was collected in April 2017, but the processing couldn’t start until December that year, when the last of the 960 hard drives used in the research arrived from Antarctica … by boat. There is a seemingly timeless truth to Tanenbaum’s adage that we should ‘never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway’.22 But what’s the bandwidth of a fully laden Airbus A380 holding 500 or more passengers, each with a lifetime’s worth of experience and knowledge? We can only work from heuristics, but a 2016 estimate23 is that a human being can ‘store’ something like 1 PB of ‘data’, in which case we’re looking at a notional capacity of 500 PB – and the understanding needed to interpret it – able to get to anywhere on the planet in less than 24 hours. There isn’t a fibre-optic network in the world that can come close to matching that kind of capacity; and even if you thought just a fraction of that knowledge was relevant, treated as a communications platform the bandwidth of a fully laden A380 is truly breathtaking! As we’ll see later, the benefits of the bandwidth of an everyday ‘communications technology’ like face-to-face interaction can outweigh the time and money spent on travel in many settings; especially once we factor in all of the unspoken cues of facial expressions and body language. According to some researchers, these unspoken signals are actually more important than the oral content of the message, and yet they are lost by all other modes of communication except, possibly, video-conferencing calls.

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Realistically, these differences are unquantifiable, but the very real extra ‘bandwidth’ of personal contact suggests that we can perhaps see business travel as a contemporary version of Tanenbaum’s station wagon: it is the rapid movement of a firm’s expertise and experience over transoceanic distances. Tanenbaum forgot the passenger!

Cost The monetary cost of both communication and transport has been falling for a long time: in 1930, a 3-minute transatlantic phone call would have set you back $250 in 1990 prices; by 1995 it was less than $1.00.24 A one-way flight from Shannon to New York in 1946 cost the equivalent of $3,000; in mid-2015 Aer Lingus were offering ‘Shannon to New York or Boston from €209’.25 For many, the falling cost of communication has been even more dramatic: VoIP (Voice over Internet Protocol), whether over public or private networks, has effectively made international calling free. ‘Skype Out’ credit to call someone on a landline in another country will set you back just 1.8p per minute for America, 0.9p for India, and 1.3p for calls to China. Drop the need to ring a regulated legacy network, and the cost falls to £0, $0, ¥0, €0, ₹0 … However, it’s quite easy to forget that relative cost matters too because it changes the relationships between these networks and, consequently, our preferences for one over the other. Trans-European rail travel has become cheaper and easier in the past two decades: trains no longer stop at national borders for travellers to switch rail systems, and the Schengen Treaty means that our passports are no longer checked at borders either. But at the same time, the rise of low-cost, point-to-point airlines operating out of underused regional airports – like Ryanair’s ‘Milan’ airport, actually in Bergamo – means that air travel has become, relatively, cheaper still. Similarly, in rural Britain the declining reliability and frequency of bus services – together with an absolute increase in their cost thanks to privatization – has led to an increase in the use of private cars even though they are, often, the more expensive option! You simply can’t look at the monetary cost of one form of travel in isolation from all of the other networks that we can use for getting from A to B.

Connectivity As we briefly discussed above, the ‘hub-and-spoke’ topology of airline operations means that connectivity is found in ‘hub’ airports: as more

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flights stop in New York, it becomes more attractive for other flights to stop there because you can connect passengers to more destinations without having to add new routes. So even though flying through a hub can feel like going a long way out of your way, creating hub airports is the best way to offer more flights between A and B (even if you have to travel via C) because it reduces the number of connections required between every possible pair of other places. This is why the concentration of flights in the New York airport system is out of all proportion to the number of people whose origin or destination is in this metro region alone. Hub-and-spoke topologies are fairly common in physical networks – you get the same kind of thing happening for shipping and railways – but things work a bit differently in telecoms and social networks, where there’s no real cost to adding another link between nodes; ‘friending’ someone or dialling a new number doesn’t require network reconfiguration or hard graft. In this situation we see something often expressed as ‘Metcalfe’s Law’26 which holds that the value of a network is proportional to the square of the number of compatibly communicating devices or users. Or, in plain English: one phone is useless because you can’t call anyone else, two phones have one possible connection, eight phones have 28 possible links, 20 phones have 190 … and 10,000 phones have 49,995,000 possible links. This exponential connectivity of ICT networks is what makes them seem so much more exciting than adding a new runway or terminal.

Convenience And, of course, digital networks are convenient. This comes in many forms: frequency (how many times a day can I use the service?), accessibility (how far must I travel to use it?), as well as comfort (how pleasant is it to use?). One of the paradoxes of modern life is that the blurring of the boundaries between ‘travel’ time and ‘activity’ time is that people are travelling more, rather than less, because mobile ICT is reducing the inconvenience of travel. We can ask: ‘To what extent are ICTs providing substitutes for use of travel time and to what extent are they providing enhancements?’27 All of these concepts are, of course, generally subsumed by economists under the catch-all concept of ‘utility’, which is quite a handy way of tidying up the mathematics, but it’s not quite so useful for policy-makers or busy professionals trying to think about real places and real choices; between here, and there.

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Networks change, networks interlink So far, we’ve tended to talk about the networks in terms of how the user registers their costs and benefits, and how this impacts the user’s conceptualization of their ‘utility’. Physical networks and the connections within and between them obviously change very slowly in comparison to digital ones, but this does not mean that they are preserved in amber: over time, even the most expensive high-speed rail and air networks respond to shifting user needs. We can frame this process of change in terms of flexibility and integration.

Flexibility By flexibility we mean a network’s ability to respond to changes in demand and use over time, but this can just as easily mean changes at the level of nodes as it can the level of the links between them. So we can further break down this concept into nodal and link flexibility28: for example, although there is quite a lot of coordination involved for safety reasons, there is no real cost to adding a new link between two airports, but there are a lot of costs involved in building a new airport. So, the air transport network has high link flexibility and low nodal flexibility. In contrast, the rail network has very low link flexibility (adding entirely new lines is very expensive) but it might not be as difficult for the train to make a new stop on an existing route. Adding the fact that networks change over time introduces the overarching concept of temporal flexibility to look at how quickly a network can evolve. It is, for example, fairly straightforward to add highway junctions incrementally as new roads and developments are built, but an underground metro line is pretty much an all-or-nothing proposition. In other words, cities don’t build a subway line with two stops and expect to ‘add to it later’, they try to anticipate – or stimulate – demand for decades to come. Compare this to our telecoms infrastructure: over time we’ve gone from plain-old copper, to fibre-optic cable and on to wireless, with each radical improvement being slowly rolled out across time and space without anyone really noticing.

The paradox of flexibility The conjunction of multiple networks with different degrees of flexibility means that our thinking about place runs counter to the assumptions of

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most pundits. If you are buying a house, you don’t typically consider the availability of mobile reception or phone lines in the neighbourhood because you assume that the flexibility of the network is such that the phone company will add a connection if it is needed. Unless we really are out back of beyond, we take ICT networks for granted but spend rather a lot of time looking at, say, the transport network trade-offs because those services are not at all flexible. It’s this concept of flexibility that, we think, explains why a world of rural telecommuters is always just around the corner: by enabling us to work from anywhere ICT has simply taken itself out of the picture. So counterintuitively, the more flexible a network is overall, the less likely it is to be factored into our decisions; or, as Amdahl’s ‘Law’29 would have it, it is the least flexible element of the least flexible network which determines the system’s overall flexibility. In global transportation networks it’s the major ports and airports that constrain our flexibility to move more stuff between A and B. In local and regional transport it’s the heavy rail and metro (subway/underground) systems that are the least flexible, leading to a house price premium in towns with good mainline connections. Firms are much more complex than households, of course, but the point about flexibility remains: businesses will tend to gravitate towards those places where they can best meet their mix of needs. And they will tend to focus on those places that provide the best access to the least flexible networks upon which they depend because those are the needs that cannot be met elsewhere. So, if a firm can meet its ICT needs anywhere, then what’s left are their other network needs. You won’t normally find a global management consultancy far from a major airport. And you won’t normally find a data centre far from a reliable power supply. A restaurant doesn’t require any of these things and, as a result, has a great deal more flexibility when it comes to location.

Integration The other part of what makes telecommunications seem so different from other types of infrastructure is the way that they have penetrated and altered other networks: automated toll roads are a good example of what becomes possible through the integration of road infrastructure with ICT. Cars and trucks now whizz through toll plazas – if they exist at all – that were once the principal source of congestion on some highways. And few industries have been so reshaped by this kind of integration as logistics: it is now possible to track in real-time nearly any package or container from origin to destination across the entire planet.

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We mainly notice ICT integration when it fails: being unable to get into your hotel room because a power failure means that your key card no longer works, or being unable to download an e-ticket to your phone and having to get a paper one issued at the airport. Integration problems aren’t always this obvious and can have very unglamorous regulatory or institutional causes: in Europe this became particularly obvious as the national rail operators set themselves up to compete with the lowcost airline operators for city-to-city travel only to find that a host of competing national standards – and associated signalling technologies – would require the outlay of billions of euros to correct. We can also think about integration in a more pragmatic sense: airports are places that integrate air, road, rail and telecoms infrastructures to support the flow of people and goods, while an intersection between secondary roads may not even integrate technology to control the flow of traffic! So major international airports sit at the intersection of multiple types and scales of networks – local roads, regional rail, international air, and ICT – while a rural crossroads is simply a place where two links meet on the road network. Rationally, the more networks you are trying to integrate, the harder and more expensive it’s all going to get, and the less flexibility you’re going to have because everything needs to mesh for this to work.

There’s not just one network: the ‘premium’ services There are many ways to get from downtown London to Heathrow: taxi, bus, London Underground (or ‘the Tube’), ‘regular’ train and the Heathrow Express. It’s been said that the Heathrow Express is, per kilometre, the most expensive train journey in the world because a oneway ticket to Paddington will set you back a cool £25. However, the Heathrow Express trip will also take you just 15 minutes, compared to a car journey of at least 45  minutes – if you’re ‘lucky’ enough to be travelling first thing in the morning or late at night – or a Tube journey of up to an hour. What distinguishes the Heathrow Express from the Tube or the road is that it constitutes a kind of ‘premium’ service where we pay for the privilege of not stopping and not connecting to lots of other places along the way. In other words, we’re trying to buy our way out of the negative effects of heavy network usage: congestion, breakdowns and delays. Similarly, France’s TGV service is premised on the fact that it doesn’t have to stop at every town en route from Paris to Lyon, or Paris to London. It’s like a hub-and-spoke system for trains. But this sort of service is only possible

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between large ‘nodes’ with high centrality and, even then, it doesn’t always work quite as well as expected: the success of business-only airlines operating between London and New York has, to put it charitably, been fairly mixed. In transport, these premium networks – what some researchers have called ‘higher-order’ or ‘upper tier’ networks30 – are fairly obvious: they’re usually distinguished by price (they cost more), by speed (they are faster) and by number (they have far fewer nodes and links). Premium networks also rely rather heavily on technology to manage flows – air traffic control systems, iris scanners and biometrics, and so on – and that adds to their cost. Perhaps the most ‘exclusive’ transport networks around today (even though in some ways the network itself is decidedly low-tech) are the parallel transit systems operated by Google, Apple and the other Silicon Valley firms: you cannot buy your way onto them at any price, and they offer mod-cons that other business travellers would kill for. The ‘premium’ exists in communications networks as well, although they are far less obvious: companies like SohoNet, Akamai and Cloudflare use private IP (Internet Provider) networks and cutting-edge technology derived from deep space satellite communications to ensure that their clients’ data get from London to Hong Kong or Los Angeles just that little bit faster than would be possible over the public network. Here, access is controlled by price: these connections aren’t offered as a service that you or I could buy for our home, but they are something bought by firms which depend on responding fractionally faster to queries as an essential cost of doing business. When we try to envision the future, we should note that premium networks often shadow their less privileged brethren: HSR often parallels regular rail routes, and when it doesn’t the costs can mount astronomically. (The Institute of Government reports a rise in the cost of HS2 from £37.5bn in 2009 prices to £72–78bn in 2015 prices. This represents a real terms increase of 46 per cent between 2011 and 2019.) The rationale for this shadowing is often to be found on the demand side: the big users and the high densities of users are in already established locations with high centrality, so why would you run new infrastructure to riskier locations without charging a hefty premium? In plain English, why is 5G being rolled out in places that are already saturated with 4G, Fibre-to-theCabinet, cable modems and all the other types of high-speed networks, instead of in places where you can still barely get online at all? That’s the ‘for he that hath, to him shall be given’ nature of infrastructure provision, and this is another powerful example of, literally, path dependency in network growth.

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The changes At each stage in their growth and evolution, the networks that emerged to move all of this ‘stuff’ around reshaped cities and their hinterlands to fit the technology. Railway stations grew their quartiers de la gare. Docks collecting and dispatching goods to far-flung colonies exploded across the Victorian cityscape. And whatever you think about the idea that urban growth in the future is mainly going to happen around airports – giving rise to the ‘aerotropolis’ – there is no question that airports have attracted their own ‘edge cities’ and satellite business districts. Plans have been made for new super-ports and for ‘airport cities’, and then, inevitably, for exdocklands, and ex-airports like Croydon and Tempelhof. The physical changes we’ve seen in cities are less associated with the spread of modern telecommunications than they are with changes in transportation itself. Yes, there may be a lot fewer docks, but the ports we have today are much, much bigger. The docks at Tilbury cover the same area as the City of London (with its million-plus jobs); the Europoort Rotterdam complex is the size of the whole of Amsterdam; and if you dropped it on New York you’d easily cover Manhattan Island. Of course, these docks are heavily dependent on automation and telecommunications, but – and this is crucial – ICT plays no obvious role in the choice of location for these mega-ports, which is determined by the shape of the coastline, and their proximity to population centres as well as road and rail networks.

Packet inspection We can understand this impact further by examining the technology of the information revolution a bit more deeply: for modern networks, distribution generally occurs using some version of TCP/IP (Transmission Control Protocol and Internet Protocol) in which everything – video, email, data, text messages … – is broken down into generic pieces or packets. These can be transmitted anywhere in the world using a common addressing scheme such that a mobile phone user in Central London can talk to a web server in Outer Mongolia without anyone really needing to care how that minor miracle happened. TCP/IP separates the data from the ‘channel’ over which it is transmitted: DSL (Digital Subscriber Line) modems on copper landline networks, wireless technologies, or fibreoptic and satellite links31 … it makes no difference to the data. But dig a little deeper and the difference between the internet and the modern supply chains is no longer quite so clear: the containerization of

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freight amounts to something neither more nor less revolutionary than the emergence of a ‘packet network’ for goods. Thanks to ‘the Box’,32 we no longer need to care, as they did in the days when the ports of London and New York employed thousands of stevedores, what is inside. As long as it fits in a container we can stick it on a boat quickly, transfer it to a truck easily and handle the whole process using standardized kit. It’s hardly coincidental that this transition lines up with a massive increase in the volume of global freight: the analogies abound while the differences erode.

What it all means for cities This history of successive waves of change, and the dynamic of aggregation of services, suggests that it will be much more difficult for today’s less connected towns and cities to leap to the front of the pack, and that the advantages accruing to the most-connected nodes will be cemented by upgrade processes. There are almost no examples of break-out from this logic. The best case, in the world of international travel, is Dubai, which – with colossal and sustained state investment in airport infrastructure and a state-run airline, minimal tax and regulation, and intense marketing of itself as a hub location and tourist destination – has managed to break into the dominant and self-reinforcing web of global air travel by virtue of adding a highly connected node linking Europe, the Gulf and the ‘Far East’. More intriguingly, research by far-flung co-authors on academic collaboration suggests that the arrival of a low-cost airline in your city could increase collaborations by up to 50 per cent, with the strongest benefits flowing to younger (and grant-poor) and more productive scientists.33 Air access? Rail access? City access … strangely, one thing that businesses don’t normally take into account when making plans for the future is whether there will be any roads or internet when they get there. In other words, it’s not about freedom, it’s about constraints. We’re arguing that – with limited exceptions – firms don’t really pay much attention to ICT as part of their big decisions: you don’t choose Chicago over Seattle, or London over New York, because of the quality of its internet connections.

The push and pull of network effects We’ve argued that understanding the impact of 21st-century communications technology means thinking about all of it – not just

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ICT but also transport; not just bits of data but also the flow of products and the movement of people; not just how connections have helped determine urban locations, but also how they, in turn, determine where the networks go and where they grow; and not just what networks people depend on, but how much freedom and flexibility they have in their use. We need to think in terms of a spectrum of flexibility: at one end are the networks such as telecoms or roads that are capable of offering nearly ubiquitous service across space, while at the other end are the restricted ‘nodal networks’ like high-speed rail and air networks that bind development to specific sites. The first type tends to flatten space by making all areas equally accessible, but the second accentuates the differences between connected and unconnected regions. For cities, this means that two powerful network effects are pulling in opposite directions. The networks which ‘equalize’ space exert a centrifugal force on activity and growth, spinning it outward and deconcentrating the urban form. The nodal networks, in contrast, tend to reinforce concentration, pulling growth in a ‘centripetal’ way towards the best-connected, most central locations. Planners and geographers would talk here about different ‘scales’, and that would be a useful way to think about it: looking at the Eastern Seaboard’s megalopolis,34 you see multinational businesses drawn towards the global networks that touch down in New York, Boston and DC, but those tendencies are then overlain by regional-scale infrastructures (rail services such as Amtrak, LIRR, and NJT … but the interstates too), and then comes the more local stuff (the buses and subways as well as local highways).

The centrifugal push The centrifugal forces have been, and remain, very strong: over the course of the 20th century the pendulum swung strongly away from water and rail towards roads, and this seems to have brought with it an apparently irreversible trend of ex-urbanization, lower densities and more diffuse travel patterns with greater ‘polycentricity’.35 The ubiquity of ICT seems to have accentuated this trend towards looseness of form and freedom of spatial choice. The effects have been dramatic: the suburbanization of industrial and logistics activity thanks to the interstate and motorway systems, the move of business activity to office parks and campuses or big-box retail parks with lots of parking and lower land costs, and the emergence of new nodes of development often called ‘edge cities’.36 Often located near an out-of-town interchange between major interstates or highways, the edge city is a rational response to infrastructure

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Figure 2.3: ‘Centrifugal push’: the lure of the suburbs

dependencies such as road in North America, or even road and rail in the Netherlands. In some cases, Atlanta, GA for example, the phenomenon is so substantial that the edge cities have become a kind of Central Business District on the (road-)accessible metro fringe.37 What seems to be happening is that these emerging sub-centres are highly specialized, but that they are specialized in different sectors from the original urban core. So, in the examples from France, the sub-centres are systematically biased towards manufacturing, construction, and transport, and away from personal and collective services.38 But in Canada, around Montréal for instance, the sub-centres each specialize in at least one high-value service as well.39 In short, the permutations and combinations of network flexibility – particularly of roads and ICT – enable a redistribution of activity out of the core for some, but by no means all, businesses. We’ve also mentioned another emerging urban form, the aerotropolis, as the crystallization of large clusters of activity around major airports.

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Schiphol, Amsterdam’s airport, is the prime European example, with its Zuidas (South Axis) development supported by road and rail infrastructure.40 In Korea, Songdo, being developed around Seoul’s Incheon International Airport, is a conscious development strategy as well. And in the USA, DFW (Dallas/Fort Worth) has emerged, midway between Dallas and Fort Worth, as an important business area in its own right, even though it’s largely just arranged around the airport perimeter. The mix of activities there includes, somewhat bathetically, ‘the world’s largest Infiniti car dealership’, but ‘its periphery has attracted scores of major companies to locate their headquarters nearby and has spawned upscale suburbs that are home to corporate executives and entrepreneurs willing to pay for the convenience of being minutes away from a flight to just about anywhere in the United States or the world’.41 In the technology sector, the new arrivals in the King’s Cross ‘Knowledge Quarter’ and around Shoreditch’s ‘Silicon Roundabout’ garner the media and policy attention, but far more people are employed by tech firms in and around places like Reading, Slough and Maidenhead than in Central London. This industry was traced back to Britain’s military-industrial complex by Peter Hall,42 but its subsequent growth is a clear product of businesses responding to the locational pull of the international airport at Heathrow, and to the road and rail links into outer metropolitan London, but especially to high-amenity villages in the Cotswolds. These are perhaps the most striking examples of responses to infrastructure potential and the flexibility that it offers. Underlying their growth is the fact that this centrifugal push is immensely powerful, has affected every urban region, and it has not been reversed by the muchheralded urban renaissance and revival of inner cities.

The centripetal pull So, what accounts for the ‘pull’? If dispersion and flattening are such powerful forces, why have urban rents gone up? There is clearly no single or automatic driver towards deconcentration, and the freedoms and flexibilities of the ‘20th-century networks’ are far from removing the vital role of busy central places. In fact, the rising cost of infrastructure, and the level of demand needed to support it, may well mean that, as Feitelson and Salomon put it, ‘we have no reason to expect that the emergence of upper-tier networks and our increasing reliance on them will herald the “liberation” from space envisioned in the late 20th century’.43 Over time, high-accessibility areas will tend to draw in high-addedvalue firms and this, in turn, stimulates demand for yet more infrastructure

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Figure 2.4: Thames Valley: well-paid tech jobs and comfortable outer towns like Maidenhead

and greater connectivity. And those firms ‘add value’ by doing what exactly? Usually it’s bringing people and ideas together! Consequently, many businesses will find that it is entirely logical to congregate around the nodes of the least flexible network upon which they depend: ‘Advanced producer services (APS) firms increasingly use major cities as hubs for global business networks’.44 This does not mean that other centres have no role – they will continue to thrive and to use the most modern networks – but the path dependency of highly-connected nodes is focusing the high-end activity in a more and more concentrated way. It was demand from business that led first to the Heathrow Express and, more recently, to the £18 billion being spent on London’s Crossrail 1. Crossrail 2, which doesn’t even have a price tag yet, is already being planned. And we don’t need to invent a new term to describe these areas where many networks overlap: looking at the pattern of settlements, roads and canals in southern Germany more than 80 years ago, the controversial – because of his connections to Nazi master-planning45 – economic geographer Walter Christaller called them ‘Central Places’. We think that ‘central places’ remains a useful concept for 21st-century towns and cities, so we’ll be returning to this idea again and again.

Different strokes … … for different folks. We’ve set out a somewhat binary choice so far: some firms need high-centrality locations, and some firms don’t. But the

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push–pull tension is overlain by an enormous range of factors which will determine how specific places or sub-regions can offer ‘packages’ which are sufficiently distinctive to influence locational choice. Alongside the pattern of high-order activity tending to cluster around network nodes whilst routine activities are exported from the core, all sorts of other variables come into play: market town ambience, university spinouts and the lifestyle choices of entrepreneurs. ‘Compromise’ locations will work for some firms: perhaps sites that offer access to both Central London and major airports, but from a semi-rural environment that punches well above its weight in terms of cultural offerings … as in the case of the Oxford and Cambridge sub-regions. But for others – culture and media; high-end banking and finance – there just doesn’t seem to be an alternative to ‘being there’… unless you offer something truly unique with a name like Glyndebourne or Buffet. It is the differing needs of the ‘different folks’ which will determine whether centrifugal push or centripetal pull is the strongest for any given business or location. In principle, businesses will always find areas with greater connectivity more attractive than areas with less connectivity. But which connectivity? Not every business needs every network: a furniture-maker probably doesn’t factor in airport location, but a global consultancy or logistics firm does. So even before we start to think about the needs of individuals and individual firms – which we will do in much greater detail in later chapters – we can still begin to see the outlines of different ‘spatial logics’ influenced by the mix of networks, the degree of centrality and the mix of connections required to ‘do business’ at particular (geographic) scales. To economists, these choices can all be expressed by the ‘cost’ of travel (not just the price, of course, but all the other convenience and time elements that we factor into our travel choices). Instinctively, we know that knowledge-intensive firms experience these ‘costs’ differently from manufacturing ones; however, explaining why this is so, how it works and what the consequences are takes up much of the rest of the book! We’ve sketched a picture of networks, of all kinds, offering unprecedented speed and capacity, and of an emerging pattern where those networks can simultaneously permit more choice of location and concentrate development around a few highly connected places. We’ve identified, as key to understanding locational choice, the degree of flexibility that firms and households have in terms of the infrastructures on which they rely. That means understanding the specific mix of types of mobility and access that firms need, for the specific markets they serve and their business-specific reliance on moving some mix of products, people and data around. It’s time to take a look at how these ‘central places’ take

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advantage of, and react to, the new levels of connectivity. Chapters 3 and 4 will now look at how the markets that firms are in, and the transactions that they engage in, relate to the framework of communication and space that the networks provide.

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3

Making Markets Men, thinly scattered, make a shift, but a bad shift, without many things. A smith is ten miles off: they’ll do without a nail or a staple. A taylor is far from them: they’ll botch their own clothes. It is being concentrated which produces high convenience. Dr Samuel Johnson in Boswell’s Journal of A Tour To The Hebrides, entry for Sunday, 15 August 17731

Central places and the markets they make Following on from the role of the networks in driving location, we now explore how and why central places come to dominate particular markets for goods and services. Goods, labour, skills and data all move in different ways and at different speeds through the networks: they have what Alfred Weber2 called different ‘weights’, and this in turn implies differing ranges (catchment areas, labour markets and so on), all of which are critical in determining how much centrality matters in each business sector. The chapter connects the concepts of scale and range to the challenges of risk and uncertainty. It describes the patterns of search and signalling which firms and their people deploy in different types of market. We stress how the subtle signals encoded in the choice of a particular office location are particularly vital in the ‘opaque’ markets which characterize the most dynamic sectors of the 21st-century economy. These are the ones where data on its own will not be enough, because judgement and confidence are critical and, consequently, the potential for face-to-face interaction in central places is a crucial asset.

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Figure 3.1: Face-to-face: the confidence to do the deal

Swings and roundabouts In the preceding chapter we argued that, historically, places with high centrality were the foci of economic activity because they were the locations where goods, people and information could be transferred between networks, and where data from diverse sources could be aggregated into actionable intelligence. We’ve also seen that over the course of the 20th century the notion of what a ‘central place’ on the network looked like swung strongly away from water and rail towards roads, and later to airports. We also noted that this seems to have brought with it an apparently irreversible trend towards suburbanization and, ultimately, exurbanization (in the sense of outmovers to rural areas who still maintain an urban way of life and commute or telecommute). So,

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why didn’t our cities die? Why did cities like London and New York turn a corner in the 1980s and start to grow again? We anchored our argument in the fact that areas with high network connectivity support levels of economic activity not possible elsewhere and that cities still have an edge here, even in the age of the internet. In fact, the emergence of both ‘higher order’ and distance-spanning networks seems to reinforce the advantages of already well-connected places. But we now need to dig more deeply into Adam Smith’s observation – in The Wealth of Nations no less – that ‘the cost of transport determines the size of productive units, the size of cities and hence the human opportunities for leisure, choice of jobs and the quality of life in general’.3 On one level this is self-evident, but if the cost of networks were the only thing that mattered then, space permitting, shouldn’t all industries end up in the same place? Our discussion of transportation in the previous chapter set out a way of thinking about how different networks exert different ‘pulls’ on businesses, but now we need to tie this much more closely to real issues affecting real industries. The connecting thread between the preceding chapter and this one is the role played by transportation and telecommunications networks working in tandem to determine where a sector or firm’s optimal location(s) might actually fall. But the really critical insight flowing from this chapter’s analysis is that a lessening of transport costs – or of transport’s importance to your business, which amounts to the same thing – doesn’t free you from thinking about transportation completely, it only leaves you ‘free’ to focus on the remaining costs. In other words, as a factor of production becomes relatively less expensive or more accessible it counts for less in a firm’s spatial strategy, though that doesn’t mean it becomes irrelevant.

How networks drive location Let’s start this chapter by imagining an ‘old school’ business at its most basic: steel. At the risk of grossly over-simplifying the modern steel industry, a foundry survives on three inputs: iron ore to smelt, coking coal to fuel the blast furnace, and labour. And the foundry has just one output: high-quality steel going to end-users across a range of industries, potentially on a global scale. Given these conditions, how does a budding steel magnate go about choosing the best location for her new plant? Alfred Weber, younger brother of the perhaps more famous sociologist Max, considered this question back in 1909 and came up with ‘least cost location theory’.4 In Alfred’s model, if we assume that the costs of

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extracting ore and coal don’t vary too radically with different locations then the most profitable location – the one with the lowest overall costs – is necessarily the one where you spend the least money moving this ‘stuff’ around. The ideal location would have ore and coal in abundance, and cheap labour nearby … Wales or West Virginia, perhaps? You can think of these inputs and outputs as having a ‘weight’: inputs that are bulky, heavy and buried deep in the ground have a high weight because they are hard to extract and move around, while inputs that are small and light have a low weight because they are easy to transport. The same goes for outputs. In a traditional industry the weight of the output is almost always less than its inputs because the process of manufacturing reduces the raw materials. During smelting, the coal is consumed to fire the furnaces, and the iron ore is melted down into a mixture of slag and steel. So, on the one hand we have ore and coal that cost a lot to move around because you need a lot of it in order to feed your furnace, and on the other hand we have high-grade steel as a kind of ‘distilled’ output that is a lot easier to move because it’s less bulky, lighter per unit of value, and comes in a handily standardized format. In this kind of situation it makes sense to prioritize access to inputs over access to markets: we can afford to sell steel across a much wider range of places than we can afford to buy coal or ore. Of course, not all inputs are the same: if you had access to good-quality ore and poor-quality coal (i.e. you needed a lot of it to reach a high temperature) then it might make sense to ship the ore to the coal because that reduces total transport costs, but the overall balance between inputs and output remains broadly the same. As we extend this line of thinking we edge into the models of traditional economists and their ideas about input substitution; however, as geographers and planners, we think it’s important to remember that the substitution of one input for another can have spatial consequences: the steel industry leaves Wales for China, or America for Brazil. Refining – pardon the pun – this process further is Alfred’s notion that the ‘cost’ of transport needs to factor in things like reliability, comfort, convenience… The best-quality steel in the world is of no use to our firm if we can’t get it to market. So variation in transport helps give rise to variation in business preference and practice: inaccessible locations therefore tend to be most suited either to either poor-quality products for local consumption (the transport costs are minimal and it’s hard for competitors to enter the market), or high-quality ones for global distribution (such is demand that even high transport costs are only a small part of the final price).

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What’s the weight of data? Let’s push our thinking to the limit: what happens when an input is everywhere? Water or air might seem like good examples, but could Weber have anything to tell us about contemporary companies whose business is raw data? Just because Weber hadn’t seen a world of global, wireless telecommunications networks doesn’t mean his ideas cease to be relevant, and Weber had realized over a hundred years ago that ‘ubiquities’ were just a special class of input that didn’t have any weight at all. To put it another way: when was the last time that you really thought about the availability of electrical power; about how it reached your home or office, and where it was produced? And was it a factor in your decision about where to buy a house or lease an office? Being willing to look for this kind of continuity, rather than taking radical change at face value, quickly gives the lie to the promise that always seems to made about technologists and a certain class of investor: ‘this time it’s different!’ As some would have had it: since we can work from anywhere thanks to digital telecoms and ICT, let’s just take our data connections and move to the countryside! In reality, just as some businesses have specialist power requirements (data centres are a good example of this), there are even businesses with specialist data requirements. For example, High-Frequency Trading (HFT) companies aren’t constrained by access per se – they generally access the same trading data as everyone else – they’re constrained by timeliness: when your window of opportunity is measured in milli- or even micro-seconds then the length of the cable that links you to an exchange’s servers matters. And even where these extreme performance requirements don’t fully apply, you might still care about factors such as redundancy or overall bandwidth: there are many high-bandwidth connections between London and New York, so you’ve always got options if disaster strikes, but if you’re based in one of those parts of Africa that is connected by just one low-bandwidth cable to the rest of the world then your entire business could fail with a misplaced anchor. The problem is not fundamentally different for a firm dealing in exotic fruits and vegetables: the goods have to reach the market before they begin to rot, so you may need to fly stuff in from South America even though using a boat would be much cheaper. The same goes for fashion. The cost of transport isn’t just about how much you pay – though that’s a good proxy – it’s about the performance that you require: reliable or quick? Cheap or comfortable? Sometimes the ‘latency’ of data access is so important that you’d pay almost any price in order to get your servers in the same building as the London Stock Exchange. Other times it seems

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to be largely irrelevant because your input is the collective brainpower of a great team of research scientists.

What’s the weight of labour? In the steel foundry scenario the location of labour isn’t much of an issue: the costs of the other inputs are so enormous that it will probably make more sense to build company towns on-site and pay staff a little extra to live in them than it would to move the ore and coal to a place where labour is in abundance. Reinforcing this thinking would be the fact that, while steelmaking is a skilled job, it’s also a job that we tend to assume can be taught to anyone. And fairly quickly, too, because it doesn’t require years of study in a Higher Education institution. In this case labour has a low ‘weight’: not only is it an input that we can move on-site fairly cheaply compared to the alternatives, but we aren’t even particularly worried about finding people to fill these jobs because we assume that we can substitute one labourer for another with a bit of training, or use automation to reduce the number of people or amount of training required. But what happens if we turn from steel to software? Even the most passing acquaintance with this industry makes it obvious that the one absolutely critical, irreplaceable input to software – for the time being at least – is people. And it’s a highly skilled labour force whose members typically have choices about where and for whom they want to work: Facebook is offering me x, but Google is offering me y, and this exciting new start-up has z. So, this particular labour force is quite happy with where it is living right now, thank you very much, and isn’t too keen on the relocation package to Poughkeepsie. So, when the only thing that matters to you is your labour force then it’s probably cheaper – and safer, for reasons we’ll get to later – to simply throw in the towel and open an office in Silicon Valley. Consequently, the extent to which you can substitute labour in one place for labour in another has an enormous impact on the degree of flexibility that you have for relocation in order to take advantage of lower costs. If you depend on ‘gifted men that refuse to migrate’5 then your flexibility tends towards zero because the weight of that uniquely talented labour pool is effectively infinite: you simply can’t get the input you need anywhere else because no one else has the skills! Although we suspect that the number of people who genuinely are indispensable is rather lower than claimed, it’s this kind of inflexible logic that supports superstar salaries on the executive board and playing fields the world over.

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What’s in a skill? Weber generalized the idea of skill with a ‘labour index’ that tried to measure the value added by labour to a particular product. It’s not particularly important whether his definition enables us to calculate an exact – but fundamentally fictitious – metric, because in the case of software it’s obvious that this index is very high for those based in and around Silicon Valley but that it is seen to be lower in, say, India. As a result, you will rarely find Silicon Valley engineers engaged in the ‘grunt work’ of data validation or technical support, nor will many Bangalore engineers be given the chance to lead new product development for a California company. There are lots of reasons why this occurs, ranging from ingrained bias to the nature of higher education, but the concept of the labour index is – like the concept of utility – a useful catch-all that frees us to focus on how tasks and processes are allocated across networks. Similarly, our steel magnate isn’t just choosing between highly skilled German steel workers and less skilled ones from a low-income-country, she is also choosing whether to manufacture lower-quality steel overseas, or specialist steel in Germany. The existence of differing inputs, outputs, skill levels and their integration into transport and telecommunications networks can reshape markets, causing the range over which goods and services are bought and sold to expand globally, or contract dramatically. One interesting example that draws this all together from the standpoint of our interest in ICT is the contemporary call centre. Historically, businesses in the UK and the USA have been particularly keen on the outsourcing of telephone support and, instinctively, this looks like a poster child for the ‘death of distance’: pick up the phone to inquire about your bank balance or to get help with a misbehaving piece of software and you never really know where the person you’re speaking to is based. However, scratch the surface and it becomes clear that the notion of what constitutes skilled labour and, consequently, an ideal location needs a little more nuance. The first, and most obvious, locational issue is linguistic: call centres to support Anglophone customers don’t (yet) operate in China or Outer Mongolia, they operate in India because that is where a large population of cheap English-speakers can be found. China may have become the world’s factory, but India has become its back office. There has, however, been a limited reversal of this trend. Onshoring and nearshoring of manufacturing is felt to give better control over unpredictability in quality and volume – a sense strongly reinforced during the pandemic by evident vulnerability to supply-chain interruptions for critical equipment – while onshoring of services has gained support because Anglophone customers were unhappy dealing

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with people hired to be little more than English-speaking machines, not empowered and knowledgeable staff. ‘Strangely’ (i.e. not strangely at all when you take geography into account), when push comes to shove, people often seem to feel more comfortable dealing with locally based and locally accountable staff. Even in a purely telecoms context, distance matters, but cultural norms, language and confidence – of which a lot more later – matter more. So, it follows quite naturally from this way of thinking about inputs and outputs – and the role that labour plays in converting one into the other – that the definition of a ‘good’ location will vary from industry to industry. Moreover, where technological change affects the relationship between these – either by replacing inputs, or by impacting the transport and communications infrastructures that bring them together – then we might expect to see changes in the locations of certain industries. In other words, technology complicates the picture by adding a dynamic element to the more sedate history of transport networks, but the fundamental principles structuring this process remain unchanged and remain tightly bound with the relative trade-offs between these domains.

Centrality and the growth of markets Up to this point our discussion has ignored the fact that many firms appear to cluster together in ways that would be hard to predict from transport costs alone. As long ago as 1926, R.M.  Haig asked, in ‘Toward an Understanding of the Metropolis’6: why have services firms concentrated in the central business district (CBD) when bulky goods – which are much more costly to move around – have not? We’ve alluded to this before when talking about the range over which inputs and outputs can be profitably moved (i.e. bought and sold). Fundamentally, as von Thünen was already explaining in the early 19th century,7 it will be a question of willingness and ability to pay. A lawyer can outbid a tailor because their business is much more profitable, but why would a lawyer continue to bid for a city-centre location when they could just as easily set themselves up in a pretty little town in the Cotswolds? For a generalist lawyer who does a bit of everything, then, the answer might be ‘city lifestyle’, but for the lawyer wants to specialize in (say) patents, the issue is whether or not the budding specialist can find enough clients to support a sophisticated ‘high touch’ service business at reasonable cost. It doesn’t really matter if the lawyer travels to her clients, or the clients to the lawyer; either way, without transport that is cheap relative to the cost of the product or service, this sort of specialization simply cannot occur

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and our ambitious lawyer sticks to wills and deeds, and charges a lot less per hour. And it’s not just about the cost of travel to one meeting, it’s about the travel involved in selling, agreeing, and delivering services again, and again, and again. Legal services tend to be a ‘high touch’ business and so the more challenging the travel, the greater the impact on billable hours and, consequently, the lower the profit.

The range of a good, and the impact of specialization The difference between conveyancing and patents is principally one of specialization: land and properties are transferred between individuals and between companies all the time and, this is important, ‘all over the place’. So you might want a city-centre location to work on the more lucrative and challenging property deals, but if you were willing to settle for the quiet life then there should be just about enough conveyancing work even in sleepy rural towns to keep you going from week to week. Clients won’t usually think to travel a long way to find the ‘best’ conveyancer, so the maximum range over which you can effectively sell this as a face-toface legal service isn’t large. And at the same time, if you’re not overly ambitious then you’re also likely to find that enough of your customers are local anyway, so the minimum range is also fairly small – a town of a few thousand souls ought to do. Compare this to the patents business and it’s obvious that the range of this service is very different: if you’re hoping that there is enough patenting business in St Ives (Cornwall) to reward your hard work then you’re likely to be disappointed. Since even highly innovative companies may only churn out a dozen or so patents a year, the minimum viable range for patenting services is very large indeed because you need access to a lot of potential clients in order to make a go of it. But the maximum range could also be very large: regulatory differences might restrict your attractiveness to some international clients, but in principle a good patents lawyer could make, or break, a firm, so it’s worth their while to find the ‘best’ one that they can.

The benefits of centrality for firms Consequently, there is a positive feedback loop between the concentration of patent lawyers and the growth of a market for their services. Specialists will gravitate towards markets already large enough to need their services; and the more of them there are in one place, then the more the companies

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needing their services are inclined to come to that place to speak to them even if they aren’t local or convenient to the HQ. The industrialists won’t move their factories, but the head office will definitely come knocking when they need specialist legal advice. And once that loop is initiated it will become increasingly difficult for other areas to compete. The concentration effects are shown vividly by figures from the Legal Services Board: with about 15 per cent of the population of England and Wales, London has 44 per cent of the two countries’ trademark attorneys, 52 per cent of all the finance and business specialist lawyers, and 64 per cent of the self-employed barristers.8 This is the approach that one famous – well, famous in economic geography – thinker named August Lösch took to understanding how great cities and highly specialized individuals and firms create each other.9 He saw a pattern of market areas emerging from the cumulative choices made by companies, not just in terms of transport costs, but also in terms of the costs of access to customers. And, as a firm, if you depend on specific labour and skills for your business, then it makes sense to locate where that labour and those skills are readily available so as to mitigate the risk that you’re left with a critical job vacancy. Lösch expanded this into thinking about how clusters of competing firms could emerge by pointing out that a concentrated geography made it easy for customers to find suppliers, lowering the cost of obtaining a service and expanding the market for a product. In plain English: if you know where to go to get good legal advice on your latest invention, then that saves you time and also, because you can easily shop around once you get there, money.

The benefits of centrality for labour There is a corresponding benefit for workers in ‘labour pooling’: if you’ve invested a lot of time and money in becoming one of the world’s best patent lawyers then it makes sense to base yourself where the people needing your services can find you. Almost paradoxically, that will be the same place that they can find a lot of your competitors! The aggregation of a lot of specialist workers creates a pool from which companies can draw, reducing the risk that there will be no one around who needs your special skills. It’s the logic of the ‘labour index’ again: Silicon Valley firms lose a lot of employees to competitors and new start-ups, but it’s also fairly easy to replace departing staff by poaching new employees from one of your competitors or by hiring a recent arrival who fancies their chances as a software engineer.

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What ultimately determines the size and depth of the available ‘pool’? Transport. All other things being equal, if it becomes easier to move staff between London and New York then those two markets start to look more like one very big, very deep pool of specialist firms and workers instead of two distinct ones. Obviously, the real world – thanks to borders, regulations, cultures and other barriers – is more complex than that, but this helps to illustrate how the concentration of workers in highly connected cities can act as a stimulant to economic development in those areas but not in their less-connected hinterlands or more distant – from the standpoint of the global infrastructure networks – lower-tier cities. London’s tech industry has benefited from the ease with which engineers from all over Europe could be moved (often by American firms) to a highly accessible city with a ‘common’ language and well-understood legal and employment regime with minimal effort (e.g. dealing with visas, sureties and other paperwork or lead times). Naturally, places that are nodes in a wide range of short- and longdistance transport networks are easier to reach for workers and employers, and are therefore likely to attract a range of both. The more specialized these areas are, the more attractive those connected sites become. One British government body, the National Endowment for Science, Technology and the Arts (NESTA), thought this worth reiterating as recently as 2007: ‘specialized or niche market preferences can often be provided for on a profitable basis from a city, as the market is of sufficient size to make this economically viable’.10 This is not only about the size of the nearby market, though. NESTA added that ‘most innovative businesses make use of urban connectivity to operate in larger national and global arenas’, so that ‘urban areas still possess a major advantage … in the thickness and density of their communications infrastructures and ICT networks’.11 Sound familiar?

Perfect information? Before we dig any further into these ideas, however, we need to factor in another issue: geography doesn’t just alter the costs of moving ‘stuff’ around, it might actually alter your ability to know what your costs actually are! Here’s a mundane analogy: you’ve just arrived in a new city for a much-needed getaway and it’s time to head out for a romantic dinner with your partner, and you are the one charged with picking the venue. Time to panic? The ‘new city, new restaurant’ problem boils down to a lack of information: since we’ve never eaten anywhere here before, we don’t even know how to begin to narrow down the options for the evening.

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Uncertainty and risk In short, there’s a lot of uncertainty here: we don’t know what we don’t know! To overcome this uncertainty we make use of a range of strategies: we ask well-travelled friends for advice, we scour Tripadvisor reviews, we look for local specialties on the board, we scrutinize the menu for signs of too much choice as a proxy for ingredients that aren’t local or fresh, and we try to gauge the number of locals seated inside. Uncertainty is why an empty restaurant is almost invariably taken to be a bad sign even when the menu looks promising: we assume that everyone else has some crucial piece of information that we do not … but perhaps it’s just that you’re in Madrid and it’s only 7 pm so the evening rush hasn’t even begun! Now compare this uncertain environment to the effort of stopping off at your favourite curry house on the way home from work – depending on where you live, the sticker price may or may not be comparable to a restaurant overseas, but the latter should feel more costly because of the work that went into making a selection (and also, consequently, more rewarding if your choice pays off and the S.O. is pleased with your ingenuity). On our home turf we have all the data that we need to make an informed choice; we feel free to ignore all of those signals and head straight to the maître d’, who is readying a table and grabbing a bottle of our favourite wine. Let’s stick with the restaurant analogy for a little bit longer. Imagine that your favourite restaurant also has a bit of a volatile chef: on most days they’re fantastic but on some days, for whatever reason, the food is bland or even inedible. With repeat visits you can begin to work out the risk of getting a poor meal: 1-in-10; 1-in-20 … You may even begin to work out the early warning signs of an off-day or develop strategies to mitigate this risk, but you also know that when things are going well for the chef then you are certain to get a good meal. So, you decide what level of risk you are willing to run, apply the battle-tested strategy you’ve developed over repeated interactions, and make the call as to whether or not tonight is a good night for takeaway. In contrast, in that other city you have none of the data from which to calculate the degree of risk. Standing outside a completely unknown restaurant in a completely new city it is tabula rasa: the restaurant might be good and cheap, or it might be terrible and you will end up paying through the nose for the privilege. You have no way of calculating the odds because you have no prior experience to go on and, worse, it’s not as if choosing restaurants in New York necessarily prepares you in any meaningful way for choosing restaurants in Kowloon! You’re much more likely to settle on a restaurant that looks like something you are familiar and

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comfortable with: something in the generic ‘global high-end restaurant’ style perhaps?

Searching and experiencing If we hadn’t been charged with booking a romantic dinner (something special) and just needed some food, then we might even opt for something where the risks are well known. McDonald’s and Starbucks the world over are full of customers not because people necessarily think that they offer outstanding food at reasonable prices but because they are predictable: there is no need to worry that your coffee will be undrinkable or that your children will refuse to eat what you’ve just ordered and scream the house down! Choices feel riskier when we are worried about what we might miss out on or what might go wrong. For most people, dining out is about the experience: choosing Mexican over Lebanese is not usually a choice about calories, so how do we know which will be most pleasurable until we’ve gone and done it? In contrast, choosing one bookshop over another changes neither the content of the book nor the experience of reading it. At the most basic level, assuming that I know what book I want to read, then buying one boils down to undertaking a straightforward search in order to find the provider best able to meet my fairly clear-cut requirements of availability and price. If I choose to pay more for a copy from the bookshop instead of buying from Amazon then that is because I have added a few dashes of convenience or preference to the mix: I want it right now, or I want to ensure that my local shop continues to function as a business because I appreciate their coffee shop and enjoy the serendipity of browsing the shelves. So, a search ‘good’ is one where it is easy to compare features – increasingly, thanks to technology this can be done remotely and in advance – while an experience ‘good’ is one whose quality can only be assessed after the fact. Higher education is often considered the archetypal experience good because you will (in the USA and the UK at least) be expected to fork out upwards of $60,000 without having any certainty that ‘you’ll get what you paid for’. Indeed, while we can probably all agree that a car that doesn’t work is a waste of money, students – and their parents – may well disagree with administrators or professors rather violently as to whether money spent on a degree was ‘wasted’ because they have interpreted the ‘point’ of a university education rather differently. The distinction between ‘search’ and ‘experience’ maps therefore nicely onto a way of thinking about markets that looks rather different from the

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one normally used by macro-economists. In place of a singular market with perfectly transparent information, we have markets that are more or less opaque.12 At the book-buying end, the market is easy to search – we could call it ‘transparent’ – since the competing offers are readily compared and the best one selected. At the restaurant-in-a-foreign-country end, we are no longer sure how to recognize a good deal, even if it’s staring us in the face. The market has become ‘opaque’ and we can only gauge the success of our choice after the fact through the experience of consuming it.

Mitigating uncertainty We have always employed strategies to try to mitigate uncertainty in markets. We look for signals that a restaurant is good or bad, or we abdicate this decision to an expert such as a local guide or a tour book in the hope that they will balance the benefits of providing tourists with recommendations that they will trust again in the future against the shortterm benefits to be gained by steering groups to a favoured business partner in exchange for a ‘finder’s fee’. These strategies might be a bit hit-or-miss, but they reduced the burden of that horrifying uncertainty that led you to wander almost aimlessly, and increasingly hungrily, around the centre of town trying to make a choice. Or maybe that was just us? Of course, nowadays we use technology to augment this process. TripAdvisor is probably the best-known web resource for today’s traveller, although there is no shortage of competitors, offering insights from other diners filtered by nationality, type of traveller (single, older couple, budget conscious …), the value of their reviews to other travellers, or any number of other selection criteria. In other words, technology has been used to transform the restaurant market: where once it was largely opaque to our frantic searching, now a little more light has been cast on the process. Yes, it’s all still potentially quite uncertain, but a lot less so than it was 30 years ago! All of that new information isn’t always an unalloyed good. Again, evidence from behavioural economics and psychology suggests that we can also suffer from ‘cognitive fatigue’ and may manage to make worse choices when asked to make too many decisions, or cope with too much data. It’s that sinking feeling when a query returns 180 restaurants matching your search criteria, made worse by the requirement to choose between fundamentally different and incomparable options. Quick: would you prefer expensive Italian with exquisite service, or a cheap-and-cheerful burrito? In the absence of a clear reason to go one way or the other, we’ll usually fall back on a mix of shortcuts and signals: a recognisable brand name, personal recommendation, or the ‘wisdom of crowds’.

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Mitigating risk Even after you’ve read the signs as best you can, there is still obviously an element of risk to each decision. So, for travelling in Andalucía, Spain, we propose the ‘gazpacho test’: after making the best restaurant choice that you can based on the available signals, order only the gazpacho; if the soup is bland and puréed to within an inch of its life then cut your losses and walk away, but if it’s spicy and chunky, then it’s time to look at the mains! That morsel of information (sorry) helps us to narrow down the likelihood of making a bad choice quite substantially; a mistake is still possible, but it’s much less likely. We can use data to work the market more effectively. A well-loved – by economists – case-study of the effect of data on markets and risk comes from north Kerala.13 Economists don’t often get the chance to test their theories in the wild, but a project involving donated mobile phones and fishermen offered just such an opportunity. Prior to the availability of mobile phones, fishermen had to make a guess about which port would offer the best market for their catch. If most of them picked the same port then one market would have a glut of fish, and prices would fall accordingly, while customers elsewhere would be left clamouring for stock and the one or two lucky fishermen who had bucked the trend would make a mint. Local fish markets had previously been inaccessible (i.e.  ‘opaque’) while the fishermen were at sea, but thanks to their new mobile phones they could access pricing data to work out which port was offering the best deal. So, ICT allowed the ‘producers’ of fish to call ahead – not, incidentally, without creating the need for market middlemen who offered a pricing service (pace Jane Jacobs and her ideas on urbanization; see p  12) – and figure out where they could make the most money. Seemingly paradoxically, over the course of the study the average market price for fish in some locations fell by 4 per cent, but average profits perfisherman rose by 8 per cent because better information meant that the risk of ‘feast or famine’ fell dramatically.

Opacity and transparency What mobile technology achieves in the example above is making the market that little bit more transparent by reducing the effects of distance and allowing what we were once separate markets to begin to operate as a single, larger one. Platform aggregators like TripAdvisor – or Uber, for that matter – achieve largely the same thing in their own areas of

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operations and there are plenty of business-to-business examples of the same approach to shaping markets through data. The key takeaway, though, is that transparency and opacity are not necessarily innate to markets: we can often use technology to transform the market. Of course, some markets have features that make it less likely that we can use technology to make links and close information gaps. Persistently opaque markets, such as patents, are going to be hard to navigate for people not immersed in them on a daily basis, so having some kind of trusted advisor will be much more important here than in a more transparent market like the one for books. This advisory position is critical in the former because knowledge of the real risks is going to be quite poorly distributed and so we’ll rely on our advisor to assess the situation. We can connect opacity back to the idea of range introduced above: search goods can be sold over larger distances because information is more readily distributed across large distances (the Sears catalogue or Amazon), while experience goods are nearly impossible to assess from a distance except through indirect, and often poor quality, proxies. Consequently, we can start to connect each type of market to a spatial scale and predict the impact of ICT upon them: transparent goods and services will tend to see greater effects from the introduction of technology because they enable large operators to take advantage of greater scale in the market, while opaque products will generally remain local creatures relying on highly specific, often untraded (or only traded for a drink), information to manage risk.

Why distance matters So, ICT helps some markets to become more transparent and, consequently, less impacted by spatial effects. Once again, this is a new version of an older story, and it is why the ‘this time it’s different’ brigade need to pay more attention to their history books. The introduction of the telegraph already showed us how changes to the transparency of markets played out in the 19th century. Here, the telegraph network had spread out across the Eastern Seaboard, and in particular along the Erie Canal and towards Chicago, with New York City playing a central role as the place where goods and information were gathered from across America and transmitted into global relationships … even if market-making news could still then take more than a week to cross the Atlantic by steamer ship. The arrival of the undersea telegraph cables radically changed all this, with messages now taking just 24 hours to be relayed to anywhere in the

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world served by a submarine or overland link. The demand for better communication was enormous: the first reliable link, between County Kerry and Newfoundland in 1866, did £1,000-worth of business – roughly £60,000 in today’s terms – on 28 July, its first day of operation. Unsurprisingly, brokers and speculators were the first to make ‘early and avid use’ of the telegraph because it ‘allowed small time delays to be exploited … for profit, by entrepreneurial capitalists’.14 The ability to relay information quickly and easily across the country provided an important impetus to the centralization of commodities and securities markets; indeed, the scale of today’s Wall Street owes a great deal to the impact of the telegraph in the period between 1850 and 1880.15 The increased circulation of pricing information made it more efficient (and competitively advantageous) for traders to exploit New York’s position as an entrepôt for goods and information. So, even though it should have enabled businesses to leave New York and use the telegraph to stay in touch, it wound up cementing New York’s advantages over the other cities of the Eastern Seaboard: because telegraph operators went where the money was, the benefits of ‘being there’ were reinforced by the new technology. Even as the markets became more transparent, unevenness in the transportation and communications networks tipped the scales towards the places where small advantages already existed. Economic geographers would call this ‘path dependency’. The newly transparent markets enabled by the telegraph did stimulate increases in scale: Gloria Steinwender of MIT studied the effects of the shift from an era when mail steamships took between 7 and 15 days to move information between the USA and Great Britain, to the brave new world where the transatlantic cable reduced this delay to a single day. Her research suggests that ‘the efficiency gain from the telegraph [was] 8 percent of the annual export value of American cotton’.16 And the increased visibility of buyers and sellers tends to encourage an increasing concentration in an ever-smaller number of entrepôts. The New York steamers may still have been headed for Liverpool or Southampton, but thanks to the telegraph their data could now be relayed nearly instantly to London, where it could be integrated with other inputs into actionable intelligence. Because of the concentration of firms in London already using this data, the City grew, even though the declining importance of geographical distance would have suggested that it shouldn’t have done. The ‘ubiquity’ of information here leads to the concentration, not dispersal, of a transparent market because other costs and constraints have become relatively more important. Inserting space into our understanding of markets complicates everything.

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Signalling in uncertain markets By this point it should be clear that transparent markets are ultimately about the wide distribution of information: we can probably all agree, on any given day, that the Dow went up and the FTSE down. Opaque markets, therefore, have something else going on: the distribution of information is narrow and not public. In other word, information is asymmetrically distributed. Typically, it will be the buyers who are in doubt as to whether they are making the right choice because only the sellers know – we hope – whether what they are selling is ‘worth it’. Consequently, a lot hinges on our ability to read the signs that point towards a good- or poor-quality product and, as we’ve seen, distance can make things much, much worse because it makes it that much harder to read them clearly. University degrees remain an especially good example of how signals work in fundamentally opaque ‘markets’ built around an experience good. Whether you think the value of higher education lies in broadening the mind, learning to think critically or just landing a good job afterwards, the value of that education is only accessible after you’ve paid for the privilege. So how do you make the ‘right’ choice? For many, the reputation of the Ivy League or Oxbridge universities stands in for all of the uncertainties about the quality of teaching, the direction of study, and the career prospects afterwards. Yes, those universities are expensive, but that cost can be oddly reassuring: very few people go around boasting about how cheap their college degree was because we all tend to assume that this means it couldn’t possibly have been very good. The benefits of those good/expensive universities carry on well after we graduate: the degree itself becomes a signal that helps us in an uncertain market. Given a stack of applicant CVs from recent graduates, a good degree in any subject from a top-ranked university can seem like a safer choice than a more relevant degree from a lower-ranked one because we tend to assume that the applicant from the ‘good’ university is more motivated, skilled and intelligent than their equivalent from a ‘lesser’ one. It doesn’t matter whether this is an accurate portrayal of Ivy League or Russell Group graduates, it helps to be able to draw on a good ‘brand’ to give potential customers confidence that we can deliver.

What signal does your office send? In much the same way, office location can be used to signal quality and credibility in opaque markets. Some neighbourhoods are desirable to

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businesses not because of the network access that they offer – though that may be part of the picture – but just because they confer ‘prestige’. There was a time when Soho (and SoHo) were good places to have an advertising office because they were affordable and you were close to useful people in the film and printing industries already established there. As the concentration of agencies increased, however, Soho (and SoHo) became shorthand for creativity, and an office there signalled to potential clients that you were part of the ‘it’ crowd. Today, with astronomical rents, the signal is much more straightforward: only big, profitable agencies are based there because only they can afford to be! Of course, a brand new agency of ambitious creatives can’t afford those rents, so they break away to go looking for somewhere with a good ‘vibe’ and lower rents, and hitherto-unheard-of Hoxton becomes the newly signifying address for clients seeking a certain ‘edge’ in their campaigns. As well, because the new agencies are staffed by younger creatives who are more comfortable with technology, you start to get cross-pollination down at the pub with the technology people spinning out of Old Street and the City of London, and an ad-tech industry comfortable with mobile and data is born. The tendency towards clustering together in a few ‘signifying’ locations is especially strong in the cultural industries where both the inputs (good people) and the outputs (this season’s hit) are fundamentally uncertain: for every hit record there are dozens of ‘duds’ that were no cheaper to produce, and for every blockbuster film there are many ‘straight to video’ releases and an even larger number that never made it out of post-production. So, geography becomes a shortcut for quality, and it’s why we speak of West End theatre, Broadway shows, Parisian dining and Hollywood movies. Like an engagement ring, the choice of office location may have no technical function but may nonetheless send out helpful (or hopeful) messages about status.

Buzz as market signal Of course, having a Hollywood address is really just the ‘price of admission’: it says you’re serious … on paper at least. So that’s a good signal for any wannabe director or scriptwriter to send, but the benefits of that location go deeper than an address on a business card when uncertainty and opacity is the name of the game: no one is quite sure what alchemy makes a great film happen, but it’s clear that at its heart it is about finding the right group of people, at the right time, to collaborate on the right project. And if your favourite cinematographer or editor

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isn’t available for your next shoot, then by far the most effective way to find the right person in an environment as uncertain as the film industry is ‘networking’. As much as actors, producers and designers might all like a good party, those schmooze-a-thons wouldn’t have survived as a way of doing business if they weren’t delivering. Parties – events, if you prefer – are not only a good way to see and be seen,17 they are a great way to put the word out that you’re looking for a new project, or to talk to some potential candidates about a project that you’re putting together. If you would trust the word of a friend or knowledgeable traveller over the recommendations of a travel website, how much more importance would you attach to the recommendation of a well-known director as to who was easy to work with and who was a pain, who had the great ideas that saved a film, and whose antics nearly destroyed it? So, we can also use our social networks to perform those all-important signalling and screening tasks, but the cumulative impact of all of that ‘hot gossip’ is a kind of distributed knowledge about other members of the group. If I hear from one person about a screenwriter who did a great job on a film, then I might file that away for the future, but if I get that same data from several people involved in different projects then that is ‘buzz’. Against the unpredictability of the market for blockbusters, the buzz surrounding ‘good people’ is one way to reduce – by just a little bit – the enormous risks attached to the investment made by producers in a film property.18 The examples from New York City, from Silicon Valley and from Hollywood show how the geography of interaction is important: buzz operates within a kind of ‘ecology’ created when people and firms in the same (or related) industries are in more or less constant contact with each other.19 When participants are ‘surrounded by a concoction of rumours, impressions, recommendations, trade folklore and strategic misinformation’,20 then the resulting swirl of information generates an almost unconscious awareness of who is working on what, who has landed a major new client and who is tipped for a prestigious award. We use this buzz to develop judgement in opaque markets where both uncertainty and its financial consequences are high. We think it’s this judgement dimension to complex situations that lies at the core of what ‘buzz’ contributes to economic activity. Judgement isn’t necessarily about ‘trust’ in others or in what they’re saying – they may all still be gossipy, back-stabbing jerks – but about the ‘confidence’ that, if enough other people say someone is a good director, then it’s more likely that they will come through for us when the chips are down. Buzz can therefore play an important role in

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whether or not deals are done, and it impacts on how people identify the players in the first place. To succeed, however, the social network must be both small enough that members who fail to deliver can be excluded – the ‘you’ll never work in this town again’ stick – and costly enough that only the best will bother – the ‘if you can make it here …’ carrot. Being in the same city, and the same neighbourhood even, lowers the cost of finding and meeting the players, and of judging their abilities in person. We actually think that ‘noise’ might be a better term for what’s going on because it highlights the extent to which this process is going on in the background all the time. ICT can, of course, have an effect here too. For academics, Twitter has become a useful way to keep with what is going on in your field; who is writing on which topics; what new methods are reshaping the field … By itself it’s a fairly passive ‘scanning’, but in creating a contextual awareness of what is going on it provides the foundation on which collaborations and conferences are built. There’s even been work on how blogging in the cultural sector has had a similar effect,21 though it’s worth noting that here too this is about finding the right people, not dealing with them.

What this all means for cities It’s apparent that choices in markets are much more complex and costly than conventional economics has tended to assume with its magical thinking ‘that producers and consumers had perfect information about the choices open to them: the services they could consume and how, the changing nature of markets and organisations and legal, technological and regulatory developments’.22 This book is predicated on the idea that doing business is difficult for all firms, but that the exact nature of those difficulties varies from firm to firm, and from sector to sector. To add to the complexity of the locational dimension, we argued that not only does distance affect the actual cost of goods and services, it also affects a business’s ability to determine what they should cost in the first place. In short, distance introduces both risk and uncertainty – which are not the same thing – into the heart of the firm and its market choices. And since distance affects our ability to make informed decisions about the value of products or services, there is little reason to assume that information is distributed symmetrically in most, or indeed any, markets. Simply by adding the distinction between search and experience goods to the mix we can begin to see why 21st-century competition might

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look very different to a bookseller or to a consultancy, to a theatre or to a video games designer. So, distance, transparent markets and search goods – whether books or steel – will tend to go together, and proximity, opaque markets and experience goods – legal advice or blockbusters – will tend to coincide as well. This obviously isn’t a hard-and-fast rule: dining out is an experience good, but it’s in a market made a little more transparent by technology, whereas an aeroplane is clearly a search good, but in a market that is undoubtedly fairly opaque. But, for cities, such a perspective nonetheless suggests some key takeaways which we can summarize and illustrate in turn.

Weight and ubiquity Earlier, we introduced the concept of a ubiquity as a core idea in thinking about the interrelated impact of ICT and information on firms and markets. When an input is everywhere, businesses’ constraints and choices change. As The Economist remarked in 2010, ‘data are becoming the new raw material of business: an economic input on a par with capital and labour’.23 But how that input is deployed varies markedly: for firms in markets where the best route to profits arises through economies of scale – those in manufacturing and call centres, for instance – information has the characteristic of a ubiquity thanks to the role of telecommunications in rendering the market transparent. In these sectors there is little purpose to remaining in high-cost centres such as large Western urban areas unless a specific labour dependency arises. But some information-oriented goods and services defy easy categorization as ubiquities, and continue to display features consistent with their being a localized input – as if they had the ‘weight’ of coal or iron ore. This finding turns out to mesh rather well with the difference between search goods with readily identifiable and measurable characteristics, and experience goods without such readily determined features. This distinction highlights the fact that there are real costs to searching for, and gathering, information, and that these are not (and never will be) zero.24 These findings help us to understand why even ostensibly footloose internet businesses are ‘rarely as flexible as imagined’25: they are constrained by the need to access skilled labour, the need to access clients, the need to coordinate activity (both in the market and internally) and the need to keep track of what all of this means for the bottom line. In short, it’s all relative: if one of your costs drops to zero that only tends to make the remaining ones look even more important!

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The value of rare skills We’ve seen, too, how the ‘weight’ of labour in locational choices is partly about skills in increasingly specialized markets, and partly about a critical mass in the labour market. It’s therefore important to remember the extent to which the traditional factors – labour and transport – still play a vital role in locational decisions. A survey by the economic geographer Ian Gordon,26 albeit from 1996, found that firms’ highest-rated locational factors were all accessibility related and primarily to do with the rail network and major airports. Next came the availability of labour, with the relative importance of white- and blue-collar workers varying with the nature of the work to be done, but with the availability of white-collar labour within the catchment area being more important than its cost. Premises are also important, but typically ranked below labour in terms of both cost and availability. Richard Darbéra’s 1995 analysis27 of ‘effective labour markets’ in London and Paris explored the relationship between a city’s labour offering and its access offering. He found that not only is Paris somewhat denser than London (both in terms of jobs and population), it has a much more effective transport system (rail and road). As a result, employers can access more staff within a 60-minute travel-time radius, and prospective employees can reach more jobs. The urban system thus works more efficiently and thus becomes more competitive because it gets more output for less wage/time cost, either because London employers cannot hire all the skilled staff they need, or because they can only do so at extra (salary) cost. In other words, Paris is cheaper for the same level of service. The availability of labour might seem obvious, but it is not always clear that policy-makers grasp this basic constraint.28

Information access: opacity and transparency The most information-dependent markets are the most opaque ones. Where there is a lot of uncertainty and risk, there is an endless chasing after good judgement and relevant experience. Perhaps the best example of firms operating in an opaque market, where every transaction is bespoke, are the rising hedge and venture capital (VC) funds. Both industries need to work closely with the firms in which they take a stake, and the costs of monitoring their investments are such that they will tend to take a position in firms to which they have ready access, or with which they have some form of prior relationship. How else to explain their willingness to invest in serial entrepreneurs, even ones who have presided over serial failures?

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Or the tendency of hedge funds to install a ‘turnaround’ team already well known to them, even if the team is operating in an entirely new sector. Yes, it’s about business fundamentals, but it’s also about confidence. It has long been thought that distance affects VC firms’ behaviour in two ways: in the diffusion of knowledge about opportunity, and in the transaction costs associated with monitoring and supervizing the investment. But it’s also important not to overlook the idea that for them, market ‘size’ is really an issue of accessibility. In other words, VC firms are likely to choose the sites where they can reach the greatest number of firms with the least amount of effort. If the density of entrepreneurs is low – as it would be for a VC firm that specializes in a particular subcategory of firms, say pharmaceuticals – and the exact location of successful new firms is difficult to predict – as it would be in view of the number of start-ups that fail – then it would be wise to choose a location with the lowest average travel cost. As a result, it is hardly surprising to find that VC firms are predominantly urban creatures, but that they are not necessarily tied to the old bank headquarters in New York or Boston. A VC firm might be based in Silicon Valley, but it could operate almost as easily out of Salt Lake City (SLC): it’s urban; it has good connections to the East and West Coasts; it has a deep (if much less well-known) start-up culture, and with it, a certain quality of life. SLC might not be the default choice, but it’s also not a ‘way out there’ decision that might call into question the fund’s judgement. In London, too, amenity plays a role for both the labour pool and the client pool: one story – probably apocryphal – related to us by a fund manager suggests that one of the first hedge funds to arrive in London chose Mayfair because ‘the [fund] manager’s wife liked the shopping in the area’.

Signalling and buzz In opaque markets, uncertainty concentrates businesses in the neverending quest for market intelligence. Perhaps no market displays the importance of these risk-minimizing strategies more strongly than the creative-cultural sector, which often combines many different strands of work (research, production and marketing, for instance) and relies on what Elizabeth Currid-Halkett called the ‘motley crew’ of collaborators. Because cultural products are also consumed socially – hence, as CurridHalkett noted, the importance of what designers hear and singers wear29 – they are susceptible to unpredictable ‘network effects’. This is a sector where ‘nobody knows’ which products will succeed: in the movie

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industry, for instance, you see huge, studio-destroying financial exposures (= risk) combined with the ever-present ‘creative differences’ emerging midway through a shoot (= uncertainty). Location (‘being there’) matters for a lot of this type of interaction, and it matters as much for the buzz as it does for the signalling. Cultural products send signals, but the place-specific characteristics of culture also create effective, defensible ways for firms to differentiate products in a competitive environment. A few places acquire such durable reputations for distinctiveness and quality that copies from another location are still considered to be imperfect substitutes. Even without the institutionalization of an ‘appellation contrôlée’ (Champagne, Speyside malts), ‘Paris fashion’ and ‘Hollywood movies’ are by now century-long markers of distinctiveness. Of course, over time these effects may weaken as new artistic and cultural trends emerge, but the most competitive sites build up such a stock of social (professional and educational networks) and physical (production studios, soundstages, and so on) capital as to become almost impossible to copy from scratch: ‘London’s universities and fashion institutes are where future designers first form networks that endure through most of their careers. Fashion designers continually used their former educational institutions as an innovation community and networking hub’.30

None of this is inevitable The shift from manufacturing to services is a long-established feature of modern economies and cities, but here again information technology is shaping trends in new ways. Some service activities are under intense pressure (when did you last step into a travel agency?), and some manufacturing may now be efficient enough, especially with automation/ artificial intelligence (AI), to compete for locations against what has traditionally been seen as higher-value activity. Alongside this there has been huge expansion in ‘storage’ activity of all kinds: from server farms to giant logistics warehouses, cities are changing in ways that are not just an endless continuation of 20th-century trends. Even in very opaque markets, existing patterns cannot be taken for granted, as technological change and the ubiquity of information bite. A striking counter-example where a cultural sector has moved away from the concentration and the buzz in city-centre locations is offered by the newspaper industry. Our 1926 correspondent R.M. Haig, quoted earlier, asserted – surely uncontroversially until the 1980s – that newspaper printing needed to be centrally located because ‘a central location is

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convenient from the point of view of the assembly of the news’.31 The Front Page (1974, but set in the 1920s)32 has it as a classic centre-city activity, intrinsically embedded in that milieu, with presses roaring away at the back of the downtown block. Over time, technological change has altered these requirements dramatically: the presses themselves have been moved to cheaper locations (London’s Docklands; New Jersey), leaving the reporters and management downtown. But today, even the writers of (basic) news no longer really need to be based in Midtown Manhattan, New York, or in the heart of Central London. Those who summarize the main events of the day – Dow Jones Industrial Averages and the biggest winners and losers on the market – may well be located in India rather than one floor down! Newspapers’ London offices are dotted about the outer edge of the central area: King’s Cross, Kensington High Street, Canary Wharf, London Bridge, Victoria, and they are definitely not co-located. On Fleet Street the great press flagships like the Daily Express’s Art Deco delight and the Daily Telegraph’s ‘Neo-Graeco-Egyptian’ pile now house merchant banks, and five centuries of tradition since Wynkyn de Worde established his printing press ‘at the sign of the Sun’ around 1500 have petered out.

Scale of city, type of market In thinking about ‘what this all means for cities’, we can draw some more on the economic geography of Lösch, and the controversial Christaller,33 to help us think about the trade-offs between travel and communications in a digital era. Christaller’s central place is set both in a hinterland for which it serves as the central node, and in complex relationships with other central places both bigger and smaller. Transport determines the degree of specialization that each can support through its centrality on the network, and thus where each central place sits within the hierarchy of towns and cities which surround it. Technology tends to make markets bigger when it makes them more transparent. So, up to a point, the ‘flattening’ power of ICT actually favours the biggest central places since they allow us to assemble the inputs most efficiently. But if you are in a completely transparent market and can use ICT to find and buy everything that you need then there is little point in remaining in high-cost locations (such as large urban cores) unless there is a specific, often subtle, reason to do so. In effect, these firms can exploit the advantages of logistics and ICT to become much more footloose and fancy free. They might not leave the metro area, but they are much less likely to continue paying the rents and congestion costs of the CBD.

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Meanwhile, firms operating in opaque markets still find that uncertainty rules, and in such cases information is often deeply local and potentially distributed across a large number of actors: hedge funds, set designers, re-insurers and art directors have to grapple with the particularities of each client’s business, product lines and culture(s) in order to deliver value for money. Here, firms are more likely to benefit from concentration in order to be ‘available’ (whether physically or virtually) quickly and, ideally, cheaply. Note too that here ‘cheap’ has the all-important wider utility connotations: as we’ve said before, a major city is not a cheap place to be, but from such a place you can reach out anywhere in the country, or around the world, far more quickly than you could from a low-cost but poorly integrated rural site. In a market economy, this is most clearly expressed in land values, raising the inevitable question of why the willingness of firms to pay exorbitant central city rents varies so greatly at a time when so many suburban sites offer a cheaper base of operations. And the variation is enormous. In the next chapter we’ll see why so much of this is about ‘bespokeness’ – everything from suits to futures contracts are easier to customize when you’re in the city. But ICT keeps eating away at the stuff that is ‘too hard’ for mass production, and it keeps making what used to be ‘bespoke’ into something that can be mass-customized as part of a routine. And AI is likely to take this to a new level by accelerating the ‘rise of the machines’ that do what used to be done by people. In the next chapter, we expand the thinking about businesses and the kinds of markets they operate in, to look at how companies organize themselves – internally and across space – and at the nature of their transactions. We consider the role of ICT in changing the choices firms make about their organization, their deals and their interactions with each other. What might those changes mean for cities? We look, in particular, at why some firms, some activities, some markets, are still clustered together in specific and often costly locations, despite the freedom that technology would appear to offer them to choose places where rents are lower, labour costs less, and congestion is a question of five minutes at five o’clock rather than all day every day.

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Doing Deals We cannot … regard the conditions of supply by an individual producer as typical of those which govern the general supply in a market. … Thus the history of the individual firm cannot be made into the history of an industry any more than the history of an individual man can be made into the history of mankind. Alfred Marshall, Principles of Economics, 18901

The art of the deal? This chapter turns the focus to transactions: the where and who of ‘doing deals’, and how they shape choices about which locations are more or less desirable for a new office, shop or plant. Donald Trump (or his ghost-writer) said: ‘I don’t do it for the money  … I do it to do it. Deals are my art form. Other people paint beautifully on canvas or write wonderful poetry. I like making deals, preferably big deals. That’s how I get my kicks.’2 Well, it’s a bit more complex than that. We unpick the costs of those choices and how a deal is shaped by how much a business’s transactions are standardized or one-offs, and what this imposes in terms of search costs around each transaction. We home in on the fact that even though ICT is shifting the boundaries of these choices, face-to-face interactions can still make or break a deal. If you are regularly ‘betting the firm’ – especially in fast-moving, highly unpredictable industries – then the informational advantages that you gain from being in central places and being able to meet a wide range of collaborators and competitors can outweigh the obvious costs of, for instance, city-centre congestion.

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Businesses do not, of course, experience markets or engage in transactions in quite the same way as a household, and this chapter helps us to get to grips with what this means for how companies organize themselves across space and what that might mean for cities. We think that adding a focus on transactions to what we covered about markets in the preceding chapter helps to explain why firms in some sectors continue to cluster together in a few square miles even though there are obvious advantages to moving to smaller, less congested towns with cheaper labour. We also think that technology has an important role to play in the extent to which firms remain subject to these same old rules! Factors such as the access that the networks can offer, and the nature of the markets that firms are operating in, drive their choices along the axis of centralization versus dispersal. We relate these choices to the perception, and the reality, that even in a digital age, many of them still can’t, or daren’t, operate without face-to-face contact.

Different ways to ‘seal the deal’ Unless you’re reading this having just returned from the stationers or are serious about writing utensils, chances are that you don’t have a vivid memory of the last time you bought a pen or a notepad, but you do have a clear memory of the last time you put down the deposit on a home. You remember the property transaction because it combined a number of features that made it memorable: (1) the amount of money on the line was significant for you; (2) you don’t do this kind of thing every week, or even every month or year; (3) you did a good deal of research before making your purchase; and (4) you continue to worry that it will all be worth it. Once again, we need to look past the amount of money spent and think about how we experience all of the ancillary time and effort costs, as well as the ongoing stress arising from the uncertainty over whether we’ve made the right decision … So in much the same way as the type of market shapes the way that you perceive and experience costs, so does the type of transaction: buying things that are standardized and cheap differs in fundamental ways from buying things that are bespoke and expensive. And, as in the preceding chapter, although the key takeaway is that geography makes all of this harder – unevenly and, sometimes, unpredictably so – we can explore the implications for cities through some decidedly unglamorous and non-‘techie’ examples. There are four aspects of ‘sealing the deal’ that we can use to tease out the kinds of choices that a business will be making for different sorts of transactions and different levels of uncertainty.

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(1) Scale and intensity Let’s start by focusing on pens and paper, but at scale. Although large companies may spend quite a lot on stationery over the course of a year, it’s probably far below what they spend on staff and office space. And the value of a single stationery order is smaller still, so the benefits to be gained from shopping around before placing each stapler or pencil order are negligible. Far better to bundle all of your future stationery orders into a single contract for supplies and then basically forget about it. You might just about get around to reviewing your contract every year to satisfy yourself that you’re still getting reasonable value for money, but what is the risk that, after having done basic due diligence, you fail to receive functioning pens or usable paper? Not only that, but it is also fairly easy in this scenario for you to adjust your ordering of paper if you need more one year, and less the year after. This kind of aggregate transaction also helps to mitigate the challenge that would be posed by the intensity of ordering: lots of staff need stationery supplies, do you want to order them one at a time? If so, pretty soon you’ll need an entire office just to cope! The relatively low risk of failure means that companies can benefit both from greater scale (bundling orders together into quite substantial transactions) and lower intensity (managing away the costs of the ordering process for hundreds of products for a multinational company). So, scale and intensity interact to impact the managerial ‘overhead’ of transactions: if you can simultaneously increase scale and reduce intensity then you are sitting on efficiency gains, whereas if increasing scale simply increases intensity, you are looking at a pretty challenging route to further growth. (2) Standardization and stability Where there is volume, there is often going to be standardization: who would use a stationer that required you to order pens by calling one number, and paper by ringing another … with different extensions to ring for A4 and Letter? Or would you be happy with a firm that shipped you whatever paper size happened to be in stock that day? Standardization goes hand in hand with stability: stationers can count on a fairly predictable level of demand and low level of churn among their customers because it is likely that the clients will only review the relationship on a periodic basis – so our stationer isn’t going to end up with a warehouse full of unsaleable blank A4 sheets, and the customer can be fairly confident that when they need paper they’ll be able to get it in short order. The conjunction of stability and standardization gives a significant advantage to the biggest incumbents since we’re unlikely to switch regularly (who would really want to spend time comparing pricing on business cards

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every time a new card order needed to be placed?), but it also yields low barriers to entry and exit since it’s fairly easy to find another stationer once we’ve decided it’s time for change. So, this is a high-volume, low-intensity transaction, and it occurs in a fairly transparent market to boot. There are benefits for both buyers and sellers to such stability, but it is premised on some degree of standardization: if you want custom stationery, then expect to pay a lot more for the privilege. Of course, technological change plays – as we’ll see again later – a critical role in defining ‘bespoke’: it wasn’t so very long ago that all printing was priced on a per-ink basis, but a lot of smaller orders are now just run off of what are essentially industrial-size laser printers, and anyone can have full-colour printing. (3) Search costs In the preceding chapter we discussed the grouping of products and services into search and experience goods, a distinction based on whether their benefits could be ascertained beforehand, or whether they could only be appreciated after you’d already shelled out your hard-earned money. Search costs are about the perceived level of effort that went into selecting the goods – the restaurant, the bookseller or the business collaborator – in the first place. These costs could be anything from background reading, to pre-tender meetings, to repeated sales calls or invitations to coffee. The really critical issue is that, where searches require face-to-face meetings, then the transactional costs mount very rapidly indeed: a sales call is bad enough, but if key members of the team are each losing one or two days to business travel then it had better be a big deal. While there is obviously a link between search goods and search costs, it should be obvious that experience goods nearly always have higher perceived search costs. In short, technology has lowered the search costs of search goods, but it may also make some things that previously worked like experience goods behave more like search goods. Our examples in the previous chapter were buying a novel from an online or a bricks-andmortar bookseller – a straightforward ‘search goods’ decision rendered even easier by technology – and choosing a restaurant in a foreign city – an ‘experience goods’ decision where technology has had a huge impact but still can’t promise you a good meal – and we see these issues playing out here as well. So, the overlapping terminology can be a bit confusing, but the search costs of a transaction can differ in any number of ways from the cost of a search good. (4) Implementation (experience) costs Does the cost of a transaction end with the taking of a decision or writing up of a purchase order? Not really, since there may be ongoing

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costs associated with ensuring that your selected business delivers on its promises. For something like stationery that is both relatively low cost and relatively low risk, we might not be too concerned with implementation costs: someone who fails to deliver paper and pens in a timely fashion will come to light long before the firm can fail as a result of this problem. Since these are repeat transactions, it is easy for the business to build up a picture of whether their partner is reliable and what degree of confidence they should have in the ongoing relationship. So, search costs may not be particularly high, given the size of the order, and implementation costs will be lower still. The implementation costs look very different when hiring a consultancy. Here, even if the actual monetary cost of the contract is low for the firm, there’s still a lot of uncertainty built into the deal: how do we know if the advice we are buying will be worth what we paid for it? There’s always a risk that the advice is worthless or, worse, actually destroys value! In other words, consultancy looks a lot like an experience good: we will only really know if it was a good deal after we’ve bought it. And to ensure that we have the ‘good’ experience that we want, we actually have to invest quite a lot of time monitoring the contract: on- and off-site activities, travel, demands on staff for documents and support …

Implications It should be obvious by now that all companies encounter a mix of different types of transactions: some things – stationery, accountancy services, equipment leasing – might be quite expensive but also quite easy to handle because they are predictable and stable; other purchases – business advice, another firm, a patent – are fundamentally uncertain in terms of their value. The costs of the latter are made worse by their essential lack of stability or standardization: each acquisition target is unique and poses its own risks (hidden liabilities, overly optimistic valuations, even fraud or other shenanigans). These interact with features like frequency (intensity) and long chains of dependencies (think just-intime manufacturing) to drive up costs for some types of transactions; and the baseline varies from sector to sector. So, where the nature of transactions points towards their posing a risk to the firm (or individual) then we’d expect to see the kinds of behaviours that we also linked to risk and uncertainty in markets in the preceding chapter. However, we can now refine this understanding by stressing that the pattern of transactions overlays the structure of the market: a market might be opaque and uncertain, but that doesn’t necessarily imply that the

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transactions within it are all equally risky. The patenting process might be fairly opaque to most of us, but obtaining a patent by hiring a good legal specialist isn’t necessarily particularly difficult, and it’s unlikely that it’s an activity in which many of us would engage every single day. Regardless, in dealing with uncertainty people do something that looks a lot like what we do when we are looking for a restaurant in a new town: they do their homework as best they can; they look for shortcuts – signals – such as a cultural ‘fit’ that reduces the likelihood of failure; and they bring reputation to the table (“Nobody ever got fired for hiring McKinsey”). But doing all of this is time-consuming and effort-intensive: the nature of the work involved is such that there are few returns to scale. To top it off, while firms in some sectors might only engage in these kinds of complex transactions once in a blue moon, for firms in other sectors this is what they do! So, the type of market in which a firm operates, and the pattern of transactions in which it engages, are constantly interacting with each other.

How firms respond Companies want to control costs and reduce uncertainty, and a standard way to do this has been to expand so that they have more control of the services they need … up to the trade-off point where the advantages of expansion start to be outweighed by the added costs of complexity. That trade-off point has shifted in a world where outsourcing is now a very common option, and where communications technologies offer new ways of maintaining control and damping down risk. Firms’ locational choices have shifted, too, as a result of these changes. We look next at how these patterns are playing out.

The boundary of the firm Placing transactions at the heart of the firm is nothing new; indeed, the ‘transaction cost’ school of thought holds that the size of the firm is linked to its need to manage risk. Clearly, some degree of uncertainty intrudes into every action undertaken by a firm – buying, selling, expanding and diversifying – because, as we’ve already seen, there are hidden costs to using the market for these activities: the cost of discovery; the overhead of negotiating; and the management of contracts. For simple goods and services – pens and paper, again – these are easily managed, but for something like good financial or legal advice these costs can very quickly add up.

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The firm can therefore try to control transaction costs both by internalizing the steps that are easy to integrate and don’t add much to the risks faced by the firm, or by internalizing the routine business processes that are most vulnerable to market failure. This boundary can, of course, shift over time or depending on the nature of the problem: an internal legal team to deal with human resources (HR) and contracts, an external legal team to work on your initial public offering (IPO). The issues associated with HR are fairly well-understood and routine, but most executives fear that outsourcing HR creates risks – teams whose incentives aren’t always aligned with your own and who might not ‘get’ your business – while the far more uncertain process of ‘going public’ is always going to be managed by external specialists because it is, by definition, not routine. The critical insight of one Ronald Coase, back in 1937, was that the size and growth of a firm is therefore a pretty good measure of how far it is willing to go to try to suppress – in the name of efficiency and risk management – the market for goods and services upon which it depends: ‘A firm will tend to expand until the costs of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction by means of an exchange on the open market.’3 That is, a firm will tend to grow if the cost of organizing transactions is low and if these costs increase slowly with the number of transactions; the firm will also tend to grow if size reduces the likelihood of ‘mistakes’ (the ‘risk’ element) or if the probability of a mistake only increases slowly with the number of transactions. So, the ‘boundary’ of the firm is determined by the point where the marginal benefits of internalization are offset by the marginal dis-benefits of expansion. Another way to put it is this: where the risks are very low or very high, then it might well be a good idea to try to take control of both sides of a deal. The former can help you to grow the business, and the latter comes into play if the board is worried about being unable to buy good, unbiased advice on the open market: then it makes sense to ‘internalize’ this transaction by expanding the company to provide that service to other departments even if that expansion causes new headaches in terms of management and coordination. And you keep growing the firm until the accumulating headaches exceed the gains to be made from reducing risks.

The firm as a ‘network of functions’ Of course, this is the firm conceived of as a single entity, but modern businesses don’t just internalize transactions, they can also externalize

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them: opting to outsource some part of their ‘non-core’ activities – cleaning, equipment management or book-keeping, for instance – to a service or agency that might save them money through scale and specialization. The firm therefore ceases to be the ‘atomic’ entity of neoclassical economics and looks a lot more like a network of functions – management, manufacturing, research and development (R&D) … – that can be acquired or shed as business logic (or executive vanity) dictates. And since both uncertainty and risk profile differ from sector to sector, the point where these trade-offs emerge varies … along with the shape of the firm. Technology reduces the risk of coordination failure for low-risk transactions, permitting outsourcing at scale even though, as we’ve seen elsewhere, this can introduce other, unexpected problems. So although Apple could buy and operate its own foundry so as to reduce its exposure to a global supply crunch in high-end steel or aluminium, that would be both costly and risky because now the firm has to cope with a host of distractions from the job of designing new phones and computers, not least the risk that metal ceases to be integral to their products. Compare this with the risks of outsourcing the iOS software that runs their tablets and phones: having tens of thousands of pieces of hardware ready to ship but nothing to run them might well have terminal implications.

The impact of technology So, if the question is ‘Where is technology in all of this?’, the answer is: ‘Everywhere’. It’s in the search costs of the transaction and in the experiential overheads of monitoring and coordination. It’s also in our ability to standardize and integrate what might once have been seen as separate types of transactions (from ‘any colour you want as long as it’s black’ to ‘use our website to customize any of 125 different options’). However, whereas the impact of technology on the auto industry is unrelenting, it’s harder to see how automation and ICT will have quite the same impact on the consulting industry: is visiting McKinsey’s website enough to convince you to buy their business advice? Is there a Compare-the-Consultant website that allows us to input a few high-level parameters about your requirements and get contract pricing back in a few milliseconds? Would we be very happy with an expensive consultant who only interacted via email, never set foot in the office, regarded faceto-face contact as beneath their pay grade? Of course, even for producers and consumers of search goods in transparent markets, there may nonetheless need to be a concentration

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of ‘those whose job it is to coordinate dispersed activities and the plethora of information pouring in from diverse settings’4. In other words, the head office isn’t going away any time soon, but there is no need for each and every business task to be performed in the same place in order for them to be performed efficiently. Thanks to email, video conferencing, reporting requirements and business travel we may feel that can keep a close eye on what the research labs are getting up to without needing to have them in the same building! Indeed, a little distance can sometimes be a good thing.5 That opens up new possibilities for managing the firm: we might be willing to accept higher coordination overheads for research if it means that we can save on property and staffing costs. Conversely, we might also shift a small number of key workers to the city centre if it lowers the cost of procuring the best business development advice through close working with the consultants. As we’ll see in Chapter 6, our Central London interviewees spend a high proportion of their work time on intra-firm contact and coordination, often face-to-face, and the tension between keeping teams together and saving costs by dividing them is constantly in play. Logically, the capacity of technology to transform business structures is likely to be particularly important in those areas involving intensive working across both inter-firm and intra-firm boundaries because it increases our ability to coordinate-at-a-distance, although those effects will be circumscribed by the complexity of what is being bought or sold. To put this in more concrete terms: the ‘McKinsey Way’ has long been part of that company’s brand, but it is also a way to manage the transaction costs of internal operations and interactions with clients: if you have to throw a project team – particularly a geographically dispersed one – together, then the ‘way’, and everything that goes with it, offers some sense of how each member of the team should fit into the project group. There may be little true scalability in management consultancy because each project is effectively ‘bespoke’, but standardization in roles – and the ICT ‘offer’ to help coordinate those roles – is one of the ways that you can manage transaction costs on project work in a sustainable way.

Spatial implications Historically, distance would limit the spatial extent of firms because of risk: what were your agents in New York up to? Family you could probably trust, but a ‘random’ hire you only saw once every few years? ICT and transport ease these limits to control, but, ultimately, for complex work, you still need to have confidence in your employees … That’s another

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reason why our analysis tends to de-emphasize the firm as an atomic entity and to focus on how informational and transactional flows within and between functional units help to define the firm. Firm structures reflect the new realities: both the increased freedom to manoeuvre and the need to access skilled labour and clients, the need to coordinate activity both in the market and internally, and the need to keep track of what this all means for the bottom line. In other words, over time, what began as an equivalence between functional and geographical concentration or dispersal – to keep a close eye on a firm’s operations you needed to have its constituent elements fairly close by – has been weakened by ICT: between travel, voice and video conference, and shared electronic resources, we now have a host of ways to keep tabs on the remote office(s). Another way to think about it is that the market creates the ‘playing field’ upon which firms operate, but it is the unique pattern of transactions – and the interactions between the dimensions of scale and intensity, standardization and stability, and search and implementation costs – that structures their individual spatial strategies. We might expect that doing lots of big deals (scale and intensity) would draw clients and vendors together, but that ignores the extent to which these transactions might be amenable to automation: some just-in-time supply chains involve lots of firms operating in very tight synchronization with each other on businesscritical transactions, but these are highly automated and, consequently, no longer need to be co-located if technology is at-hand to help. Conversely, an absence of standardization and stability – an opaque, complex market where everything is bespoke – is going to reward firms that are accessible to clients, partners or suppliers because it lowers the risks of transaction failure. And those costs are particularly high if search and implementation challenges mean that coordination is integral to success: high search costs encountered once in a while might not have much of an effect on a firm’s choice of HQ, but when they are encountered repeatedly they will tend to encourage concentration. The same goes for implementation costs. We can place stationery and steel into the ‘stable’ and ‘standardized’ columns, but both personal and professional services will often fall into ‘unstable/uncertain’ transaction patterns; however, while both types of service use information as an input, a key distinction between a personal service such as cleaning and professional services like consulting is that the former can exploit both the ‘law of large numbers’ (i.e. the fact that many people like to have their home professionally cleaned when they can afford it) and the underlying stability of the market (i.e. the need for housecleaners is fairly predictable) to bring technology to bear on their operations. This process weakens the importance of central places on information flows in a way that creates greater competition over larger

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distances: click on TaskRabbit.com … In contrast, for specialist business services we can sort our way through a lot more potential partners if we are near them – close enough to be familiar with them, to read their signals and to look them in the eye – than if we are far away. So, projects that would not be viable in smaller towns because of the search costs are manageable in large cities, because the sheer density of firms increases the likelihood that we’ll find our perfect match.

Localization, agglomeration and clustering The most central places, however, aren’t just more, they are also different. In the preceding chapter we largely treated the firm in splendid isolation as if, after accounting for market risks, it had ‘free choice’ as to where to locate. What the transaction perspective highlights is that even in a world of omnipresent ICT, the location of your clients, collaborators, suppliers and competitors matters. Transaction patterns create the opportunity for feedback effects between organizations that ‘trade’ with one another, regardless of whether those trades happen in an open market or between internal business units. Where these feedback effects give rise to more widely shared benefits they are often called ‘positive externalities’, and this brings into play a host of overlapping ideas about the benefits of proximity with names like ‘agglomerations’, ‘growth poles’, ‘neo-Marshallian districts’, and ‘clusters’, to name just a few of the more common ones. So, if the ‘perfect match’ and the mutually profitable deal are more likely in a dense agglomeration, what do we mean by that term? Some of it is about firms being physically close together – economies of localization – and some of it is to do with the shared networks and markets of big complex cities – economies of urbanization – but we think that you need to look deeper still into what businesses and institutions add, and gain, when they are linked not just by proximity and trade, but also by the ‘buzz’ of interaction; and consider why a cluster can’t just be manufactured by eager public agencies throwing together a suburban office park or offering tax abatements on a downtown office retrofit.

Localization economies We can trace the concept of a ‘localization economy’ all the way back to Alfred Marshall, who argued in 18906 that they emerge when firms are able to pool demand so that a service or product can be sold either to more than one company, or to one particularly large company. In other words,

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we’d expect benefits in terms of efficiency and risk management: vendors can sell their specialist wares to several firms in the same sector, and clients can contract out specialist products or services to a company that can gain economies of scale. This concentration of suppliers and buyers creates ‘derived demand’ for further specialized products and services and so spawns a host of companies whose existence is all, ultimately, predicated on supplying the ‘anchor’ firm or group of firms. Localization economies are therefore strongly associated with the activity of a more narrowly defined sector. So, the congregation of car manufacturers in Detroit is an obvious example, as is the concentration of finance work in the City of London and on Wall Street. Similarly, research in the UK into the biotech sector indicates that the presence of larger firms around Cambridge encourages new start-ups to locate nearby, and this supports the localized contracting-out of business functions.7 This same basic logic underpins the government-mandated ‘Out of London’ strategy for the BBC. It was hoped that, by relocating many of the state broadcaster’s functions to Manchester, the majority of specialized and highly skilled suppliers would be forced to follow suit. The reality, of course, has been a bit more mixed. Manchester’s TV production complex has grown significantly, but many (not least, senior BBC executives) proved rather less enamoured of this opportunity to relocate. The idea that a key sector or firm can be used to ‘pin down’ a host of supporting activities connected to the supply of services and products to the core sector is a common one. However, not only does the BBC’s experience show that this is harder to achieve in practice than in theory, but specialization also comes at a price: there are real risks for an economy dominated by a single industry. Principal among these risks are technological lock-in (that there is a ‘right way’ to make something) and conceptual lock-in (that there is a ‘right way’ to think about something) that encourage a ‘Not Invented Here’ syndrome. Checkland, in 1976,8 coined the rather memorable ‘Upas tree effect’ to describe the way that the long shadow of a singularly dominant sector could stifle the emergence of new businesses. Named for an African tree that purportedly killed those who slept in its shadow, the effect appears when an established firm or sector starves competitors, spin-offs and start-ups of resources, including fresh ways of thinking or new lines of business. Interestingly, Checkland was writing about Glasgow. Few non-Glaswegians will today think of Glasgow as likely to lead the way in new industries, but that’s because we don’t know our history. Early successes in heavy engineering, and in shipbuilding in particular, meant that towards the end of Empire, Clyde-built ships plied the world’s oceans and underpinned British trade and colonialism. As a sector, shipbuilding

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relied on skilled manual labour and specialist parts in abundance, and it was common for multiple generations of a family to all find employment in the yards. The city therefore should have been poised to take advantage of all those new ways of moving ‘stuff’ around, but so obvious was the route into shipbuilding – and the demand for all of the ancillary products and services with which to build them – that you’d be mad to try your chances in a risky, newfangled industry like, say, automobile or aircraft manufacturing! So although there were very real and quite promising attempts to start up these new industries in Glasgow, they had trouble accessing finance, staff and supplies because no one could see why it was worth the risk when boats (and, to a lesser extent, trains) were clearly still the best way to move stuff around … Aberdeen seems to be going through something similar. There should be a natural fit between offshore oil and offshore wind and, indeed, the Scottish Government has stated: ‘Renewable energy is a growth sector which the North East of Scotland is ideally placed to exploit, with the infrastructure, assets and workforce to support its continued expansion.’9 But whether through an absence of focused government action or a general reluctance to move on from the lucrative Oil and Gas industry to the much less certain Renewables sector, this transition is, at best, taking place rather slowly. Oil and Gas employs 282,000 in the UK (2017 figures),10 with over 30,000 in the Aberdeen city-region alone. In contrast, the whole of Scotland has only some 10,000–15,000 jobs in non-hydro Renewables, and the city’s manufacturing sector seems hardly to be involved in the renewables projects that do exist, which are largely dependent on imported technology.11

Urbanization economies The contrast between economies of Urbanization and economies of Localization revolves mainly around diversity. Urbanization economies – as their name suggests – are about cities in all of their messy and chaotic glory. The benefits of urban life, for both residents and businesses, are perhaps most closely associated with the urbanist Jane Jacobs, though there is no shortage of newer work with titles like The City Ascendant (by economist Ed Glaeser)12 and The Rise of the Creative Class (by urbanist Richard Florida).13 As we’ve seen in the preceding chapters, cities have a rich mix of infrastructures for moving people and stuff around, and the very largest and most resilient of them also typically have a rich mix of industries that not only exploit this infrastructure but also depend on a

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web of suppliers who serve a range of industries: think accounting and legal, or graphic design and UX (user experience) specialists. The diversity aspect of urbanization economies is illustrated by finance work. This sector is absolutely integral to economic life in London and New York, but does anyone really doubt that these cities would not survive its decline? We don’t assume that it would be easy, or necessarily pretty, in the short term, but people would continue to flock to these cities for a variety of reasons, most having little or nothing to do with the financial services sector. In short, there is a diversity there that the localization economies of Detroit or Glasgow did not have, and that’s because urbanization economies are not only about access to shared resources – as a localization economy can offer – but also about access to shared networks that allow businesses to do deals in richer and deeper markets that localization economies can’t match. Whilst both types of economies of scale can be thought of as marketbased benefits, localization economies can help firms to manage risk, whereas urbanization economies can help firms to manage uncertainty because cities provide a depth and breadth of transport, communications and markets that non-urban areas struggle to match.

Agglomeration These economies of scale are at their greatest where activity – especially employment – is concentrated. According to Scott and Storper,14 40 per cent of US employment was found in counties making up just 1.5 per cent of the country’s land area. Storper and Venables suggest that ‘agglomeration consists of different sectors sharing common input structures and clients’15 and that sharing encourages deals and increases output. Agglomeration effects can occur along two axes: vertical (linked to the proximity of stages within a single supply chain) and horizontal (tied to the presence of competitors and collaborators). And, perhaps confusingly, they can occur both independently and concurrently. What they both confer is transactional benefits associated with scale, intensity, standardization, stability, search and implementation costs. Horizontal agglomerations tend to place competing firms together, usually for the purpose of making themselves ‘collectively available’.16 So, the firms have access to more potential customers, but it also gives access to more potential staff. Indeed, as Chapter 3 suggested, the labour pool may even be the more important piece today, and it will clearly play an important role when universities are seen as producers of specialized labour and knowledge. As Lösch17 put it, highly educated workers can

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‘provide a non-mobile, valuable, and restricted input to production’, so minimizing the recruiting (search) and retention (stability) costs for this group will be a priority. We look at the special case of ‘university towns’ later, in Chapter 7. It is also helpful to think about the ability to ‘search’ the competitive landscape as having two other benefits for agglomerated firms: observability, whereby a firm can more easily monitor and copy what its competitors are doing; and comparability, whereby a firm can more easily benchmark its own output against other approaches.18 And, as we’ve alluded to elsewhere, working within a shared institutional, regulatory and cultural context creates a kind of standardization – a set of norms – that supports additional scale and intensity of deal flow not only in the search but also in the implementation phases of transactions and projects.

That special something In Book 4 of his 1890 magnum opus, Principles of Economics,19 Marshall observed that in some cases concentrations of industry emerge that, through a combination of specialization and input/output integration, also create an environment within which ‘the mysteries of trade become no mysteries; but as it were in the air …’. A more technical definition was given by Nachum and Keeble,20 who wrote about the ad trade in London as a ‘geographically concentrated group of competing, collaborating and independent firms connected by a system of market and non-market links’. In other words, we know that some places become, and may remain, ‘special’ for certain types of industry. Working from these definitions, a cluster could be as big as Silicon Valley, as long-established as Emilia-Romagna’s high-end manufacturing, or as informal as Soho’s advertising/media cluster. We think that the key distinction lies in the ‘non-market’ links – Marshall’s ‘in the air’-ness – which connects them back to our discussion of noise and buzz, and to the ways in which firms try to manage high levels of uncertainty by getting ‘close’ to their markets and suppliers. Silicon Valley isn’t ‘just’ a localization economy, nor is it ‘just’ an urbanization economy, though it is both of these too. We all know that there is something more there, even if we’d struggle to put our fingers on exactly what. We think that a key difference is that it was also built on buzz. In a discussion on networking culture, Paul Saffo (director of the Institute for the Future) commented that: “Silicon Valley is a tightly packed place, hemmed in by hills on one side and water on the other – everyone is constantly tripping over each other, gossiping and swapping

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information and intrigue”.21 History offers several well-known examples of this buzz in action: the Homebrew hobbyist club, at which Steve Jobs and Steven Wozniak premiered the first Apple computer, functioned as both a job network and a kind of peripatetic trade fair where budding inventors and entrepreneurs could show off their latest creations. Much in the same way that Elizabeth Currid-Halkett writes about New York’s art/design/fashion world,22 it is about seeing and being seen, especially by people who ‘get’ what the designer, or computer builder, is trying to do and can see the potential … even if the prototype is full of bugs. The events were further supported, and lubricated, by the flow of information and ideas between engineers and investors at more informal social places like Walker’s Wagon Wheel bar in Mountain View. So, both New York and Silicon Valley are characterized by a continuous chatter in offices, studios, bars, trade fairs and restaurants that is itself an important form of information transmission and is crucial to what they offer as locations. Governments have invested a great deal of money in trying to replicate the success of Silicon Valley without ever really understanding or caring about how Silicon Valley came to be and how what is there now differs from what was there at the start. Many countries have tried to manufacture ‘technopoles’ on the Silicon Valley model; their experience suggests that the idea that there are (per the Secretary-General of the OECD in 200123) more than 380 ‘clusters’ in America alone is a profoundly problematic assertion. Where people have tried to plan clusters, the principal attraction for firms has been policy-generated; things like access to national lab facilities or tax incentives, rather than the ability to play into a vibrant technological and entrepreneurial scene. This doesn’t mean that there is no role for the state in directing activity and development. Far from it: a key structuring element of the Paris region’s economy is the high-end HQ and business cluster at La Défense, a direct product of state planning and investment over decades; and even London’s Canary Wharf financial centre is as much a product of government shaping and investment as it is of market decisions. But public agencies need to proceed with care. As Max Nathan and Emma Vandore’s work on the ‘Tech City’ ecosystem in Inner East London24 shows, government ‘adoption’ of a cluster and brand with a view to managing its expansion is by no means a guaranteed winner. The sociologist Richard Sennett sceptically remarked that ‘when authorities announce a dedicated area devoted to creativity, I think – this area is over’.25 Our point is that this ‘special something’ is produced by a milieu where experimentation, uncertainty, and job-hopping or collaboration are not only tolerated, but encouraged and rewarded. All that ‘buzz’

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helps to develop a situational awareness of the ‘industry’ (whether art or electronics) and of your own position within it such that new ideas and opportunities can be rapidly picked up, examined, discussed and discarded. The cumulative effect of this can be seen in the differences between Silicon Valley and Boston’s Route 128 tech corridor. Both have been exhaustively covered elsewhere, but we want to point to two key things that come from the seminal work of people like AnnaLee Saxenian,26 and Peter Hall and Ann Markusen27: first, that Silicon Valley was defined by a competing mass of smallish firms, none of which owned all of the pieces required to produce the next ‘minicomputer’; and second, because of this, the culture had to tolerate openness since innovative firms needed collaborators – often former employers, employees, or competitors – to deliver the next generation of hardware, software or services. Massachusetts Route 128 is probably much less well known as a hotbed of technology innovation, but at the same time as Silicon Valley was taking off, so too was ‘America’s Technology Highway’. Route  128 is, in part, an orbital highway around Boston, and it was here where you could find the R&D facilities of companies like Digital Equipment Corporation (DEC), Wang Laboratories, Raytheon and Polaroid, as well as more recent creations such as EMC, Autodesk, and Lycos. Some of these are, or were, very large firms indeed, but what you wouldn’t have seen – despite the torrent of graduates emerging from Harvard and MIT – is firms with the launch trajectories of Google, Facebook, Apple, or Intel … and what all of that earlier research mentioned above concluded was that the vertically integrated model, especially when combined with an ‘if you leave, you’re dead to me’ view of employee loyalty, doesn’t create the ‘buzz’. There are plenty of signs that today’s tech behemoths have learned – even if not always consciously – the lessons of history. Indeed, the back of the sign marking the entrance to Facebook’s original campus at 1 Hacker Way was intended to be rather an object lesson in how quickly fortunes could shift in the Valley: it still bore the branding of Sun Microsystems, its original owner. But the internalization of these lessons goes much deeper than this: Facebook deliberately supports competing teams working on the same basic product enhancement, while Google is also branching out into housing provision for its employees. Both of these behaviours are objectively wasteful and apparently superfluous, but they are also, quite transparently, attempts to replicate and maintain the creative tension brought on by tough competition and promiscuous interaction. It’s hard to see this strategy as anything other than an attempt to help a gigantic multinational behave – from a creative standpoint – like a cluster of much smaller firms.

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Related and unrelated diversity We think that all of this can be understood as a balance between related and unrelated diversity: it is a ‘paradox of clusters’ that if they lack any coherence then there are no synergies, but that if they lack any diversity then they suffer from the kind of lock-in we highlighted earlier. 28 People need to be close enough – physically, socially, culturally  … – to understand each other, but different enough to create some creative friction. Facebook and Google’s campuses strive to reproduce this in a way that also controls (with, we suspect, mixed success) the risk of information leakage. They operate as cities within cities, with competing project teams fighting like start-ups for investment from the ‘mothership’, and the corporate housing ensuring that those social exchanges are ‘captured’ internally, while a corporate ‘ethos’ provides an underlying coherence of culture. These companies don’t absorb new product lines, they absorb people: the ‘acqui-hire’ makes a small team an offer they can’t refuse so as to bring them to the campus and throw them into the mix as well. When we combine this perspective on the competitive advantages of diversity with the spatial characteristics of social networks, this sets up a tension in which increasing distance – be it physical or social – increases the likelihood of diversity, but also reduces the likelihood of coherence. Contrariwise, more concentration tends to reduce diversity but will help to increase coherence. Menzel and Fornahl29 focused on the distinction between a thematic boundary that differentiates one ‘production and innovation system’ from another, and a spatial boundary that separates one group of organizations from others ‘working in the same thematic field but located elsewhere’. Either way, we are looking here at the ways in which information flows across organizational boundaries in formal and informal settings, and at the challenges of managing and maintaining the diversity of those inputs. This approach seems particularly powerful because it accounts for the observed behaviours of firms in what are widely recognized as clusters, while also allowing for flexibility in how they are configured. Over time, the tension between thematic and spatial coherence might be expressed as a movement into entirely new technologies. This is effectively what has happened in Silicon Valley, which has negotiated the transition through several generations of radical hardware and software change. And it is what did not happen in Detroit, which once contained many start-ups pursuing a range of automobile technologies, including the Detroit Electric models! So whilst it is easy to focus on how businesses clump together spatially, the problems of science cities and technology parks

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highlight the fact that proximity alone is not a guarantee of interaction, nor, thanks to telecommunications, is distance any longer a barrier to association.

What this all means for cities Centripetal and centrifugal forces The tension between the forces of concentration and decentralization is an ongoing one, and it leaves key questions decidedly undecided: will management functions continue to accumulate at strategic global locations, or will technology-enabled electronic interactions/transactions encourage a re-diffusion of the coordination function? Will cities remain important employment nodes but slowly lose their dominance, or will there be yet more concentration of employment there? Will this tension impact on cities of different sizes and prominence in different ways? What we can say is that the greatest benefits of physical proximity will accrue to individuals and firms that operate in uncertain markets with complex outputs, short innovation and product cycles, and a predominance of unstable, short-term contracts. But that does not mean that no other sorts of business will benefit from locating close to others, and we look here at what the factors are that seem to influence these choices and, consequently, the future of towns and cities.

Transaction patterns and the boundary of the firm In discussing insourcing and outsourcing, and whether or not transactions cross firms’ boundaries, we saw that there is scope for a variety of responses even within a single sector. Take one of the biggest and relatively most stable sectors: financial services. We see two simultaneous forces at work, pulling in opposite directions: the ‘disagglomeration’ of the back-office functions to cheaper and more distant locations, alongside a concentration of higher-level jobs involving complex coordination tasks within the very largest urban cores. Routine work and routinized transactions are ‘expelled’ from the high-cost sites and re-concentrated in areas where they can be performed economically at scale. Conversely, ‘bespoke’ work on uniquely large deals, the creation of specialized financial products, and on the associated work in legal, technical and management issues needs to happen around the boardroom table where information flows – both internal and external – are fast and free.

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Thanks to specialization and to the growing complexity of modern business, firm boundaries may be less clear cut than in the past, but some factors are common to many businesses: the more complex the job, the more crucial it is to keep the team together. It’s about ‘how big is your table?’, and also about how skilled you are at managing relationships when they are at once more important than ever, but also less than ever before guaranteed by institutional frameworks and company boundaries. If your firm’s information flows are fully internalized, as they might be for a traditional R&D facility or back office, then technology makes it a lot easier to bundle up those operations and relocate them, especially if the staff like the amenities on offer. But for very many firms, as we’ve seen, there is a continual tension between keeping-together and saving-by-splitting.

The influence of search costs, complexity and risk This connects our thinking back to discussion in earlier chapters of the cost of travel (e.g. for meetings) as well as to the distribution of sectors such as high finance, consulting and the creative arts, which experience high levels of uncertainty. These uncertainties are best managed through intensive search and implementation phases – i.e. lots of face-to-face meetings – and these sectors will therefore value being in areas where it easy – and therefore marginally cheaper – to engage in such expensive activities. They are, consequently, more willing to pay for city-centre space than those sectors such as R&D, logistics or engineering, where this need is now much reduced. These other industries face transaction costs that are differently organized: unstructured, inter-firm exchanges are less common and involve fewer participants, and the products and services produced tend to be ones that scale more readily. Of course, proximity can also serve other functions, such as helping to contain both high search costs – screening a large number of possible partners – and the high cost of implementation failure – signalling the ability to complete projects successfully. Where firms are operating in opaque markets, with much uncertainty, these are strategies to lessen, though never to eliminate, the associated risks. The cultural sector is one where such interrelation and reinforcement is absolutely integral: ‘It is tempting to think of the “creative process” in terms of the individual artist struggling in a lonely garret or an isolated cottage in the Welsh Marches. This may be true, so far as the act of “creation” goes …’,30 but the artistic value chain is much longer and more convoluted than this. ‘Upstream’ sources (education, the pool of talent) link ‘downstream’ to markets in other sectors, and this web of activities does seem to be quintessentially metropolitan.

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Thinking about knowledge industries and city growth throws up the apparent paradox that while cities are humanity’s largest artefacts, they seem to play their most important role at the micro-scale. Urban diversity appears to encourage, or at least to enable, innovation in many – though by no means all – domains. The cultural industries in particular seem to benefit from what Scott calls the deliberate ‘destabilisation of prevailing norms and practices’,31 and cities stimulate this instability by bringing into contact highly skilled workers – taken here in its broadest sense as those who ‘produce’ culture in its myriad forms from their sewing machines, paintbrushes, spray cans or computers – with a wide range of backgrounds. These ‘micro’ contacts, put together, bring about sweeping and profound ‘macro’ changes to the urban economy and how firms act within it.

The quality of the buzz The implications for city futures are bound up with the issues raised earlier in this chapter around clustering and agglomeration. Revisiting our earlier definition of agglomeration, we can see that none of specialized labour, specialized suppliers and shared input structures and clients automatically require the continued co-location of firms, although this would have been a natural assumption for many centuries. If specialized labour can ‘dial it in’, if specialized suppliers can be met at trade fairs or via a short-haul flight, and if suppliers can now be readily found online, then why is proximity still necessary? So, this begs the question – as raised by, among others, Saskia Sassen32 – of whether management functions will continue to accumulate at strategic locations, or whether a ‘hybrid space’ involving technology will enable a re-diffusion of coordination functions? We showed how clusters of firms struggle to balance the inevitable tugof-war between the coherence that they need to maintain information flows between divisions and firms, and the diversity that avoids the ‘Upas Tree effect’ of a monoculture: ‘keeping-together’ versus ‘savingby-splitting’. The importance of geographical concentration is in helping to maintain that balance, rather than simply meaning that there are lots of other firms nearby. Scale clearly matters because the market has to be big enough to support all these firms, the flow of deals, and the buzz that surrounds them, but it is the qualitative differences that determine whether a London or a New York can retain its ‘command-and-control’ role or whether a Thames Valley or a Route 128 high-tech agglomeration will ever amount to a significant innovative cluster.

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The influence of ICT on all this We’ve pointed already to the many ways in which ICT affects markets, transactions and information exchanges, so it will be clear by now that the relationship between technology and work is vital, fluid and only to some extent predictable. As more and more economic activity involves the ‘generation, processing and exchange of information’, then factors affecting these aspects of firm operation will have a greater and greater impact. The management guru Peter Drucker observed33 that ‘the most important, and indeed the truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing. The most important contribution management needs to make in the 21st century is to increase the productivity of knowledge work and the knowledge worker’. So we can expect that the focus of investment this century will be in the processes and activities that enhance access to information and decision-making by knowledge workers. And in spite of the irritation that flows from seemingly endless round-robin emails and Zoom calls, the ability to nurture relationships and access information at a distance is nonetheless transformative. In the film industry, a more familiar – but also very dynamic – market, the switch to digitization has reduced the number of jobs working with film but encouraged a rise in collaboration by big studios with remote post-production firms and workers. Hollywood’s use of Vancouver (a short flight from LAX, and in the same time zone for coordination purposes) as a low-cost destination for film and television production is a useful illustration of how this relationship may operate in the real world. Air travel enables specialized staff and equipment to be easily moved onto location for short periods of time; however, learning by on-site labour has also led to the outsourcing of activities that were previously ‘locked in’ to Hollywood. Here again, the ‘F2F versus virtual’ boundary has shifted, and could well continue to move. Routine productions which require neither close supervision nor particularly specialized staff are the most amenable to offshoring. The only downside, according to industry myth, anyway, is that Canada is so clean and well behaved that you have to import your rubbish, graffiti and drug deals from south of the 49th parallel to make it all believable … What ICT achieves is to make increasingly complex activities – ones that weren’t possible at a distance 10 or 15 years ago – into manageably routine ones and this introduces a dynamic element to all of this: many activities that start out in the most highly skilled production systems are, over time, deskilled or reimagined in ways that enable them to be parcelled out across continents. Thanks to ‘premium’ comms network services like

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SohoNet or Akamai, there is increasing scope for transactions – digital effects, post-production, location shoots – to be coordinated between Canada, the USA, New Zealand, the UK and Germany in ways that were inconceivable just a decade ago. In contrast, at either end of the production scale, films may continue to resist straightforward offshoring – partly because of the complexity of feature films, but also because of the overheads required to set up a production abroad. Outsourcing abroad can reduce the cost of all those caterers, drivers, costumers, grips, art directors, VFX experts, and set construction workers by subcontracting out work whose relationship to the rest of the film-making process is relatively weaker, but the success of that approach depends on how much the interactions can be standardized and managed from a distance, which is why scale is also a factor.34 It’s all relative: offshoring and outsourcing involves coordination costs that may be too high for a small, art-house film, and it creates risks that may be too severe for the next blockbuster, where you’d prefer to fly your own people in to keep an eye on things. The other issue of perspective relates to the fact that the knowledgerelated activities and businesses are not the whole picture. In all the hype about the knowledge economy, it is easy to forget that ‘the creatives’ are likely to make up only a modest share of overall employment, and that far more people will be employed in more routine work. Even what Brinkley and colleagues35 call ‘the more excitable accounts’ have in mind a group that made up just 11 per cent of all British workers.36 In other words, decades of growth in various knowledge industries have still only brought us to the point where 1 in 10 workers are employed in real innovation or knowledge work – whether measured in terms of patents, process innovation or art openings. So the remaining 90  per cent of the workforce faces continued pressure not only from the offshoring of ‘indirect’ informational services (e.g.  technical support and other back-office functions) but also from the growing substitution of capital (machines, ICT, AI) for informational labour (people at desks). Not all of them: but a large proportion, wherever their job does not involve much personal interaction or essential face-to-face contact. You might have heard of AI? As we explain in the next chapter, we’re quite sceptical of some of the ‘more excitable accounts’ of what AI will mean for employment. One tempting definition would be: a technology that is clever at well-defined tasks and rather less so at ill-defined ones. But there is no question that the ‘routinized’ aspects of white-collar jobs in sectors such as accounting/book-keeping and customer service face a potentially radical restructuring and, consequently, significant impacts on employment opportunities and volume, in areas previously considered

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‘safe careers’. That may even extend to drafting short documents and summaries: as we write this, the OpenAI initiative is making waves with the quality of output from its GPT-3 algorithm. In a talk at the London School of Economics and Political Science (LSE) a few years ago, the economist Ed Glaeser opined that it was hardly surprising that the darlings of the ‘sharing economy’ had started in cities, suggesting that cities had always been about sharing economies: parks as shared gardens, restaurants as shared kitchens37 … Some might see Airbnb as turning homes into shared hotels or Uber as turning private cars into shared mobility. In the definitions we advanced above, you could also see them as unlocking the potential for urbanization economies (pooling resources with enhanced efficiency) within what were previously localization economies (more locally restricted and differentiated resources). But, again using the definitions from this chapter, it’s also easy to see why these companies aren’t going to lead to some kind of economic renaissance for most: Airbnb and its thousands of ‘hosts’ are not a cluster, nor is Uber and its many drivers. The transactional aspects of these platforms are highly automated and thoroughly routinized, the ‘staff’ are just there to deliver a product.

The direction of travel We have been looking at how firms adjust continuously to the market and its pressures. What are the implications for cities, city-regions and regional differentials? The history of London shows how the tension between cost pressures and the benefits of ‘being there’ has played out. The depth of that history shows, too, that we are talking about long-run trends and continuity, not a sudden revolution in response to digital magic. Long before all-pervasive ICT, locational choices were being determined by the nature of transactions and by whether businesses needed to incur the costs of a big-city setting. John Goddard’s ground-breaking empirical study38 of businesses relocating out of London in the 1970s was clear about the distinction. The firms that left were more likely to have ‘programmed’ (pre-arranged) interactions with other firms, suggesting that these offices had less need to rely on the deeper, but often more casual, ‘orientation’ interactions that come from situations where buzz and noise abound. Firms that had rejected government inducements to leave London operated through less structured exchanges with external contacts so, for them, the costs of ‘doing deals’ in London were still worth it, because the benefits of availability for quick short-notice interactions outweighed those costs.

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Ten years later, Gillespie and Green39 added a further spatial dimension to this pattern. They found that, even with the growing use of ICT to support inter-office interaction, the relocation of back-office activity still tended to peter out approximately 80 miles (130 km) from the centre of London. In their view, this was the point of diminishing spatial returns where the declining cost of office space could no longer offset the rising cost of interaction, especially in terms of travel costs. Clearly, better ICT – free voice calls, mobile, video-conferencing – could extend this further, but that’s still about diminishing returns, not full substitution. The need for, and value of, face-to-face contact is what’s being priced into these choices every time. Places like Brighton now form part of London’s commuter belt but that’s (we would argue) because better ICT can save you needing to travel up to London every day or can enable you to do a bit of work on the train … making the experience of having to sometimes stand on a delayed, overcrowded train for more than two hours just a tiny bit more bearable. These are deeply embedded patterns, and they are particularly noticeable in the decisions of businesses in the most dynamic sectors. Another 20 years later again, NESTA reported in 2007 that fully 90 per cent of ‘knowledge workers’ were concentrated in Britain’s city-regions.40 In fact, subsequent work by the Centre for Cities think tank showed just how great the concentration of this type of work in the South East really is. Of the top 10 cities in their list of ‘knowledge-intensive cities’, only two (Edinburgh and Leeds) are more than 2 hours from Central London by train.41 Over time, these effects have been compounded such that London and the South East have far outpaced the other English regions in terms of overall rates of growth. This is a story of London and its hinterland. Not just London, though: it is a World City story. The Paris region too has played out a similar narrative – deconcentration of offices away, but generally not far away, from the central city core, primarily to the ‘Petite Couronne’ immediately west and south,42 and loss of industrial jobs, especially from the inner north; but all within an overall growth surge which has seen the region’s employment grow from just under 5  million to just over 6  million between 1992 and 2015;43 a capital region with 36 per cent of all French executives (but only 19 per cent of France’s total population), where 40 per cent of the workforce are graduates.44 In the New York metropolitan region, similarly, the last 25 years have seen continued overall job growth,45 a continued concentration of highend employment in the Midtown and Manhattan hubs, and a steady pattern of decentralizations – sometimes back offices, but international and regional HQs (finance, publishing) too. In the latter case, many moves

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have been quite short, to close-by locations. Where Paris moves have been just across the périph’ motorway ring, the New York equivalent is just over the river(s): across the East River to Long Island City, across the Hudson to NJ locations like Hoboken, where one incoming business told The New York Times that the logic was ‘primarily to keep employees close to the Manhattan HQ, while providing them with a Class A stateof-the-art environment’.46 In analysing firms’ structures and their spatial organization, we’ve stressed their focus on reducing risk at manageable cost and related this to why clustering together helps in many sectors. We’ve seen how ICT is widening choice for many firms, but making less difference in many of the high-touch activities; and we’ve sought to place such current technologydriven changes within the long-term trends. A consistent picture emerges as to which businesses, in which markets, are going to carry on benefiting from concentrating in highly urban locations, and which businesses – or parts of them – are more able to choose non-central places without business risk, or even to free themselves from ‘place’ almost entirely. Within all of this it is apparent that face-to-face contact is one of the key variables in determining firms’ need to cluster in central locations, and the next chapter explores this ‘people/face-to-face’ aspect in more depth.

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Talking Shop … and hear poor rogues Talk of court news; and we’ll talk with them too Who loses, and who wins; who’s in, who’s out; And take upon’s the mystery of things William Shakespeare, King Lear, 16231 We have, so far, been looking at how face-to-face contact sits within the systems and markets of the modern city. Our way of thinking about businesses, places and the world of ICT has suggested a series of ‘layers’ which structure how the 21st-century economy works. The networks (essentially Chapter  2’s transport and communications networks) provide a basic substrate which markets load with potential, and the deals (Chapter 4) are how businesses release that potential, transaction by transaction. But the business choices, and company dynamics, that we have been discussing are embedded in an underlying human reality. Contact clearly matters because it improves deal quality and helps to manage transaction costs, and so, even in a world of faster and higherquality information technology, people seem to attach an especially high value to face-to-face interaction. Beyond the management of uncertainty – a fairly abstract construct, it has to be said – what is it that they value about meeting up when it’s so expensive to do in terms of both time and money? This chapter explores that ‘people’ dimension: we look first at the nature of face-toface contact – what it consists of and what seems to matter most – and then we link this to the importance of central places as a locus of faceto-face contact.

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Our human need for contact Being social is Good For You: Susan Pinker’s studies of life in the Sardinian hilltop villages, where ten times as many men live to over 100 as elsewhere, showed the importance of the ‘human touch’: ‘Every centenarian we met was supported by kith and kin, visitors who stopped by to chat, bring food and gossip, provide personal care, a kiss on the cheek.’2 So it’s good for us in a personal sense. And that’s true of the work environment, too: all other things being equal, we tend to prefer working somewhere with a social dimension. But context always matters: it’s clear that villages are great places to be supported and cared for in our dotage, but for young people they can also be socially, economically and culturally stifling. When generations live together it can be hard to see someone as anything other than their family history, as a conductor instead of a farmhand, or as a programmer instead of the manager of the family shop. Cities are where you go to be anonymous, to reinvent yourself and to build a ‘social network of choice’ with all of those other misfits and rebels tracing a similar path to new markets and opportunities. Of course, ‘villages’ exist within cities too: to children growing up on some Inner London council estates – not altogether dissimilar to American ‘projects’ – the city’s cultural, social and economic opportunities can be as effectively remote, if not more so, as they are for a child growing up in Middle England. Leaving to one side the cumulative effects of deprivation and discrimination, the same tight social network that can provide support and close friendships to last a lifetime can also make it difficult to conceive of leaving, of forging one’s own destiny and of not following friends – or older brothers and sisters – into the ‘family business’. This insight was codified by work the famous sociologist Mark Granovetter undertook on ‘weak’ and ‘strong’ ties in neighbourhoods within the city of Boston.3 Granovetter pointed out that although strong ties – where two individuals know each other well – might seem to offer benefits in terms of trust, they can also have negative effects if they yield a lack of exposure to ‘novelty’. In Granovetter’s study, people tended to find new employment opportunities not through their close friends (strong), but through their acquaintances (weak), and neighbourhoods tended to mobilize more effectively in the face of shared challenges when there were weak ties that created bridges between more local ‘villages’ (our word) created by tight social networks. Weak ties tend to be found between dissimilar groups, and to bring together people who have been exposed to different information about their environment. So, if you’re a company – or one of its employees – and you’re in need of new knowledge or data, then it’s helpful to be able to access a wide

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range of weak ties. You tend not to look to your office neighbour for radically new insights, but for day-to-day support. There are shades here, too, of the concept of related and unrelated diversity that we introduced in the previous chapter. In a corporate context, too much diversity makes it hard to understand one another, but too little leads to groupthink and ‘not invented here’ syndrome. In other words, where people are navigating complex and uncertain environments, breadth and diversity is what counts. So, in thinking about why firms would choose a costly central location over a cheap suburban one, places with a lot of potential for quick, frequent, light-touch contact may offer a key element that they are looking for.

The nature of face-to-face Without wanting to oversimplify things, it can be helpful to see F2F as a communications technology. Anyone who has pressed ‘Send’ on a quickly drafted email, and then had to spend twice as long explaining (verbally) what they really meant, intuitively understands that difference. Nor is F2F just about what is said. We intuitively extract an enormous amount of information from what was not said, from who speaks and who listens, from who is enthusiastic and who seems bored, from the level of catering and effort made … We put all of this together into a bigger picture and pick up unconscious and intuitive messages. In our own interview programme (about which much more in Chapter 6), one of our Central London correspondents, a market researcher, described the process as “Getting a sense of the person … it’s a two-way process of trust … we need to be in touch with each other, get a feeling of how we do it. It’s face-to-face, it’s multi-sensory.” As profoundly social animals, we engage with, and respond to, social stimuli in ways that we would never respond to a written report, a phone call or an email. Co-presence is ‘like being on stage and playing a role’,4 and sometimes it is about the performance, not the message. In person, the host of a meeting can much more easily see that they are ‘losing’ the audience and adjust the message accordingly. Financiers interviewed in a 2003 study reported that the ability to meet in person reduced the risk of a costly misunderstanding and enabled information to be communicated more quickly.5 This was true even within a single firm with different offices, but they were clear that the challenges are even greater when employees from different firms or industries were involved. Reducing these risks – so increasing clarity and confidence, and ultimately lowering transaction costs – can be a major advantage of faceto-face contact, but it does not always need to be formal, sitting-aroundthe-table contact. Edward Leamer and Michael Storper have an intriguing

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division of personal interactions into ‘handshakes’ and ‘conversations’; the former are about building bonds and agreeing ways of working (even where this isn’t explicit!), while the latter are connected to the ongoing flow of information.6 Many projects are formally managed like this: a ‘kick-off’ meeting where the individuals meet, introduce themselves, socialize and, it is hoped, build a general confidence in the teams involved, before the project settles into a more ‘routine’ format, where information is exchanged and participants are regularly updated on progress. One of our own respondents, a London-based transport planner, matter-of-factly summarized this as “yeah, fortnightly project meetings, first two face-toface, then video once something’s running”. There’s an obvious connection here to the search and implementation costs of the preceding chapter, but now instead of thinking in the abstract we want to focus on the people who have to actually go to these things. Did the Chief Exec come to the kick-off meeting, or send the junior VP of Business Development? Is the VP asking to meet every month for a debrief over a pint, or in the boardroom? Handshakes get things moving by sending the right signals about commitment and confidence before the more routine modes of conversation take over, and we carefully select the channel of communication, the location and the frequency to keep everyone motivated and, with luck, on-track.

The frequency of contact Compared to an email dashed off on the train or a quick phone call, going to a meeting is a really expensive proposition. The further the travel, the greater the cost. Jumping on a plane to New York sends all the right messages about commitment, but if it takes you three flights and 36 hours to get there – and the same again on the way back – then that handshake had better be worth it. The economic geographer Philip McCann7 captured this in a simple model which added the frequency of contact to the standard ‘bid/rent model’ of location that dates all the way back to von Thünen,8 showing that businesses may be willing to pay very high (read: Central Place-level) prices if they are reliant on frequent face-to-face contact. Think of it this way: if your business is handshakes then you need to base yourself somewhere that keeps them affordable. So the high-contact firms – and their people – will tend to concentrate very heavily in central-city places because they rely on intensive faceto-face interaction and need to minimize the travel costs: ‘not only do meetings between decision makers often take place several times per day but also such meetings are often arranged only at very short notice

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on the same day. In these cases, the frequency of face-to-face contact is maximized and the distance between agents is minimized.’9 Or, as an interviewee in the property sector put it: “Here you can do five or six meetings in a day, all over Central London … one day last week we went from the office [near Bloomsbury] to London Wall, then to Spitalfields, and on to [big consultancy in E1]; in between, two hours in a Pret A Manger …”. So, we’d expect to find these individuals and firms in sectors such as international finance, real estate portfolio management, publishing, political consulting, and the arts and theatre, and in locations such as Downtown and Midtown Manhattan, and London’s City and West End. We think it’s really important to note that these demands are not specifically about ‘innovative’ or ‘creative’ sectors of the economy. Even among highly innovative firms there are marked differences in choice of location: in some knowledge-intensive sectors, companies are nonetheless spread out across the whole city-region because their business is much less about frequent and ‘externally facing’ contacts. Think of the software and telecoms firms – Oracle, Microsoft, Telefonica, Vodafone and Sage – in Reading, Slough and Maidenhead, towns in the ‘Western Arc’ outside London; of course, these firms have meetings all the time, but many nonsales contacts will be ‘internally facing’, and the remainder may well be continent-wide in scope, so being in the city offers no particular advantage. But, from these locations in the western Thames Valley, you’re often less than 30 minutes by taxi from Heathrow. Similarly, from New Jersey, Figure 5.1: Western Arc tech firms: Oracle at Thames Valley Park, Reading

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Connecticut, or areas a little further upstate in New York, you can reach any number of airports for long-haul flights without passing through New York City proper. The point is that firms with fewer ‘promiscuous’ external interactions will tend to value access to over being in a city-centre location. Technology and mobility now work together to allow greater freedom of choice since you can easily be in touch, keep in touch while on the move, and drop in on key contacts whether they are down the street, down the line or across the ocean. This is all creative work, but it does not have the same contact and transaction patterns as the cultural industries or high finance, and so the locational preferences differ as well.

What’s the bandwidth of Chardonnay? In the world that our two ‘people’ chapters are focusing on (growth sectors, knowledge-based, centrally located), the choice between F2F and ICT is a daily one, commercial as well as personal, and it is laden with implications: for risk, trust, learning, potential profit … the richness, complexity and nuance of F2F are the essentials of its ‘bandwidth’. And clearly ICT can now substitute for some kinds of F2F because we can still see the other person’s face, even if they’re not physically present any more. But even if the Skype call or Google Hangout is possible, how does that help us if business is mainly done over after-work drinks down at the bar or in the queue for the loo at the nightclub? This is where Elizabeth Currid-Halkett’s sampling of The Warhol Economy10 sheds invaluable light on why some parts of the cultural sector, in spite of low pay and, frequently, poor prospects, continue to cluster in New York City’s busy, congested, febrile atmosphere. Currid-Halkett quotes an art director: “When I think about it, I met all these people [who gave me projects] at parties … like gallery openings or a dinner party or a barbeque. Honestly, like any social event.” Currid-Halkett comments that institutions and industry parties are both sites where formal transactions – the buying and selling of art and labour – occur and where informal transactions – the exchange of industry knowledge and development of social capital – happen such that, together, they constitute a ‘scene’. It would be a mistake to treat people ‘working the crowd’ as yet another example of people calculating every moment of their lives in commercial terms; yes, “many are motivated to socialize for business reasons, [but] a lot is uncalculated and coincidental”.11 As we showed in Chapter 3, this is about making the most of the noise while having fun. In contrast to the active mode of “let’s get a date in the diary”, this is a more passive collating of morsels of actionable industry intelligence over canapés (pardon the

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pun). The ‘industry event’ is one of the most effective ways ever devised for people to scan the horizon for looming threats and opportunities while simultaneously catching up with actual friends and tooting their own horn a little bit to potential clients and collaborators.

Untraded interdependencies? Oh, you mean the buzz! As should be clear from this discussion, the power of social contact and buzz is not reserved just for the ‘creatives’ or the ‘luvvies’ of the arts and culture world. In all the knowledge-based sectors – from law to management consultancy, real estate to catastrophe insurance – F2F is also at the core of exchanges where people engage with others, outside their own firms as well as inside. They are bouncing ideas off one another, brainstorming about new products, and sharing information about emerging opportunities and technologies. As we saw earlier, in thinking about frequency of contact and the nature of information and relationships, these “untraded interdependencies”, as the economic geographer Michael Storper (among others) calls them,12 are crucial in understanding why some places do better than others in the new economy. Such contact is essentially social in nature and origin, and only secondarily economic in its impacts and ramifications. Figure 5.2: Enjoying the Sunday morning buzz in Bologna

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In opaque markets, the buzz of these ‘interdependencies’ embeds a kind of signal in the noise that helps us to identify the trending players, projects and products. Thinking about what that might mean for cities, Peter Hall’s prognosis in 1998 was ‘the likelihood is that places with a unique buzz, a unique fizz, a special kind of energy, will prove more magnetic than ever …’.13 The Warhol Economy paints an amusing picture of how this works in New York City, contending that night-time amenities and entertainment are essential attractors of talent, not just cool places for people to hang out and be entertained: ‘… you’ll say “Oh, I’m working on a project” [And they’ll say] “Oh really? Drop me a line tomorrow”… talking shop is big but it’s unspoken but talking shop happens …’ Here we have perhaps the industrial-strength version of the ‘buzz’ phenomenon – provided by people whose Manhattan-o-centric world-view is “Everyone I know lives from 14th to Canal”.14 Figure 5.3: The Manhattan world-view: “Everyone I know …”

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Bar chat versus e-chat: buzz and the ‘IT Revolution’ Currid-Halkett clearly regards ‘buzz’ as a local affair, but then the nature of the arts and fashion world is about seeing and being seen. The presumption in favour of F2F being integral to buzz rests to some extent on the assumption that electronic communications cannot provide the kind of feedback and quality of exchange that operates over, say, after-work drinks at a bar in New York. But the emergence of ‘social’ platforms such as Facebook and Twitter, as well as of more narrowly focused collaboration tools such as Slack, may mean that technology is finally becoming a vehicle for the broad-based, shared context that lies at the heart of buzz. In short, the ‘bar chat versus e-chat’ frontier is not a fixed or stable one. Another of our respondents, a television producer for some of your favourite guilty pleasures, said that she had found her latest project through Facebook and used a mutual contact to make the introduction. This was no one-off: “I’ve got a lot of Facebook ‘friends’, but 400 of them will be people I’ve worked with, say, up to 50 people added with each job – but there were only 50 people at our wedding!” So, it’s still ‘word of mouth’ of a sort, but the initial handshake happened via social media, not after-work drinks. We can expect these boundaries to continue to shift over the time, with different functions such as ‘work search’ or ‘confidence-building’ co-evolving with ICT differently and at different rates. The process operating in a bar or nightclub will remain, for the foreseeable future, qualitatively different from Facebook posts or Twitter replies. However, just because a shared drink is better than a shared video conference for fostering confidence, does not imply that these types of interactions are going to remain uniquely local. Rather, what we see is an augmentation of both processes: as we communicate and travel more, the reach of buzz and, consequently, clustering is being significantly extended.15 The value that we attach to the buzz of being social as part of doing business is reflected in the kinds of offices that we seek out. Twenty years ago the ‘managed office’ business was a rather sedate one: in any given city you could find a company or two that offered small firms traditionally furnished ‘offices’ containing executive desks, a few filing cabinets, a shingle on the door, and a bookable ‘boardroom’ for larger meetings. Having looked at a few of these in our time, we can safely say that they felt like a kind of corporate purgatory: firms on the way up would move out as soon as they could afford their own space, while firms on the way down would hold on until the bailiffs came to repossess the equipment. Then came the ‘co-working’ spaces … WeWork, ServCorp and similar operations expanded quickly in the major cities, competing on flexibility,

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stylish furnishings and free beer. The scale of this industry is suggested not only by WeWork’s hoovering up of Central London office space,16 but also by the apparent discrepancy in 2015 between property registration numbers, which recorded 7,000 businesses, and business-based figures of nearly 20,000.17 These businesses wanted to be near others that were like them: small, young, dynamic and technologically-savvy. They wanted the ‘vibe’ of, say, Google’s offices and they got them: beer on tap, fußball tables, and good coffee for the taking. They also got social activities such as ‘speed-dating’ for start-ups, and the design aesthetic of the dot.com boom: no motivational posters in sight, but lots of Herman Miller chairs.

Knowledge, trust and confidence In Chapter 3 we pointed out how central to firms’ decision-making is the whole issue of uncertainty, risk, and therefore cost. One of the key things that businesses need their people to do is to build up relationships which can help reduce the risks of poor information, uncertain evaluations, missed opportunities and so on. Those relationships are easier to form when we have some kind of shared frame around which to build ‘trust’: in bygone days, when bankers were largely drawn from an Oxbridge and ‘public school’ background (a ‘private school’ background to anyone raised outside the UK), there was a ‘shared biography’ in which trust was implicit. In his magisterial history of the City of London, Kynaston18 records one interviewee stating: “Good Etonian standards means a total trust – if you say you’ll do something, you’ll do it. On the whole, dealing with Etonians in the City, you had a sense of confidence that they would behave impeccably.” How times change. Kynaston connects the decline of this uniformity in background and outlook under the impact of Thatcher’s deregulatory ‘Big Bang’ to a newly found need for bonds to be ‘actively manufactured’. Wearing the ‘old school tie’ on Fridays was no longer going to be enough for bankers to know who was ‘in’ and who was ‘out’, so new ways of signalling your in-the-know status – and of screening out the ‘wild cards’ – needed to be found. And this brings us back to the people aspect. We’ve stressed that reducing risk and uncertainty, so lowering transaction costs, is one of the great advantages face-to-face contact can offer. However, there are potential downsides to all this instinctive, touchy-feely, ‘in-my-gut’ judgement. In business terms, it’s the problem of groupthink – a failure to question assumptions even when they’re past their sell-by date – and it’s an obvious variant of the stasis we discussed in Chapter 4 when talking about Glasgow and Detroit. You also don’t get the unrelated variety that brings new ideas to the table when you

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apply the ‘old school tie’ ethos and rely on strong ties as a way to judge others and evaluate what you’re being told in an informal after-work chat. It’s a difficult and demanding line to tread: how to rely on the screening and signalling strengths of face-to-face contact while avoiding the temptation to drop into lazy characterizations and the easy comfort of ‘people like us’? What’s going on as firms and their people successfully navigate these shoals is well expressed by Boden and Molotch19 in their emphasis on co‑presence: the setting aside of both shared time and shared space, quite often so as to weed out potential collaborators who look like they will not put in the effort needed for a successful project. One of our City interviewees made the ‘signalling’ point explicitly: “the expectation at senior level is a courteous reception and a bit of formality. It’s getting close to clients and signalling the value.” A 21st-century study of the small ‘boutique’ financial industry in London by Sarah Hall20 confirms that it is still the people who matter: large deals are not sealed by the firm’s name – it may not even have one – but by the individual and their relationship with the client. Or, as one associate in her 2007 interview programme put it: “Knowing your clients is crucial … I was actually told that when I started here … like I went to the Six Nations [rugby tournament] with a client and that’s how they come to trust you … you share your experiences with them and they see what you’re like as a person, not a voice at the end of a phone line. Trust centres on me as a person as well as me as a corporate financier.” Fifteen years on, our own interviews suggest that this kind of informal exchange is getting harder: “It happened in the past, but not now … There’s far, far less of all that now, people are more sensitive, everyone’s got a Compliance Department  …” (from a senior banker); and from another City player: “In the City generally, there’s a lot fewer lunches, post-crash: expense accounts have been reined in, regulation and policy are tighter.” It was noticeable that hardly any interviewees, and none of the younger ones, mentioned this sort of ‘trust-through-sport’ angle. In fact, the word ‘trust’ rarely came up in our interviews and respondents were much more likely to use the word ‘confidence’: “is there reality behind the pitch, are they someone in whom you can have confidence …” (private investor), and they often related it to “getting a sense of the person” (market research director). Given limited time and capacity to interact, and the need to meet or have met people, fund managers will typically talk to ten or twenty preferred people: “how do you get to be (and stay) one of them? It’s about their feel for me, and us: for example, am I generally a bull rather than a bear, if I suddenly turn bearish, say, what does that mean? You

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need to know people to judge” (equity broker). It might be just that, colloquially, ‘trust’ has come to mean an almost blind faith in another, but distinguishing ‘confidence’ and ‘trust’ is not just a wording issue: it expresses a difference between ‘I have confidence that they will behave according to norms’ and ‘I trust that they have my best interests at heart’. We can do a deal with someone in whom we have confidence because, even if they are a cut-throat competitor, that’s something we can work with without needing to trust them with business-critical information.

The confidence game? Not for everyone Clearly, proximity and ‘buzz’ do not matter as much to every industry. For some, the social and work networks do indeed benefit from a bigcity location and the proximity to many other players. It seems that many small and medium-sized enterprises (SMEs) and freelancers deploy their personal networks as their principal business development tool. And this makes proximity relevant because, while such a strategy is in principle available to small firms anywhere in the country, it is the firms in London that are able to maintain more extensive networks more easily. And it seems that this helps to drive a pattern of development in which Londonbased SMEs not only seem to grow larger, they also appear to grow faster while generating higher levels of innovation.21 But for others ‘co-location’ is not nearly as important as it might look, nor is it a guarantee of interaction: the science cities and technology parks beloved of governments wanting to create ‘clusters’ of activity full of innovative activity and bright people tend to assume that shoving industries – sometimes related and competing, other times unrelated and uninterested – together in one place will bring on the benefits of those ‘untraded interdependencies’. But in talking about the Silicon Valley networking culture, we remarked that the key element was the people interactions happening offsite, sometimes to the fury of the senior managers who would very much prefer to keep their latest product under wraps. These information flows are what businesses get out of the location; whether it is in Silicon Valley itself, further afield in the city of San Francisco, or a plane-ride away in New York and London.

What sort of information? We’ve raised all sorts of reasons why F2F helps businesses to gather and disseminate information about their environment, but to really get to

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the heart of what is going on here we need to go one step further and really think about how all of that information becomes knowledge. This is a subtle distinction that we’ve been skirting around for the past two chapters and it’s implicit when we talk about ‘information flows’ and uncertainty: how do we ‘know’ anything at all? It has also been implicit in the tensions we’ve highlighted between strong and weak ties or between related and unrelated diversity. You’ve no doubt had the experience of talking to someone and it becoming clear that you just aren’t ‘getting’ each other: maybe you gradually get the sense that the same words mean slightly different things, or maybe you literally speak different languages … There’s just no way to get across what you mean.

Tacit and codified knowledge Going back to the idea of F2F as communications technology, the transmission of an idea involves three stages: the encoding of the message, its transmission, and its decoding on the other end. Encoding and decoding are reciprocal processes: in a technological network this is done by protocols that tell the system how to break up and reassemble the packets of data, but for knowledge this step is done by people and it’s a lot more challenging. And instead of packets of data, we have the huge diversity of human endeavour: works of art, pieces of furniture, technical reports, lines of code and profit-and-loss statements. Michael Polanyi sought to capture something of this in the distinction between ‘codified’ and ‘tacit’ knowledge.22 Codified knowledge is the ‘message’ that we send, while tacit knowledge is, in a sense, all of the experience and judgement that went into writing those messages in the first place. Tacit knowledge is all of the things that we know but can’t put into words because it is understood almost instinctively. You wouldn’t really understand because you’ve not got the background and experience. You can’t put an artist and a scientist together for a couple of hours and expect novel insights to emerge out the other end, but put two artists or two scientists working in similar fields together in front of a work of art or the latest research in their field and you’ll have an entirely different outcome. Similarly, the output of programming activity is, by definition, encoded knowledge that expresses through lines of code what a particular piece of software actually does and how it does it. But the knowledge of what makes a good application and, as importantly, the ways that a particular company solves problems and manages data through code is tacit. Moreover, programmers – like artists or, frankly, any other expert – can also work backwards from finished output to tacit understanding: they

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can decode a great deal of information about other programmers from the contributions captured in version control systems. Over time, those changes tell us a great deal about the creativity of a developer’s solutions (do they work around the limitations of the language or platform?), the expressiveness of their programming style (does it work with the language’s strengths?), and their ability to see the big picture (does it solve one problem, or many?). In short, through continued interaction, workers develop a culture of production, be it for West End shows or FinTech platforms. Hence, like culture, tacit knowledge tends to be ‘sticky’ because it is formed over time and within a particular context. In fact, it wouldn’t be much of a stretch to suggest that tacit knowledge is culture. This is where the importance of frames of reference comes in play. Shared context is developed through standardized processes, training seminars, institutional and regulatory settings, as well as social functions that encourage staff to mix and share. Employees (potentially even those working at competing firms) come to understand instinctively that ‘this is how things are done’, and creating that shared frame is a lot easier when your staff are co-located: they can turn to their neighbour and ask “How do I deal with this?” or say “Hey, I was thinking that we might want to  …”. Even before the COVID-19 pandemic, businesses were already hard at work on ways to circumvent the spatial limitations of tacit knowledge: video-conferencing tools, internet forums, intranet services, Slack, Yammer and so on.

The ‘knowledge base’ approach So, investment in better ICT can help firms to move the frontier between tacit and codified knowledge by making it just a little bit easier to ‘stay in touch’. Given this, why isn’t our story just one about firms getting a handle on as much tacit knowledge as they can through technology and then moving out to the ’burbs? Once again, it’s all relative: if access to codified knowledge becomes easier, then the ability to access, produce or control tacit knowledge becomes, paradoxically, that much more valuable. The reality continues to be that proximity lowers the barriers to access to knowledge because it helps teams, companies, and communities to maintain the shared frames of reference that enable firms to benefit from ‘spill-overs’ more easily. So, the pandemic aside, for every software developer thinking “This face-to-face stuff is rubbish, I haven’t seen my team in eight weeks because we just use Slack”, there is a trading team thinking “If we don’t get back

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in the same room soon we’re going to start making expensive mistakes” or a theatre saying “We need everyone round the table in order to start planning our next production”. There’s something deeper going on here than ‘just’ tacit versus codified, or related versus unrelated, and it’s even more difficult to put it into words. Economic geography and innovation studies have adopted a technical term relating to unstructured, ‘factual’ information about the world; they termed it the ‘knowledge base’, and it has the sense of a common set of understandings about the world upon which people working in a particular field might draw. What the knowledge-bases approach enables us to grasp is why these spillovers appear to operate differently depending on the sector. As they always do, academics looking for larger patterns in their data23 have tried to systematize the idea of a ‘knowledge base’ as a way of understanding how you might get different innovation systems in different regions: Silicon Valley’s high-tech, Emilia Romagna’s furniture, London and New York’s finance and advertising … The University of Stavanger academic Bjørn Asheim has argued for the existence of three main types of knowledge base: analytical, synthetic and symbolic.24 Each of these can to be traced back to different innovation processes – ways of creating and sharing new ideas – that depend on geography, and proximity, in notably different ways.

Analytical knowledge The analytical knowledge base is oriented towards what we commonly understand as scientific knowledge developed in an R&D context. It is often testable, falsifiable, replicable and requiring ‘analytical skills, abstraction, theory building, and testing’.25 This is the sort of base that enables knowledge to be transmitted by publication or lines of code: the ‘encoding’ of knowledge is much more direct and, in the computing sense, declarative, so the capacity of ICT to transmit analytical knowledge is that much more powerfully enabled. As we’ve noted earlier, the way in which a researcher or developer encodes their knowledge can also be read by other experts in ways that are much richer than just ‘this line of code does X’. So, everything from the style of the comments and choice of programming language (C++, JavaScript or Lisp?), to the presentation of the model, and how and with whom people collaborate on a publication or coding library imparts knowledge about a person and their ‘product’. For this reason, we think that the tacit element here is much stronger than some people realize, but these means of demonstrating your skills and building a reputation remain much more observable than in the arts

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or consultancy. Given this, by implication there’s much less obvious need for frequent or direct face-to-face interaction in order for analytical knowledge to propagate effectively. So we’d expect there to be a tendency for the more traditional type of stand-alone tech firm or research institute – IBM, with its research labs in suburban Dublin or New York, is a great example of this – to look to strategies involving a mix of remote and inperson working in high-amenity, but less congested locations: nice places without the drawbacks of the big city. The presence of firms like Twitter and Airbnb in downtown San Francisco, or Google at King’s Cross in Central London complicates this picture. There’s definitely something different about these firms. Part of this is the line of business (things badged as ‘social’ or ‘peer’-based), and part of it is the durability of the start-up mentality (whether conscious or not) and the kind of internalization in which companies like Facebook engage, but we wouldn’t be surprised if the single biggest factor is the kind of employee that these companies want to hire. The ‘Young Turks’ that staff these companies don’t want to spend hours on a bus or train when they can afford to be ‘in the heart of it all’ and they definitely aren’t ready to settle down to the quiet rural life.

Synthetic knowledge Synthetic knowledge is rooted in experience and practical applications, the sort of thing that develops over long-term relationships through applied research and process development. There’s an old joke, presumably one written by engineers, about the expert called in to fix a recurring problem with a reactor; they spend 30 minutes roaming the site before producing a hammer, thwacking a pipe and leaving. Although the problem has been resolved, the company running the reactor baulks at the invoice for $20,000, to which the engineer replies: “Value of hammer $5. Value of knowing where to use it: $19,995.” So, even though the outputs of synthetic knowledge are often codifiable (e.g. as blueprints or strategy documents), many of the inputs will remain profoundly tacit because they flow from ‘a trial-and-error process, involving user-producer interaction as an essential input and selection mechanism for innovation’.26 Examples of synthetic innovation and knowledge from the literature include plant engineering, industrial machinery, production systems, and shipbuilding. But we think you’d also see a lot of it in ‘front-end design’ for applications and software, or in the wide range of consultancies where the to-and-fro of ‘iterating a solution’ means that meetings feature as a regular cost of doing business.

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Logically, firms rooted in this knowledge base will want to be ‘close’ to customers so as to minimize the cost of all those meetings. But there are two subtleties here that militate against it having to be a city-centre location: the first is that many of the relationships here are fairly predictable and bilateral, not ad hoc and many-to-many, so while accessibility matters, you don’t necessarily need people from five different firms around the table at a moment’s notice. And the second, that since your clients could be based nearly anywhere in the city, or even country, the accessibility you need is not necessarily to the city core: you could be jumping on a plane, onto regional rail, or into your car, depending on where the client is located. By this we don’t mean to imply that consultancies will sit neatly arranged around the M25 or ‘péripherique’: you won’t find McKinsey touting its prestigious Surrey HQ any time soon, even if that’s where many of its senior staff live. But here we’d point to the fact that McKinsey’s clients are governments, ministries and all manner of multinational entities. You need to be where the action is, but you don’t need to be in the Square Mile (London’s financial district). The same might be true for the likes of Arup (engineering consultants) or PWC (financial, among other, consultants): they’re within a kind of ‘Goldilocks zone’ where access is excellent, but the costs are just a bit more manageable.

Symbolic knowledge In the economic geography literature, the symbolic knowledge base is about ‘the creation of cultural meaning’, so it’s primarily artistic and aesthetic in nature and incorporates everything from industrial and graphic design, to advertising and film-making, as well as art and music. There is clearly a very strong tacit component, but one that is rooted in the complex associations, aspirations and connotations that particular brands, artists and performances raise for each of us. There is necessarily a lot of interaction: outputs are often collaborative and bridge across disciplines, and there are feedback loops that link producers of one cultural product as consumers of another. As Elizabeth Currid-Halkett noted, there is an importance to what music the designers hear, and to what clothing the band wears.27 The rate of change in cultural outputs also means that knowledge about the market, the roles of individuals within it, and where you’ll find the right ‘fit’ for your next project is often generated at gatherings (‘events’, if you prefer). For these innovation processes to operate effectively, you’ve got to have people able to interact with one another on a frequent basis, and the only place where intensive, regular multilateral flows are

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cost effective is the city. The difficulties of doing this anywhere else are exemplified by the degree show for graduating art and fashion students: this is the kind of ‘event’ where careers are launched through a mix of show-and-tell and excitement-fuelled networking, so there were (quite understandably) howls of protest when, in light of COVID-19, universities proposed running this – together with some classes in sculpture – online.

One constant: change Although we have discussed each knowledge base in isolation, it is clear that there is going to be a significant level of overlap between them: surely programming has aspects of synthetic knowledge, as does advertising? Scientific theory is heavily informed by the kind of trial-and-error process we might more readily associate with the synthetic knowledge base and there is ‘buzz’ in the scientific community about groundbreaking research … the scientists working on black holes also claim to have learned quite a bit from the VFX people they worked with on the film Interstellar.28 On top of all this, over the life-cycle of a product or process, we can expect the manner of working and problem-solving to shift, perhaps frequently, between bases: from theory, to problem-solving, to communication … and back.

ICT: all change? Even though people and businesses have more options than ever before about where to locate, thanks to the power and ubiquity of ICT, we have stressed the continuing and crucial role of face-to-face interaction throughout our argument. This runs sharply counter to the common impression that the effect of the ‘information revolution’ will be to replace great swathes of human contact, as in current alarmism around the idea that Millennials would rather stay at home texting each other than meet up face-to-face in a bar or restaurant.29 ICT is, we would argue, changing everything, but not changing everything that much. It has had, and is having, great effects on the media that people use to communicate in their working lives: the omnipresence of email, the shift in the role of the phone, the penetration of video-calling … If it’s routine, it’s probably online, but if it’s complex then it’s probably still going to be done (at least in part) in-person. There remain important differences between firms, and people, and in how they deploy the mix of these technologies. The use of video-

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calling illustrates the sectoral differences: publishing, and digital itself, have gone much further in integrating the use of video calling into their activities than others. And whilst some sectors may never do so, for others (journalism? design consultancies?) it is possible to envisage that much more of their internal contact could switch from F2F, even if the external does not. So, our interviewee from a European bank reported that videocalling had helped to reduce long-distance travel for meetings with other divisions or teams, whilst for a London-based consultancy it had helped to reduce the necessity of repeat trips – after the kick-off meeting – ‘up North’. But F2F has rarely shrunk much, in total, as a result of all this: in most cases our respondents seem to be using video-calling as an ‘upward’ move from phone call or email, rather than a ‘downward’ move from F2F. As one of our interviewees said: “Anything that serves insight, knowledge and so on, you’ve got to stay personally connected, so face-to-face.” We’d argue that this is because, once again, it’s all relative: video-calling, email and the teleconference help to peel the ‘lower value’ interactions out of our busy schedules, but they don’t substitute for the need to get on a train or plane to meet the major new client. During the pandemic, we heard from one venture capitalist who said that while existing business was ticking over and, in fact, the lockdown had been good for pushing the older partners to finally engage with teleconferencing technology, new investors and deals were largely ‘on hold’ until people could travel again. As an involuntary experiment, the pandemic has been great at showing us how much and in what ways we need F2F, an issue we explore later in Chapter 6.

Artificial intelligence: change and continuity By now you should expect that we’re also going to be sceptical of the impact of the biggest technological change of the past decade: Artificial Intelligence (AI). To our way of thinking, AI is just the latest, and industrial-strength, version of ‘this time it’s different’. Or as the great Jill Lepore puts it in her review of Andrés Oppenheimer’s book30: No-one is safe. Chapter  4 “They’re Coming for Bankers!” Chapter 5 “They’re Coming For Lawyers!” They’re attacking hospitals: They’re Coming for Doctors!” They’re headed to Hollywood: They’re Coming for Entertainers!” I gather they have not yet come for the manufacturers of exclamation points.

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Yes, AI is going to change things, and many millions of jobs are likely to be affected. But we struggle to see why it should be any more disruptive than the first industrial revolution. Or the second. Or the third. If there’s anxiety in the papers, maybe it’s because this time it’s the white-collar jobs in journalism that are being industrialized? In its automation/robotics guise we think that AI does indeed have the potential to make big, if not earth-shattering, changes to Central London working life and its faceto-face component. In commercial law, for instance, there is a clear-eyed recognition that AI will impact on costs and competitiveness in the very near future: the specific example our interviewees referenced was due diligence work. This time technology is not just about replacing clerical workers or cutting down on meetings: “it has the potential to replace a task which currently takes fifty lawyers three weeks working 24/7”. The capacity of deep learning and natural language processing to handle disclosure and document analysis at scale potentially wipes out a lot of billable hours and a lot of entry-level legal work at prestigious law firms. But AI doesn’t make sense of documents – it finds patterns in them – nor does it help you to construct legal arguments – though it might help you to zero in on important documents or contractual terms. Until AI can help you to understand what was understood or left unsaid at the negotiating table, and to integrate precedents, norms and regulations, it’s hard to see how it can move much further up the value chain in legal services. This, then, is a field where technology is going to bring big changes, but not to everything, everywhere. In the simpler bits – uncontested divorces, updating wills or straightforward property transactions – it’s hard to see why clients wouldn’t prefer to save some money and work with AI, but it’s hard to see that coming into the complex parts of contracts, torts or mergers. One of our senior lawyers, when interviewed, was surprisingly sanguine about the jobs prospects for legal graduates: “they’re young, they’re bright, they’ll find other things to do”. And for many big players in the financial and professional sectors this could be the shape of things to come. Apart from commercial law, other activities already noted include the property/ legal interface – with the example of residential conveyancing as an early model of the move away from professionals to digitized low-margin processing at scale – and insurance, where a move towards ‘insure-tech’ (a close relative of ‘FinTech’) is already under way as AI and machine learning make it steadily easier to customize pricing and gauge individual risk with only small inputs of skilled staff time. In other words, AI-type technology makes it easier to create standardized products that look and feel like bespoke ones, but that’s a

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trend that has been gathering pace for decades. The City will still excel in producing genuinely bespoke products in which AI is, at best, operating in a supporting capacity. So, although similarly disruptive potential must exist in parts of the banking business, as well as in any of the professional activities – such as accountancy and audit – where a lot of data has to be assembled and sifted, for many city trades that ‘frontier’ may not move much for the foreseeable future. The effects of industrialization will be, as they have always been, in the volume business. So, where business is about the ‘personal touch’ it will continue to remain so. For members of the Bar, whose core business is all about personal involvement, it will continue to be so; for equity traders, and for brokers, ICT and AI are making, and will continue make, a difference, no doubt, but not to the core modus operandi and only partially to the scale of operations. In London’s classic ‘West End’ trades (or NYC Midtown’s) – PR/Comms, advertising, pressure groups, digital specialists, designers … – this seems even more likely to be the case since the primacy of tacit knowledge, exchanged face-to-face at a range of formal and informal interactions, will sharply constrain the impact of AI. And if we think about two other big London sectors – health care and construction – the expectation is similarly nuanced. In medicine, AI will, like other technologies, increase the ability to generate alerts, to make diagnoses, to document them, and to allow doctors to concentrate more on the human aspects and less on record-keeping or notifications. Or, at least, it should do that if the designers of AI-augmented systems listen to what users, and not administrators, need.31 But these professions will all, always, have a human component. Some people seem to be comfortable with a video interaction with their doctor via a service like Babylon Health or The GP Service (just two of the many we’ve seen advertised on public transit), but these aren’t patients negotiating complex and interacting health conditions. As anyone who has rung NHS Direct will know, sooner or later you will be referred to hospital A&E (ER) for just about anything where the symptoms are ambiguous or the issue can’t be dealt with by a prescription. So, the opportunity of AI, and of ICT more widely, is the reduction of ‘transaction costs’. For the GP, it’s dispensing with the costs of face-toface meetings for easily treatable conditions, seeing young professionals or busy families running low on a repeat prescription … In principle, that should leave more time for the hard stuff, as well as the quick check-in with a lonely elderly person on a new medication. Similarly, in project management for buildings, cloud-based qualitycontrol software can document every job stage, and can check processes and completions, but a project manager still has to be out on site as well,

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communicating with the workforce and badgering subcontractors. Better information, but the same job.32 The constraints on the widespread use of, and substitution by, AI are in many ways similar to those on the already experienced moves towards back-office transfer, outsourcing and offshoring. So, in our day-to-day working lives, it looks to us like AI is likely to help us to take care of ‘admin’. It will ‘understand’ (in its limited way) our individual preferences well enough that routine tasks that currently take up quite a bit of time will be resolved more quickly by an omnipresent and always-on assistant: GP appointments, negotiating who will do the nursery pick-up, booking tickets, checking out at the till … but not telling us if we should really make the effort to attend the awards dinner or if the client is happy with the work.

What does all this mean for cities? From what we’ve seen, three main themes seem to be emerging: the need for team coherence (you can’t just leave the bosses in the centre and send everyone else to the ’burbs); the dependence on ‘tacit’ knowledge and therefore some – maybe a lot of – face-to-face contact; and the risk of service issues like the problems manifested in offshoring call centres: unhappy customers and poor-quality services. Overall, our analysis and our interviews tend to suggest that the Central London economy, with its huge range, its complex webs of relationships and its offer of unparalleled access to each other, offers a robust foundation for absorbing AI’s potentially seismic impact. Place still matters, and continuity, not just change, is still the name of the game.

Who needs centrality, and who doesn’t? We’ve argued that not every business needs intensity of contact or a central place. The type of location chosen is heavily influenced by the type of business and by how much people need to be in more or less frequent contact. CBD versus inner-city versus suburban convenience versus ‘amenity-based’ choices like pleasant market towns 100  km from the big city: they each attract a different mix of people and businesses, each making different judgements about the need for, and costs of, contact. Our argument has been that the complexity and diversity of external information flow is what pulls companies in (the centripetal pull), while more structured and, often, internalized information flow is what allows them to choose a way out (the centrifugal push).

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A very thorough and data-heavy French study compared big cities with suburbs and rural areas, in terms of how much communicating (of all kinds) workers in firms did – and what role F2F played in the mix. Their picture is a familiar one, of ‘a situation where basic information can be exchanged by e-mails, more sophisticated interactions are concentrated on the phone, and finally face-to-face meetings are reserved for the most complex interactions’.33 So, complexity again and the need for quality responses, but since there are only so many hours in the day (we are all ‘capacity-constrained’), we’re going to reserve F2F for the ‘top end’ of the ladder of contacts: the ones with the greatest risks or the highest rewards … The great cities’ central areas, at the heart of huge agglomerations of people and activity, allow this to happen most easily because of their high connectivity, and they are lively to boot. So, they attract both the businesses that get the most benefit out of the location, and also the people seeking opportunities to work in dynamic, well-paid sectors (or those that cater to them). Such firms are characterized by Ian Gordon as being ‘close to the cutting edge of market or technology change; where there is substantial customization of the product/service for qualitysensitive clients; with sophisticated forms of collaboration in providing a complex product; and/or the provision of strategic advice and support to highly-placed decision-makers’.34 And for the people themselves, what big central cities offer the young and ambitious is also – surprise! – their ‘bigness’ and their centrality. For the workforce, ‘places with concentrations of such jobs ought then to provide the greatest opportunities for those with ambition and capacity to learn’.35 They are a vital element in central places’ propensity to attract inmigrants, and in their role as ‘escalators’ up the job hierarchy. As Glaeser and Maré suggest, central places which possess both a concentration of ‘escalator portals’ for the ambitious (a range of independent employers with overlapping demands in terms of skill sets), and a flexible, competitive labour market encourage on-the-job acquisition of human (and social) capital.36 Face-to-face contact – meaningful, work-related – is an essential part of this metropolitan package, especially for the important part of big cities’ workforces who need work environments which are ‘places where you learn’ new and marketable skills.

Place quality It isn’t just the overall location type that affects these choices. It also matters crucially what the places are like: what they offer and are seen to offer. Central places have got centrality in common, of course, but they

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also vary in their attributes, and especially in how their attributes are perceived by different businesses. This is most noticeable in the creative/ arts/ cultural sector, where the West End, Broadway, Hollywood, Soho, SoHo, Montmartre, Belleville and Kreuzberg all carry (or have carried) a kind of ‘brand load’ as well as a purely locational meaning. The two aspects reinforce each other: the place–product link gives value greater than the sum of the parts, giving them a kind of ‘monopoly rent’ in their specialized markets. But this is not just true for the media and the creatives. People whose businesses merge high technology and high design content – architects and web designers, software and game designers, ad-tech and e-publishing – are often found in what Hutton has called ‘signifying New Economy precincts’.37 Here, the work–life mix enriches the local ‘information surface’, and face-to-face contacts are seen as a vital part of the mix. So, similar patterns (though generally with lower rents, and you’ll likely find some younger gallerists in the mix as well) can be seen in any of the signifying locations for industries or activities, often in repeat patterns of ‘discovery’ of a new area, from East London’s Shoreditch (aka Tech City) to the former scrapyards and panel-beating sheds of Hackney Wick’s ‘Nine Yards’, and from Brooklyn’s DUMBO [Down Under the Manhattan Bridge Overpass] to Williamsburg.

Plugging in to chaos Central places are not just big undifferentiated heaps of activity. The specific nature of place and localization matters. Elizabeth CurridHalkett’s work stresses the importance of being there: all the creatives she interviews highlight how important it is to be in the same neighbourhood as the tastemakers who can advance your career with an endorsement, and as the collaborators with whom you can share ideas and create new projects. So the pattern of success may appear arbitrary, and the access to the ‘gatekeepers’ of career validation may be unsystematic and random, but the geography in which this social production system occurs is not random at all … the creative producers that flock to New York, despite high rent costs and increasing gentrification of their older artistic neighbourhoods, come here to plug in to this spatially bounded chaos.38 In London, our interviewees endorsed this geographical emphasis for certain sectors – advertising (Soho, Clerkenwell), PR (West End),

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publishing (historically Bloomsbury, but also one company that had moved out now moving back into London as part of a rethink around ‘learning sciences’ rather than just ‘educational publishing’), re-insurance (tightly focused near Lloyds in the City), banking (around, of course, the Bank of England). But many also demonstrated that for many activities any reasonably central location will do, because the drivers are more to do with access to clients or collaborators and to the Greater London labour market, rather than having to be in ‘prestige’ or signifying locations, or needing to be on each other’s doorsteps.

Being there – and being there together Note that two things are, or may be, going on here: ‘being there’ in the sense of being near (so able to get to meetings or events quickly and frequently), and ‘being there’ in the sense of occupying the same space so intensively that you’re forever bumping into each other. Elizabeth Currid-Halkett’s New York respondents made much of the latter: ‘[it is the] physical reality of the city. You run into people, see people on the street. Casual, quick relationships.’39 These informal, street-level interactions would be impossible, laughable even, in LA where everyone drives, so perhaps it’s the difference in industrial specialization, or perhaps it’s because of the difference in the built environment that LA revolves more about events than neighbourhoods. For London, or Paris, or Tokyo, and for players in markets like real estate or finance or ICT, the ‘bumping into you in the street’ dynamic is not seemingly as important, so this dynamic needs testing sector by sector. Just because a neighbourhood like Clerkenwell or the East Village offers the potential for frequent on-street encounters, it doesn’t necessarily follow that they are vital to every industry or even to industries that are located there. Our Central London interviewees’ lives certainly did not mirror the Manhattan creatives’ world: over four-fifths of our own correspondents, when asked how much ‘bumping into people’ happened or mattered, said only rarely, and that, no, it didn’t matter. In the heart of the City, a broker said, yes, “you can’t walk very far outside the office without handshakes, ‘how’s it going’, and so on [but] it rarely if ever leads to work, just occasional low-grade chat”. A Silicon Roundabout IT design director gets more out of it: “I bump into people relatively often, say every couple of weeks, for example when I’m going out to get lunch around Shoreditch. But does it lead to work? Well, of course, I know them already; maybe find out what they’re up to, possibly some work potential, in that it brings them to the front of your mind.”

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Much more common was the perception (from a planning consultant) that “It’s about gatherings, not the purely random,” so people in Central London, as perhaps in LA, operate much more on the basis of making it happen. We’ve seen that London does have some ‘signifying localities’ – we’ve mentioned Soho, Clerkenwell, Shoreditch and, of course, the City and the West End – and some of them do seem to support an ecology of informal contact and bumping-into. But that does not mean that they, or the businesses that inhabit them, are reliant on the sort of ‘random street-level interactions’ described for New York’s SoHo or East Village. Face-to-face contact is clearly vital, but it comes in many forms and settings, rather than significantly on the street.

Central places aren’t stable What’s also noticeable is how dynamic these geographies are. The interactions, particularly the face-to-face ones we’re focusing on, trigger external effects very quickly. The mechanism of transmission, of course, is that rents and/or property values rise in response to an area’s desirability. The classic London example of this was Wapping: part of the London Docks – the first to be abandoned as a working port – its gaunt warehouses and cobbled streets were handed over during the 1970s property slump to the most junior gofer in property firms’ offices. They let space to artists, cafés, wholesalers and Coca-Cola Southern Bottlers. Anybody, and cheap. A buzz of interaction and style exploded. The market picked up in the ’80s, and the property trade sniffed groovy fashionability. Within a decade, Wapping was upscale waterside apartments, estate agencies and trendy half-off-the-radar hybrid restaurant/ art spaces like the Wapping Project. Now DOA. The artists fled north and east: first Limehouse Cut, then Bow, then Hackney Wick, now perhaps to Walthamstow, and the estate agents – and gentrification – followed them avidly. Not surprisingly, some of London’s newer ‘signifying locations’ are under similar pressure, triggering snarky (and possibly accurate) commentary – along the lines of our quote from Richard Sennett in the previous chapter – about the government’s Tech City branding sounding the death knell for start-up activity in Shoreditch’s Silicon Roundabout. It’s now an old story: cheap New York City rents sucked in talented artists in droves, driving waves of cultural innovation in the Abstract Expressionism of the ’50s, and the larger East Village art scene of the late ’70s and early ’80s. But as ever larger and more prominent galleries and hipster joints made the Village, then SoHo, then the Meat Packing

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District respectable, the art dried up and the artists moved (or were moved) on. As the New York Times put it: ‘Goodbye Chelsea and Williamsburg, New York art is filing a change of address’.40 The perceived risk, from a ‘clustering’ standpoint, is that if the artists are dispersed across Queens, Brooklyn, Hoboken, Jersey City … then they are no longer hanging out in the same places or running into each other. We would agree that this is a real concern for cities that pride themselves on their breadth and depth in culture and media, but we’d also point out that, as in London, this is a long-run pattern and somehow ‘the creatives’ survive. The question is, of course, whether ‘this time it’s different’? We’re always suspicious of such conclusions, but certainly the degree to which housing and business rents in large cities exceed what is affordable by practising artists, designers, theatre workers, and so on is something we’ve never seen at this scale before. We should be worried, but that doesn’t necessarily mean that it’s time for Southend or Brighton to start marketing themselves as the new art capital of Britain.

The future of cities? In looking at the ‘people’ dimension of what cities offer, we’ve explored the distinction between choosing a ‘big-city-centre’ location and choosing a specific part of the central area. We’ve looked at the interrelationship of centrality with F2F, and the extent to which they are and are not the same thing. And we’ve tried to understand the patterns in face-to-face contact, in the way that it interacts with firms’ needs for information in their particular markets, and the signals we give and receive about confidence in the information. We’ve also reviewed the extent to which e-communication (of many kinds, and in different ways) is both supplanting and augmenting face-to-face exchanges. Inevitably, the patterns vary strongly from market to market and from business to business: in ‘promiscuous’ trades like PR and journalism, the constant whirl of contact seems both to be hard-wired in and likely to persist; whereas in law or insurance whole sub-sectors could peel off as AI takes the place of human presence, analysis or contact. As elsewhere in our book, we think it’s time to dust off some old tomes and start looking for continuity, not reasons to believe in a big break with the past. So, in unpicking how this interplay of influences works out and where the trends might be taking our cities, it’s instructive to reconsider two 1990s views of what the ‘communications revolution’ was going to mean for 21st-century businesses, markets and urban futures. In her thought-provoking 1997 work The Death of Distance, Frances

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Cairncross bravely included 30 ‘important developments to watch’ phrased as predictions; some (‘the effect will be to increase understanding, foster tolerance, and ultimately promote world peace’ at no.  30) now seem sadly optimistic and redolent of the (first) dot.com days; but many are recognisable now as spot on (‘people as the ultimate scarce resource’, at no. 19, for instance). No. 25, on the ‘rebirth of cities’, is particularly interesting, and specific: As individuals spend less time in the office and more time working from home or travelling, cities will transform from concentrations of office employment to centres of entertainment and culture; that is, cities will become places where people go to stay in hotels, visit museums and galleries, dine in restaurants, participate in civic events, and attend live performances of all kinds …41 We haven’t been to many of these recently thanks to COVID-19, and we certainly don’t agree with everything in her book, but those who dismiss it out of hand as being in the same vein as Thomas Friedman’s The World is Flat42 almost certainly haven’t cracked the cover. A year later, Peter Hall noted that ‘the dissemination of media may paradoxically even increase the need for face-to-face contact …’ and predicting that ‘Some activities will not be substitutable at all … similarly with all manner of eating, drinking and variegated schmoozing’.43 Two decades on, that still seems like quite a balanced judgement to us.

The cities today: ‘But what do they DO?’ This chapter has tried to get under the skin of our great cities, their central cores and the role of face-to-face contact there. We’ve traced a vital thread which one might encapsulate as Uncertainty>>F2F>>Shared Context>>Knowledge – and so Contact>>Proximity>>Central Places. Which leads us to an attempt to understand what F2F means now, in the central places of today. We wanted to move from thinking about how F2F works in general and in theory, to how it works in the specific and,

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in this specific case, Central London. The distinction between tacit and codified, and the introduction of distinct ‘knowledge bases’ as a way of thinking about how sectors might differ in their reliance on F2F, suggests a way forward: an exploration of individuals’ experiences in greater detail than we could cover in this chapter. So, as we alluded to at several points in this chapter, for the next one we asked people in a range of dynamic and highly-connected organizations what ‘Face-to-Face’ means in their daily lives. If we don’t understand that, we’re not likely to be able to judge what’s essential or long-lasting, what’s intrinsic to an industry’s way of operating versus a temporary phase, and what might be susceptible to loosening by the use of e-contact, and so on. And those questions and answers should help us to think about the robustness of our city centres and our key economic sectors over the longer term. Reading a wide range of literature stressing the importance of faceto-face interactions left us curious about the actual content of those contacts. We said to each other: ‘But what do they DO?’ What is the contact for, what does it involve, and what’s actually going on in the bars, boardrooms and cafés? The next chapter tries to explore just that type of question in the context of business meetings, social gatherings and catch-ups over coffee.

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Let’s Talk: Face‑to‑Face Interaction Now Up, and with Sir  W. Batten to White-hall to the Lords of the Admiralty and there did our business betimes. Thence to Sir Ph. Warwicke about Navy business – and my Lord Ashly; and afterward to my Lord Chancellor, who is very well pleased with me and my carrying his business. And so to the Change, where mighty busy; and so home to dinner, where Mr. Creed and Moore; and after dinner I to my Lord  Treasurers, to Sir Ph. Warwicke there, and then to Whitehall to the Duke of Albimarle about Tanger; and then homeward to the CoffeeHouse to hear news … Samuel Pepys, The Diary of Samuel Pepys, entry for 14 November 16641 So: what do they DO? We wanted to talk to people about what they talk about when their face-to-face contacts happen, and about how the ‘people ideas’ in Chapter 5 play out in practice: real people talking about real jobs. Over two years, and in a variety of locations across Central and Inner London, we met with some forty individuals from a wide range of industries2: an agent at the Bank of England; a producer for Love Island; an account manager at OpenTable; the London-based assistant of a worldfamous artist; someone from Google; the founder of a specialist catering start-up; partners in law firms; someone from Lloyd’s Insurers; someone from an ad agency…. We were not aiming to deliver a statistically robust sample of the city’s workforce, but to dip into the enormous range of roles and wide variety of dynamic and knowledge-intensive sectors of the urban economy. The point was not to focus on a single sector or industry, but to understand why all of these different people doing very different

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things felt the need to be in London and to pay the price associated with everything that entails; why they ‘had to be there’. We asked them about their meetings and contacts: the why, the where, and the how. Were they formal sessions (agenda’d meeting, deal or pitch?) or was it predominantly social and ‘just’ about staying in touch (‘bread on the water’)? What about location: did they take place in offices, cafés, at a gallery opening or out on site? And the reason for personal contact: how did they choose between F2F, email, phone, or a video link like Skype? Our interviews also explored whether ‘bumping into people’ really happens, if it matters, and, if so, why. And then, in spring 2020, as the coronavirus pandemic hit London, we reached out again to see what the sudden experience of working from home all the time might tell us about both the immediate and longer-term effects of a world without face-to-face contact. What our interviewees told us then forms the last section of this chapter.

What they told us We asked our interviewees – from the whole range of activities – what face-to-face meetings and encounters they’d had over the week immediately preceding the interview. There was a huge range: film shoot, team meetings, informal chats, formal client meetings, video-conference call to LA, bits of work at home with a collaborator, arranged meeting with another firm, client function/schmooze, dinner-debate with politico, and so on, and so on. A huge range, too, of responses about the crucialness, or not, of face-to-face contact and the central location; from the commissioning editor (“I don’t go out and about from the office that much anyway …”; “So you’re very de-centralizable?”; “Very!”) to the West End PR maven (“Here you can do five or six meetings a day, all over Central London … you’ve got to be a social animal”).

Let’s talk The patterns? Well, first of all, if you’re a foreign power thinking of invading London, do it on a Monday morning around 10. Everybody’ll be in a team meeting.… Which is to say that a big chunk of the time that people spend in face-to-face meetings is internal, and a lot of it is just keeping the machinery of the operation going. It’s worth noting how predominantly F2F this all still is: 80 per cent of our interviewees described meeting internal colleagues face-to-face as a regular part of the

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working week, and even though a proportion – perhaps around a quarter – of these internal meetings involved colleagues linking in electronically via Skype, Teams, Zoom, phone, and so on, this was ‘in place of ’, and not the basic modus operandi. So, one of the key things people do is talk to each other within the organization. It may not be why they’re there, but it’s a regular element once they are there. This contact is partly management – keeping the show on the road and checking job progress – and partly preparing for client contact and pitches, and to a lesser extent (in frequency terms) project development, sharing ideas and nurturing innovation. In advertising, and specifically the digital trickery to reach into new segments, one of our interviewees described a world where the face-to-face contact within the operation was more or less continuous: “Tuesday: in the office all day, and the face-to-face stuff was all ‘internal’, though at least one of them was in the café, not at my desk. I spend a lot of time in informal meetings – it’s an industry of persuasion: building confidence, getting people ready to back an idea, or to work late for you. Wednesday was some of the same, plus liaison (email based) with external clients including [a major TV network], plus a formal meeting: a creative review to present to our firm’s creative exec – this is a frequent working mode, each week. And on Thursday it was again some of same, though the afternoon’s main event was a client call to LA.” There’s a lot of keeping ‘your people’ on the same page, even if your meetings aren’t actually in the firm’s offices. In PR, one Monday was described as “breakfast meeting round the corner, internal meeting at the office, lunch over the road with our lot, another internal meeting at office, out to meet a West End property firm at their office round the corner, and then another internal meeting at the office.” But people use the venue and the format to signal a range of things: formal or informal, coffee in the ‘caff’ or something in the calendar … it all matters even when it’s internal. A journalist painted a similar picture of a web of intra-organizational contacts: “Internal meetings practically every day, and lots of them, with varying degrees of casualness as against arranged or regular. This week they included meeting my magazine editor, getting together with the books department of the magazine, an ideas meeting to generate features, an (arranged) meeting

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on a photo-piece with the writer and the photographer, and including the editor of the mag, with sandwiches in the boardroom; and then quick catch-ups with people in the building: people want to meet for coffee all the time!” Consultancy firms in real estate, planning and so on were perhaps not so frenetic, but still had a dense pattern of intra-firm contact. One consultant team leader said (of the inevitable ‘Monday-of-meetings’): “our team’s internal meeting … it’s the best way of disseminating information. Young staff tend to say ‘we didn’t know that’ or ‘we never heard of that pitch’, so it’s a half-hour standing meeting, with a rotating chair, about who’s meeting who, what pitches we’ve got this week, anything new from legislation, and so on. You can’t rely on emails – people don’t read them unless the word ‘bonus’ is in the heading!” In the previous chapter we identified importance of tacit knowledge about the market and the roles of individuals within it. Here is the company-internal manifestation of that, together with the meeting as motivator and a signal from senior staff that the information is important, delivered in a format that (hopefully) sticks when everyone heads back to their desk. As per Sarah Hall’s study3 quoted in the previous chapter, the ‘signalling’ aspect may well often be as important as the actual meeting content. In one of the design businesses, an interviewee said: “we had nothing formal meeting-wise, but we had an internal session where we sat around the table talking about a project together and working it up”. Their (yes, again) Monday team meeting, mainly on work planning, had been “ten of us in the team here, and eight non-London team members joining in the conference call – they tend to contribute to the call a bit more, because we in London can communicate at any time”. But being designers, they’d had a team day which even she described as “a funny one. It started with a yoga class upstairs, then we had a pecha-kucha4 within the team, 18 of us, each presenting on the same subject matter, and then late afternoon going kayaking from Limehouse Basin to Hackney Wick and team-building with the Europe people, ending up with pizza and beer in Hackney.” Surprisingly, perhaps, this is just as true of the internet businesses. A senior manager in an online booking agency described a typical week: Monday morning was all internal meetings, including a couple of oneon-ones; Tuesday was two internal meetings, one of them by Hangout because two of the participants were out of the office; Thursday back-toback internal sessions involving heads of department plus team meetings, and Friday four internal meetings (a one-on-one, then strategy with the regional team, one other meeting plus another one-on-one); and then Happy Hour in the office! And in the London office of a leading tech

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firm, a young sales engineer’s Monday was “a lot of internal meetings, mostly F2F – couple of conversations, on plans for the week, next steps and focus”. Friday had been “internal catch-up: F2F plus one by videoconference who’s not in London, then a team meeting for all the UK and Ireland sales engineer team (mostly present/F2F, but two on videoconference from Dublin)”. So, although other days had been less like this (“Wednesday? – mostly desk-based work, the only F2F was a quick internal discussion”), it’s clear that even the companies at the core of the IT revolution have F2F at their core. Some other sectors, though, seem to be less in this swim. In publishing, one of our interviewees averaged about one face-to-face session a day, of which two were regular arranged sessions. Publishing’s reliance on video conferencing is higher than elsewhere: in another firm, our interviewee used it as a more or less complete substitute for F2F meetings and indeed only had two internal F2F meetings all week. And our respondents in the legal profession – possibly, but by no means certainly, because of their seniority – relied only very sparsely on face-to-face internal contact, largely in pre-arranged regular sessions. In management consultancy too, the impression was of a tendency to minimize face-to-face contact, with a senior consultant noting only three internal face-to-face contacts in a week, though he added: “Wednesday, I was in the London office, for internal meetings on client-related matters. I could have done it remotely, but not after being out all day on Tuesday: it’s important to be visible and present as a leader in the team. And also, then, people will pop by to say ‘oh, by the way, this happened’.” The sense is of a less intense reliance, in general, on direct personal contact, but it’s still important for keeping abreast of the important ‘stuff’ that no one thinks (or wants) to put in an email; there’s a kind of situational awareness that develops from being regularly (even if not continually) in the office. It’s about being available and making the effort to see, and be seen, around the office. So, even before we get to the assumed rationale for being in the big expensive city (to sell to others), we have a huge amount of activity which is about talking amongst ourselves. And it features more, and less, in some perhaps surprising ways.

Clients and colleagues So, apart from ‘keeping the show on the road’, what is all this face-to-face contact about? Well, what’s clear from the people and firms we talked to is that the core work content for these Central London players does still rely heavily on face-to-face interaction. Everybody’s workload involves

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some face-to-face contact, and for 80 per cent of the interviewees some of that contact is with people outside their own organization: primarily clients. A lawyer described a two-day ‘lockdown’ session in their office, with 30 people there from the client organization plus their consultants, on a Development Consent Order at the stage of mid-project finalization of the case (“They like to come here. We have better biscuits”). A property advisor’s previous day had been dominated by two major client meetings, one over lunch: “it wouldn’t have worked as a conference call or video-conference link: tough negotiators, big egos, arranged it as a lunch for a feeling of informality – in fact this is often the case, with a sandwich or a drink as ‘props’…”. And the other one, a principals’ meeting, which is sometimes at the client’s office, sometimes as yesterday at a West End hotel (which the client owns …): “you need to see the whites of people’s eyes, with tough negotiators and high-value transactions; you see and hear far more, including extraordinary things that a video link wouldn’t capture”. The costs of bringing together all of these senior staff are substantial, but the insight it gives into the counterparty and their motivations, commitment and competence is invaluable. As the market research analyst, advising a global coffee retailer, noted: “face-to-face showed just how much they and [other global coffee retailer] hate each other! But the side comments, the jokes, the spontaneous stuff that’s so revealing – you need it to understand what the brief really is.” These are real-life illustrations of how face-to-face contact acts on what earlier chapters have argued is central to firms’ decision-making: the linked issues of uncertainty and risk, and therefore of cost and the prospect of a successful transaction, where, as Boden and Molotch observe, co-presence is so important.5 One of the key things that businesses need their people to do is to build up relationships which can help reduce the risks of poor information, uncertain evaluations, missed opportunities, and so on. Key to this dynamic is the fact that all projects are punctuated by progress meetings where the client expects to see key team members live and in the flesh. Whether it’s at the client’s office or at your place depends on a curious combination of factors: our interviews sometimes gave the impression that there was a power factor at work – who needed who most – but there is also power of brand: one of our interviewees commented that they don’t really have travel costs, clients like to come and visit them for the experience and, we assume, the bragging rights. Our correspondent noted that it’s a strong brand that people want to be associated with, and that the offices are deliberately quirky and ‘different’. A more hard-headed distinction came from the private investor: “if I’m in due-diligence mode, I’ll probably go to the office or premises of the opportunity firm … if I’m in ‘get to know’ mode, it’ll be somewhere like

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here [Brown’s Hotel] or the IoD in Pall Mall”. Drawing again on Edward Leamer and Michael Storper’s terminology, it’s clear that our interviewees distinguish between ‘handshakes’ and ‘conversations’ in their work.6 The Premier Cru version of the ‘just about everything’s in Central London’ syndrome was provided by an independent regeneration policy advisor, whose week would probably confirm the darkest suspicions about the metropolitan elite: “Monday, met senior civil servant at department’s offices as part of discussions with about implementability of current policy; Tuesday, met Minister about Local Growth Fund and had lunch with rail developer, partly about development potential, partly just keeping in touch; Wednesday, up to the North West for round-table, then back in London for drink with ministry Private Office, building on links there; Thursday, lunch in Central London with two Partnership Chairs; then afternoon tea with Business Angels, and meeting with community leader in West London about a development there”. Of course, not all the meetings are in London – these firms work all over the UK, so the face-to-face contact may take place in Manchester (project inception meeting at client organization’s HQ) or Leeds (for project steering group). But a very high proportion are in Central London (at least three-quarters, for our interviewees), and this seems especially true for the high-interaction trades like journalism, PR, policy advice and property. Indeed, the journalists, PR people and internet company interviewees mentioned meeting each other as part of their pattern of work over the week. The picture is of a continuous buzz of interaction: fascinating and irresistible to some, but to others, part of the “great accumulations of humanity” that “ferment and reek like a dunghill”, according to Sir Walter Scott, horrified by the great size of Edinburgh in 1828.7

Doing the job, keeping the relationship going Some of the face-to-face work involves other sorts of ‘not in a meeting, not at desk’ activity. Interviewees had, in the last week, run or been involved in: photo-shoots to provide content for digital advertising; casting/auditioning; film shoots; and trade shows. Most but not all were in London, perhaps in cheaper space in Inner London locations like Hackney, or outdoors on Parliament Hill – in this case, the interviewee noted wryly that there had been just one client team member there “but their presence varies with the glamour of the location: a fashion-shoot in Barbados, rather more of them turn up …”. But the ‘being there’ actually has more function or potential than just getting that bit of the job done.

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A young designer commented that the trade show took days to put up, and days to knock down afterwards, but that the debrief following this was critical, both for the job and for the relationship – as it included a social element, which the client is keen on. This is an illustration of how, as we remarked earlier about ‘knowledge bases’, proximity lowers the barriers to access – because it helps teams, companies and communities to maintain the shared frames of reference that enable firms to benefit from ‘spill-overs’ more easily.

Buzz and schmooze The other big thing that the face-to-face contact is ‘about’ – alongside actually doing the work – is the ‘buzz’ of networking, schmoozing, looking out for work, judging and being judged. All our interviewees engaged in this, though to wildly differing extents. Some of the literature might make you think that modern service workers do little else, drifting from coffee to lunch to reception to bar. As we’ve seen, they actually spend a great deal of time doing – yes! – that work thing. Still, there’s no doubt that the world of schmooze and buzz is a vital part of the work environment, and that it accounts for a sizeable chunk of ‘what they do’. Particularly when ‘what they do’ is manage external relationships and partnerships that require continual assessments of judgement or ability, confidence, and commitment. But not for everyone. Almost a half of our interviewees had little workrelated social contact of any kind. Sometimes this is because of level in the company. As one young economist at a big consultancy said: “I’m relatively junior, so I’m not that client-facing anyway.” And sometimes it’s about company structure. Firms may have separate teams or individuals who do most of the work search and client entertainment, and so even quite senior people described a working week that involved very little contact of this kind. Or the social contact may only be an occasional, special burst: publishers descending on a university, or a couple of conferences a year, where there’s a burst of networking that may then be followed up with emails and so on over the following months.

Lunch is dead? Long live dinner(-debates) For the others, there seem to be two main headlines: one, lunch isn’t what it was; and, two, organized events now provide an essential structure to many people’s work-based social activity. The image of Central London

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as a whirl of expense-account lunches spent swapping gossip and trading insider tips (and beloved of ‘how to’ guides like ‘5 Reasons to Schedule More Business Lunches’8 or ‘The Importance of the Business Lunch (Written By Someone Who Formerly Disliked Them)’9) is true only for select parts of the modern-day workforce, it seems. We were told that “Insurance is a sector where there’s still a lot of lunching together and drinks together … it’s part of the ‘why they’re in EC3’ …”. This seems still also to be true in the worlds of journalism, PR, property and politics. One comment, from a ‘self-described small-p politician’: “the world is full of offices with lots of people not doing much … At lunch you can get a shedload done!” Beyond this, though, hardly any of our interviewees regarded business lunches as part of their toolkit: one senior lawyer explicitly said “Lunches? No, very few, one a month if that – it just doesn’t fit with the office or the time.” This change is partly put down to changes in business practices and pressures: a Lloyd’s Name observed that “For professionals like lawyers, with the pressure of chargeable time, there’s less willingness to spend time just interacting  … lunches twice a week when I started in the City, now hardly ever.” It is also associated with the regulatory changes we noted in the previous chapter: “… regulation and policy tighter …” and “everyone’s got a Compliance Department” (both from the banking sector). One wry comment about ‘the old days’ from someone now involved with regulation was “it’s unclear to me how anyone remembered the deals done over lunch”. In other sectors – such as design, IT, advertising and fashion – it’s the quick contact, the coffee and then back to work, that seems to fit the pattern much better. Breakfast meetings, too, are seen as manageable and worthwhile for maintaining contacts: “the main vehicle for business development”, according to one specialist lawyer. And whilst people at all levels and in most sectors mentioned the role of having drinks with clients and contacts – “the people who’d come up from the New Forest client, went with three of them to the pub round the corner”, or “like with the printer, going for drinks together”, or “a drink last week with an MP I keep up with” – it was all in a fairly light-touch and semi-casual way: not particularly often, mostly a way of confirming and maintaining relationships and not, by the standards of the 20th century anyway, a very booze-drenched milieu. What does seem to be widespread in London, though, is the reliance on more structured events: predominantly in the evening, and including dinners, to create the setting for – even the excuse for – the networking and contact that people need. The events mentioned ranged from awards (sometimes sponsored by the firms themselves, but often by others),

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via research launches, college shows like the Central and St  Martin’s rooftop Future House exhibition, smaller cultural events around food or music, to a client’s Dragon Boat Race at Canary Wharf … The VP of an internet business had spent: Monday evening at an award ceremony for the 100 Top Restaurants, “with two to three hours’ networking”; Tuesday evening at a smaller event attended by journalists, especially lifestyle writers; and Wednesday evening at the kick-off of another award round, discussing progress with fellow sponsors. Dinners, too, are used heavily as a format in the legal profession, in property and in communications businesses: when asked about after-work events, a solicitor said: “Evenings? Constantly, too many according to my wife. Say, two a week, generally up to about 8 pm; plus, say, once a week a dinner which lasts till later. Tonight I’m hosting a [Professional Association] discussion about the ‘Hybrid Bill’ process, here; last week I had an association board meeting, a retiring members’ dinner, and a round-table on the process itself. The first week of last month, there were three dinners in a row, including another association and the parliamentary agents …” Closely related to this format is the event hooked onto a current policy issue as a basis for attracting like-minded people: hosting a dinner-debate with one of the Deputy Mayors; attending the Mayor’s (early evening) Tourism Panel; the (mid-morning) City of London Users’ Panel; the Lord Mayor’s Breakfast “attended by big players, and by the officers, but important to keep in touch with the members too”; an Infrastructure Commission round table  … all had taken place in the week of the interview. Meetings of professional institutions played a similar role: even where there might be focused discussion on a specialized topic, there was also space for the catching-up, keeping in touch, saying what you’re up to, for the ‘buzz’. Alongside these structured events, there is a separate pattern of one-toone contacts all over the city centre in a great variety of ‘neutral’ spaces. Particularly for small firms, single-handers and freelancers, these are invaluable places for the meetings – and, in between, the online work – that keeps work coming in and getting done. The four-person graphic design practice with no meeting space had agreed to meet a new client from South West London in the V&A’s café: a literal halfway point. The private investor in early-stage tech businesses holds his key meetings in hotels or club-type settings. The independent property researcher listed (a tribute to her research) 12 good ‘co-working spaces’ across the City and

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West End, some of them great institutions like the British Library and some provided by firms like Google at its campus in Shoreditch, and stressed their usefulness to her semi-nomadic working practices: “places to meet, and work, use the free Wi-Fi … not Starbucks or Pret, though, too noisy”. These patterns tend to confirm our suggestion earlier (in Chapter 5) of a shift from the City of a generation ago. There is good evidence of a general trend away from personal networks of trust based on affiliation towards looser ones of ‘buzz’ and ‘enough confidence to judge’: people meeting at an event and hitting it off, then keeping in loose touch until the opportunity arises. As we saw earlier, in thinking about frequency of contact and the nature of information and relationships, these “untraded interdependencies”, to use Storper and Venables’ phrase again,10 are crucial in understanding why some places do better than others in the new economy. We’re not naïve, you have only to look at politics or the theatre to see the importance of connections forged at certain tertiary – and in some cases, secondary – educational institutions, but the distinction between trust and confidence does matter, and in this world ‘online buzz’ could be an increasingly important component of getting, and staying, in the loop.

What they didn’t talk about (or not much) What didn’t feature as much as might have been expected were formal pitches for new work, individuals’ own work-search, or firms’ recruitment activities. Two of our interviewees had done a pitch to a prospective client in the week we met: just under a quarter either mentioned one scheduled in the preceding or following week, or said that they were working on a proposal, or remarked on how crucial it was to do the presentations faceto-face. Regardless, it clearly isn’t that big a part of the week-in, week-out workload. Despite our interviewees mostly working in highly competitive sectors, they are not apparently on a non-stop and endless treadmill of bidding for new work. For some businesses, casual F2F is, however, an important part of work search: the owner of a small firm providing lunches and sandwiches to high-end City businesses remarked that “receptionists like to chat, that’s what it comes down to – and cake samples!”

Buzz in the age of blogs? Nor was looking for a job very prominent in the weeks that our interviewees described: nobody mentioned it, either as a component

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of face-to-face interaction at work, or as part of their social life. The impression is that this is one area where the digital world has made deep inroads. One senior executive said of recruitment “it’s a mixture of referral, recruiters, people we know, and LinkedIn, though we’re actually trying to cut the use of recruiters and LinkedIn, and concentrating on getting people before they hit the top of their grade!” A freelance TV executive recalled getting five weeks’ work on a documentary after contacting someone as a result of a Facebook post – what she described as “word of mouth, but via social media”. Face-to-face contact will be part of this mix, no doubt, but the referral and the people-we-know aspect seem to be less reliant on it than ever before, because digital search, buzz and contact is substituting for big chunks of it in ways that people find perfectly workable.

So, why F2F? That leads of course to a key question: why was it face-to-face? Why not e-contact? One of our interviewees in market research described it thus: “A conversation is a big fluffy bundle with a nugget of information in it”. There are the ‘functional’ reasons for wanting an interaction to be F2F: in journalism, the welter of internal meetings seemed to reflect the fact that whilst you can do a certain amount by email, “you cover more ground if you sit down and talk about it”. In management consultancy, “an exchange like that will take seconds, as against the minutes needed for an email and then responding to it”. And at the IT giant, a recent office reorganization which put teams together had already made a difference: “snappier and immediate conversation instead of three 2-way chat messages followed by a walk to the other end of the building”. Also ‘functional’, though part of the quality rather than the speed of the interaction, is the very important advantage that people see in the real-time reciprocity and adjustability of a face-to-face exchange: in negotiations where you need to keep responses flexible and evolving, or going through work where “you can go over it at the right pace, repeat, explain it as necessary, judge the pace, read the body language”. And equally, F2F is “for difficult and sensitive conversations” where, again, the two-way adjustments are vital – reflecting the ‘transaction cost’ point made in ‘Doing Deals’ (Chapter 4) that, where the costs and risks rise, you are willing to invest more effort and time to get the benefits. Clearly this is related to the ‘touchy-feely’ nature of F2F that some of the academic literature stresses. Most of our interviewees concurred: “Getting a sense of the person”; “A phone call, you can’t read the body language”; “PR’s very much about seeing the colour of your eyes”. For

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the private investor, “face-to-face is mission-critical at the beginning, I struggle to see how you could do it any other way. Forming a judgement about someone, do they know what they’re doing, is there reality behind the pitch, are they someone in whom you can have confidence – it’s the core of the requirement, can only be done face-to-face”. And it’s not just the meeting itself, it’s the context which can be crucial: “I’m always struck by the importance of the debrief as you’re being walked back to reception, ‘listen, I had to be harsh, but actually …’ and so on” (IT engineer). In summary, “the special aspect is you can read people – and they can’t put you on mute and have a side conversation!” When it comes to getting the work in the first place, F2F was stressed heavily: “I did one recently where I went in and chatted, established chemistry. I never ever went for a job where I couldn’t meet the client … for new work and pitching, physical presence is very important, going to see them, partly it’s evidence of commitment.” The word ‘chemistry’ is important: it speaks of a crystallizing relationship, of an increasing commitment, and of an evolving confidence about the other player and their judgements. It’s seen as essential given the importance of relationships in such a competitive marketplace. For a corporate lawyer: “In our situation (big firm, reputation, and so on), they assume we, and the rest of the shortlist, can do the work. It comes down to relationships (and of course fees). Do they like you? Do they see you as a person rather than just another contract? It’s very competitive; so whilst it’s easy for lawyers to lock themselves away and be ‘Big Brain’, clients want a relationship and we need to work on that.” In a similar vein, a property advisor reports saying to the younger staff: “no matter how good a professional advisor you are, ask yourself, what distinguishes you from hundreds of others, why you? [The] answer is relationships. Technical knowledge is a given; do they enjoy spending time with you? That’s what makes the difference and leads to long-term relationships.” This is Central London as a filtering mechanism for competence (it’s too costly to be here if you’re no good) and then, beyond that, it’s about the relationships. Even when being pitched to rather than pitching – as in journalism – to develop a relationship, the F2F aspect was crucial: “The PRs are really desperate to meet you face-to-face, even if only for 10 minutes

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on their day down from Manchester. I could have met someone who wanted to come in and show me her chocolate range … You’re trading your time, and they’ll make an effort too.” F2F is also used to help keep relationships going. The other side of the PR/journo relationship was acutely summarized (by a PR) as “deal with them like your bank manager, contact all the time, even if you don’t need them at a particular moment … I’ve had to handle a few bad stories, and if you know them and they know you, they’re less likely to do you down.” Both these examples are illustrations of Philip McCann’s model,11 quoted earlier, in Chapter 5, of how businesses may be willing to pay high city-centre rents if they are reliant on frequent face-to-face contact. They show how F2F, understood by all as intrinsically costly, is treated as an investment: one that will help get you through the inevitable failures in a world where risk and uncertainty mean there are no guaranteed successes. These are all business-to-business interactions. Within the Central London businesses themselves, as we’ve seen, the crucial role of face-toface interaction is also taken for granted. Even for a technical publisher, where “face-to-face isn’t that critical  …”, that is “except internally. There’s a lot of face-to-face contact, all the time, it’s an important part of teamwork – even though we could all do most of it from home in theory”. Another academic publisher who, again, relied very little on face-to-face contact, pointed out that in ‘trade’ publishing the picture is different because big names call for, and get, F2F (press launches and receptions) as part of the firm’s offer.

And why not F2F? The contact and meetings that weren’t face-to-face are, as you would expect given the wealth of digital alternatives, now enormously important and dense. The people we spoke to were very clear – though with different patterns of use, from business to business – about the utility of e-contact, and about the things that F2F wasn’t now needed for, as well as about the new things that e-contact makes possible.

The whites of their eyes The first thing to say about Skype, Zoom, Hangouts, and so on, is that for some of our interviewees – about 20 per cent – the attitude was that they don’t find them that helpful. Many avoid their use, quite often citing “technical problems”. Sometimes this seemed to be sector-specific: “in the

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last 14 years, had one video-conference (Germany) … Not particularly comfortable – the technology is always a bit in the way (even including on FaceTime); a particular problem anyway with graphic design work: you want to be both showing and looking at the work, and making eyecontact, judging reactions, etc – and this is very hard in a screen-based connection …”. In property development, the same argument was made in relation to showing and discussing materials. And a transport consultant also stressed the complexity angle: he distinguished between “an internal video-linked meeting of our two offices, and a steering group with a lot of people in the room including client-side and academics: face-to-face much better”. For a market researcher, “you don’t actually look into people’s eyes, you look at their faces”. David Foster Wallace’s prescient piece,12 from the 1990s, nails with his customary toe-curling clarity some of the difficulties: Good old traditional audio-only phone conversations allowed you to presume that the person on the other end was paying complete attention to you while also permitting you not to have to pay anything even close to complete attention … Video telephony rendered the fantasy insupportable. Callers now found they had to compose the same sort of earnest, slightly overintense listener’s expression they had to compose for in-person exchanges … for the image-conscious, there was of course no answer-as-you-are informality about visual-video telephone calls, which consumers began to see were less like having the good old phone ring than having the doorbell ring and having to throw on clothes and attach prostheses. But for firms where the information being exchanged is fairly well codified and you don’t need to see the ‘whites of their eyes’ these concerns don’t seem to exist. In a global IT firm, video links are clearly integral, averaging at least one such session per day in the week of the interview. Video-conferencing can be combined with screen-sharing or various tools like Google Docs, or with TVs, one on each wall, one showing the person speaking, the other with drawings or relevant information displayed and the camera will pick up whoever is talking. For publishers, it is clearly also a core work tool: “with new authors, I always make sure we Skype, not just email, and that time counts as face-to-face, you can see their expressions”; though not used incessantly: “Video-enabled link first time to say hello F2F, not since then… tend to do WebX call to show the platforms content can or will be used on.” City lawyers too use video links for both client meetings and intra-firm

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sessions. Even without all the kit, mobile technology offers quick and easy conferencing. A fashion designer: “I’m starting to get into it. Everyone has an enabled phone, so some people will use FaceTime to get visual as well as audio connection.” This sounds a bit more like the future – with the addition of video-conferencing to the toolkit, to be used when it suits, but not necessarily that heavily – than does outright refusal because you can’t see the whites of their eyes. It may be that the scale of actual substitution for F2F is not that great: avoiding routine ‘report-to-Board’-type travel and where sufficient history and, consequently, confidence already exist. Two thoughtful responses came from the financial sector. A banker interviewee, whilst starting by saying that video-conferencing “never came up to its billing in my experience”, went on: “It’s interesting – there’s some potential for listening, looking, reading body language, but somehow it’s not the same as face-to-face and you don’t pick up the nuances.” And an international equity broker was even more specific: “[Video-conferencing] is great for internal stuff, and the bank is anyway very tough on ‘internal travel tourism’ – nobody now goes to Frankfurt to report [but] … we don’t use [video-conferencing] with clients.”

Email: as exciting as mains electric An even more core digital technology for business is no doubt the email. It’s seen as both important and over-dominant: “Relentless. Not gone away, but unfortunately a big reliance on it” (management consultancy), and “Too much. Emails and meetings is the basic modus op” (law). Its role is significant for some, though not all: “emails are quite important to me – for example at [regeneration organization], with its blame culture … you can nip stuff in the bud, and file it. Bit of a successor to memo culture, and the paper trail, so it’s not a substitute for F2F, it’s more for memos and post-issue legals”. In PR, after F2F contact: “I produce meeting notes and email them out, actions and responses follow on.” In publishing, again, “huge reliance, the industry needs things written down” and “a lot of to-and-fro, the business is writing, after all!” For many, though, it’s as basic, boring and taken-for-granted as mains electricity: “OK for general communication and to the rest of the office”; “passing on files, having been briefed on a project, passing on work, booking-in photographers, getting cost estimates”; “can do simple things and follow-ups, like dates, or ‘we’ll pay this much for that piece’ …” and “it can be ‘thanks for your time’, confirmation of details, spread new tech to rest of team, or problems ‘anybody know about this glitch?’ …”. As for

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the relationship with F2F, email might be used to ‘reinforce’ occasional face-to-face contact, cementing a relationship or keeping people feeling appreciated. In general, though it is for “more black-and-white exchanges than face-to-face nuances” (advertising freelancer), not instead of the personal contact.

Hello Central, what’s the matter with your line? Mixed in with all this, and with us for over a century, is that fine old technology, the telephone. It did, of course, substitute, in a big way, for face-to-face interaction in the early years of the 20th century. How has its role evolved in the range of choices we now have for business communication? Reactions and use seem to be very much more a matter of personal taste and ways of working than for any of the other e-technologies. Perhaps this is because the phone, if not the mobile, has been part of everyone’s life for ever. From “Phone is good and you can get a lot out of a phone call, even though you can’t read body language” (political advisor), or “conference calls are integral to our way of working” (management consultant) or “… couldn’t function without it” (London property advisor, but based outside London) to “No, don’t have a desk phone, not all conference rooms have a phone … From a firm perspective, phone’s not part of the environment” (IT), or “… not a lot, don’t have kind of client work with endless phone conversations” (law) and “… not much or at all. Can be much clearer in email” (economist) – the range is wide, and the only variable that usage seems to track, to some extent, is the respondent’s age. There’s a sense here that those dealing with relationships, and with uncertainty or complexity on a day-to-day basis, still value the sense of connection and intimacy afforded by someone’s voice in your ear. There are subtle degrees of closeness indicated by the choice of phone: a personal mobile number signals something different from the office phone picked up while at your desk. One young designer made this distinction, and the ongoing utility of the phone even for those whose main mode of communication is textual, thus: “… never use the desk-phone, all mobile. I do make a conscious effort to use the phone, you’ll get a response quicker – though it can be a bit of a faff compared with sending an email”. The new mix and role was illustrated by a journalist interviewee: “The office is much quieter than it used to be. There’s less phoning … in a newspaper in the old days everybody’d be on the phone and your problem was the level of background noise. Now it’s the opposite, you have to keep the volume of your own calls down …”. We’ve substituted

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email for the lower-value phone exchanges, but when a deadline looms or a deal hangs in the balance then a quick call can be the most effective method of getting things done. Alongside, and evolving rapidly, are digital links that seem to supplement the main modes: texting on mobile phones, and chat messaging via many different channels for quick queries and fixing arrangements; or shared screens to augment video-conference or conference-call sessions. It’s a constantly evolving surface, illustrated by one freelancer’s remark about how he and his colleague “use Skype when we’re occasionally working from home, but mainly for instant messaging, we tend to have moved beyond the ‘seeing the person’ aspect of it” (shades once more of Foster Wallace).

Substitution and complementarity It’s apparent, a cliché even, that the digital revolution has had profound effects on the way we work. And that the mix between ‘why F2F?’ and ‘why not?’, and between the roles of the different technologies, is always in flux. As one of our real estate players observed: “… e-technology’s changed the way we live and work, yes – email on the move, videoconferencing, remote control of home central heating, all of that. But email or text or fax use: that’s not communication. You can’t convey emotion in an email. Their use has to be part of a blend of communication methods”. In PR, an interviewee described the changing mix over time (since the ’80s): “a combination of meetings and phone; then meetings + email + phone; now meetings and email”. The technologies substitute for each other and for ‘old tech’. “People do (still) make big requests by email – I mean it isn’t always F2F even if it’s a big deal – but that’s about replacing a letter with a formal ‘Dear X’ email, not substituting for F2F.” One might recall, too, that it’s not that long (15 years?) since lawyers were agonizing about whether emails could have the legal status of paper. Now they eat them for breakfast … The whole question of substitution for F2F is perhaps best placed in context via the comparison with the impact of the phone a hundred years ago. Then, suddenly, for the first time in history, you could talk directly to someone who wasn’t actually there – sensational! By that standard, our ‘revolution’ is a lot less revolutionary and summed up, perhaps, by our private investor’s remark: “… in general, this is how e-technology sits: it adds and can accelerate, but it’s always about complementarity, not substitution”. Even asking the question may be an age-related syndrome. Interviewees said things like: “The millennial generation, I mean 1987 to 2000, so

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17 to 37 now, and their use of technology and affinity with the digital world, mobiles, laptops, social media, it’s taken for granted as part of their world”; and “younger people – including our 14-year-old son – take it all completely as given anyway”. There’s that relativity again: it’s about the perception of relative costs and benefits that tilts us away from the phone towards the video conference, or away from the personal automobile towards the ride-share app.

A world without F2F? Nearly half our respondents offered a view on the future of F2F contact and, not surprisingly in the light of earlier responses, the underlying view is that it will remain essential. Not that it would be the same, or the same for everyone, however: “… in the future, though, perhaps the number of 18–25-year-olds walking about on FaceTime on the streets is an indication of the way things could change”. Or, balancing the two sentiments, “Transformational change is continuing, and F2F is probably less dominant than it was – but it’s still key and will never disappear” (property sector). From inside an IT giant: “Will F2F disappear? I expect not. The special aspect is, you can read people …”. Several respondents sought to put the question into context: “Change can be overstated. Look, there’s huge excitement about Uber, but they’re really just another predatory capitalist being clever in a new sector” [his sector, transport]. They pointed out that alongside ever higher penetration of IT is a move towards more collaborative sharing of office space and time: “this is the ‘Clerkenwell hipster’ mode affecting even the corporate world”. And the gender impact: “I think I’m in the first generation of women for whom we can genuinely balance work and home-with-kids, because the technology enables us to keep the work and career going, with fewer compromises.” A cool summary of the basis for F2F or not in the future came from the restaurant reservations sector: “anything that serves insight, knowledge and so on, you’ve got to stay personally connected, so face-to-face. The more transactional an activity is, the more it can be done anywhere, and the more it can be automated.”

E-tech to eat Central London? Lurking in the background for many sectors is The Next Big Thing: AI, that is to say, the automation of processes and skills hitherto requiring people to do them, often face-to-face. The ‘AI threat’ is generally couched

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in terms of its employment effects – massive job losses, and so forth, as we’ve discussed in Chapter 5. But a City lawyer related it to F2F and central places as well: “Fierce competition and high costs means there’s continual pressure to reduce the face-to-face content wherever it can safely be reduced. Look at residential conveyancing, which is the early model of this: it used to be done by solicitors, now it’s mostly computerized and very low margin. Anything that can be commoditized will be done by robots. One of our big competitors, they’re huge, are developing technology to do due diligence work: using key words to search thousands of documents simultaneously, etc. It has the potential to replace a task which currently takes 50 lawyers three weeks working 24/7.” In her view, the issue wasn’t so much the jobs (“… they’re young, they’re bright, they’ll find other things to do”) as the huge effect on costs and competitiveness, for business currently done at volume in the heart of the City. Other parts of the law would, however, remain largely unaffected: barristers, for example, whose core business (opinions, court appearances, ‘cons’ with clients and instructing solicitors, and so on) is all about personal involvement and will continue to be so; they are and always have been – since 1422, anyway – in Central London (Inns of Court).

The social-to-work linkage A lot of writing about the ‘work–life balance’ is premised on the assumption that social and work lives are merging to be one indistinguishable whole. In the words of the New Yorker cartoon’s confused husband: “I can’t remember – do I work at home or do I live at work?” But when we explored the ‘work-related’ content of socializing it seemed that ‘work’ and ‘life’ are still very separate for very many people; to the question “what about the work content of your social face-to-face contact?”, just over half (52 per cent) said there was none. The responses were strongly influenced by age and seniority: the great majority (four-fifths) of those saying ‘none’ were over-40s and high up in their organization. And they were aware of this difference, saying things like “when I was in Hong Kong, and younger, the work–social interaction was much greater, as it no doubt is for the younger staff now”. Where older and more senior people’s social and work lives did overlap a lot,

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Figure 6.1: Jongno 3-ga, Seoul: just ‘being there’ after work

they were in PR and political consultancy: “entirely integrated: social life is work people, plus university friends”, and “social and work lives have really always been as one”. In the case of at least one management consultancy there was socializing with other ‘alumni’ who had spread out into a range of industries. Among the under-40s who said there was a lot of overlap, the most striking expression of its nature was in advertising: “people move, it’s quite a promiscuous industry, being sociable is the oxygen. People in the advertising industry do talk about work, and people are buying you, so you always have one eye on the way you’re perceived.” University and excolleague ‘alumni’ networks cropped up frequently. And also the reality that your college-based and first job contacts often define quite a tight circle: “most of our friends are graphic designers – so inevitably there’s quite bit of shop, bound to talk about it. But it’s not really a way of getting work … lots of work chat, ideas as well as people gossip. Met old university friends last week to catch up, but also around ideas, things people have seen that they’ve liked.” Some related it to being close to the centre: “the social aspect isn’t a chore, would be if you’re based out in the suburbs.… My impression is that in our Canadian office they go straight home – even if they’re going out after. In London it’s on to something at 6.30 or whatever.” Does it lead to work? In advertising, yes, “social contact has led to work, but not immediately”. Similarly, in PR and public affairs, the lunches and dinners were an interpenetration of work and social lives,

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whereas for many of our interviewees they are very definitely a part of the world of work, separate from private or home-based socializing. Respondents in publishing described discussing big projects, or checking out people’s progress, “but even if we talk about work, it’s not of business significance”. As noted earlier, this may be different in ‘trade’ publishing, where the social and the commercial seem to intersect more. But overall, a clear conclusion is that outside the most high-contact professions (advertising, PR and so on), the use of one’s personal social life as a commercial tool or asset is very limited indeed. The ‘Manhattan creatives’ model is not one that can be used to understand most networks and work relationships in Central London today, and assumptions about the merging of social and work lives do not seem to be a reliable basis for planning future homes, offices or localities. Similarly, the ‘bumping into people’ question: does it happen, does it matter? Somewhere under 30  per cent of our Central London interviewees said it did. They were, shock news again, in advertising, PR, the art world, TV, and digital design (small-firm end, not corporates). In advertising: “it certainly happens, all the time; near home (Finsbury Park) as well as in the round-work milieu of Old Street, Clerkenwell and Holborn. It matters quite a lot, in an industry as badly organized, loose-fit, frenetic as advertising – if there’s something going on, at that moment, and you happen across someone, it can easily produce something.” Another interviewee pointed out: “A lot of the ad-trade is still in Charlotte Street, so the likelihood is greater.” And in PR: “I bump into people all the time, then it’s ‘oh we must …’; one of our biggest clients ever, I met at the gym; I’m a chatterer, I’m outgoing and I’m loud!” There are, perhaps, traces of it in property or project development, and in insurance’s tight EC3 cluster around Lloyds of London. However, the majority of our interviewees do not inhabit this world and, when asked if ‘bumping into people’ ever happened, and/or mattered, over two-thirds said it didn’t happen or only very rarely; and no, it didn’t matter. But then we aren’t just looking at ‘the creatives’; for one lawyer: “my clients aren’t particularly the people one would bump into outside this office”. The common point which emerges that almost all our respondents made was about “creating your own luck”, as one said, adding that his office’s local bar is called ‘The Happenstance’. That is to say, the crucial importance of being in places, and specifically at events, where you would be likely to run into someone useful or interesting. The phrase “it’s not random” was used more than once, and “only if I fix it”, said another – naming, en passant, the coffee bar in SW1 where you could, as if by chance, bump into senior civil servants from useful departments of state. The point is that it’s deliberate, it doesn’t just happen on the street or in a

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trendy bar; rather, people use a range of place-based resources to create a space in which opportunities can unfold, and a new contact can become the kind of professional acquaintance who will ‘put you in touch’. Evening events, as we saw earlier, are a vital locus of this activity. This is not just the public affairs-oriented dinner-debates and so on; young professionals too mentioned that “I can go to particular things, where I sort of know I’ll know someone, for example a talk. Rather than specific places …”, and “for example, before and after Future of London seminars … aided by a drink to break the ice … people from past projects, or clients, or others who’ve been at earlier events …”. Eighty per cent of our interviewees told us that these kinds of events – breakfasts, briefings, openings, industry events – were the place to ‘make your own luck’. The spread was similar across almost every sector and every kind of business, and it appeared to be as true for older, more established players as for younger staff eager to make new contacts and explore new opportunities. So, while it’s apparent that some ‘signifying localities’ do exist (Mayfair for fine art, Soho for the ad business, Clerkenwell for design, and so on), and that some of them do support an ecology of interaction and bumping-into, the great bulk of Central London organizations operate much more on the basis of making it happen. ‘You have to be there’, for sure; but ‘there’ is far more likely to be an event than a sidewalk, although one or two interviewees drew explicit contrasts with the ethos of New York City: “I have a friend in New York who meets people all the time, she’s out every night and gets work. But it also seems like a city where people do give you a chance to show what you can do.” Similarly, some also pointed to much smaller towns and cities – Oxford and Zurich were name-checked – where chance meetings on the street seemed more likely. So, there is a question as to how much we can generalize from London to other places, and we return to this in the next chapter.

Central, or nearly All these responses about what people are doing in the modern city environment raised questions and discussion about not just F2F but also central places. Over and over again we raised the question ‘Why Central London?’. Many of the responses are familiar from the literature: • Labour market factors: clearly hugely important, and maybe getting more so? • Prestige, or ‘signifying locations’: sometimes, but not actually raised very often

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• Proximity to clients: yes, especially when put together with proximity to other collaborators or contacts • Frequency of need for contact: this obviously matters greatly, but perhaps in different ways from how the literature presents it. From sector to sector, the importance, and possibly the longevity, of the need to be in Central London varied. A few seem to be “so decentralisable!” (in the words of a publisher), while for many others it would be inconceivable that they, or their part of the industry, could function anywhere else.

Staff: ‘Offering London’ Over half of our respondents cited recruitment as a crucial reason for a Central London location; the ‘talent pool’, ‘staff catchment’ and ‘best candidates’ cropped up repeatedly. This isn’t just about size (or depth) of commuter pool in the numerical sense – though it clearly is that – it’s also about how you get the kind of staff, particularly young staff, that you need. “Firms are ‘offering London’ to the 20-somethings they need for a team of any size” (advertising). One consultancy’s merger with a firm based mainly in Reading had prompted the suggestion of moving the bulk of the staff there to reduce costs, “but the lead partner said no: won’t attract the best talent, and clients won’t want to come for a meeting”. And for a market research firm near London Bridge “it’s not a prestige address…[but] it’s cool for the young staff”, they like “a mews in an old hop warehouse … attracts top staff, even at interview stage”. ‘Talent’ is thus a key factor in what attracts business to some areas. Increasingly, too, there is a two-way pull here: who wants to be in central places? The firms, obviously, but also the employees because of the range of work choices, the potential for flexible working and, as we saw earlier for a working mum, the fact that the technology now enables a combination of career progression and family work–life balance.

Signalling The ‘prestige’ angle emerges rather less than one might perhaps expect. Only a few interviewees (mainly law and media) mentioned it. Of course, there is more to the concept of the ‘signifying location’ than just prestige, and indeed this is what emerged just as much from the interviews. Companies are located in Bloomsbury or Fitzrovia (publishing, technical

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design) because “the address is part of the firm’s identity – they contribute to the area …”, or the fact that “the company ethos stresses a sense of connection and community, so being based somewhere that feels like the people you’re serving” (fashion design) means Central London (in this case, Covent Garden).

Connections – international, national, local, personal Leading the ‘Why Central London?’ answers was, inevitably, the whole matter of connections. Three-quarters of our respondents gave answers about connections to clients, to collaborators, to the rest of their industry, to other important players. We’re back to the raison d’être of the ‘central place’: highly connected, as Christaller found in Germany almost a century ago,13 so full of opportunities (and competition), and offering the crucial advantage of lower ‘search costs’. Some of this is very specific: a law firm that has a lot of insurance-industry clients has to be in EC3, in the south-east corner of the City. PR in the property sector means the heart of the West End, near Oxford Circus and Hanover Square. But London firms don’t just serve each other; many have a national and international client base, and 15 per cent gave the hub location (for travel to the rest of Britain, or the expectation of international clients arriving at Heathrow) as another consideration. Client linkages are far from the only ones. Almost as many respondents talked about other sorts of connections: a journalist, “They like to get ministers to come to the building …”; or a City solicitor, “when I was running a Reigate office, it was very hard to get people to get on a 5 o’clock train up to London for early-evening contacts and events, compared with the ability to continue straight from your desk in a central office”. And for an academic publishing firm, which had previously been part of that sector’s general move out to the Thames Valley/Oxford arc, a move back inwards to the northern fringe of the West End had been driven by “the wish to be more associated with digital businesses, as part of rethinking the business as ‘learning sciences’ rather than just ‘educational publishing’ …”. Here, digital means the SME-dominated Shoreditch ‘tech’ cluster just to the east, not the multinational software firms of the corporate Thames Valley.

Just being there What also came out of the interviews was many people’s fascination with, immersion in and delight with the city centre and what it means for their

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business. Of course, the majority of the million and a half commuters who grind into the Central Activities Zone (the CAZ, essentially the West End and City) every morning are probably far from sharing in this buzz. Their faces are grim as they plod across London Bridge at 8.30 in the morning. Still, nearly half our interviewees said about ‘Why Central London?’ things like “it’s all happening in London” (media); “London’s where all the action is, all the money, government, media” (private investor); and “walking past stores all the time, see who’s going into them, who’s got sales, what they’re doing for signage” (fashion). Even for sectors not normally associated with ‘buzz’ there’s something about working there that means not just ‘more’ (more money, more congestion, more opportunity …) but also ‘different’: “it’s the capital, the global city, ‘everybody’s here’ …” (regeneration); “I’m here because I’m an expert on Central London and I’m interested in it, I want to be in and around and absorb it – you know, being here and looking” (property research); “understanding our core city – London’s a large part of our total market – steeped in it …” (internet reservations). And on a more personal note: “I’d had a long-standing desire to work in Central London … the fascination of London World City” (property); “I walk to work in 45 minutes, with my dog Wizard … and it’s good for travel anywhere” (IT); “it’s exciting, nerve-wracking, on your toes, you feel as if you’re where things are happening – it’s the glam! – I was delighted to be working in Manchester Square, I wanted to be cool!” (market research).

People at the heart of the city A picture builds up of an immense whirl of activity – surprisingly stable as a mass, yet equally volatile in terms of its particulars and the impact of ICT. The interview programme illuminated how face-to-face contact fits into that activity, and we can perhaps summarize it with a look at: what people are up to; what they get out of it; when, in the sense of how often, they do it; and where the key places are.

What? Going back to the ‘What do they do?’ question: the face-to-face activity, across the sectors, still accounts for a lot of work time, despite the availability of more channels of communication than ever before: meetings, internal and external, of course; very often cups of coffee together for a quick exchange; less ‘doing lunch’ than formerly, but lots

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of events, especially in the early evening. So, the work-related exchanges continue on outside office hours as a really important part of many Central London businesses’ modus operandi now. But that doesn’t mean that people’s social and work lives interpenetrate as much as is often argued. There’s a marked age effect (you socialize with your work mates in your twenties, much less in your forties), and even among the younger ones, there’s hardly any (directed/structured) work talk anyway, except where ‘all our friends are … [designers, say]’. It’s also easy to exaggerate the importance of the casual encounter, the ‘bumping into someone in the street’ that feels like it ought to be a feature of the London anthill. Except for one or two business sectors – advertising and PR stood out – it’s clear that it’s much more about “making your own luck”, as one interviewee said, by attending events where you’ll meet people and can network.

Why? Why do they do it? Not surprisingly, the biggest reason for the stream of face-to-face meetings that people described is the rapid exchange of information: on projects, on possible projects and (every Monday at 10, everywhere) on internal management. A meeting can take up a lot of people’s time, but it gets a lot more attention than a 10-page email, and it brings misunderstandings and gaps to the surface much more quickly too. We often dislike them but getting everyone round the table works for all of the reasons that emerged in Chapter 5. There’s a lot of ‘soft marketing’ in the short meet-ups, and coffees seem to be the lubricant for a lot of the more formal business activity that goes on around them: checking people are OK or on your side, preparing a bigger session and so on. It’s a matter of presence and contact being evidence of commitment and reinforcing relationships. As we suggested in Chapter 5, this is less about ‘trust’ (in the way it’s colloquially used), and more about developing an understanding of, and confidence in, your contact: who they are and what they want. You don’t trust your competitor to tell you everything, but you do need to know if you can have confidence in their judgement. Do they understand the unwritten rules laid down by convention, the written rules laid down by regulators, and the overarching power of norms of competitive and collaborative behaviour? The other reason often suggested for all this face-to-face activity is the exchange of market information. Our interviews actually found very little evidence of people actually ‘trading’ information, rather, a bit of work

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chat, a lot of gossip and – with younger professionals – informal sharing of ideas and experience. So, this is about the background noise: the continual buzz that tells you the shape of the market, where to find its movers and shakers, who’s ‘hot’ and who’s not, and the swirl of rumours about what’s in the pipeline long before it makes a formal appearance.

When? How often all this face-to-face contact happens varies dramatically from sector to sector. A venture capitalist described “touching the investment quite frequently”, but it turned out they meant every few weeks. In PR, advertising, journalism and property, there was a daily stream of meetings, short conversations, presentations and functions. It is probably increasingly true to say that the reason for choosing a central place is less to do with how often face-to-face contact takes place than with how often it might take place: being available at any time, rather than being in meetings all the time. Increasingly, the ‘when’ is the morning and evening; the latter is perhaps a bit more social, thanks to some ‘lubrication’ at the bar, while the former is a useful place for combining some formal knowledge transfer (from a regulator or ‘big beast’, perhaps?) with a bit of light contact over post-talk refreshments (‘it’s been ages, let’s catch up next week …’).

Where? As to where they are doing it: the first thing to say is that centrality is, of course, still crucial, but that ‘central’ is constantly moveable. The Central London of a generation ago has expanded to take in neighbourhoods, from Spitalfields in the east to Paddington in the west and Bankside Southwark in the south, all of which formerly had little to do with the core. This ‘instability’ may or may not matter: as we saw in Chapter 5’s discussion of the unstable geography of central places, New Yorkers are concerned that Manhattan’s character and cost are changing in ways that could threaten the city’s business ecology, but the more dynamic a city economy, the more likely is this sort of change. Within this expanding core, it’s apparent there are still ‘signifying locations’ for some sectors and trades: the prestige angle is not perhaps mentioned as often as formerly, but showing your clients and competitors that you’re ‘part of it’ by attaching to a place brand like EC3 (insurance), Soho (advertising) or Shoreditch (digital) is still quite often part of locational choice. More generally, for a lot of our respondents, the buzz

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of Central London and of ‘being there’ both was significant and could be met by use of a range of spaces, as well as specific coming-together locations: neutral places like hotel lobbies, co-working spaces, the more spacious but less functional café-restaurants, and so on. Very often, these are the essential places for the ‘not random, but not by accident either’ encounters that seem to be such an important piece of the jigsaw.

Was this the future? The coronavirus year Shortly after our first draft of the book went out for review, the coronavirus struck: first in China, then in Italy and Iran, the rest of Western Europe following shortly thereafter, and then the world. With rapidly rising death rates and acute pressure on the health services, whole countries went into lockdown and imposed various forms of ‘social distancing’; brakes slammed on entire economies. It certainly wasn’t something we expected, but it put to the test all of our easy assumptions and arguments. With many people forced to work from home indefinitely, was this the moment that we’d discover that F2F wasn’t quite so important as we and our interviewees had thought? We wanted to understand both the immediate effects in their sector and what our respondents judged to be the likely longer-term impacts on how business would be done in future. Questions of this kind surfaced Figure 6.2: Lockdown London: empty streets and offices

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immediately in the worlds of media, academe and think-tanks: from a focus on ‘the biggest remote work experiment in history’14 to, as suggested by one commentator, the ‘working from home revolution’.15 And not just London, of course: Le Parisien too was soon asking ‘Télétravail, une nouvelle norme?’ (‘Telework, a new normal?’).16 Figure 6.3: Lockdown London: restricted public transport

In April and May 2020 we went back to our Central London interviewees, and despite the troubled times, a third of them responded, across a range of sectors from media to finance to property. We asked them three questions: about the immediate effects in their business and sector; about what it meant to be without face-to-face relations; and about their immediate judgement on the likely longer-term impacts of the virus and lockdown on how business will be done in future.

Basically, ‘coping’ Perhaps surprisingly, at least half our respondents said that working from home (or WFH, as it was immediately abbreviated to, around Day 2 of Lockdown) was already part of their modus operandi, so their working life was not as different as they or others might have expected. Even so, it was not without problems: IT systems capacity; the limits of videoconferencing; and the now-very-familiar downsides summarized by a finance sector player: “those who do not have easy access to outside areas are finding it more stressful than others, many miss the social interaction with other people, even things like simply catching the Tube;17 tensions

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Figure 6.4: Lockdown London: a different kind of face-to-face

are breaking out in households where there are children and spouses trying to work/do homework in confined places”. For others, changes had certainly been needed but seemed to have been manageable. In PR/media: “my immediate reaction is that my industry’s pattern of interactions are evolving very well to deal with the COVID-19 pandemic”. And there were several mentions of the work–life-balance benefit of not having to commute: “But they love not having to travel to work. They radiate with enthusiasm about having that extra day a week at home – the joy of isolation” (graphic design). So, for a surprising number of those employed in London’s most knowledgeintensive industries, if you left childcare or home-schooling out of the picture and if you weren’t worried about your next pay-cheque or your partner’s health condition, lockdown might have felt more like a shiftof-focus than a crisis. Business still got done, and the holdout, traditionalist firms were finally forced to acknowledge that maybe they didn’t need their staff onsite fivedays-a-week, nine-to-five. But already, too, we had identification of what was missing, and what now necessary, in an ‘e-only’ work world. This was both within the organization and outside it: “Internal communication

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is consuming more time as calls invariably involve more conversation than shouted questions across an office.” Hence “So many more Teams/ Zoom meetings – daily whole-team catch-ups and weekly smaller group meetings, just for chatting, as far as I can tell, and to keep everyone sane” (publishing). And although existing clients were generally getting what they needed, “new client production cannot be done over the phone. Building trusted new relationships requires face-to-face contact” (insurance broker).

What’s missing? Our second question, ‘What, if anything, do you miss about the face-toface interactions (internal, external or both) that you had before the onset of the COVID-19 pandemic?’, produced a wealth of responses. For the most part, the feedback was loud and clear on F2F’s essential contribution to a full-value work environment, but there’s always one exception: “I’m not missing very much of face-to-face at all. I’m missing the occasional drink … but I have just started a new job which is going to be based at home anyway …” – oddly, a very experienced PR person. There was heavy stress on the quality of interaction, and this came in both general terms: “I am hopelessly prejudiced on the subject of the value of face-to-face interactions, deeming them vastly superior, deeper and more nuanced than their Zoom-like equivalents … Zoom meetings are dry and cool, logical and efficient by comparison. You don’t get those silly creative comments that help to make sense of something or indeed offer solutions …” and also in the industry-specific details: “… Working on the edit of a feature-length documentary, and being able to look at/choose footage, make quick amends on the timeline, and review together, would be radically different working remotely. It would require the editors rendering out sections of film to share each time – which is time-consuming and processing-heavy. It would also take a collaboration that, in many ways, has the spontaneity and ‘special something’ of a musical jam session, where it’s hard to put your finger on exactly how and why something is clicking, but you can feel when it is …”

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So to force creative work into more of a linear, assembly-line style was seen as risky and frustrating although, interestingly, an editor on a biggerbudget horror film commented that they’d been given access to online collaboration tools to use at home that would, even just a few years ago, have required access to SohoNet, a worldwide private data network connecting the biggest film production cities. In the media too: “[one of our feature writers] was saying that the news and features executives and commissioning editors were spending so much time in Zoom meetings and conferences it was almost impossible to get hold of anyone to discuss things”. There’s a clear-eyed understanding that WFH on a permanent basis is going to bring up new coordination challenges: “Whereas, if you are all on the news floor you can just catch someone in passing or approach them while they are doing something else less urgent … [it] reminds one how much discussion is involved in producing a newspaper every day, making it pretty hard to do it all remotely.” And what does a regeneration advisor miss? “The social interaction. Ours is a relationship business …” Many of these themes had been touched on in our earlier series of faceto-face interviews, but the coronavirus pandemic and ensuing lockdown had brought the issues into much sharper focus, reinforcing many people’s views on the importance and irreplaceability of face-to-face interaction and its qualitative aspects. As a graphic designer put it: “I think this current situation if anything is reminding people that they do want to interact with others. The quality of a relationship cannot develop via Skype. You can maintain one, but it doesn’t really get any richer in a human sense.” Beyond the quality of the exchanges, our interviewees commented on their nature too: the managed nature of e-contact meant missing out on the chance or semi-accidental encounter and the possibilities that might offer. These were often related to intra-firm contact: “I find my communication is with my internal team, and I have lost the casual workrelated questions, catch-ups and chats with other departments … the biggest thing I miss about the face-to-face interactions is the post-meeting debrief! The comments on whether you thought it went well, what surprised you, how a decision made could affect another one …” (fashion design); “the inability to have one-to-one conversations during breaks to resolve specific problems/issues is a particular downside – decisions are often, and necessarily, made in a more ‘autocratic’ manner. Lack of coffee break/water fountain chat/banter is a downside, minor issues/ misunderstandings can often be resolved this way” (finance sector). These are primarily team and project-oriented problems, in sectors where it’s much more likely that people operating with partial pictures will make mistakes or miss the cues that really matter.

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Again, business realities were spelled out, especially in finance and insurance. These were, once more, a mix of internal: “We all miss inperson interaction, and the need to maintain contact with and motivation of large teams has placed a significant additional burden on leaders. Team calls (unlike physical team meetings) are not sufficient to be confident all remain engaged and active”; and external: “Client and counterparty interaction is the critical arena of competitive differentiation in our business – the lack of face-to-face engagement will erode advantage over time.” And in the development industry: “it’s quite hard to nobble someone in the corridor if you’re not in the corridor”. We are back at the core of why high-end firms are located where they are, and what they get out of it. Musing on the wider issues than just the single question of F2F and its absence, our respondents suggested what other things a WFH/‘e-only’ work world means, such as the lack of stimulus and inspiration. From the advertising world: “The other thing I miss about working in an office on Regent Street, which came as a total surprise, is the wealth of stimulus being around Soho. Stepping out for lunch, the ever-changing shop-window displays and retail trends was always helpful for refreshing our thinking and keeping us up to speed. There just isn’t an equivalent of that in the WFH environment … This is perhaps much more important for my line of work – marketing/advertising/communications – than others.” And from a market researcher: “We are missing the dynamism, the energy, the colour, the eccentricities, the inspirations, the cross-fertilizations, the curiosities of human contact, afforded by our vibrant city.” It’s the urbanization economy writ large! Perhaps the final ‘cri de coeur’ on this broader sense of what’s missing comes from a university academic: “I miss library access (a lot of material isn’t online), chance encounters with colleagues, face-to-face teaching with groups of students, live lectures, public events, my research projects (all currently suspended) and the regular routine of travelling into university which, perhaps pathetically, I’ve continued to do postretirement as an emeritus.” So: everything, really.

“Permanent change? I bloody well hope not!” Our third question, ‘Will the alterations in your industry be permanent?’, started to address the longer-term effects on how business will be done

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in future, based on experience during the pandemic and its associated lockdown and ‘social distancing’. This issue became the subject of national, indeed global debate from very early on. Immediate assertions that ‘things will never be the same’ were soon balanced by ‘things will be remarkably like they were before’: a particularly gloomy version of the latter being expressed by France’s economy minister, Jean-Yves Le Drian, with his ‘Ma crainte, c’est que le monde d’après ressemble furieusement au monde d’avant, mais en pire’.18 Like everyone else in the middle of lockdown, our respondents began to speculate as to whether behaviours would change over the longer term. Would there be greater emphasis on work safety and well-being than hitherto? Would there be more tolerance of parental flexible working time/location? Perhaps something of a marginally more level playing field from a gender perspective, with working couples learning to better share childcare? And so on. The results, to put it charitably, have been mixed, although favourable ‘reviews’ of those who deftly handled childcare challenges on air suggest a modest shift in attitudes. The expectations that this sets – we should all be so poised when parenting – might not be particularly healthy, but it’s a sea change from previous agonizing interview experiences. As to other work-related behaviours, respondents shared the common view that business travel, especially flights, would decline: “people might get on planes less often  … people have learnt that they can operate through social media  …”. Although no one was looking for this type of change, in quite a few cases it was being treated as an unwelcome but necessary ‘nudge’, whether for the senior partners uncomfortable with video-conferencing, or for the academic contemplating a ‘flipped classroom’ and the prospect of having to prepare for an entirely different kind of face-to-face experience: “once’s it’s flipped, it’s staying flipped”. Online behaviours were also evolving: “Having gone from replying instantly to Slack messages and email, almost to prove we are online and working, there has been a shift in terms of people’s working behaviours, for example, being a bit more fluid with the working hours and knowing the output of the work is what matters and not the presenteeism.” Working from home was generally seen as an already well-established pattern which would now get stronger. The personal advantages could be substantial: “I love the quiet space I have to work in, and can get through work quicker, plus have thinking time available. At the office, an open-plan one with lots of loud characters in the room, there were no appropriate spaces for thinking.” And, as an example of how the lockdown had the potential to influence longer-term practice: “I don’t think it’ll necessarily change our industry [publishing] itself much, but the concept

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of meetings being virtual will be more accepted …”. However, it also produced more sceptical responses, with perhaps the most astringent from the graphic designer: “Personally my feelings about how to work remain unchanged because I had already been working from my house … It’s a reminder of why I wanted to take a space in the first place. You’ve seen our setup, we can’t get much smaller without reverting to solo working from home, or possibly a desk share. Neither appeal.” Specific sectors produced sectorally specific forecasts. In advertising: “what budgets remain might flex more towards service innovation – how brands can deliver whatever it is they do in the era of social distancing – rather than pure marketing spend … they might look to bring more creative thinking closer to their product and service teams”. In the development business, an expectation of something of a swing back to a public-private partnership methodology. And in the media industry, but a point of quite wide application, the possibility that “companies will slow down on hiring for internal creative teams’ marketing arms, and instead go to external parties on a project-to-project basis”. But, too, something of a plea from a designer working with the events sector: “we need things to go back to exactly how they were, without any modifications: people in rooms, face-to-face, is what we need”. Hmmm: “exactly how they were”, eh?

“Torching money on property” Some of the clearest and most specific reactions were in relation to the implications of the lockdown and remote working on development potentials. Demand for office space will fall as firms learn lessons on what they really need it for: “Square footage costs for physical space in prime locations will be reviewed and undoubtedly reduced over time, particularly as social distancing may become a periodic feature of our lives for the foreseeable future …” (City finance), and “You’d expect that the WFH experience is revealing to many advertising agencies and smaller marketing operations that they are torching money on property and workspace that isn’t necessary” (advertising). For a property professional: “The office sector already looked to have a bleak future in our view … and I certainly wouldn’t ever build any office space again.” Co-working space, too, was very critically assessed. One developer in this specific sub-sector remarked that they are “screwed in two ways here” because they are losing all their short-term revenue thanks to the lockdown and having had to close the co-working space, but also because when (or if) they reopen, “many of the companies won’t renew their

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tenancy, or will reduce it because this experience has made them realize they are paying for something they don’t need”. This is all largely because of lessons learnt about remote working and the potential to keep it as part of the mix ‘going forward’, but nobody is expecting the pre-pandemic pattern of office-based business to change radically, even if its previous growth flattens right down. One of our insurance industry respondents said: “I very much doubt that the office workplace will disappear, indeed I suspect in the immediate aftermath many will rush back to the office to escape the confines imposed on them by the lockdown.”

Catalyst and accelerant Given their tendency to stress that F2F remains an important part of their ‘normal’ work activity, it’s not surprising that respondents expect it to still be crucial in a post-Covid world. However, this was expressed in nuanced ways: “what the lockdown helps us to recognize is the irreducible core of functions that depend on physical presence, and I think always will”. This, surely, is at the heart of the ‘lessons of the pandemic’ and links strongly to the themes of our book. The longer-term impacts of months of WFH, and an ‘e-only’ work world for many, will form part of the continual juggling and adjustment around business needs, contact and location that we have sought to unpick. And they will be different in each industry. It’s important to recognize, too, that for many people, and many sectors of the economy, WFH was never actually an option. If you were working in a sector that kept going (the health service of course; or collecting the bins, baking bread, or driving a bus …) or if your job was in a business that completely shut down (pub, restaurant, cinema, gym …), then you either carried on working away from home, or you stopped working entirely. As our market researcher pointed out: “We forget though in our office talk-y world, that there are many, many jobs which aren’t desk-based. Something researchers forget all the time, assuming that everyone is as familiar with discussion and writing as we are. They’re not.” For a lot of people, the pandemic world was very different to before – and a lot scarier. Change will eventually arrive for key sectors and workers too, but it’s the more flexible sectors – not to forget grocery shopping and home delivery – that seem likely to show the most abrupt and permanent changes. But when we think about these ‘Will it stick?’ sorts of question, it’s possible to argue that things may well change less in the long term than we feared in the thick of the pandemic. At the most basic level, we might be suspicious of any initial reactions as being much of a guide. As General Haig is said to have observed during the First World War: the news from

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the front is never as bad, and never as good, as it is first reported. The inertia and innate conservatism of society – especially if the disruption to our lives is relatively short-lived – tends to suggest that it will be easy to drop back into pre-existing patterns. Our ability to carry on with ‘business as usual’ could perhaps cynically be drawn from the endlessly cruel example of the Grenfell Tower tragedy: according to the media in 2017, ‘nothing will ever be the same again in the housing system’. Guess what, it bloody well is. One of our respondents put it best: “… it will be more of a catalyst or accelerant of trends that were happening, than necessarily an event that causes a change in totally new directions”. It’s a view that we share. The move to home working and greater use of technology, forced on many by the crisis but already well established, will undoubtedly receive new impetus. In relation to recruitment, one respondent suggested that her firm “could see this as an opportunity to hire from Europe-wide and not feel constrained to people who can commute to London …”. But, overall, respondents expect it to be a world where, in the words of a market researcher, “there will still be a call for both online and F2F, but a better understanding of the benefits and disadvantages of each”.

What, then, for cities? ‘What, then, for cities?’ is our formula in the main text of the book for our judgements about what the trends we identify could mean for different sorts of urban setting in the future. There has been plenty of speculation of this sort since the pandemic hit. One of the more optimistic (for cities’ futures) came from Ann Markusen at the University of Minnesota: My prediction for COVID-19: don’t expect the current epidemic to intensify the dispersion of urban residences to further out precincts. Yes, our interdependency and proximity render us vulnerable to pandemics. But they also show us how much we need social interaction. I’m imagining many people joyfully returning to their churches, gyms, coffee shops, favourite stores, theatres, galleries, and parks. We’ll see!19 We draw two basic conclusions from the experience of the pandemic and lockdown. The first is that the world of work will change as a result, and the second is that these are effects that work around the margins of the core advantages that cities will continue to possess. So many already-visible trends will be accelerated and strengthened, such as remote working

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(better supported by the technology than hitherto), and a further slowing and flattening of the office boom. And an ongoing preference for places that are convenient, adaptable, and that permit the kind of personal interaction which is both socially and economically essential. The focus now switches back from the fine grain of Central London activity, towards the broad scope of urban futures. Our penultimate chapter – Chapter  7 – will try to draw together the threads so as to identify plausible implications for cities and towns in the 21st century.

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7

What, Then, for 21st‑Century Places? But what is to be the fate of the great wen? The monster called … ‘the metropolis of the empire’? William Cobbett, Rural Rides, 18301 Across the arc of this book we’ve tried to set out our thoughts on the factors that will push and pull activities and people to and from our cities over the next few decades. A single book cannot possibly do justice to them all, and it would be a very ambitious one that tried to explain them by means of a single integrating theory. So, we begin by returning to our original ‘ask’: we want you to think, to question and to dispute. We will undoubtedly get things wrong; but if you approach the future with a critical eye and the question ‘Why? Why should it be different this time?’, then we think the post-industrial landscape might be littered with marginally fewer white elephants. We are particularly interested in the nature of the glue that holds the great urban concentrations together. What distinguishes the ‘sticky’ activities from the ‘footloose’ ones, and what is it about the sticky stuff that makes it much more likely to remain concentrated in the big, expensive hubs and not the smaller, cheaper ones? We’ve argued that this has to be seen as the interaction between four distinct layers: the network, where ‘stuff’ is projected into local, national and global relationships; the market, where information rarely flows as easily as we might like to think; the firm, where the costs of coordination affect growth, structure and location; and the individual, who needs to try to make sense of this wealth of noisy, complex and, above all, uncertain data about the world around them just to keep their company, their job and their life afloat. All the way through we’ve highlighted the importance for the most knowledge-intensive industries and individuals of proximity and

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face‑to‑face contact. To boil it down, if the choice of place is driven by the importance of ‘being there’, then how might different sectors of the economy manage the trade-offs between proximity and technology, and between push and pull? That leads us naturally on to thinking about how those choices play out in towns and cities both great and small.

Being there We’ve argued that proximity is a vital ingredient of the ‘glue’ that binds people – especially in those sectors where work is highly specialized and highly resistant to automation – to the ‘big-city’ markets. It immerses them in the buzz of information and judgement that is vital when you are operating in the fundamentally ‘opaque’ markets where information is a complex mixture of data and judgement. At its most basic, this is about needing to have access to lots of people and lots of information, and if that’s what you need then you need to be ‘near’ where lots of people are. ‘Near’ doesn’t (any longer) mean that you have to be on their doorsteps, but it does mean being able to reach them easily and quickly, and this points towards the continuing relevance of central places and their big transport hubs. Inevitably, however, how much these factors matter depends on the nature of the business and the product. As we suggested earlier, a client might make many trips, over quite a large distance, to meet with different consultants before selecting one; not so for a stationery order. And for high-value transactions, we can sort through a lot more potential partners if they are close by: close enough to be able to look them in the eye. So, projects that are manageable in large cities or agglomerations – because the concentration of firms increases the likelihood of a good match – may not be viable in smaller towns because the costs (of contact) are out of all proportion to the returns (of confidence and certainty). Face-to-face interaction provides a quality and intensity of contact that is simply not substitutable by technology if what is needed is, in the words of one of the interviewees in our Central London series: “Getting a sense of the person … a two-way process of trust … you pick up unconscious and intuitive messages.” Meeting up provides a context and richness that is always missing from a written report, a phone call or an email. And video-conferencing is still only a ‘next best’ solution: fine when you know each other, but not the way to make an effective introduction. One of our City ‘players’, as we reported in Chapter  5, illustrated the importance of getting to know each other as a two-way process by describing how people come to know him as, in City parlance, either a

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‘bull’ or a ‘bear’, and how if he suddenly changes his approach then they will factor that knowledge into their evaluation of his latest market call. When we have a ‘feel’ for you, we develop confidence in your judgement. Confidence, built on top of high-quality and high-intensity contact, is always going to be important in the opaque markets where uncertainty rules and bespoke deals are the norm. As a consequence, some businesses will pay very high prices or rents in order to be close to the places enabling the maximum interaction possibilities. What COVID-19 showed us was that a lot of what we assumed needed to be done face-to-face could, at a pinch, be done online surprisingly well. For very many organizations, a lot of office life carried on, adequately enough, through lockdown and into the ‘recovery’, over Zoom, Teams, FaceTime, Skype and any number of other collaboration tools, whether video-based or not. However, some parts of ‘being there’ clearly were missing in action – or at least seriously compromised – as those who attended ‘leaving drinks’ for a departing colleague, a ‘welcome event’ for new hires, or any other kind of event with a social dimension would have experienced. This is about the business as culture, and it’s just not something readily relayed over the internet.

Should I stay, or should I go? The sectoral balance This all raises the question as to whether these major technological and cost changes will make for significant sectoral differences in Central London and its competitors. This question – Will different sorts of activity respond differently? – was one of the basic enquiries in our London interview programme. In almost every case, the response from our interviewees was that they regarded continuing to operate in Central London as essential. And, as we saw in Chapter 6, there was little sectoral difference in the use – clearly extensive and important – of the ‘make your own luck’ places and events which now fulfil the role often ascribed to business lunches or random street encounters.

Who needs to be here? Some sectoral differences did emerge. “We must do lunch” still happens in communications-oriented activities like PR, journalism and politics/ pressure groups, as part of the non-stop stream of contacts, whereas in most other sectors it is relegated to a minor role. It still features in the property and insurance markets, too, where it seems to be used

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primarily to signal significance and effort to important clients. Here, the pull of the centre remains dominant and in only one case – an academic publisher – was the response tending towards an outward move. Even this was not a persuasive sectoral pointer since it was balanced by another academic publisher whose firm had recently chosen to move in, not out. In no other sector did we detect any sense of pressure for a change of strategy. Over and over again, the considerations of staff, client connections, market size and being in the swim were seen as key to the choice. Still, this does not mean that they will all carry on as at present, and that ever-more-developed information technology will make no difference. It is clear that in several sectors there is a more or less constant process of review of ‘what needs to be here?’. In insurance, banking, law and publishing, large chunks of the business (and thus employment, and need for space) are not only already carried out in cheaper locations, but also offer yet more parts that could be exported from the urban core. Other sectors (with bigger average firm size, and where some competitors have already moved out) could be in the same category: consultancies in management, HR/placement, property advice, and technical disciplines like architecture, planning and engineering. But let’s be clear: we’re not recommending moving your architecture practice to the Brecon Beacons, or the Berkshires, or the Massif Central, if you intend to sell your services in London, or New York, or Paris. These sectors often combine periods of intense communication and interaction with periods of being ‘on the beach’ doing development work for the firm. And those periods of intensive collaboration with clients are rarely in the same place, so while you might decide there’s no reason to spend money on a large HQ office that sits half-empty because your staff are ‘on site’, you also won’t want to be spending even more money on travel and accommodation than you are already. Given this, perhaps you should investigate a slightly cheaper location somewhere around the ring road and near the airport instead? If frequency of interaction is one factor in location for knowledgeintensive firms, the other is the balance between ‘tacit’ and ‘codified’ knowledge. Where meetings are not really needed all that often, and where a lot of the business is fairly routine and replicable, then a second wave of ‘back-officing’, outsourcing and offshoring may well follow. But that probability seems to be constrained by the need to get and keep teams together, and the reality that beyond a certain point a firm cannot decide to keep just its high-added-value, high-F2F-interaction people in the city centre and banish the rest to Maidenhead, or Poughkeepsie, or Melun: the nature of their business means teamwork and co-location.

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What the recent experience of the pandemic has done for many firms is highlight what parts of their business can work successfully remotely … and what parts can’t. The property industry was soon reporting that the pandemic had given a ‘big push’ to the already established ‘gradual shift towards the hub-and-spoke model – where companies have their headquarters in a big city such as London or Birmingham and smaller satellite offices in the regions’.2 It has also drawn in sharp relief the extent to which different types of meetings need to be daily, weekly or even less frequently. Even companies with a more traditional view of employment are undoubtedly already putting the finishing touches on new ways of working policies that involve fewer people in the office day-to-day, more flexible hours, and more acceptance of ‘working from home’ as part of the mix. And, for the foreseeable future, the risk of infection will certainly encourage firms not to bring people together who don’t need to be in the same room. We see this as potentially driving lasting change in the balance between what Bosetti and Brown3 called the ‘Consolidated HQ’ model most recently pursued by both Apple and Google – in London, as well as in San Francisco – and the ‘Scattered’ or ‘Slim-lined HQ’ in which smaller in-person groups within firms are knit together through ICT’s digital linkages. What, then, do these themes imply for real places? Yes, the ICT and digital revolutions and their enabling flexibility for transport and communication do loosen things up but as we’ve seen, they mean very different trajectories for different sectors of the economy; and this leads to very different implications for different types of place. So, we now turn to how we see those differences playing out – how growth trends may flex in light of the new realities, and what that might mean for real estate – and suggest how policy-makers might respond to such change.

A pen portrait of three World Cities For the great metropolitan centres, the evidence suggests continuing (if slower) growth and dominance: their unique selling point (USP) and comparative advantage are protected and enhanced by the lack of flexibility inherent in complex transport networks – especially where they intersect and overlap – and their robustness to ICT’s ‘distance death’. They offer unparalleled opportunities for face-to-face interaction and enable bespoke transactions in opaque and highly profitable markets. This is especially true of the central cities (New York’s CBD, London’s Central Activities Zone, and Paris’s Ier–Xème); but it also holds for the expanding fringes like Shoreditch and Paddington in London, DUMBO

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and the other nearby bits of Brooklyn in New York, or Belleville-NationBercy in Paris XIème and XIIème, and, indeed, for the areas that support and feed off them. In the case of London, analysis of employment growth between 2009 and 2014 – a recession and its aftermath – showed that the expanded Central Activities Zone (CAZ) saw more employment growth, at a faster rate, than London as a whole.4 The expanded CAZ, with less than half of London’s jobs but over half its gross value added (GVA), is home to especially dynamic sectors: 63 per cent of the jobs there were in the five sectors of professional/scientific/technical, financial, comms/IT, business support and accommodation/food (compared to 46 per cent in Greater London). Their interdependence is hinted at in the GLA’s ‘heat map’, showing co-locating firms in three key sectors and four main groupings, in the West End, City, Old Street and Clerkenwell/Holborn.5 So, we have two trends interacting: first, this geography of concentration, intensification and specialization in and around the city cores. As the Centre for London recently observed, this is far from new, but it is, if anything, intensifying: ‘London has a long history as a location of choice for global corporations’ head offices, yet data suggest that this trend has recently intensified. New and converted office landmarks are changing the face of London’s central business districts as well as that of emerging locations such as Hammersmith, Battersea and King’s Cross.’6 Figure 7.1: Heat-map of co-locating firms in selected sectors in London’s Central Activities Zone, 2013

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And second, alongside this, the prospect of a levelling-off, or at least slowdown, of overall metropolitan growth as businesses in more sectors decide that the agglomeration benefits are not worth the costs. Some space-hungry users like warehousing, logistics and storage have been leaving Inner London since the collapse of the longshoreman’s trade postWorld War 2, but the move out of the core will spread to those industries where AI and digital applications are biting, with company restructuring and/or delocalization impacting on middle-ranking professionals in financial services and business administration and support, as well as the retail sector’s workers both on the shop floor and in the back office.

Change in finance: the City of London These trends of growth in the centre, within a more static overall setting, are even more marked in the financial sector, epitomized by ‘the City’.7 Overall, Greater London’s banking, insurance and associated activities have not been growing particularly quickly (up 12 per cent in the period 1991–2015), but they are more concentrated than formerly (despite ‘offshoring’ and so on): financial services jobs in the City now account for nearly 50 per cent of the Greater London total, up from 40 per cent in 1991.8 And the jobs are, on average, highly productive and well-paid, so the businesses have kept, and slowly grown, high-value teams – not shrunk them or packed them off to the ’burbs. Around that trend, though, emerges a pattern where the City’s growth in non-financial sectors has actually been much greater, even in this, the UK’s money hub. In 1991, finance accounted for nearly half of the City’s 274,000  jobs – by 2015 it was down to 36  per cent, but out of nearly 500,000.9 The fast-growing sectors in the City are actually professional services, communications and information; and they include many smaller firms, suggesting that this hyper-central location and its mix of opportunities is attracting a wider range of enterprises than ever. In the context of global city ‘competition’ and regulatory change, one interviewee noted that London’s ancillary financial services firms alone employed more people than the entirety of Frankfurt’s financial sector. The depth of the market – and its labour force – matters. Back then to the ‘Should I stay, or should I go?’ choices. No doubt costs will continue to drive the search for savings. It is apparent that a lot of activity will continue to decentralize. But the responses will be a complex mix, including increasing use of e-communication (of course); increasing automation/use of AI (where algorithms can take over from furrowed brows); the shift of more work outwards – to home, to clients’

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offices, to provincial branches – for some or all of the time; and a greater reliance on public and ‘neutral’ spaces for face-to-face encounters. As one interviewee observed: “the more transactional an activity, the more it can be done anywhere …”. So, if it doesn’t need to be there, it will be moved. This is not a recipe for an emptying Central London, but it does point the way to a future where headcount growth (at the level of individual firms) trends gently down, where small enterprises play an ever-larger part, where big employers become medium-size employers in the CBD, even as they grow overall, and where social spaces and the public realm are increasingly important. At present, the City’s 124,420 firms are 99 per cent SMEs, with only 1 per cent establishments of 250 workers and over. But that 1 per cent (about 240 firms) employs over 50 per cent of all City workers.10 These firms’ decisions, about who needs to be here and who doesn’t, will continue to be the ones that trigger structural changes and discontinuities in headcount and the demand for space. For them, the cost savings from decanting staff and from the use of AI are constantly in tension with the need for leaders – and their teams – to be in the Central London swim.

And (most of) it is expected to go on growing Thus, there is a constant churn of firms resulting from such company decisions about going or staying. There are a lot of relocations: a snapshot for 2013 showed 1,600 more firms (accounting for 10,470 jobs) migrating out of London than moving in.11 Yet the total number of firms still grew, reflecting London’s higher-than-average company ‘birthrate’, with 7.7 per cent more businesses added in the capital between 2013 and 2014. 12 London’s planners evidently expect this growth to continue: from 2015’s 5.5 million jobs to 6.7 million by 2041; so up 1.2 million in 25 years.13 Within this, a third of the growth (425,000 additional jobs) would be accounted for by the ‘Professional, Real Estate, Scientific and Technical’ sectors, seen as providing 1.25 million of the forecast 6.7 million jobs. Also expected to grow strongly is ‘Information and Communication’, seen as overtaking the (still growing) ‘Finance and Insurance Activities’, both expected to grow well past half a million jobs; and ‘Arts, Entertainment and Recreation’, up almost 50 per cent to nearly 300,000 employees. This specialized, higher-order, custom-built activity brings with it, too, a big slice of not-so-high-added-value stuff: scores of other supporting activities in thousands of businesses employing some two million people. These provide vital services, including the jobs for less-skilled workers that are an integral part of the city’s socio-economic fabric: Administrative and Support Services, Accommodation and Food Services, and population-

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related services like Education and Health and Social Work. These are also forecast to grow substantially within the overall total. Where we do see things trending markedly downwards is in those other sectors whose employment is built around fairly standardized, routine activities: Retail, Wholesale, Transport and Storage, Public Administration, Utilities and, inevitably perhaps, Manufacturing but also, perhaps surprisingly, some Legal, Financial and Accountancy services.14 Not every part of those sectors – there’s no reason to expect the imminent demise of your ‘artisanal’ coffee roaster or furniture maker, or of the highend fashion boutique where the service is part of the pleasure of buying – but the parts that, historically, employed lots of people who aren’t part of the knowledge economy, in what was once predictable, secure, longterm employment.

These are World City trends: New York London is unique, but it’s not without parallels. Its sister World City, New York, shares many of the trends we’ve talked about, with a similar population turnaround since 1990, and the continuation of that growth: when the mid-2015 estimate of 8,550,405 was announced as up 4.6 per cent on the 2010 Census count (8,175,133), NYC Planning commented that ‘The city has not witnessed such a robust pace of growth since the 1920s’.15 Figure 7.2: Midtown Manhattan from Brooklyn: ‘… the classic skyscraper landscape …’

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New York is, of course, much more than the City, and much, much more than Manhattan. It sits at the heart of a metro region (the New York Consolidated Metropolitan Statistical Area, or CMSA) covering 31 counties in four states, with a population of over 20 million – comparable to the 23 million of the South East region around London. However, Manhattan – the original core, allegedly bought from the Lenape tribe for 60 guilders in 1626 – concentrates activity and employment to an extraordinary extent: perhaps only Hong Kong, another island city centre, is comparable. Nearly two-thirds of NYC’s three million-plus jobs are located in Manhattan (London’s Central Area has more like a third of the city total). And the jobs are overwhelmingly concentrated in the Manhattan CBD: the classic skyscraper landscape of the Wall Street financial district and the more varied business quarters in Midtown, south of Central Park around 42nd Street and Grand Central Station, about as far south as the Empire State Building and 30th Street. This central area again shares a London feature: it is somewhat bipolar, with two high-density zones – Midtown (= the West End) and Lower Manhattan (= the City) – separated by the ‘Valley’ which, though less dense, still has a busy concentration of activities, building forms and ethnicities. New York’s future, like London’s, is forecast to see growth continue: the change, whilst less dramatic than London’s, is for the population to reach 9 million by 2040.16 Employment, too, is growing steadily: the city ‘is experiencing its largest and longest job expansion since the end of World War II’.17 Since 2009, total employment in New York City has grown by 22 per cent, compared with a national average increase of 13.5 per cent. It reached 4.55 million jobs in 2018, well above the pre-recession level (3.83 million) in 2008. The growth is predominantly (60 per cent) in business services, leisure/ hospitality and health care. A particular group of sub-sectors together account for most of the high-paying jobs added: professional and scientific services (+87,600), including lawyers, accountants, architects, computer systems designers, scientific researchers and marketing professionals; the technology sector (internet publishing, computer systems design, software publishers), up 80  per cent since 2009, adding 63,200  jobs to reach 142,600 in 2018, to become one of the city’s economic drivers. Banking added 12,900 jobs in the decade, but the securities industry took years to recover and though now growing is still 4 per cent smaller than before the 2007–08 crash.18 Although the Manhattan/CBD share of New York’s total employment has declined (from 64 per cent in 1990 to 59 per cent in 2018) as a result of strong job growth in the outer boroughs, it is notable that threequarters of the jobs added were in sectors with salaries below the city-

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wide average, suggesting that top jobs are as concentrated as ever in the high-value, high-contact core and that overall inequality is just as severe. So even though the finance sector story is somewhat different, there are many parallels with London in this World City story.

Paris: same, but different As Llewelyn-Davies et al put it in 1996: ‘Paris is one of the great cities of the world. But so too, for most people, are Rome, Barcelona or Rio. What makes Paris a World City is its unique combination of history, culture and style with real and very great economic strength.’19 The Paris region (Îlede-France) is home to 12 million people, quite concentrated in the centre of the region in Paris-Ville and the dense inner suburbs; it has nearly 6 million jobs and, with 31 per cent of the national GDP20 (compared with 19 per cent of the people), it is a main driver of the French economy.21 Unlike New York and London, it did not see the striking turnaround in the late 1980s, because the population had been rising, not falling, since the Second World War, and growth since 1990 has been a continuation of a trend, not a reversal. Although the inner parts of the metropolitan area are much more densely populated than London, this is rather less true of the employment pattern: job density in the Paris, even in the central arrondissements, never reaches the levels of Figure 7.3: Paris: ‘… one of the great cities of the world …’

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Manhattan or the City of London, and leading sectors like finance are not as hyper-concentrated as we’ve seen for the other two World Cities. This partly reflects the different structure and grain of the city: Paris does not have the bipolarity of the other two, or their marked separation of residential and employment areas in the centre. It is much more mixed-use throughout, and that is also in part a tribute to the very high penetration and efficiency of a transport system which, combined with high densities, means that if you live and work in the inner part of the region (the ‘Métropole du Grand Paris’, or MGP, with its 7  million population) then you have more jobs near your home (and employers have more choice of labour) than in other cities.22 This inner ‘Métropole’ has some 4.8  million jobs (2018; up from 4.4 million in 2010)23 concentrated within it, and to a lesser extent in the ‘villes nouvelles’ in outer suburbia. They average a high qualification level, attracting 35 per cent of France’s ‘cadres’ (managers). Within this inner part of the conurbation, Paris-Ville has 46 per cent of the jobs, with many of the higher-order ones focused in a ‘Quartier Central des Affaires’ (QCA, the French equivalent of CBD)24 in the centre and western districts of the city around the axis of the Champs-Elysées: very different from the towers and canyons of Wall Street or Bishopsgate, and an area which is shifting its emphasis, losing banks to the office-tower districts nearby, and gaining high-profile digital businesses. The next two clusters are indeed the two districts close by, to the west and north, that have attracted national and international businesses looking for large floorplates and newer accommodation: La Défense, immediately to the west, housing 1,500 HQ offices and 180,000 employees,25 has 12 per cent of the MGP’s jobs in a very concentrated cluster of highly qualified staff26 (47% ‘cadres’). This zone, a product of sustained state initiative from the 1960s onwards, and quite slow to pick up speed at first, is now one of the marked differences from London and New York: a specialized high-end business district on a very large scale, just outside the old city but only two stops from the QCA by regional metro. Similarly close, to the north, and in third place, is the Plaine St-Denis, a redevelopment zone again attracting major firms, including movers from the city and La Défense, but on a less concentrated scale and more comparable to the pattern of office development in London and New York. The IAU (Institut d’Aménagement et d’Urbanisme) comment that employment growth, and commercial development, has increasingly concentrated in ‘les communes déjà fortement employeuses’ – ‘already job-dense localities’.27 Looking ahead, the expectation is that both population and employment will continue to grow, with the population of the Île-de-

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France rising to 13.5 million by 2050; within that, Paris-Ville, which had slowly been losing population, is expected to climb back to over 2.2  million, about the level of 2013, though it will, of course, be a steadily smaller proportion of the regional total: from 18.6 per cent in 2013 to 16.5 per cent in 2050.28 Again, the Paris patterns and development choices are distinct from London’s and New York’s, though as with New York there is a similarity in that job growth is now tilting away from the centre (Ville, Manhattan) to the inner ring (proche banlieue, Outer Boroughs). Here, very consciously, the decision to protect the historic scale of Paris-Ville itself has been coupled with a strategy of intense close-by development and one of the best transit systems in the world to produce comparable accessibility and contact opportunities, but in a different way.

Future perfect? Powerful shared processes and trends characterize these three World Cities, around inevitable differences and particularities: they seem set on a track of continuing growth within which high-value activities go on concentrating, with their key business districts – mostly but not always the most central areas – playing the face-to-face/proximity card as a vital part of their offer. The changes outlined above are big-scale, even by the long-run standards of these great metropolitan centres. If we look across the three examples we’ve just presented, what do we think this might mean for how business will ‘work’ in the future?

Office life: more, different Inevitably, real estate demand will respond over time and not necessarily in a straight-line projection of earlier trends. Looking first at the office market, and once again from a London perspective: the 2015 London Plan forecast almost four million additional square metres (m2) of office space from 2016 to 2031, assuming 9 m2 per worker. This would mean about 250,000 m2 of new offices annually, which is the same as the annual rate between 2000 and 2012 (a mixture of boom and recession).29 Given the expected growth in headcount, that could be a believable scale of change, though with all sorts of caveats about the effects of the pandemic and of leaving the European Union. The interesting question, though, is what does ‘office’ now mean? Every major city has a very large supply of conventional offices – large

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floorplates, serried ranks of desks with workstations and screens – and it’s hard to see how these have much of a future in the near term without major refurbishments. However, more flexible sorts of office are also now common and these may well be rather more attractive for firms looking to adapt: London has seen steady expansion in serviced offices, from 243,500  m2 in 1995 in 150 locations across the central area, to around 550,000 m2 in 280 locations by 2015;30 and an increasing range of co‑working spaces (sometimes ‘affordable’ and targeted at start-ups, but not necessarily) for all sorts of SMEs and single-handers.

‘Tout le monde en co-working’ You know a trend has really arrived when even the Parisians are using yet another English word: yes, ‘un co-working’. In London, very fast growth in the last decade has created a whole new sub-sector of co‑working spaces, generally less clearly divided between different firms and characterized by shared public spaces such as cafés and sitting-out areas aimed at encouraging B2B (business-to-business) interaction and knowledge-sharing. A 2015 London survey showed 132  incubators, accelerators and co-working spaces, with room for up to 3,800 SMEs on any given working day. Two-thirds were offices, and a quarter workshop space; to this, a 2016 update survey added artist studios and ‘maker spaces’, for a total of 480 workplaces.31 The most popular locations correlated with digi-tech, communications and the creative sector, which have higher start-up rates: very concentrated in the CAZ and some of the fringe boroughs, especially in ‘tech-y’ and ‘designer-y’ Old Street, Shoreditch and Farringdon, together with Soho and the central part of Camden.32 Not huge numbers yet, and some of our ‘post-COVID’ responses showed scepticism about the format’s robustness (see Chapter 6), but the potential is indicated by the fact that in one of the most dynamic sectors, Information and Communications, London-based SMEs employ 93,000 people, with 73,000 sole-proprietor businesses or businesses with no employees. These firms account for turnover of £17bn, equivalent to 24 per cent of the sector’s total.33

New ways of working It’s not just the format that’s changing, the amount of space demanded is changing too. Since the 1990s, typical office layouts at 16–17 m2 per worker have fallen dramatically and are now around 11 m2 per person.

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This is partly about a declining need for spaces for filing, papers, desktops and the other trappings of the 19th- and 20th-century office. However, it is also about the increasing prevalence of ‘agile working’ set-ups (i.e. you haven’t got your own desk any more, pal) which means that many offices are already planned on the basis of, say, eight desks per ten people: ‘The binary relationship between higher headcount and additional real estate has been broken.’34 In light of the trends we’re anticipating, we think that you might expect to see more space being given over to meeting and break-out rooms, even two-person or one-person video- or tele-conferencing spaces. And in both the co-working and the more conventional office formats, new ways of working are combining an office base with remote working, heavy use of digital communication, and reliance on shared ‘social’ space. Characteristically, the office is your base, offering common systems and familiar contact, but now supporting quite a wide range of other modes of working: ‘It is usually not an “either or” but a “both and” solution.’35 The development industry is increasingly working out how to react to these shifts in practices and in demand. Firms such as Fora target central and fringe locations like Clerkenwell, Bethnal Green, Borough, Brick Lane, Kentish Town, Ladbroke Grove and Shoreditch with ‘boutique, hotel-style shared offices’.36 WeWork arrived from New York in 2014 and by 2016 had completed on another 17 deals to take its total London occupation to nearly 108,000  m2 by the end of 2017. Mainstream developers then muscled in, supplying increasing numbers of buildings, including some serviced offices, with some in the central City core.37 The effect on the conventional office development market is to make it steadily less conventional. Developers are already learning from the small-office trends so as to make their product more attractive to a 21st-century workforce: more individual, less generic; more mixeduse, less single-purpose; more able to compete in a market where users expect to be welcomed, to socialize and to mingle. This can have faintly comical outcomes: one of the biggest new ‘cornflakes packets’ on the London skyline at 22 Bishopsgate was being marketed in 2018–19 as a ‘vertical village’, complete with: ‘constantly changing art installations’, an incubator space ‘to foster collective creativity, collaboration and innovative problem solving’, and ‘a holistic approach to wellness with meditation and Pilates’ on Level 41 – a hundred metres above street level. Even though we don’t think this idea is completely off-base, the image of a bunch of guys in suits trying to look laid back and relaxed is irresistible.38 However, we’re a little sceptical of the idea that people want to socialize by taking the lift to the bar on Level 41 rather than getting away to a ‘local’ or to a trendier part of town. Google and Facebook have their

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‘golden handcuffs’ – free laundry, food, gyms, arcades, printing rooms, drinks, even spares for your laptop – intended to keep staff onsite and working all hours, but we suspect that that approach worked best when the competition was equally isolated by Silicon Valley’s highways, its poorly connected transit system, and its hourly rail service. Now that Airbnb and Twitter and all the rest of the ‘peer-to-peer economy’ firms have set up shop in downtown San Francisco those handcuffs probably chafe a little bit more, since these upstarts offer all the same perks and the city of San Francisco itself. Not that the tech behemoths of this decade aren’t still attractive employers, but it seems oddly telling that they’ve had to start up their own transit systems in order to bring their employees to the suburbs from the city!

Offices and contact But what is going on is a realization that work locations, especially offices, will have to work harder to provide choice and flexibility for the individual and the firm. This may mean designs that blend a domestic tone into office architecture; it certainly means a trend towards settings which feel more like places where you will want to hang out, co-operate, innovate, socialize and learn, and less like places that are churned out on – you guessed it – an industrial scale. These places are expected to respond better to individual needs and tastes by offering employees more varied spaces in which to work. This is what one commentator39 termed a ‘flight to quality’, offering an openness to the ‘public’ (provided they are suitably well groomed and well behaved, of course), and a readiness to mix in other land uses like residential or F&B (food and beverage) besides office-based work such that their apparent diversity becomes an asset – because it keeps workers engaged and enthused – rather than a costly worry for insurers and facilities managers. Coupled with this, and strongly related to our analysis and interviews on the why and how face-to-face contact works, will be demand for spaces (both mixed into the ‘workspace’ supply and freestanding) for the whole 6-to-8-pm industry, of ‘managed relationships’ and ‘managed opportunity’, where social and work lives overlap and the buzz rises to a roar. In a world where many businesses and workers are opting to use IT and locational flexibility to set up part-time shop in, say, WeWork (because you don’t need to go to Central London every day), it seems that social events – and even study tours or awaydays – start to assume greater importance because of their contribution to bonding.

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In other words, single-use, high-rise zones in the urban core dominated by just offices or just homes will increasingly be a thing of the past, as the market offers (or at least pretends to offer) the range and flexibility and the mix of uses that promote interaction and contact.

‘Industrial’ (or not) A huge amount of the business space of any city, of course, is not in these various office formats. The real estate industry tends to call this ‘industrial’ land and floorspace: that is, non-office employment space of many kinds. It, too, will see major impacts arise from the business response to technological and socio-economic change. ‘Industrial’ is actually something of a misnomer: very little manufacturing, as such, is left in the great cities (now a little over 2 per cent of London’s jobs); and some 43 per cent of the 129,400 jobs in London’s Designated Industrial Areas are now non-industrial. A survey40 in the biggest of them, Park Royal, reported that 40  per cent are ‘non-industrial’: professional services, education, retail, restaurant/café, arts/entertainment/sport. So, they are evidently already much more mixed-use than how planning policy sees them, as ‘locations for storage and distribution purposes, waste management, repairs and maintenance, or food preparation’.41 Areas like this provide space for all these functions that keep a great city ticking over. But it’s clear that they are under pressure from both the non-industrial land uses expanding within them, and from the high returns offered by a switch to housing use. London has seen a long war of attrition, with its planners trying to defend a core stock against market pressures and to manage the release of industrial land into other uses. They have seen their benchmark of 37 hectares annual release overtopped by an actual rate of release (2010–15) of 105 ha/p.a. – nearly three times more than planned.42 Although many of these spaces can look ‘unloved’ – or ‘unsightly’ to some of the new neighbours across the way – they serve a critical function: they are cheap and flexible. Waves of gentrification have gutted the spaces where, as long as you didn’t mind the shabbiness or the noise, you could get lots of room to experiment and to grow on the cheap. Two decades ago, it was places like Shoreditch or riverside Wapping, and DUMBO or Williamsburg that offered this. Now … well, if you have to ask then you probably can’t afford it. The alternative offered by developers – that they’ll put in some studio spaces on the ground floor and name the tower after the industry they evicted – doesn’t work because rents need to cover the costs of the build. Run-down, cheap industrial

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units can offer spaces at prices that allow an ‘it’s wild and out-there, but it just might work’ start-up to get going. Renovated-rate studios are for either the already successful or the independently wealthy (step forward the revamped Hackney Wick). In Paris, where to no one’s great surprise the approach is somewhat more dirigiste, there has been complete and high-profile land-use change in the former wholesale markets of Les  Halles (fruit and veg), Bercy (wine), and La  Villette (meat). However, this has been coupled with major provision in the inner suburbs, notably a 600-hectare ‘pôle agroalimentaire’ of activity (30,000 jobs) around the relocated Rungis market (11,000  jobs).43 We can conclude, then, that London’s current trend which, projected, would see the total stock of industrial land fall by another third over the period 2016–41,44 is not simply an unavoidable outcome of economic change and the loss of manufacturing work: it is also the interaction with policy. Different policy responses could be imagined that could both protect the activities defined as important to a functioning city and make positive provision for them in a structured way. Retailing is the other big chunk of non-office employment and land use where technology and social change are having dramatic impacts. Online shopping, home delivery, ‘high street’ closures, even the ‘end of stuff’, have changed the sector enormously. This seems likely to continue. The bricks-and-mortar consequence will be the freeing up of sites on the low-density, car-dependent ‘retail parks’, as well as in town centres; and the people effects will involve a slow but sure shrinkage of employment in the sector. London planners forecast it flatlining at around 450,000 jobs, and this looks on the high side to us. When spare space is released, and it is accessible and the interiors are flexible, it will be creatively adapted, becoming climbing walls and craft breweries with attached bars and an appropriately industrial ‘vibe’. But less flexible spaces in awkward, poorly connected locations face a rather more uncertain future. The message is strikingly similar in New York. There had been a history of massive growth – the retail sector added 58,000 jobs between 2009 and 2018, up 20 per cent, over half of it driven by grocery stores (13,800 jobs), health and personal care stores (10,000 jobs), and electronic shopping and mail-order houses, which more than doubled to 13,400. Yet in 2018, total sector employment at 350,100 was virtually unchanged from four years earlier.45 Job growth had ground to a halt, reflecting changes in shopping patterns as the sector undergoes fundamental changes in the way business is conducted. Across all these sectors, then, the World Cities are seeing important transformations in terms of who’s here, what they’re doing, and which spaces they’re doing it in. Policy-makers and the property development

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industry will have a continual whirl of pressures, established and new, to confront.

Staying or going: costs and benefits of agglomeration So far, our prognosis has been based on the probability of continued success and expansion for the great metropolitan centres – ‘onward and upward’ – but as we’ve shown, businesses are continually confronting choices: stay or go, expand in-house or buy-in, be here now or decamp for cheaper digs? Are the agglomeration benefits worth the agglomeration costs? At the macro scale, this translates into a future-of-cities question about the risk that the ‘World Cities’ become victims of their own success: they may be able to attract the highly-paid and the super-rich, but this undermines both the ability and the willingness of the remaining 99 per cent to hang on in dark, dank corners or poorly integrated suburbs where they are inadequately served by the public transit they need to get to work in the CBD services. Paradoxically, it is increasingly those on a minimum wage who face the highest relative costs in London and New York. Sometimes, they even face the highest absolute costs too! These downside factors are treated by economists as congestion costs, or ‘diseconomies of agglomeration’, but after paying for commuting, rents, utilities, and real estate taxes, some families will be left with little to nothing at all. For independent contractors or small start-ups, the disincentives to setting out your shingle will also include the price of business accommodation (rentals, land costs, property tax), housing costs (house prices and rents), transport congestion (road and rail), and an increasingly onerous infrastructure burden (for energy and water supply in particular). At a certain point, your average household and entrepreneur can no longer make the sums work, and this will have a direct impact on a city’s labour market. Overall office costs are undoubtedly eye-wateringly high in the great cities. According to Knight Frank, in 2016 office rentals in London were the fourth highest in the world, after Hong Kong, New York City and Tokyo.46 Paris was 13th, at less than half the London level. Overall office occupancy costs were highest in London’s West End (£2,211/m2/ year) and Hong Kong CBD (£2,185), though markedly less in the City (£1,206) and Midtown Manhattan (£1,030).47 Both as a measure of the value of staying rather than going, and as a driver of the hunt for savings, these are very strong indicators. As for the experience of the workforce: the cost of living comparisons also show that the World Cities are high up the list, but differences in

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salary rates mean that smaller cities feature too. For the overall cost of living, London is 12th costliest out of 207 cities ranked: less expensive than Hong Kong, Zurich and Singapore, but dearer than New York City, Paris and Dubai. Affordability for graduates is similar: London is 13th out of 20 listed – below Berlin, NYC, Paris and Frankfurt.48 In many cities, the worry is once again moving (slowly) up the policy agenda that a combination of increasing living costs and opportunities elsewhere could lead to a resumption of the outward residential moves which characterized the first three post-war decades. In Paris in 2019, for example, a live debate raged about the city becoming ‘invivable’ – unliveable – for young professional couples now choosing regional cities: ‘Hier, les jeunes cadres seraient allés dans les banlieues chics de  Paris. Aujourd’hui, c’est les capitales régionales.’49 Costs are clearly crucial. And geography, of course, still matters. Whether it’s the protected countryside around London or the rivers and oceans constraining New York and San Francisco, the great cities face physical constraints which make ‘outwards’ even more difficult than onwards and upwards. Some of these constraints are bound up with acute global issues: climate change and sea-level rise (New York); dislocation from European markets (London); the inequality built into the late 20thcentury neoliberal city (most, if not all, of the major cities); they are well outside the scope of this book, but they could change the prospects very dramatically in only a few decades. Overall, the picture is of World Cities, from London, Paris and New York to Tokyo, Shanghai and Hong Kong, maintaining their hegemony, deepening their grip on specialist markets, and adapting to a pattern of slower growth around ever-increasing complexity and variety.

Lessons for other cities? The focus of our analysis and argument has been the case of London, and our interviews are a slice through Central London working life at a particular point late in the second decade of the 21st century. They seem to point to patterns and conclusions about the behaviour of firms and their people. How much, though, can we generalize from the London experience to other places, whether the other great World Cities, or the smaller cities and towns that have a different role in the world’s spaceeconomy? There are some indisputable common themes. F2F will remain key: for ongoing relationships; for judgement in new ones and for evidence of commitment. Therefore, the essential World City attributes – unmatched

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Figure 7.4: Lessons for Barcelona? For Zurich? For Chicago?

accessibility, opportunities for interaction, convenience, readiness for the meeting that ‘might happen’ – continue to be vital and determinant for a huge range of activities. Everywhere, ICT and AI will carry on with the processes both of substituting for and of complementing the face-to-face advantage. AI will take big bites out of some sectors’ employment, but it won’t be terminal. For some smaller cities, though, the picture could be rather different. Where they have been trading on a cost advantage to attract outward-moving back-office functions, AI could mean that some of these back offices (and their staff) are no longer even necessary. There is a complicated relationship between places and their people and businesses that needs careful consideration, and which should make us especially wary of transferring lessons from Silicon Valley to Sebastopol, or even from London to Ljubljana. Part of this is about the influence of culture on how business gets done. We can contrast the constant ‘business socializing’ that two of our interviewees linked to New York (“a friend in New York, meets people all the time” – designer; “in New York, it’s non-stop, the whole time” – publishing editor) with our London respondents, who tended to downplay the frequency or significance of ‘bumping into people’ on the street. But that difference also plays out in scale: in Oxford (160,000 population), where our educational publisher bumps into people because “it’s a smaller place”; in Zürich (380,000), where the greater likelihood of seeing people had attracted an internet engineer and their partner; or in Prague (1.3 million), where

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the pedestrian route from the government offices high in Hradčany down across Charles Bridge and into the city centre around Vaclávské Náměsti (Wenceslas Square) is a good place for ‘chance’ encounters with important city players. In London we’ve already noted a shift to ‘make your own luck’ places (the dinner-debates, the breakfast seminars, the neutral spaces, the gallery openings, the known hangouts). This plays out in smaller cities, too, where their role in facilitating easy semi-casual face-to-face interaction is likely to grow, as working patterns and ICT applications change working practices. The home office might be a nice place to work, but you still need to get out and see people in order to keep tabs on the industry, on the movers and shakers, and on the buzz that surrounds a new project or new kid on the block. For the big and highly organized cities of the second rank – not ‘World City’ players, but still internationally important and with strong dynamic economies, from Munich to Barcelona to Seattle – we might judge that their future is pretty similar to that of the World Cities, and for similar reasons. So, we cannot transfer the Central London experience elsewhere as a template, but we can still use it to think about likely change and continuity.

The issue of scale One way to think about this tension is by thinking more deeply about scale. The concept of scale was implicit in the structure of our book: the ‘macro’ of the infrastructure networks; the ‘meso’ of markets and firms; and the ‘micro’ of real people doing deals and making choices about head offices and headcounts. But scale also exists in our thinking about central places: in Chapter 2 the ‘macro’ scale helps us to think about global structures linked by networks and brought to life at key nodes where goods and information are exchanged at unprecedented volumes; in Chapters 3 and 4 the scale is that of the city-region where the economic ‘gravity’ of an urban core organizes a complex periphery of suburbs, edgy inner-city neighbourhoods, and just-off-the-interchange edge cities; and in Chapters 5 and 6 we zero in on neighbourhoods and the places where people meet to talk shop, whether over a coffee or an after-work beer. Taking this structure, and freely adapting from Lösch,50 we think that what distinguishes Soho from Shrewsbury – or Little Italy from Lancaster, PA; or Belleville from Bourges – is that the former is central at all of these scales simultaneously. Like SoHo and Belleville, Soho sits in the centre of a world-spanning travel and communications network: half an hour on the ‘Elizabeth Line’ (when it’s finally finished) from Heathrow, with so

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much fibre-optic cabling available that you can buy the bandwidth to do real-time film editing in collaboration with film-makers and animators in New York and New Zealand. Soho also helps bring into being a regional ‘ecology’: it is not just central to the global advertising and film industries, it is also central to the Tube and rail networks that bring in the hordes of runners, freelancers and full-timers working in related professions who live nowhere near Soho but whose travel and meeting patterns are utterly defined by it. And it has, too, a dense local network of venues – screening rooms, members’ clubs, bars and restaurants – where business can be done and good gossip shared. Take out any one of these scales and Soho becomes something very different. Compare a central place like Soho to the Thames Valley’s Reading or Slough: these cities are both home to a number of major multinationals in ‘tech’ and communications, but while they may be ‘big’ (big offices, big towns, big employment catchments), they are also ‘peripheral’, in quite a literal sense, both to the multinationals themselves and to London’s own dense economic networks. It’s not that they are not major employers making use of highly skilled workers, but their most senior personnel will have spent a lot of time shuttling back and forth between the ‘mothership’ overseas and the clients in London. Their ‘offer’ is a good quality of life, not so much the buzz.

Towns and small cities What if you’re farther out again? If you’re a planner in Shrewsbury, or Bourges, or Lancaster, what’s your offer? What are you the central place for? In central-place theory,51 a notional market town sits in a level plain providing goods and services to its hinterland. Fifteen or twenty kilometres away – twice the distance a pack animal can cover in a day – is the next town. And so on. Of course, the plain isn’t always level, and towns are built for all sorts of other reasons … But there’s a core of logic to it, both for the distribution of the little market towns serving a few farms and villages, and of the higher-order places serving wider areas with their big weekly fairs, courts and maybe even a bishop. Outside the cities, the Western world is covered by places like this. The patterns vary: a historian of Bourges, in setting the town’s geographical context, points out that the number of towns of over 10,000 people in Europe is triple that in North America, for a population that is only 40 per cent greater, and that their average spacing of about 16 km compares with 50 km across the Atlantic.52 Towns like this, too, are facing the challenges and possibilities of the 21st-century’s world of instant communication,

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worldwide trade and changing cost patterns. We’ve taken one such town, in the centre of Britain, to explore what those challenges and potentials might be; and then we look briefly at two other ‘market towns’, in France and the USA, for parallels and differences.

Shrewsbury, not Soho Shrewsbury, an ancient market town 160 miles (250 km) north west of London, is the county town of Shropshire, home to some 72,000 people. It is the commercial and service centre for a rural hinterland of some quarter of a million people that stretches across the border into MidWales. The town lies astride the old A5 route from London to the Irish Sea port of Holyhead, with the M54 10 miles (16 km) away as its link to the national motorway network. There is a daily direct rail service to London (approximately 2½ hours away) as well as cross-country services to Manchester, Birmingham and into Wales. Shrewsbury is also a historic town – one of the best-preserved mediaeval towns in England – with a 12th-century castle and an old town centre within a great loop of the River Severn. But this is not a place with a high visitor profile: tourism is part of its fairly broad-based local economy, but at under 10 per cent of local jobs this is well below employment in health care (over 20 per cent) – reflecting the presence of the regionally important Royal Shrewsbury Hospital – and distribution. Manufacturing’s 6  per cent share of the jobs is thanks to just two main firms in the advanced engineering and food sectors; finance and communications are noticeably less significant than in the national economy.53 Like many classic Lösch/Christaller centres, it dominates its catchment and is quite self-contained: over two-thirds of the area’s workers both live and work in Shrewsbury.54 For the town’s Shropshire hinterland, only quite slow growth in population is expected, without much inward migration, so the number of people in the labour force will be static, or may even decline, over the next two decades.55 The town is nonetheless planning confidently for an expansion of the economic base, looking to increase floorspace for offices, shopping and general employment: much of it in non-central, sometimes edge-of-town, locations which have the capacity that the tightly constrained town centre does not. What, then, might Shrewsbury – and by implication many similar towns and small cities – expect in the 21st century? What does their scale imply for the pressures and potentials that will arise from the economic, social and technological changes now under way? Are their current strategies soundly based?

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Benefits, costs and scale Starting, as we did for London, with what the benefits and costs of agglomeration mean at this scale, and taking this Middle England town as our example: on the benefits side, Shrewsbury obviously suffers far fewer of the ‘diseconomies of scale’ than towns closer to London’s redhot core. Office rents are dramatically lower, house prices are on average 30 per cent lower than those in the South East, and wages are about 5 per cent below the Great Britain average.56 Households will be making their own cost of living comparisons and firms will, in turn, be judging the implications for business viability. The other side of the equation is the difference in the scale and type of potentials that a much smaller agglomeration can offer. First, Shrewsbury is the central place for a market of only some 250,000 people, not tens of millions and a global network. Second, without this massively greater scale, the agglomeration benefits it could confer are just not there: so the up-front search costs needed for complex and high-profit projects – which can be met in London – are not going to be viable in a smaller town with a far lower density of possible collaborators and clients. So, much less opportunity for the dense and frequent patterns of contacts which enable bespoke transactions in the opaque markets which offer the highest returns. Shrewsbury does not have the global links, and even the nationalscale links are limited, so it lacks the top-level access and weight. But there is nonetheless ‘depth’ lower down and at a finer scale: it’s ‘small but thick’! It’s tempting for analysts to always privilege the big-city view that acquaintances (Granovetter’s ‘weak ties’)57 are the thing that matters. But the ease of local contact, interaction and trading, even if it is in less profitable markets, is still an asset of value to a place. Not unconnectedly, this relates to the quality and character aspects of a town’s appeal: many people want to live somewhere that feels like home, where people look out for each other, and where you are dealing with the familiar, not the endlessly new. Not everywhere is playing the same card, and the game changes at each scale.

Quality of life? This leads us on to one benefit that can be associated with less agglomeration and lower cost, which we can place under the heading ‘quality of life’. In the case of Shrewsbury, the public authorities are aware of this and make much of it: Shropshire’s local plan talks about ‘promoting

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Shrewsbury as a business investment location and a place for a range of businesses to start up, invest and grow, recognising the economic benefit of the Shropshire environment and quality of life’.58 Not just that, but one of the local engineering firms is quoted as valuing ‘a thriving town with quality hotels and restaurants’, and the possibility is also seen of marketing a better work–life balance to attract people with small businesses who can use ICT to work from home. Note that this is not a ‘Country Good, City Bad’ judgement; the point is that for certain sectors, firms and households the ‘quality’ appeal of a small rural place can outweigh the very different appeal of the great metropolis. Of course, this probably only applies if your town centre has retained some of its appeal despite years of abuse by planners and developers bent on ‘rationalizing’ the street layout and floorplate.

Face-to-face? Yes, but … Another powerful theme for the World Cities is our conclusion that face-to-face interactions will remain key, especially deals dependent on relationships, judgement and commitment. In a town the size of Shrewsbury, there will be lots of opportunity for face-to-face contact in a tight-packed town centre, and for chance encounters en route to a meeting at the Shire Hall or with the familiar faces of competitors and collaborators in the Bull Inn (Banks’ Amber Ales), together with it being easy to pop in to the solicitors’ to finalize the deal … But because of the scale you won’t get the same advantage from it as you might in London: as we’ve seen, the market simply cannot support the transaction ‘cost per shot’ because the transaction value is not great enough.

Technology: handle with care We’ve also stressed how, everywhere, ICT and AI will be both substituting for and complementing F2F’s role as a communications band. Freed up by digital connections, delocalization of even the more professional, financial and administrative services could accelerate beyond what has already happened, spreading further up the businesses and the value chain. In theory, businesses in more sectors could decide that the bigcity agglomeration benefits are not worth the agglomeration costs. This could open up opportunities for towns like Shrewsbury to attract footloose firms: not just from the high-cost South East, but from the

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bigger conurbations like Birmingham/the West Midlands, an hour away to the east. But AI and ICT are by no means a guaranteed ‘ticket to Shropshire’. They could indeed be helping, as we suggested above, with the ‘quality of life’ package (remote working, home-based office work, work–life balance). But where places have been mainly trading on a cost advantage to attract outward-moving back-office functions, say, then AI could make this all irrelevant. If you don’t need a location at all, then cheaper becomes irrelevant: the ‘death of distance’ is outdone by the ‘death of work’ itself.

Businesses to attract? To keep? These are daunting considerations for towns and small cities where businesses are thinking about expanding, and where public authorities are trying to work out how to develop the local economy. The 2017 Economic Growth Strategy for Shropshire looks for ‘at least 3,700 new jobs’ over five years, of which one might guess half to be in Shrewsbury.59 Target sectors include environmental science, creative/digital business, tourism, food and drink production and health/social care; an earlier study envisaged adding 250–300 office jobs per year in the town.60 ‘Targets’ are more ‘hopes’, given the limited leverage available to local councils: at least these reflect to some extent what Shrewsbury’s firms are already doing, and some of the town and county’s assets and attributes. Beyond that, anyone looking to attract inward-moving firms has to start with a heavy dose of realism about scale and comparative advantage. Firms in finance, comms/IT, consultancy and other opaque markets where there is intensive face-to-face contact and bespoke transactions, rewarding a lot of speculative time and effort, will choose bigger places; their scale in places like Shrewsbury will continue to reflect local needs. And. as we’ve seen, thoughts of persuading ‘out-mover’ firms to migrate from the cities have to be tempered with caution over the impact of AI and digital. As technology cuts more deeply into office-based businesses there will be fewer needing an office, and fewer such jobs to ‘persuade’ anyway. But this particular town at least has things going for it as well. For Shrewsbury and Shropshire, tourism has real potential to grow with greater appreciation and exploitation of heritage and countryside. And creative and cultural workers will continue to respond to the ‘quality of life’/work–life-balance appeal – there were already over two thousand such people in the county a decade ago, 43 per cent of them working from home.61

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Realistic real estate The smaller cities and towns are not short of enthusiastic boosterism and endlessly optimistic real estate professionals and municipal politicians. But a cooler look at sectoral prospects also means a more cautious take on property development needs. In the case of Shrewsbury, the Offices Study62 prescribed a need for the town centre’s office floorspace to grow by over 40 per cent over 15 years; in the rest of the town and the business parks, by 55  per cent. This was ambitious a decade ago, and is not credible now. There might be some of the expected growth in officebased work, but this scale of development is not going to be needed. New ways of working are already having an impact, and not just in the great cities. Although the pressures on space and costs are generally less intense, the trends we have already described – combining an office base with remote working, reliance on digital communication, ‘agile working’ or hotdesking formats with fewer desks than total staff, increase in co‑working offer, use of shared ‘social’ spaces offsite – will all affect the future for office floorspace, both in total and in format. Some of this is seen in the demand for space per worker: we remarked earlier on the drop over the last two decades (from 16–17 m2 to about 11 m2 per worker), and in Shrewsbury, too, where the average was around 15 m2/worker in the mid-2000s, this decline can be expected to continue. The business park format will continue to attract occupiers, mainly because of easier parking than in the town centre, but here, too, growth cannot be taken for granted: business parks might work for larger, integrated firms where information flows are primarily internal and between business units, but they lack the opportunities for easy semicasual, face-to-face external interactions, which the more dynamic sectors tend to see as part of doing business. Indeed, one of the property agents interviewed for the Offices Study contrasted the town centre (“quirky offices in Grade II listed buildings … close proximity to services and public transport …”) with the business parks’ lack of facilities other than modern, purpose-built office buildings.

Other employment space All towns have a great extent of other commercial property which, as we said earlier, the real estate trade tends to label as ‘industrial’. It’s used for storage and distribution, waste management, repairs and maintenance – all the nuts and bolts of modern life – together with

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a sprinkling of leisure and out-of-town retailing. It grows at more or less the rate of level of population and economic change in the wider catchment. One type of property, though, will not be following past trends. For retail space, the powerful impacts of ICT mean there will be no longterm quantitative need for out-of-centre growth, and little prospect of significant employment increases. The crucial issue for towns like Shrewsbury is quality: turning the town centre and its streets into ever more of an experience that people – visitors, businesspeople and residents of the hinterland – will choose. And where face-to-face interaction – with traders, clients, acquaintances – is an intrinsic part of the package. Shrewsbury has the head start of history and character, but others are not so lucky. Even here, there is a lot to do: improving the centre’s mix of rather tired, smallish malls, and working on every aspect – not just, but crucially including, shopping – of this central place for all the county’s activities.

A sideways look We’ve examined Shrewsbury and its choices quite closely, and we think that a lot of the issues raised apply to many towns like it across Britain. We now look much more briefly at places in other countries which might call out similar considerations: Bourges in central France and Lancaster in Pennsylvania.

‘Une ville moyenne depuis plusieurs siècles’: Bourges, France63 Bourges is the same sort of size as Shrewsbury, and is similarly about 250 km from the capital. Its population has fluctuated around 65,000 since the mid-1960s and is static or declining. Its hinterland, the ‘Pays de Bourges’, is home to about 150,000 people and is about half the size of Shropshire – but there are no other towns even reaching 10,000 within that area.64 Like Shrewsbury, it is a very old settlement: as Avaricum, it was an important stop on the Roman route from the Rhone valley to the Atlantic west, and it has been the major town in what was historically the comté of Berri, comfortable rolling farmland, for two thousand years since.65 It is not, however, now perceived as well connected: although the A71 autoroute serves it, this is not a major axis from Paris to other grandes villes; nor is it served by main-line or high-speed rail to the capital. This is not a recent phenomenon: ever since the 18th century’s development of a

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Paris-centred network and economy,66 Bourges has been ‘une péripherie nichée au coeur de la France’ – peripheral even though at the heart of France.67 Its historic core, with cathedral, Renaissance palace and museum, is a protected zone and a tourist draw, though mainly for short visits: ‘tourisme de passage’.68 Manufacturing is still important, with a Michelin plant and defence technology, the air-force base employs some 2,400 people and there is a small military training college.69 But these are shrinking sectors: Michelin once employed 4,000, now 500; and the arms industry, from which a third of households once drew some income, is said to have never recovered from the fall of the Berlin Wall.70 The town centre, too, feels under pressure, a familiar litany of high rents, e-commerce and suburbanization.71 Despite this background, the Local Plan72 has the same ‘onwards and upwards’ feel as Shrewsbury’s with, for example, a 5 km2 tract to the south east of the town allocated for expansion of artisanal, industrial and mixed uses, and no apparent attempt to rein in the edge-of-town retailing that must affect the centre as much as e-commerce does. More interestingly and thoughtfully, the town’s consultation on tomorrow’s Bourges, ‘Trajectoires 2050’,73 does look to identify potential for a sustainable future, including doubling tourism visits, sustaining the defence sector, integrating the region’s agriculture into local food chains and a circular economy, and (well, there are a lot of old folk) ‘la silver économie’. Efforts to capitalize on the town’s urban character include the regeneration of the 19th-century Mazières foundry and mill zone for housing, and of a former military hospital site as the écoquartier Baudens. Essentially Bourges faces the same challenges as Shrewsbury, possibly in a tighter setting, of a smaller catchment and an economic base more vulnerable to decisions in distant HQs. Like its English cousin, it can work with assets it does have: the ‘quality of life’ offer of an attractive old country town, the possible tourism upside, the variety of housing forms and settings. In business terms, the same patterns and potentials seem to hold: again, the importance of continuing to attract trade from its own catchment through variety and differentiation of the town centre’s offer, and via the appeal of personal interaction; little case for expansion of floorspace, given only limited future job growth; and a need for highstandard ICT connections, not so much to lure in-mover firms as to complement the centre’s opportunity for face-to-face contacts in (largely local) business markets. For places like this, the 21st century’s ‘Information Age’ will mean quite lot of hard work, ‘running on the spot’ just to stand still.

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‘One of the oldest inland towns in the USA’: Lancaster, PA74 Across the Atlantic, some 240 km by road or rail from New York, and about an hour west of Philadelphia in the ‘Pennsylvania Dutch’ country a few miles from the Susquehanna as it flows out of the Appalachians, Lancaster has been linked to Philadelphia by the Old Philadelphia Pike since American turnpikes were invented.75 No mediaeval heritage like Bourges or Shrewsbury, but a long history for all that: a ‘Great Minquas Path’ ran across the site of Lancaster to nearby Conestoga, the chief town of the pre-colonial era.76 As has been said of New England: “It was by use of these immemorial ways, not by trailblazing, that English colonists from Massachusetts Bay reached and founded Hartford … and many another promising spot for settlement.”77 The town was settled by Europeans around 1709, and became the county seat in 1729; it now has a population of just under 60,000, more or less static since 2010.78 The surrounding area, Lancaster County, has been growing, by about 4 per cent over the same period.79 Like Shrewsbury it has a highway connection of about 25 km to the national interstate system (I-76) and it is then about two and a half hours to the World City; train connections are principally to Philadelphia (in a little over an hour) and New York (nearer three). The town, and area, does have some distinctiveness, partly because of its age as a colonial settlement and more particularly because it is associated with the Pennsylvania Dutch and the Amish communities in villages and farms in the countryside nearby: both a living community and a selfaware visitor attraction. Lancaster’s central area has quite a bit of character and urbanity in its own right, with heritage attractions and interesting buildings from a range of eras, though perhaps feeling somewhat gaptoothed and low-intensity by European standards. The catchment is extensive: the County population is over 540,00080; whilst some of this, in the north east and north west of the County falls within the hinterlands of Harrisburg and Reading, it is clearly still a big potential market area. Economic relationships with Philadelphia do not seem very strong: commuting to the city, and its outer suburban business districts, is in the low hundreds only.81 The economy of the town is quite broad based. Manufacturing, with 14 per cent of the jobs (2015 figures), produces tractors, building supplies and structural steel; professional/technical/scientific services (5 per cent) includes two substantial pharmaceutical laboratories; retailing accounts for 14 per cent; and accommodation/food, perhaps surprisingly, only 7 per cent despite the visitor attractions. Seven manufacturing firms employ

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over 500 people, as do two financial services businesses, including the HQ of Fulton Finance.82 Retailing, on the standard North American pattern, is dominated by the array of malls and outlet centres outside the centre, notably the giant (134,000 m2) Park City Centre mall with 170 stores, only 4 km from the CBD. In a familiar pattern, the number of stores is edging downwards, as chains concentrate under the impact of e-commerce. The city centre is, of course, far from immune to these pressures, but independent retailers have actually seen some growth, up by 58 shops in the decade to 2019,83 and the historic 1889 Lancaster Central Market is acknowledged as a high-quality draw.84 The ‘quality of life’ card is consciously played by the development body. Lancaster can offer ‘Easy living in a bucolic setting, but with the modern amenities and cultural attractions that many people desire’.85 On top of that, they lay the ‘big-city pressure card’ too: ‘sick of the commute, the job market, and the failing schools?’.86 And listings are quoted which place Lancaster amongst the ‘Best Cities To Retire To’. This is not, in terms, targeting business choices so much as residential, but it could easily be inflected to do so. Longer-term plans and strategies are thin on the ground. The economic development website87 makes much of Lancaster’s being ‘Centrally located in the New York/Washington corridor, within 500 miles of 40% of the US population’, which is not exactly a USP. The city’s own land-use plan88 is, of course, a zoning document, not a strategy: it zones a ‘Central Business Core’ of 4 × 6 blocks, a halo of ‘Commercial Central Business’ around it, and two sizeable ‘Historic Districts’ adjoining to the west and south east of the CBD. But inner-area regeneration does seem to be an active effort, especially in the heritage clusters such as the former Conestoga Cork Works, now a hotel, apartments and restaurants, and the conversion of the extensive former Hamilton Watch Complex for inner-city apartment living.89 Comparisons with European towns and their contexts need care. North American shopping patterns, outside the big cities, offer much less potential for the traditional town centres to capture catchment spending; there are deep-rooted and still-running suburbanizing and car-dominated patterns to contend with; manufacturing and retailing, still big employers, may have years of shrinkage still to come. It could be that the ‘quality of life’ pitch, plus high-quality ICT, plus the surprising resilience of American small-city institutions (local press and radio, active municipalities, confident business communities) will combine with what a reviving downtown can offer – face-to-face interactions, attractive in‑town residential options, differentiated shopping and bars/restaurants

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– to give Lancaster new potential as the central place in its sizeable County hinterland.

The future, and scale The perspectives and choices for freestanding towns like Shrewsbury, or Bourges, or Lancaster, are essentially bound up with scale: of the town, its catchment and the population and businesses within it. Growth will fundamentally relate to that, and not to inward investment or exogenous factors; although one variant of this is the tourism sector, where there is often unexploited potential. The message is that large-scale new building, unless very specifically and carefully justified, could risk being a waste of land, resources and infrastructure. Within that framework, however, the prospects for these towns are broadly positive. But that conclusion does not necessarily follow for many of the similar-scale places across Britain and Europe.

Other town futures We now change the focus, though not the scale, to look at another kind of smaller city and town: those in or near the former industrial heartlands across Europe and North America. They are very often clustered in quite tight groupings, very different from the ‘a day on a horse’ distance which traditionally separated the more freestanding market towns of classical economic geography. Our cases below are in North West England, but similar examples can be found in the Ruhr, the Nord-Pas-de-Calais and adjoining Wallonie, northern Pennsylvania and many other regions.

Look North West In north west England, strung along the south–north spine made up of the M6 motorway and the West Coast Main Line, three towns – Carlisle, Preston and Wigan – illustrate our scale points in different ways. Carlisle – bigger than Shrewsbury, at around 108,000 population – is the Border city on the line of Hadrian’s Wall: beyond, nothing but Scots. Like Shrewsbury it is a historic city which serves a wide rural catchment of some half a million people, and it is even further from its nearest big conurbation: 60 miles (90 km) from Newcastle/Tyneside. It is clearly established as the central place for much of Cumbria and into southern

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Figure 7.5: England’s North West

Scotland – so has a continuing role providing shopping, services and administration to that hinterland. However, the scale point is important once again: Carlisle’s business services activity is less ‘sub-regional’ in its reach than its shopping centre, and its office market is quite small and slow-moving. Combined with familiar pressures on retailing, and stasis in the important admin sector, the

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realistic prospect and target is for stability in its traditional county-town role, reinforced by a focus on the character and appeal of the historic core as a place to meet, not just to shop and work, coupled with some growth potential in two sectors related to its location. Astride the M6 motorway and the London–Glasgow mainline, just north of the Lake District, and the western hinge for Hadrian’s Wall, it has a significant tourism industry (with some 5,000 jobs attributable), which can both draw on and bolster Carlisle centre’s attractiveness, whilst transport and logistics are also still growing, linked to the strategic ‘border’ location which has long made the city a hub for both road and rail.90 As with Shrewsbury, it’s a positive picture; but one calling for caution, not gung-ho development mania. Back south along the West Coast spine, Preston is bigger again (pop.  141,000) and marks the north-western edge of the complex of Lancashire industrial towns. Another very old settlement, its traditional ‘Preston Guild’ celebration has been held every 20  years since the 14th century: Lancastrians say “once every Preston Guild” when they mean “rarely, if ever”. Unlike Carlisle or Shrewsbury, though, Preston shows little trace of its mediaeval past, presenting much more as the typical North of England array of terraced streets, old mills, factories and rail yards. Nonetheless, it is one of the more successful and broadly based of these towns. It is the county town of Lancashire, so an administrative centre and police HQ, with a university (UCLAN), an engineering tradition still reflected in an important British Aerospace presence, and a shopping and office role dominating part of the county: the travel-to-work area covers some 420,000 people. It also has some role as a centre for regional services, such as the HQ of one of the country’s biggest social housing providers (Places for People Group), and financial business services which have chosen it rather than the bigger cities of Manchester or Liverpool, possibly because of its location on the north–south axis. Workplace earnings figures91 suggest quite a prosperous place: average weekly earnings at £562.30 are nearer the UK average (£569) than the surrounding county or region (approximately £530). It also seems to be benefiting – in terms of comparative job growth and employment rates – from the local council’s deliberate focus on local and sub-regional economic circuits. According to the New Statesman in 201892: Rather than chasing inward investment from large multinationals, as it previously had, the city forged an alternative growth model … Before 2013, major public bodies, such as the University of Central Lancashire and Lancashire Constabulary, had a combined annual budget of £1bn, but startlingly little of this money was spent locally. Inspired by

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the ‘Mondragon model’ in the Basque Country and the ‘Cleveland model’ in the US, Brown’s team persuaded six of these ‘anchor institutions’ to procure more goods and services from Preston-based firms (such as local builders, printers and farmers), rather than relying on outsourcing companies often headquartered in London. This is, of course, not a universal panacea for small and medium-sized cities, but it does relate well to the argument about recognizing a place’s scale and potential in designing intelligent responses. And it sits well with a recognition that if the town centre can attract and hold its existing catchment population, and build circuits of local interaction and activity, then there is potential for the future. The scale point is particularly true for the towns and cities in urban Britain’s – and urban North West Europe’s – complex web of small and large metropolitan areas. Unlike more rural Carlisle or Shrewsbury, Preston is quite hemmed in by competing centres: similarsized towns having their own catchments, with Blackpool, Blackburn and Wigan all less than 20 miles/30 km away. Development strategies which aim to achieve growth by essentially cannibalizing other towns’ hinterlands – for shoppers, service users or investors – are unsustainable and will ultimately waste resources and effort. The ‘Preston model’ seems to be based on at least some recognition of 21st-century reality. Southward again comes Wigan, a 15-minute train ride away, and only three junctions south on the M6. Its national image, somewhat unfairly, is as the stereotypical ‘grim-up-north’ town (Orwell’s The Road to Wigan Pier, rugby league football, the Trencherfield Cotton Mill museum). It is, indeed, still a significant manufacturing town, though now more in food, packaging and light engineering rather than its former textiles and coal-based heavy industry; and it still, especially in its deprived inner estates, houses a lot of poor and often unskilled people, though the more suburban parts of the Borough are reasonably prosperous, with high employment rates.93 Wigan town centre, its shopping and its services operate in a far more boxed-in setting than those of Carlisle or even Preston. It is woven into a complex net of similar places: Preston to the north, Bolton to the north east, St Helens to the south west, Warrington due south, all within 12 miles/20 km: its catchment does not even cover all of its own Borough area, and the two regional cities of Liverpool and Manchester are only 20  miles (36  km) away too. It is apparent that Wigan and the other Greater Manchester towns do not have a similar scale or reach, despite their notionally greater size (Wigan Borough’s population is over 300,000, though the town itself is only about a third of this).

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Figure 7.6: Former industrial towns: ‘a distinctive and appealing place’? Standishgate, Wigan

The IPPR North think-tank categorized such towns as Overshadowed: cities with larger neighbouring cities that are losing, or have lost, higher-level functions to their larger neighbours (thereby supporting the economic growth of the latter) – in effect, their economic growth is displaced. Overshadowed cities are linked to core cities by strong commuting flows; examples of them in the North include Blackburn, Burnley and Bolton.94 The think-tank suggests growth potential as a key logistics hub for Greater Manchester, which is the sort of thing that external experts very often suggest for locations on motorways and near intersections. We are doubtful. That might help the logistics industry, and possibly sub-regional business more widely, but it is hard to see what benefit it would bring to Wigan itself: trading large tracts of developable land and greatly increased truck flows for very low job-densities in enormous sheds. These Lancashire towns have to base their strategies on the reality that they are part of a complex urban hierarchy centred on Manchester, with only a limited degree of independence or room for manoeuvre. Their success or failure will largely be part of Greater Manchester’s success or failure. And it could well be that using the developable land to house

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Manchester (and Liverpool) commuters, combined with a ‘Preston model’ attempt to increase local economic circulation and focused attempts to make the town centre a distinctive and appealing place, would produce more benefit for Wiganers than waiting for external investors to pick that particular junction on the M6 for their next logistics park.

The ‘penumbra’ of the World City We have been thinking so far about the future for places quite a long way from London, or Paris, or New York. A different sort of thinking comes into play within the very large outer regions over which these great cities cast a shadow of influence. In some directions this can extend up to 100 miles/150 km, so that even towns two hours from the metropolis are influenced by them and can draw an economic role of some kind from that relationship. Closer in, the big-city effect is even more dominant. Being a town within London’s orbit is very different from being a town in Shropshire, or Cumbria, or Lancashire. And by the same token, a town like Melun or Senlis, in the Île-de-France in Paris’s rain shadow, has very different prospects from Burgundy’s Bourges, or even more distant Breton Vannes, or Perigueux in the Dordogne. Starting with the case of London: the most obvious big-city effect is the heavy reliance on the metropolis for work.95 A district like Thurrock, 20 miles east of the city, sends over 22,000 people there of a morning: 30 per cent of its resident workforce. Even Hampshire, a southern county 40 miles/60 km from London at its nearest point and stretching down to the Channel coast 100  miles/150  km from the capital, has nearly 10,000 commuters heading for London every day. This is only 1.4 per cent of its workforce, but it’s a striking contrast with the self-contained nature of a provincial city like Carlisle, where 93 per cent of working residents are employed in the district itself. These links are reflected in commercial connections, with firms in all the counties around London providing back-up activities to the city’s businesses and spinning work off out of their connections there. So, towns in London’s ‘penumbra’ have additional potential over and above what they derive from their own immediate catchment or their distinctive local appeal. This works in varied ways across the region. Some localities are the nearest thing Britain has to an ‘edge city’. In the Thames Valley and South Essex, it is not just the towns themselves – Slough and Wokingham west of London, say, or Grays and Southend downstream to the east – which are urbanized, but also the areas in between, which contain as much economic activity as the towns do, sometimes more. In

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Figure 7.7: London’s ‘penumbra’: the South East of England

the Thames Valley, international players like Microsoft, Oracle and O2 have more or less freestanding operations handy for Heathrow Airport and not too far from the city. Very differently, the city of Brighton, on the coast 50 miles (80 km) from London, has carved out a niche as an alternative London with universities, seaside and an arts scene, still within an hour of London

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and also international air travel at Gatwick. Of course, other less blessed locations may struggle to find a bit of sunlight in the penumbra. London’s big suburban centres like Croydon or Ilford – former towns swallowed whole by London over the course of the 20th century – should, one might think, be able to offer much of the big city’s advantage at lower cost, and it has generally been argued that they could thereby help create a more ‘polycentric’ metropolis. There is little sign of this dynamic so far: they struggle not only to carve out a role in relation to the conurbation core, but also against the threat of activity ‘leapfrogging’ them to locate in ex-urban towns like Redhill or Brentwood, set in the green belt a few miles further out, or in the bright lights of Brighton. Could a better understanding of the 21st century’s technological and economic change, and the ways in which firms respond to the choices about face-to-face contact versus online business, have the potential to guide their strategies and investments more soundly? Perhaps, as with the Lancashire towns, they need to accept their essentially satellite role, and work out what that means for their development plans and their centres. The mixture of opportunity and threat for the places in the ‘penumbras’ of New York and Paris is equally varied. But the settings – geographic, economic and political – are even more disparate. New York sits at the highly urbanized heart of an Eastern Seaboard mega-region which stretches hundreds of miles from Washington to Boston. In contrast, the Paris conurbation completely dominates its largely rural region: there is no other town reaching 100,000 and even the wider ‘Bassin Parisien’ contains only 200,000-population cities like Reims and Orleans, sitting in open countryside. The French state has seen its role as being to structure and guide development choices across this wide territory, whereas in the USA states and federal agencies have, since the mid-20th-century largesse of the interstate system, mainly left it to business to decide on towns’ and cities’ futures, sometimes mopping up afterwards. In both these contexts, smaller places face difficult choices about what it is they can continue to offer, in between the pull of the metropolis and the risks of ever-increasing digitization.

The university towns One special form within the ‘smaller city and town’ grouping where the ‘What, Then, for Cities?’ question is full of interest and potential is the university town. As well as providing a highly educated workforce, they are often also a particular variant of advanced service centre: their

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academic excellence is a source of research-based spin-out technology which drives businesses clustered around universities with key specialisms, English examples being biotech in Cambridge, sports sciences at Bath, and medical research at Newcastle. In the USA, Stanford (outside San Francisco) and MIT (across the Charles River from Boston) have for decades been world leaders in the harnessing of technological research. Their potential economic contribution, as we adjust to an increasingly knowledge-based world, could be ever more important. What exactly is on offer, however, needs careful thought. Some evidence from the literature96 suggests that whilst, at first sight, it would seem obvious that universities facilitate face-to-face contacts, this may actually be much less important for analytically and synthetically oriented work: the Science Park campus model, for example, is notable for the absence of that kind of interaction (sandwiches at the desk, drive home at 5.30 pm). However, this does not mean that they cannot also benefit from local interaction effects. For instance, the popularity of ‘college towns’ up and down the East Coast of North America with entrepreneurs suggests both that these are highamenity places to work, and that they see a benefit to the opportunity to interact with researchers at the university. This may not be the kind of intense, late-night socialization that Elizabeth Currid-Halkett describes in the Manhattan art world,97 but it still assigns an importance to face-to-face encounters and to these towns’ proximity to major urban areas. University towns are perhaps the best example of the allure of Richard Florida’s ‘3 Ts’: technology, talent and tolerance.98 But there’s a central weakness here to the idea that this is your ticket to ride: it might be your ‘offer’, but who are you offering it to? It’s not that this vision of a diverse, skilled workforce doesn’t matter, but that there needs to be some realism about the kinds of people who are going to stick around post-graduation. It’s not just about having three kinds of swanky coffee shop catering to fund analysts; it means building an environment that attracts people with different backgrounds and different ideas about what the future should look like. And that’s because the one thing that university towns and cities do at scale is create a labour pool from which firms can recruit. Instead of having to work out how to lure young, energetic people to your neck of the woods, they are coming voluntarily for what is, outside of pandemic times, the experience of a lifetime. Clever businesses will take advantage of this ready pool, often by drawing on the personal networks of staff, students and alumni. It’s a kind of modern variant of the ‘old school tie’ strategy and it obviously works particularly well in places like Cambridge (either one) or Stanford which produce highly skilled graduates in worldleading areas: Lösch’s ‘gifted men who refuse to migrate’.99

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But what about the towns surrounding universities that don’t – despite the dreams of their Deans – ‘do’ spinouts? Should you hope that they ditch Drama and start to specialize in something more … lucrative? We think that one reason that university towns are special is that they provide city-like amenities to towns that could never otherwise afford them. Quite aside from the amount of money that universities, and their students, pump into local economies, there’s a reason that people often refer to them as the ‘heart’ of the town: how many others can boast such a variety of music and theatre, art and design … and all the other intellectual and cultural trappings that a university can offer? Princeton, New Jersey, is a pleasant-enough town but not, on the surface, all that different from the other wealthy suburban enclaves that supply skilled, well-paid workers to the great metropolis of New York, or equally skilled but less well-paid workers to the industries (such as publishing) that have set up shop across the Hudson River. Of course, there is the ‘Dinky’ train that makes connections to the mainline rail corridor between New York and Philadelphia easy enough, but the distinctive benefit for those who don’t work at the university is the amenity: theatre, dance, lectures, evening classes, and so on. The other nice thing about universities as employers is that they don’t work like other firms: not unlike public sector organizations, demand tends to go up when the economy as a whole goes down. So, they are counter-cyclical (up to a point) and pay relatively well once you move past the leafy towns surrounding New York or London. They also act a bit like centres of tourism, luring people in at various scales – regional in the case of a more niche university, international in the case of Oxbridge or an Ivy League university – who pump-prime an enormous range of businesses. There’s clearly an unresolved tension between specialization and generalization that plays out in the debate surrounding the former ‘polytechnics’ (which were more practically focused) and the ‘establishment’ universities with centuries-long pedigrees, that has parallels to the earlier agglomeration versus clustering debate: is it about doing one thing very, very well (Bath) or doing a range of things well that feed off one another (Cambridge)? And over what range does that ‘good’ appeal? University towns often have options that aren’t available to other towns of a similar scale or location, and they should look to make the most of that position.

Choices facing smaller towns and cities Thinking about ‘other towns’ – often classed as small and medium-sized cities (SMCs) – shows how 21st-century urban futures will be a far more

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complex pattern than a simple choice between the great higher-order, higher-cost metropolis and the cheaper, less intense or less dynamic places arrayed around it.100 The futures they can look forward to, and make happen, are not only very varied, they also call for careful and intelligent thinking about the limits of the arguments about agglomeration benefits and scale, and about what these smaller ‘non-great-city’ places need in terms of a favourable policy environment. An important dimension of their variety is, of course, location, and in particular a town’s location in relation to its neighbours. Some of this is to do with the significance of, but difficulty of understanding, agglomeration. We have argued earlier (Chapter  4) that the great cities offer unparalleled opportunities for contact, business and growth, based on agglomeration benefits arising from both sheer scale and also communications potential. There is strong evidence101 that, from the early 1990s onwards, large cities were indeed once again becoming the principal engines of their national economies, after many years of widespread decline. As is often the case, the analysts’ needle swung dramatically in that direction after decades of deep gloom about UK and US cities. It tended to lead to a somewhat simplistic ‘bigger-is-better’ approach, underlain by a sense that there must inevitably be a trade-off between policies that promote agglomeration and more rapid growth, on the one hand, and those that seek to minimize regional inequality and accept slower growth, on the other. Henry Overman, for example, has argued102 that much-needed investment in some of Britain’s most successful (or potentially successful) cities has been held back by too many place-based interventions, which he characterizes as ‘a lot of jam spreading’. Philip McCann, however, has criticized this approach, and the validity of the evidence on which it is based. He argues103 that: [bigger-is-better] would only be persuasive if such scaleproductivity relationships were clearly evident, as indeed they are in many other countries. However, the OECD and Eurostat evidence […] suggests that there is no such relationship in the UK, thereby largely undermining the citysize distribution arguments. As such, neither the UK urban system as a whole nor many of the largest cities conform to the standard textbook type of descriptions of urban productivity. And this brings us back to scale, and how to think about it. Comparisons between larger and smaller cities and regions, or parts of them, may be a lot less telling than analysts think if they don’t choose the right scale of

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spatial unit to measure agglomeration or productivity. Individual towns in the North of England, for example, may compare poorly with big cities; but as IPPR North remark, such comparisons have led to ‘headlines that proclaimed a widening of the North–South divide, but which overlooked the fact that quite different patterns of economic success might be found if considered at a wider spatial scale’.104 As an example, Greater Manchester, as an urban complex including both the core city and its constellation of surrounding towns, is likely to be a more useful way of assessing potential than focusing unduly on its individual elements. This is especially true when administrative boundaries are as arbitrary as they are in urban England. We noted above that the town of Wigan and the Borough of Wigan are very different in size and nature; similarly, the administrative City of Manchester, which contains the very dynamic successful CBD, also covers a lot of quite poor inner city. If you then compare productivity and GVA growth in the ‘Core City’ of Manchester with the SMC of Wigan – i.e. the Borough, a lot of which is moderately prosperous lower-middle-class commuter-land – you get a different story from a perhaps more telling comparison between Manchester’s City Core (CBD), or its travel-to-work area, and Wigan as a hemmed-in industrial-heritage town some 20 miles away. This is not just academic. It matters for regional policy. McCann’s critique of ‘agglomeration = productivity’ arguments is paralleled by his warning of the dangers of over-concentration on core cities, without sufficient broader consideration of connectivity and coordination between a wide variety of places. His view is that the UK has as much of a ‘regional problem’ as it does an ‘urban’ one, and that if policy-making is disproportionately focused on this one element, then it will not achieve the stated objective of regional rebalancing.105 These are not arguments to say that cities are not important, or that urbanization and agglomeration are not vitally important factors, but they do stress once again the need for careful understanding of scale, location and interrelationships in building a basis for effective public policy at urban and regional level. The national policy context, too, is in play here. This is a particularly acute issue in Great Britain. Rather less so, perhaps, in more federalized states like Germany and the USA, or indeed in better-articulated national/ regional systems as in France. The English SMCs – Shrewsbury, Carlisle, Preston, Wigan and places like them – have been operating for at least a decade in a chilly context of weak pan-regional policy (‘Northern Way’, then ‘Northern Powerhouse’ and, ludicrously, ‘Midlands Engine’, all of which have been more ‘public relations’ than ‘public expenditure’); longpromised and endlessly delayed transport upgrades; the disproportionate regional impact of the ‘austerity’ spending cuts; and declining and

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uncertain European regional funds. Coupled with a laissez-faire economic policy of ‘leaving it to the market’, it is no wonder that Preston’s circulareconomy model attracts other municipalities, too; the perhaps inevitable criticism of it from the right, as ‘protectionism’, carries little weight given the overall policy and funding setting these municipalities face. Even in the unfavourable conditions of neoliberal political economies, however, there are tactics that SMCs can adopt in order to get the most out of their specific non-big-city nature and location. The Preston-style focus on getting the most out of the local economy is already seen as a model by other councils like Hartlepool and Bristol, and by the Welsh Assembly. Targeted place-specific work to improve skills and access to employment can do more than generic national programmes. Realism about scale and interdependence with neighbouring, often bigger, cities can be combined with institutional change to improve collaboration and connectivity and enable these places, as IPPR North urge, to articulate ‘their unique role within the wider urban ecosystem’.106 Because each of these towns and cities is unique. They are not just pieces on a chessboard of socio-economic adjustment. There is a reality to the idea of local distinctiveness, both actual and perceived, which can contribute to attractiveness and place choice. Another of the Lancashire towns, Bury, is less than 10 miles (16 km) from Manchester city centre. It still feels different, and feels itself to be different, from the Big City, and not just because it produces Bury black puddings and the Mancs don’t. Similarly, Shropshire’s environment and quality of life are a vital part of Shrewsbury’s offer to firms and individuals, as is its sense of a thousandyear market-town history. The feel, and the quality, of the local ‘offer’, and the potential for face-to-face interaction to be one of their defining attributes and advantages, are crucial for each of the SMCs in making people want to be there – and crucial to their being places of choice. Each town can find a role, but what it must not do is try to do things that simply do not make sense in a 21st-century economy.

Towns and cities in a post-pandemic era All of this thinking on the challenges facing cities and towns in the 21st  century is based on their long-run history, on the logics and constraints of geography, and on the evident power of proximity and personal interaction. But hang on, doesn’t the impact of the Covid-19 pandemic call all of this into question? We think not. The pandemic and the responses it evinced will undoubtedly generate and influence change. They probably will create

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opportunities for smaller places. At least in the early days, newspapers reported with a kind of glee on the sudden surge of interest in homebuyers ‘plotting moves out of the city [read: London] to a rural area or smaller town as people conclude that home working is here to stay’.107 The logic – and there is logic here – is that a longer commute is bearable if you don’t have to do it every day. As we discussed in Chapter 2, it’s the sum total of time, money, convenience and related costs that makes up our travel budget. Train and bus trips didn’t suddenly become more expensive, nor did car trips become markedly less so, but people suddenly became very wary of the ‘cost of illness’ attached to being on public transport. Articles about people moving were followed, rather predictably, by articles about offices and shops moving too: ‘UK office demand is “shifting to the suburbs” amid Covid-19 crisis’108 and ‘To survive, shops in Britain will have to move to where the commuters are now’.109 Again, there’s a logic to this: the pandemic weakened the hold that having ‘an office in the city’ had on the business imagination, and if people were sticking closer to home then it makes sense to try to move your retail business closer to their homes as well. So, in comparison to WeWork, which went ‘all in’ on London’s property market, its rather less glamorous competitor IWG, with smaller and rather less fancy offices pepper-potted all over Britain, looks to have invested rather more wisely. But scratch a little at the surface and it becomes clear that this is the Londoner’s (or New Yorker’s, or Parisian’s) definition of ‘the countryside’: somewhere with good rail links back to the Big Smoke, as London was once known, or the Big Apple, as New York is often still known, and a reputation for nice shops and good schools. So, there are big opportunities for towns embedded in the wider ‘Southeast of England’ or NY Metro area, but rather fewer if you are far from the global hubs that everyone loves to hate. As importantly, we can’t help wondering if this is more an infatuation with the idea of moving to the country that will, for many, collide rather dramatically with the fact of living there and discovering that Amazon doesn’t deliver within the day, that driving between engagements leaves less time for your yoga practice, and that the shops aren’t open all hours. And lurking in the background are two important, but largely unspoken assumptions: first, that only one half of the household will still be making the journey into the city; and second, that you’ve (miraculously) found a quaint cottage with a good internet connection. Because if you’ve got to be on the train (or the interstate) by 6.30, then who is dropping the kids off at school? Or picking them up afterwards? And if you’re going to be on non-stop Zoom or Teams calls then you’d better hope that the local broadband infrastructure can cope. Neither of these is assured, and both

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imply some ‘buy now, regret later’ challenges for couples whose dreams collide with the more mundane reality of a different set of challenges to city living. For towns, if you’ve not got much of a centre to speak of – or what centre there is turns out to be nondescript chains or charity shops – then it’s also hard to see this influx of ‘city slickers’ leading to many new opportunities. They’re used to choice and quality, and they’re used to shopping online, so they might well just continue to seek these out through web-based purveyors of fine produce rather than reinvigorating the local high street. And that’s before you get to the issue of what happens if they do: navigating the competing priorities of the ‘flat white’ crowd and the long-standing residents is going to present some unusual new challenges for local councillors and mayors if the hoped-for influx arrives. Within cities, we wonder if something quite different might happen: a new ‘localism’ that builds on the density and diversity that cities have always offered. Perhaps we’re optimistic, but wouldn’t you rather walk to work than stuff yourself into an over-crowded railway carriage/subway car when you’re nervous of what you might catch? And cities do have the scale to offer choice: there’s enough local demand to sustain both the fancy coffee-shop-cum-co-working-space and the cheaper ‘caff’ catering to the builders and pensioners. This process too will have its tensions, but at either end of the Victoria Line in London you can see households living and working more locally in knowledge- and skills-intensive industries (web design, small-scale furniture production, marketing, arts and culture). So, we wonder if the local high streets in big cities might be unexpected beneficiaries of the pandemic? Probably at the expense, in the near term at least, of the CBD’s restaurants and other social establishments. Realistically, that also likely means further polarization of the city centre into either scaled-up or specialized businesses. What is going to change (or has changed already), however, is the citydweller’s view of green space. A rabbit hutch in Hackney or Williamsburg seemed just about worth it (not that you had much choice when landlords could count on 40 other people to bid for what you refused) when you had all of London’s or New York’s attractions on your doorstep. But these ‘opportunities’ looked rather less enticing when you’d been locked up for weeks on end and been banned from the local park because the people lucky enough to have gardens thought it was too much of a risk. Memories of lockdown will fade for younger people and so, eventually, will the aversion to homes without gardens or balconies, but for some time we think that a lot of landlords are going to find their poorly designed innercity flats harder to shift when a prospective tenant is asking themselves: ‘Is this somewhere I could live and work for two months straight?’.

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The desire for green space is one of the arguments we see trotted out whenever analysts claim that cities, this time, are doomed. But in the UK, at least, all of these articles are about the demand for homes, and very few note the challenges around supply. Good luck finding an attractive detached property within the Cambridge/Oxford/Reading arc that is noticeably more affordable than a terraced property much closer in. And the lag between high demand and an increased supply of housing is likely to mean just one thing in the near term: higher prices for the most desirable homes. To re-use a turn-of-phrase from earlier in the chapter: we think that there will be a flight to quality, not a flight to the countryside.

Ways of working in a post-pandemic era The world of work, post-pandemic, has involved a lot of change and challenge, even for those who were in a reasonably secure office job. However, we were struck by how much of the practice that emerged resembled the already-existing ways of working for many academics. The flexibility around working from home; the focus on contact rather than just presence; the ‘planned’ socialization of conferences, whether live or online … many businesses and organizations have moved in these directions. The academic world has long been an industry where select employees were given a lot of latitude to structure their working day as they saw fit: there were important ‘meetings’ that it was poor form to miss, and certain ‘deliverables’ that had to be produced but, historically at least, it wasn’t seen as particularly important where you did this. Most academics would hope to be in the office three or four days a week during term, one or two days a week otherwise. ‘The conference’ was basically subsidized travel to catch up with colleagues and contacts in a scenic location, and the talks a good way to dip your toes into the latest thinking, but it’s over coffee or drinks that new collaborations or ideas would be hatched, and socio-professional networks activated or simply maintained with some polite chit-chat. Socialization here is planned, in much the same way as it is for today’s busy city executive at the breakfast sessions, around a mix of structured and unstructured information flows. These are all rooted in the idea that through regular ‘light touch’ contact you maintain confidence in potential collaborators and keep a weather eye on the risks and opportunities on the horizon. Of course, like any other industry academia also suffers from its own inertia: there were ideas about new ways of teaching that had been in

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circulation for quite a few years, but only a committed few had taken the plunge into ‘flipping the classroom’ and making the most of the new array of online learning tools. The pandemic has called time on the lecture as the default for everything from literature to particle physics, and the investments that academics make in new ways of delivering their ideas are going to be with us for a long time: we think that few classes will ‘revert’ as the pandemic passes because this transition would have eventually happened anyway. Lockdown brought the investment of energy forward and probably forced academics to go a bit further than they’d have liked, or would want to continue, but that’s about it. Again, it’s the pandemic as the petrol, not the fire. So, what from this can we transfer to other knowledge-intensive industries? What do we think they will look like post-COVID? Well, 9–5 every Monday to Friday is almost certainly gone for good, never to return. Given that businesses can so transparently run without regular working hours and the culture of ‘showing your face’, why would you go back to this way of doing things after? Especially since it looks like you can cut your office costs by encouraging staff to work from home a couple of days a week when they can. As, of course, many city-centre firms were already doing. But in that case, you are going to need more flexible spaces and more social spaces: a lot more. So, savings, yes, but not the end of the office or of the HQ. This was all happening already to some extent, but the pandemic forced this investment to be accelerated rather dramatically, with perhaps also a bit of ‘rushing for the exits’ that wasn’t necessarily fully thought through. We tend to suspect that the standard, ‘can-you-believe-we-weren’t-using-this-before’, office plan of the 2040s hasn’t quite been invented yet. At the level of the employee, to our minds this implies allowing teams to sort out for themselves how to ‘deliver’ against a deadline. Staff will need the time and space to work out how to use technology and travel to maintain the ‘coherence’ of the group and the focus on goals. Your role, Madam CEO, is to distinguish between the teams that are working (and let them get on with it) and the ones that aren’t (and work out why). But if your staff aren’t coming in every day then you will need to put more effort into creating opportunities for mixing it up at all levels. So, it can’t just be the top-down speech from management, it has to be about hearing from peers (parallel sessions, even!) and about opportunities for ‘chat’ where ideas can be followed up, a sense of confidence in others developed or maintained, and a whole corporate culture of working reinforced. Many of the most-admired technology firms were also already headed in this direction: they just splashed out a lot more cash on the problem than the universities did. Ultimately, those ‘perks’ look cheap compared to

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the cost of finding and training up new people. They have to be, or they wouldn’t be on offer. Again, we suspect that a lot of other businesses could learn from them to value the staff that they have: most employees aren’t looking for beanbags, a company bus and fußball tables, but they probably would welcome a decent, subsidized cafeteria and the odd bonus. Remote working is going to make it that much more obvious which firms are thinking about their remote staff, and which see it as a way to save more money, and employee commitment and motivation are likely to follow those leads. But, we stress once again, these are not new issues. A former senior exec observed to us that “I don’t think that I could have led a group of 15 to 20 working on very challenging major projects if they had all been dispersed. Every day, I walked around, building trust and they helped each other – ‘I heard that you are working on this, did you know that …?’” They added that, even 20 years ago: “With remote teams, you may have both active and passive members. Leaders have to work hard to understand each individual and how to hook into their interest.” And as a comment on the pandemic’s impacts: “I fully realize that WFH has some advantages, especially for routine work. My concern is that many companies may see it as being more efficient and therefore good … I believe that it could be in the short term, but not necessarily in the long term.”

I’m happy for you, but… All that said, the thing that this book very obviously does not tackle is the consequences for all of the non-knowledge workers. The majority of employees are not going to end up working in something that looks more like an academic job with lots of flexibility and lots of autonomy. The pandemic drove home that even the most knowledge-intensive firms and organizations have two classes of workers: the ones given the freedom to work whenever and however they liked so long as the job got done, and the ones who were somehow expected to turn up at work regardless to clean, staff the reception desk, deliver the packages we were all ordering, and generally keep everything ticking over. The pandemic exposed, too, our reliance on labour which is regularly undervalued and underpaid … if it’s paid at all! The long-run consequences for (mostly) women who took, or were de facto forced to take, time off to become teachers and carers will also be severe. Moves to the countryside risk baking in those losses to the labour force even if not everyone who moves feels it as a loss. There is also a very real risk that the new flexible means ‘work whichever seven days of the week you

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like’ just to tread water. The immediate priority for many businesses was, of course, simple survival but, post-peak-crisis, companies need to take stock of how to make flexibility work for everyone. Supportive, as opposed to extractive, flexibility matters because diversity matters. It’s not ‘just’ that promoting diversity is morally right (it’s definitely that), but that it’s also good business practice too. Looking back across this book at how information and knowledge ‘move’, it should be obvious that maintaining a diversity of inputs to your teams ensures that more good ideas reach your key decision-makers and that you’re not missing shifts in consumer or client preferences that will impact on the bottom line. And if you’re looking again at the assumption that most of your staff will be at their desks most days of the week, then why not have another look at all of your other assumptions about working practices that push these people out? Perhaps it’s also time to revisit the ‘seemed a nice chap’ type of hiring or promotion decision? There’s also a clear need to look again at how the ‘non-knowledge’ jobs actually work: in logistics, ‘mobility services’ and manufacturing in Britain and America, many employees might as well be robots already since that’s how they’re treated. But that’s because we don’t tend to look outside our own borders for good ideas (diversity of inputs, again): though not without their own challenges, German and Japanese firms both seem to embed and encourage autonomy much further down the chain of command than their Anglophone competitors, and the result is that they build up stocks of applied knowledge that are very valuable to the bottom line even as companies continue to invest in AI and further automation. Quality doesn’t seem to suffer from that human touch, it goes up. German and Japanese engineering are still bywords for quality, and that quality is ‘sticky’ in a way that the less skilled stuff isn’t. More mundanely, recall the case of the onshored call centres: even if voice recognition-enabled AI can field increasingly complex requests, it’s useless when queries become genuinely complex and context (and some sympathy) starts to matter, because judgement is required. AI doesn’t do a good job of taking the ‘but in your case we’ll waive that requirement because I can see it was a genuine misunderstanding and you’ve been a good customer over the years’ decision, it follows the algorithm. Even in the ‘low skill’ roles, knowledge of ‘how things work in practice’ matters and can build confidence in your firm and its offerings. This kind of applied knowledge is just as sticky as the more formal and readily recognizable kind. It is highly local and contextual in just the same way. So, one lesson for town and cities in struggling regions is to work out how to build on that stock of experience, and how to find and keep employers who value it.

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Getting organizations to ‘buy local’, both by encouragement and by direction, creates opportunities for local knowledge and entrepreneurship to come into play. It also brings into play the Keynesian local multiplier: a pound spent with a local business tends to be re-spent locally many more times than a pound spent with a national or multinational chain store. We mentioned earlier the Mondragon, Cleveland and Preston ‘models’, where serious efforts are made to build up local circuits of trade in services, goods and jobs. Moves like this, away from a buy-everything-in mode towards a more self-sustaining local economy, could become much more accepted in an environment where local-ness is seen to have new benefits.

Towns and cities in an information age We’ve seen that two forces are at work simultaneously, pulling in opposite directions: the networks which ‘equalize’ space exert a centrifugal force on activity and growth, spinning it outwards and deconcentrating urban form. The nodal networks, in contrast, tend to reinforce concentration, pulling growth in a ‘centripetal’ way towards the best-connected central locations. The effect on places (cities, towns, countryside …) is similarly dual: both the ‘dis-agglomeration’ of many functions, with back-office moves to cheaper more distant locations, alongside a re-concentration of higher-level jobs within, in London’s case, its City financial core. So, what then are ICT and the ‘Third industrial revolution’ doing to places? It’s obvious that the impact changes with different scales. For the World Cities, and the ‘second order’ conurbations which offer similar, though less global, links, these super-connected centres are focusing the high-added-value activity in a more and more concentrated way. Their firms’ ‘network dependency’ is high, and these major cities will remain hubs for global business networks. ICT is part of the networks that matter but, as we’ve argued throughout, rarely the key. For smaller places – the towns and smaller cities away from the great conurbations – ICT will, of course, affect their businesses and the markets they operate in. In principle, your residents can sell to anywhere and buy from anywhere but, in practice, only goods that are searchable (or sufficiently valuable that no one cares about the inconvenience) will be traded. So, what really matters is range: access to a market big enough to support the services they’re offering. Because without transport that offers access which is viable relative to the cost of the product or service, Shrewsbury or Carlisle or Bourges or Lancaster, PA cannot serve their catchment. Digital connections are, of course, essential, but they are not locationally determinant in the same way.

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For places in the ‘penumbra’ of the great cities, the impact of ICT could cut several ways. Negatively, if AI automates away activity that might once have been targeted for decentralization; positively, where ICT allows yet another function to be ‘hived off’ from the HQ. In the rural hinterland, however, we do not see ICT as the facilitator of a world of country-based telecommuters, always ‘just around the corner’ for at least the past two decades. It’s the ‘Paradox of Flexibility’: by enabling us to work from anywhere, ICT has simply taken itself out of the picture, and gives no special advantage to locations that have no other assets. Peter Hall’s final word on the topic is apposite: As so often before, technological progress is paradoxically villain and hero: on the one hand destroying jobs and firms and entire industries and ways of life; on the other, creating vast new economic opportunities and solving intractable problems of urban society. But the way we use it will depend on us. That is the message for the next century, and the next age of urban history.110

‘What is to be done?’ (Comrade V.I. Lenin, 1902)111 Cities have always changed, sometimes slowly and gradually, sometimes suddenly and dramatically. Paris had pottered along for centuries as the dull provincial centre of a Capetian kingdom which was little more than a regional duchy. Then, over the course of the 13th century, Paris exploded from around 20,000 people to over 200,000; the biggest in Europe and possibly smaller only than Hangchow in the entire world. Intertwined reasons drove this growth: greater royal control over its notional domain; a flood of silver which stimulated a more dynamic economy; a consequent concentration of revenues, rich patrons and spending in the city, and so keen suppliers of wine, wheat and salt; and a ‘take-off’ into domination and concentration on a scale unseen since Roman times.112 We are not forecasting anything as dramatic for the cities of the West in the 21st  century. But change there will be, alongside surprising continuities. And there will be powerful reasons behind that, too. Our book has sought to explore how cities great and small might evolve over the coming decades, and where technology will, and will not, play a critical role in their futures and the choices they can make. We’ve argued that the digital world of ICT is an intrinsic part of it, and yet not actually crucial to locational choice. City leaders need to be wary of trying too

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hard to inflect these economic trends and businesses choices – they have little real leverage. Paradoxically, this is not the same as saying that cities, states, and countries cannot shape their business environment. What we’re trying to do is help you think about the ‘grain’; working with the grain is expensive but working against it even more so, and that much more likely to fail as well! In which case it helps to put what money there is where it’s more likely to work. Some places do have land to sell, and cheaply, that’s suitable for big logistics or manufacturing or data-centric firms. But you shouldn’t be under much of an illusion that they will stick with you when the going gets tough or a better offer comes along, nor that these businesses offer a good foundation for building a rich, diverse ecosystem of firms. So, what about the places that have the potential to nurture ‘sticky’ sectors? We recognize that there’s a real problem for policy-makers in that developing resilience and innovation is risky: to stimulate the next Silicon Valley you need a culture that supports risk-taking, you need firms that don’t worry too much about the leakage of intellectual property because they also reap benefits themselves, and you need a high tolerance for failure. Because most firms will fail; the problem for public policy is that modern political discourse tends to see this as profligacy, not investment, and it tends to get the tax base angry because it is oh-so-easy to regard it simply as ‘waste’. But at least as important for city leadership is the reality that for more and more of the businesses the key asset is the people: so, the focus should be on getting it right for them. Homes that they can afford, metro and buses that work well, centres and suburbs that are lively, pleasant and ‘vivable’, where the face-to-face contact is a vital part of ‘being there’; it’s a demanding enough agenda without trying to reorganize the economy as well … For the smaller places, the point is to find and maintain a role. For Shrewsbury, or Carlisle, or Bourges, that’s about succeeding as the attractive ‘central place’ for their natural hinterland. For Wigan, or Lens, or Utica – towns whose original raison d’être was cotton, coal and heavy engineering – these proud and independent-minded places will need to work towards a role as places of choice much more integrated into the Greater Manchester, Lille-Metropole, Syracuse city-regions: not shrinking from being part of a bigger picture, not being shy about being somewhere commuters want to live. The pandemic has shaken things up to the extent that people are considering options that they might not have previously, but it’s not clear that there’s a big, new opportunity to attract London’s fashion designers or account executives to country towns in the Cotswolds or Suffolk. However, within London’s commuter belt there may be a

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once-in-a-lifetime opportunity: a reluctance to travel and more general embrace of flexible working could make more local options attractive, while weakening the relevance of the dominant ‘signifying locations’ in industries that are now less reliant on ‘seeing the whites of their eyes’ as part of doing their deals. Steering this sort of shift requires leadership. This raises governance questions, particularly in an ‘Anglo’ world with underpowered and underfunded local government and a faith-based reliance on the market to supply answers to difficult problems. Elsewhere in Europe, with more self-confident and better-resourced municipalities, or in Japan with its more consensual approach, there is more prospect of coherent responses, building on already solid achievements. Looking at the future with a critical eye, and with a sense of what economic and technological change might mean for all sorts of different places can, we think, give policy-makers, investors and developers some sort of steer: which trends matter, which are worth trying to respond to, and where the most obvious mistakes can be avoided. This is not a set of prescriptions. But it is a way of thinking which can, we believe, help in analysing the challenges faced by towns and cities in the coming decades.

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And in the End … My Wife and family return’d to me now out of the Country, where they had been since August by reason of the Contagion, now almost universally ceasing: Blessed be God for his infinite mercy in preserving us. John Evelyn, The Diary of John Evelyn, entry for 6 February 16661 In the end, it’s still about the human touch: making time and making contact, even when it might well seem like it’s gone for good. In this context, ICT is the great enabler – we can ‘reach out’ across cities and continents as never before – but it is not the great substitute – F2F is still integral to maintaining relationships, confidence and commitment. So, ICT substitutes for the trip across town when all we really wanted to do was say ‘Hey, how are things?’, but there is no substitute for when ‘seeing the whites of their eyes’ is essential. Consequently, central places, where contact is easier and quicker, retain a crucial advantage. And the great agglomerations, where there’s lots of potentially useful contact all around, create a critical mass for doing business in many of our most dynamic sectors. Not in every market, or for every sort of deal, of course: for great swathes of business, from travel booking to logistics to advanced engineering, 21st-century digital technology means liberation from ‘you had to be there’ day in and day out. This book has been about how these differences work, and what that means for cities. In our Introduction, we raised a range of questions. We asked: what do people value about cities? Is distance ‘dead’? Why do firms still pay astronomical rents for the CBD office when ICT should allow them to locate in cheaper suburbs? And why isn’t telecommuting much more common, as forecast for a long time now? To answer these questions, we looked at how different ‘layers’ of interaction stack up, one on top of the other: infrastructure, which creates

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the opportunity ‘surface’ of sites that are more or less connected; markets, which load the infrastructure with potential depending on the ranges across which goods and services are sold; transaction patterns, which configure firms and their connections within markets; and the people, who set this all in motion day after day. Each with a role to play. By allowing us to interact effectively at a distance – up to a point – ICT affects how much different industries and people value ‘being there’ at the heart of it all. In other words, flexibility isn’t about doing whatever you want, it’s about focusing on what’s most important to your line of work. And if your line of work involves – as it does for many of the most valuable industries – moving knowledge around then you will need to focus on people and how they collaborate, compete and coordinate. We then set out to explore how that all works now for F2F and for choice of location, as well as what it might look like in the future. We used this as a way to think further about which jobs and markets are most susceptible to relocation and/or automation, as well as the impact of AI and related technologies. Our questions included: what does this world of constant change mean for developers, for investors, for policy-makers? And what more can we say about each ‘layer’ of place and its future, from World City down to peripheral market town? Why, then, cities?

Cities are about uncertainty! The markets where cities have a critical advantage are the ‘opaque’ ones characterized by risk, uncertainty and a lack of standardization. Those characteristics confer high value on confidence (or trust), contact, buzz and, hence, proximity. Of course, many markets have been made much less opaque by ICT, but really technology has been doing this for two hundred years: think the 19th-century telegraph and cotton prices. It’s nothing new, even if it seems that way! The cities offer the buzz and (live) social networks as ways of screening and signalling in these opaque, but very profitable markets. Part of this is about places and the clustering of activities. It explains, too, the existence of signifying locations like Manhattan’s East Village (signifying ‘coolly fashionable’) or London’s Clerkenwell (signifying ‘design cluster’), in many sectors but especially in the cultural industries. Wherever there is a lot of uncertainty, ‘geography is a shortcut to quality’. In addition, the need for frequent and short-notice meetings strongly influences location and the need for centrality; for 21st-century businesses quick, frequent, light-touch contact seems to be as important as it has ever been.

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This all gives central places a vital advantage, because it is the high price of fixed infrastructure (rail, airport, docks) which is the key conditioner of centrality, not the digital infrastructure which creates the flexibility and freedom for other activities to escape central places. Agglomerations and clusters tend to develop around the nodes of the least flexible networks: the path-dependency of highly connected centres focuses the high-end activity in a more and more concentrated way. In this matrix, F2F is more important, not less, and ‘lunch is dead’. The range of contact ‘channels’ is wider and deeper than at any time in the past, but face-to-face contact provides extra ‘bandwidth’ that other channels cannot, especially for tacit, understood, and inferred information and knowledge. Transactional exchanges can rely on ICT, but for insight and knowledge F2F will always have the edge. It offers speed, quality, reciprocity, and the clues of body language, among other things. It is critical to building relationships, and relationships are key in a world and an economy where competition is as much about affinity as about competence (everyone is competent, so how do you pick your collaborators?). We’ve stressed that reducing risk and uncertainty, so lowering transaction costs, is one of the great advantages face-to-face contact can offer. However, there are potential downsides to all this instinctive, touchyfeely, ‘in-my-gut’ judgement. Not just the business risks of groupthink, in the sense of a failure to question tacit assumptions when they’re past their sell-by date but, more insidiously and importantly, the effect of unconscious bias which is at its most evident in the ‘old school tie’ ethos, and at its most severe in the case of stereotyping, particularly on race and ethnicity. Firms can and do try to correct for this in process terms; they can insist on appointment practices which rely on pre-set criteria and skills, to avoid the ‘seemed a nice chap’ type of decision. A genuinely open society and economy needs ‘players’ and institutions fully alive to how difficult and demanding a line it is to tread: to rely on the screening and signalling strengths of face-to-face contact whilst avoiding the temptation to drop into lazy characterizations and the easy comfort of ‘people like us’. What all this face-to-face contact is, and where it takes place, is changing too. Our interviews suggested that a surprising amount of Central London’s F2F is internal to firms, building coherence, keeping things on track; that outside your own organization, it’s primarily with clients; and that ‘lunch is dead!’ So, quick contacts over coffee; attendance at early-evening events, debates, briefings; manufactured casual contact, in neutral spaces – these are the patterns and setting within which key interactions now take place. And these non-random events and gatherings are much more significant than ‘bumping into people in the street’, which

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hardly any of our interviewees regarded as an important aspect of being in the busy Central Area. Being in places or at events where you would be likely to run into someone useful or interesting, and much of the buzz of Central London and of ‘being there’, are clearly being met by a range of places. These may be specific coming-together locations, but they are very often neutral venues like hotel lobbies, co-working break-out spaces, the more spacious but less functional café-restaurants, and so on. Essential places for the ‘not random, but not by accident either’ encounters that seem to be such an important piece of the jigsaw, they look like a space demand that both planners and developers would do well to nurture.

Information – the continuous revolution All of this means that, across many fields of activity, ICT allows more choice, it accelerates change, and it enables contact … but it doesn’t replace F2F. The ‘continuous revolution’ in information should not be treated as a uniquely 21st-century phenomenon. ICT is actually less revolutionary than the phone was 100 years ago (for the first time ever, you can talk to someone who isn’t here!), and the information revolution is just one more wave of change among many. Nor have the dramatic advances in digital communication led to the ‘death of distance’. A brutal lesson in the continuing relevance of geography was delivered to Britain at the height of the Covid-19 crisis by the continuing and acute dependence for protective equipment on supply chains based overseas – and its consequent unavailability to the National Health Service.2 Location and physical proximity are still vital considerations in all sorts of decisions. Of course, there are many deep changes, affecting all of us. Videoconferencing is an important addition to firms’ toolkits, but it tends not to be a substitution, except for some of what we used to achieve via business travel once a contract was under way. So, not at the outset, or when winning the work. Email has become the most routine of comms modes, about as basic and exciting as the plumbing, with quite a bit of substitution, mainly for phone calls. Social media are shifting the frontier between bar chat and e-chat, so that ‘word of mouth’ is much less automatically face-to-face than previously. And then there’s AI: artificial intelligence is penetrating further and further, deeper into white-collar activity. Like the first industrial revolution, it is shaking up job patterns, along with how and where business is done. The speed of technical advance, and the potential impacts are breathtaking. One commentator, trying out the latest (GPT-3) AI system, observed

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that ‘the structuring of responses is pretty competitive with the kind of arguments one might expect from an undergrad term paper responding to a rather boring question’.3 Scary enough … But no innovation in technology has yet reduced the total number of jobs, even while it has been laying waste to individual sectors. And the same commentator’s judgement was that ‘tools like this aren’t going to replace journalists or writers worth their salt …’.4 Law, banking, insurance will all look very different in 10 years’ time, but wherever they need high-level contact, judgement and personal relationships, they won’t be calling on AI. For the cities, the networks offer a spectrum of flexibility. At one end are the networks such as telecoms or roads that are capable of offering nearly ubiquitous service across space: they equalize space by making all areas equally accessible. At the other are the restricted ‘nodal networks’ that bind development to key locations: they accentuate the difference between connected and unconnected places. There is no single or automatic technological driver towards deconcentration. Firms choose their location along this spectrum. Some have great choice and flexibility: if the networks they rely on are primarily ICT and the highway system then they can wave goodbye to high-cost central cities. But for many more the place is still key, and the inflexible but highly connected systems – plus the pool of skilled labour they draw in – are what fixes them. ‘Network centrality’ is a useful way to think about this: central to the networks for moving ‘stuff’ around (big things if you’re in logistics, surprisingly little things if you’re in banking), and central to the networks of information flowing through your sector or firm (digital if you’re dealing in searchable goods, highly analogue if you’re dealing in dreams, for example of the next blockbuster). These networks are also conditioned by scale and connectivity. If your work involves small teams and highly localized information flows then that network is relatively isolated from its environment; so, as long as you can bring the brains together, then it doesn’t particularly matter where you do it. It might as well be somewhere scenic. But ‘betting the bank’ type deals involving diverse informational inputs and expertise are the opposite of this: your team is large and constantly changing, and your network of informants larger still, so you care a lot about being ‘in the swim’ at the centre of it all. In this world of change for cities, who’s going, and who’s staying? We’ve shown that the greatest benefits of proximity will be to firms in uncertain markets with complex outputs, short ‘product cycles’, and constantly changing transaction patterns5: high finance, creative and cultural businesses.At the other end of the scale are sectors such as ‘traditional’ R&D (creative though that may often be), logistics and many of the ‘back-office’ functions of banks and other large employers. In the middle

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are the consultancies: there are some significant benefits to being far enough away to save some money, but still being close enough that client meetings aren’t a hassle. So, it is the type of input or output – and their associated search and experience costs – that determines whether it’s actually worth the investment in a city location. Central-city locations attract, and will continue to attract, businesses and markets with a high degree of customization, quality-sensitive clients, collaboration for complex outputs and advice to decision makers. Management functions will continue to concentrate at strategic global locations, because even though technology will enable more and more electronic interactions and transactions, personal contact will still be vital. The personal contact industries, and the jobs within firms that rely on personal contact, will still see central place, proximity and convenience as an essential driver of office location. As our interviews showed, even some of the activities which decentralized a generation ago are, at least partially, moving back inward. Cities will remain important employment nodes, but it’s important to remember that the workers who deal with a high level of ‘tacit’ information are still only a minority of total employment; for much of the workforce, the pressures are still predominantly those of outsourcing, offshoring, automation and a squeeze on demand. The CBDs will continue to grow, but probably much more slowly, and they will not necessarily be generating the same demand for massive office floorplates staffed by thousands of white-collar personnel. A much more mixed picture – of jobs, sectors and space – will evolve, and the boundary between employment areas and residential areas will get fuzzier and fuzzier.

City futures? Mainly bright, some cloudy patches The great World Cities look set to continue their dominance, though we expect that the growth rate will slow from its recent dramatic burst, particularly now. When we asked ‘Why Central London?’, a great array of responses showed how wide the offer is: the depth of the labour market, including ‘offering Central London’ to vital young staff; prestige or signifying locations; being near clients; the need for frequency and speed of response; the hub location for air and rail: they all attract firms in complex advanced judgement-based markets. The great cities could choke on worsening living conditions, unaffordable housing, fear of disease, and ever-more demanding commutes: they reflect the unequal and hyper-financialized societies they dominate, and continued success is not guaranteed. But their underlying advantages are without question huge.

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Are they resilient in the face of major shocks like COVID-19 and consequent lockdown? The pandemic ran a full-strength test of what an ‘e-only’ work world could be like. Our conclusion is that the experience will cement and accelerate certain tendencies that already existed, but will not create fundamentally new ones: by looking backward we can see overall continuity across multiple seeming revolutions. So, we don’t mean that COVID-19 will have no effect on how businesses organize themselves and their employees. But it won’t do away with the need for F2F or cities either. And, so, we’d push back very strongly against the idea the pandemic means that London and New York are going to lose their lustre and fall into permanent decline overnight. Humans – and cities – have short memories and long evolutionary histories: a short, sharp negative shock followed by slow recovery and reconfigurations seems most likely to us. Outside the great cities, there’s a kaleidoscope of opportunities and challenges. In the World City ‘penumbra’ around London, places like Slough, Reading or High Wycombe also have their own distinctive offer, though they vary quite dramatically in terms of the details: the M4 technology corridor works for global IT not because these are necessarily the prettiest of towns, but because they are close to the airport, close to the clients in London, and close to the ‘good life’ in Surrey, Berkshire and Buckinghamshire. University towns, too, have special assets, both as nodes in the knowledge economy and as places to live. At the most prestigious end, Cambridge benefits from its world-leading reputation for higher learning, but has also carved out a distinct role for itself that goes beyond the ivory tower: it is both a handsome commuter suburb for London and a leading area for the UK’s life sciences cluster. But many other towns and cities can now benefit from the presence of a higher education institution to create jobs in growth sectors and to offer the ambience that will attract people to live and work there. The challenge for the smaller cities and towns further from the centre of it all is to define a credible place in the space-economy of the 21st century. For many of the major regional cities the task is to cement their role – often very long-established – as their catchment area’s attractive market and social centre in a world of online shopping and offshored office jobs. The job is even tougher for the smaller places nearby, which were essentially created by 19th and early 20th-century capitalism to serve the needs of a few manufacturers (Oldham, Lancashire … Erie, PA… Roubaix, Nord-Pas-de-Calais), and which are now short of assets and advantages in a world where size, variety and connectivity are the key attributes, and where they do not dominate their hinterland as they used to.

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In Chapter 3 we talked about the ‘range’ of a good as a way of thinking about the catchment a town centre will serve. But the range is not fixed for ever, and people’s changing reactions (to the pandemic, for instance) might simultaneously be advantageous for local high streets (things for which we might previously have travelled further – coffee? co-working space?) but also undercut their business (technology eating into what local shops used to provide, from groceries through to high-end goods). Building up local economic circuits – the ‘Preston model’ – could be important here, in making the most of the resources each town already has available. Even if a town’s leaders conclude that their best shot now is as a satellite to a bigger, more dynamic city in the region, they still have to make their place attractive enough to draw in commuters and growing businesses, and to slow down the rate at which their young folk leave. What they must avoid is the sort of short-term fix (more sheds by the highway interchange? A few dozen jobs in a fulfilment or data centre?) which will last one short round of the trade cycle and leave the place even more battered than it was. Fast, reliable connections to the major job hubs will be vital; so, too, will education and training; and the assets and traditions that they do have, whether it’s canalside warehouses, a brewing heritage, or a long-established festival, should be thoughtfully used to build an attractive, varied future. These aren’t policy answers or recommendations. They merely sketch the range of challenges that policy-makers, investors and developers are facing. We would like you to think critically about which trends really matter; which economic and technological changes are the important ones, and which are surface ‘froth’; and what this could all imply for the city or town that you live in.

‘Being there’ is still at the core of the urban experience. Even in a world of instant digital access and unparalleled connectivity, central places matter, and face-to-face contact is what they do for a living. That is their story, and it will be their future.

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Weber, Alfred (1909 [1969]) Theory of the Location of Industries, Materials for the Study of Business, 7th edn 1969, Chicago: University of Chicago Press, p 2. London Datastore (2015) Population Change 1939–2015, London: GLA, www. data.london.gov.uk United Nations (2018) ‘68% of the world population projected to live in urban areas by 2050 says UN’, Department of Economic and Social Affairs, 16 May 2018, https://www.un.org/development/desa/en/news/population/2018-revision-ofworld-urbanization-prospects.html Porter, Michael (1998) ‘Clusters and the new economics of competition’, Harvard Business Review, November–December. Florida, Richard (2002) The Rise of the Creative Class – And How It’s Transforming Work, Leisure, Community and Everyday Life, New York: Basic Books. Lancashire County Council (2020) Local Authority Profiles: Blackpool Unitary, Preston: LCC (section 2, ‘People & Communities’), https://www.lancashire.gov. uk/lancashire-insight/area-profiles/local-authority-profiles/blackpool-unitary/ US Census Bureau (2019) Quick Facts Flint City Michigan, (table entry: median household income 2014–2018), https://www.census.gov/quickfacts/fact/table/ flintcitymichigan/INC110218 Christaller, Walter (1933 [1966]) Central Places in Southern Germany, 1966 translated edn, New Jersey: Prentice-Hall. Drucker, Peter (1999) Management Challenges for the 21st  Century, London: Butterworth Heinemann.

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Hall, Peter (1998) Cities in Civilization, London: Weidenfeld & Nicolson, p 950. Jacobs, Jane (1969) The Economy of Cities, New York: Vintage. Crane, Nicholas (2016) The Making of the British Landscape, London: Weidenfeld & Nicolson, pp 106–8. Vance, J.E. (1970) The Merchant’s World: The Geography of Wholesaling, Foundations of Economic Geography, New Jersey: Prentice Hall. The ‘City of London Corporation’ is the historic financial district at the centre of London, the city. It’s basically Wall Street, except that it has its own government, and both individuals and corporations get to vote. It should not be confused with the Greater London Authority (GLA), which is what most people mean when they say ‘London’. Miller, William (1970) A New History of the United States, 3rd edn, London: Paladin.

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Quoted in Aspin, Christopher (1969) Lancashire: The First Industrial Society, Helmshore: Local History Society, p 14. Cockburn, Henry Lord (1888) Circuit Journeys, Spring 1845, p 268, quoted in P.J.G. Ransom (2013) The Iron Road, Edinburgh: Birlinn Publishing, pp 56–7. Abercrombie, Sir Patrick and Matthew, Robert (1949) Clyde Valley Regional Plan, Edinburgh: HMSO, p 11. Taj Mahal (1969) Six Days on the Road, from the LP Giant Step, New York: CBS/ Direction Records. Written by Earl Green and Carl Montgomery, copyright 1961, renewed 1989, Southern Arts Music & Tune Publishing Co., all rights reserved. The airport closed in 2012 after only three years of (loss-making) operation. A recent article said that ‘el aeropuerto vale menos que si fuera una finca rústica destinada al cultivo de hortalizas’ (‘the airport is worth less than if it was a country estate used to grow vegetables’): El Confidencial, ‘La agonia del aeropuerto de Ciudad Real: un dueño sin dinero cargado de promesas’, 21 April 2018. Kasarda, J.D. (2000) ‘Aerotropolis: Airport-driven urban development’, Urban Land 59(1), pp 32–41. The Collins Concise Dictionary plus (1990) London & Glasgow: Collins. Whitaker’s Almanac (2000) London: The Stationery Office. Office of Technology Assessment (1995) The Technological Reshaping of Modern America, Washington, DC: US Government Printing Office, p 106. Standage, Tom (1998) The Victorian Internet, 2nd edn, London: Phoenix. OFCOM (2018) Annual Monitoring Update Postal Market, Executive Summary, para.1.10. Ibid, p 24, para 4.18. Strogatz, Steven, ‘Friends You Can Count On’, New York Times, 17 September 2012, https://opinionator.blogs.nytimes.com/2012/09/17/friends-you-cancount-on/ The Economist, ‘Problems down the line’, 10 January 2015. 1 petabyte (PB) = 1 million gigabytes (GB). Tanenbaum, Alfred S. (1996) Computer Networks, 4th  edn, New Jersey: Prentice Hall. Salk Institute, ‘Memory Capacity of Brain is 10 Times More Than Previously Thought’, Press Release, La Jolla, CA, 20 January 2016. Hamill, X (2000) ‘The Introduction of New Technology into the Household’, Personal & Ubiquitous Computing, 4(1), p 59. Smith, P., ‘A context for those complaints’, New York Times, 16 December 2007, http://jetlaggednblogs.nytimes.com (he had found a ticket at a jumble sale dating from 1946 which cost the equivalent of $3,000; in mid-2015 Aer Lingus were offering ‘Shannon to New York or Boston from €209’). Hantman, N. (2006) ‘Metcalfe’s Law: Right? Wrong?’, IEEE Spectrum, https:// spectrum.ieee.org/computing/networks/metcalfes-law-right-wrong Lyons, G. and Urry, J. (2005) ‘Travel Time Use in the Information Age’, in Transportation Research Part A: Policy & Practice, 39(2), p 257 [emphasis in original]. Feitelson, E. and Salomon, I. (2000) ‘The Implications of Differential Network Flexibility for Spatial Structures’, in Transportation Research Part A: Policy & Practice, 34(6), pp 459–79. Audirac, I. (2002) ‘Information Technology and Urban Form’, Journal of Planning Literature, 17(2), p 212. Feitelson, E. and Salomon, I. (2000) op cit (note 28).

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Office of Technology Assessment (1995) op cit (note 15), pp 102–6. Levinson, Marc (2016) The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, 2nd edn, Princeton University Press. Catalini, C., Fons-Rosen, C. and Gaulé, P. (2016) Did Cheaper Flights Change the Direction of Science?, Bonn, IZA Discussion Paper no. 9897. First so termed in Gottman, Jean (1961) Megalopolis: The Urbanized Northeastern Seaboard of the United States, Cambridge, MA, M.I.T. Press. Defined in Hall, Peter and Pain, Kathy (2006) The Polycentric Metropolis: Learning from Mega-city Regions in Europe, London, Earthscan, ch  2, ‘Anatomy of the Polycentric Metropolis: Eight Mega-City Regions in Overview’. See Hall, Peter and Ward, Colin (2014) Sociable Cities, 2nd  edn, Abingdon: Routledge, pp 145–6. Leigh, N. (2000) ‘People versus Place: Telecommunications and flexibility requirements of the CBD’ in Wheeler, James O., Aoyama, Yuko and Warf, Barney L. (eds) Cities in the Telecommunications Age, Abingdon: Routledge. Gaschet, F. (2002) ‘The New Intra-urban Dynamics: suburbanisation and specialisation in French cities’, Papers in Regional Science 81(1), p 63. Coffey, W.G. and Shearmur, Richard. G. (2002) ‘Agglomeration and Dispersion of High Order Service Employment in the Montreal Metropolitan Region 1981–96’, Urban Studies, 39(3), p 359. Bruinsma, F. (2009) ‘The Impact of Railway Station Development on Urban Dynamics: A Review of the Amsterdam South Axis Project’, Built Environment, 35(1): 107–21. Kiger, Patrick ‘Evolution of an Aerotropolis’, Urban Land magazine, Washington, DC: Urban Land Institute, 27 October 2016. Hall, Peter (1987) Western Sunrise: The Genesis and Growth of Britain’s Major Hightech Corridor, London: Allen & Unwin. Feitelson, E. and Salomon, I. (2000) op cit (note 28), p 459. Athey, G., Glossop, C., Harrison, B., Nathan, M. and Webber, C. (2007) Innovation in the City: How Innovation has Developed in Five City-regions, London: NESTA (National Endowment for Science, Technology and the Arts). Christaller, Walter (1933 [1966]) Central Places in Southern Germany, 1966 translated edn, New Jersey: Prentice-Hall. Hall and Pain (2006), op cit (note 35), p 5 note that it was ‘later discredited by reason of its use by the Nazi administration in the planning of occupied territory in Europe’. Harlander and Wolfram describe Christaller’s involvement in the ‘Grossraumphantasien’ with, for example, his proposed division of all the German and German-held territory into 57 ‘Reichsgau’: Harlander T. and Wolfram, P. (2012) NS-Architektur: Macht und Symbolpolitik, Berlin: Litverlag, p 242.

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Johnson, Samuel (1773 [1903]) in Boswell’s Journal of A Tour To The Hebrides, ed. Cotterill, H.B. 1903, London: Macmillan, entry for Sunday, 15 August 1773. Weber, Alfred (1909 [1969]) Theory of the Location of Industries, Materials for the Study of Business, 7th edn 1969, Chicago: University of Chicago Press. Smith, Adam (1776) The Wealth of Nations, quoted in Munby, Denys (ed) (1968) Transport: Selected Readings, London: Penguin Modern Economics, p 8. Weber, Alfred (1909) op cit (note 2).

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Lösch, August (1954 [1973]) The Economics of Location, 6th  edn 1973, Yale University Press. Haig, R.M. (1926) ‘Toward an Understanding of the Metropolis’, The Quarterly Journal of Economics 40(2), pp 179–208. Von Thünen, Johann Heinrich (1826) The Isolated State (Der isolierte Staat in Beziehung auf Landwirschaft und Nationalökonomie): see Schumacher, H. (1983) J.H. von Thünen, ein Forscherleben, 2nd edn), Rostock. Legal Services Board (LSB) (2011) Research Note: The Legal Services Market, London: LSB. Lösch, August (1954) op cit (note 5). Athey, G., Glossop, C., Harrison, B., Nathan, M. and Webber, C. (2007) Innovation in the City: How Innovation has Developed in Five City-regions, London: NESTA (National Endowment for Science, Technology and the Arts). Ibid. ‘Clark, G.L. and O’Connor, K. (1997) ‘The Informational Content of Financial Products and the Spatial Structure of the Global Finance Industry’ in Cox, Kevin R., (ed) Spaces of Globalisation: The Power of the Local, New York: The Guilford Press, pp 8–114, distinguishing between ‘opaque’, ‘translucent’ and ‘transparent’ markets, based on the informational content of what is being traded. Jensen, Robert (2007) ‘The Digital Provide: Information (technology), market performance, and welfare in the South Indian fisheries sector’, The Quarterly Journal of Economics, CXXII(3); see also Srivanasan, Janaki and Burrell, Jenna (2015) ‘On the Importance of Price Information to Fishers and to Economists: Revisiting Mobile Phone Use Among Fishers in Kerala’, Information Technologies and International Development, 11(1), which helpfully contextualizes the simplifying claims in the Jensen study. Graham, S. (2004) The Cybercities Reader, Abingdon: Routledge. Steinwender, Gloria (2018) ‘Real Effects of Information Frictions: When the States and the Kingdom became United’, American Economic Review, 108 (March), p 657. Ibid. Currid-Halkett, Elizabeth (2007) The Warhol Economy: How Fashion, Art and Music Drive New York City, Princeton University Press. Another way, of course, is to copy a successful film, but even those efforts fall flat more often than not. Bathelt, H., Malberg, A. and Maskell, P. (2004) ‘Clusters and Knowledge: Local buzz, global pipelines, and the process of knowledge creation’, Progress in Human Geography 28(1) Grabher, G. (2002), ‘Cool Projects, Boring Institutions: Temporary collaborations in social context’, Regional Studies 36(3), p 205. Jones, B., Spigel, B. and Malecki, X. (2009) ‘Blog links as pipelines to buzz elsewhere: the case of New York theatre blogs’, Environment and Planning B 37(1), p 99. See critique in Graham, S. and Marvin, S. (1996) Telecommunications and the City: Electronic Spaces, Urban Places, Abingdon: Routledge, p 56. The Economist (2010) ‘A Different Game: Information is Transforming Traditional Businesses’, February Special Report, http://economist.com/specialreports/ displaystory.cfm Graham, S. and Marvin, S. (1996), op cit (note 22).

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Breheny, Michael (1999) The People – Where Will They Work?, London: Town & Country Planning Association. Gordon, Ian and McCann, Philip (1996) ‘Industrial Clusters: Complexes, Agglomeration and/or Social Networks?’, Urban Studies, 37(3), pp 513–32. Darbéra, Richard (1995) ‘The Market Effective Size: Criteria for comparing transport systems’ efficiency between mega-cities’, paper presented at PTRC European Transport Forum, Paris, OEIL. Gordon, Ian (1999) ‘London and the South East’, in Breheny, Michael (1999) op cit (note 25). Currid-Halkett, Elizabeth (2007) op cit (note 17). Athey, G. et al (2007) op cit (note 10). Haig, R.M. (1926) op cit (note 6). Wilder, Billy (1974) The Front Page, Hollywood: Universal Pictures. See earlier note (Chapter 1, note 8) regarding his politics.

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Marshall, Alfred (1890 [1925]) Principles of Economics, 8th edn 1925, London: Macmillan & Co, Book V, Chapter 12, p 459. Trump, Donald J. (1987) Trump: The Art of The Deal, New York: Ballantine Books. Coase, Ronald (1937) ‘The Nature of the Firm’, Economica 4(16), pp 386–405. Ibid. Boden, D. and Molotch, H. (2004) ‘Cyberspace meets the Compulsion of Proximity’, in Graham, S. (ed), The Cybercities Reader, pp 101–5 (reprinted from Journal of Urban History, 1987). See also: Bahcall, Safi (2019) Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries, New York: St Martin’s Press. Marshall, Alfred (1890 [1925]) op cit (note 1). Athey, G., Glossop, C., Harrison, B., Nathan, M. and Webber, C. (2007) Innovation in the City: How Innovation has Developed in Five City-regions, London: NESTA (National Endowment for Science, Technology and the Arts). Checkland, S.G. (1976) The Upas Tree: Glasgow 1875–1975: A Study in Growth and Contraction, University of Glasgow Press. Scottish Parliament (2018) Scotland’s Economic Performance: Aberdeen City Council and Aberdeenshire Council, PSE026, Edinburgh: Scottish Parliament. Aberdeen City Council (2018) Aberdeen Economic Policy Panel Report, www. aberdeencity.gov.uk Ibid. Glaeser, Ed (2006) The City Ascendant: America’s Urban Economy, prelim. draft edn, Harvard University Press and NBER. Florida, Richard (2002) The Rise of the Creative Class – And How It’s Transforming Work, Leisure, Community and Everyday Life, New York: Basic Books. Scott, A.J. and Storper, Michael (2003) ‘Regions, Globalisation, Development’, Regional Studies, 37(6), pp 579–93. Storper, Michael and Venables, Anthony J. (2004) ‘Buzz, face-to-face contact and the urban economy’, Journal of Economic Geography, 4(4), pp 351–70. Scott, A.J. (1984) ‘Industrial Location and the Logic of Metropolitan Organisation: A case-study of the women’s dress industry in the Greater Los Angeles region’, Economic Geography, 60(1), pp 3–27.

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Lösch, August (1954 [1973]) The Economics of Location, 6th  edn 1973, Yale University Press. Cook, G.A.S., Pandit, N.R., Beaverstock, J., Taylor, P.J. and Pain, K. (2007) ‘The Role of Location in Knowledge Creation and Diffusion: Evidence of centripetal and centrifugal forces in the City of London financial services agglomeration’, Environment & Planning A, 39, pp 1325–45. Marshall, A. (1890) op cit (note 1), Book IV, Chapter 10, p 271. Nachum, L. and Keeble, D. (2003) ‘MNE Linkages and Localised Clusters: Foreign and indigenous firms in the media cluster of Central London’, Journal of Industrial Management, 9(2), p 173. Saffo, Paul (1998), quoted in Mullins, Justin ‘That Something Special’, in New Scientist, 7 November 1998. Currid-Halkett, Elizabeth (2007) The Warhol Economy: How Fashion, Art and Music Drive New York City, Princeton University Press. Johnston, D. (2001) Opening Remarks in the OECD-DATAR World Conference on Local Clusters, January 2001, http://www.oecd.org/document/22/0 Nathan, Max and Vandore, Emma (2016) Terraforming Tech City: Place Branding and Spatial Imaginaries in Inner East London, Discussion Paper 2016-02, Birmingham: University of Birmingham Business School. Quoted in ibid, p 29. Saxenian, Anna Lee (1994) Regional Advantage: Culture and Competition in Silicon Valley and Route 128, Harvard University Press. Hall, Peter and Markusen, Ann (1985) Silicon Landscapes, London: Allen & Unwin. Menzel, M.P. and Fornahl, D. (2010) ‘Cluster Life-Cycles: Dimensions and rationales of cluster evolution’, Industrial and Corporate Change, 19(1), p 205. Ibid. Llewelyn-Davies, UCL Bartlett School of Planning and Comedia (1996) Four World Cities: A comparative study of London, Paris, New York and Tokyo, for the Government Office for London. London: Llewelyn-Davies. Scott, A.J. (2001) ‘Capitalism, Cities and the Production of Symbolic Forms’, Trans. Inst. British Geographers, 26(1), pp 11–24. Sassen, Saskia (1991) The Global City: New York, London and Tokyo, Princeton University Press. Drucker, Peter (1999) Management Challenges for the 21st  Century, London: Butterworth Heinemann. Scott, A.J. and Pope, N.E. (2007) ‘Hollywood, Vancouver and the World: Employment relocation and the emergence of satellite production centers in the motion picture industry’, Environment & Planning A (39), pp 1364–81. Brinkley, I., Fauth, R., Mahdon, M. and Theodoropolou, S. (2009) Knowledge Workers and Knowledge Work, London: The Work Foundation. http://thework foundation.com/assets/docs/publications/213_know_work_survey170309.pdf_ Ibid. Glaeser, Ed (2015) The Happiness of Cities, LSE Public Lecture, theigc.org/event/ lse-public-lecture. Goddard, John (1975) Office Location in Urban and Regional Development, Theory & Practice in Geography, Oxford University Press. Gillespie A.E. and Green A.E. (1987) ‘The Changing Geography of Producer Services Employment in Britain’, Regional Studies, 21(5), pp 397–411. Athey, G. et al (2007), op cit (note 7).

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Centre for Cities (2010) Cities Outlook, London: Centre for London. Beckouche, Pierre (2004) ‘Les relations Paris-banlieue à l’ère des régions urbaines’, in Michaud, Yves (ed), Paris, Université de tous les savoirs, Paris: Odile Jacob. Llewelyn-Davies et al (1996) op cit (note 30), and INSEE/IAU (2017) Chiffres-clés de la Région Ile de France, Paris: CCI Paris-Ile-de-France. INSEE/IAU (2017) op cit (note 43). Office of the New York State Comptroller (2019) New York City Employment Trends, Report 1-2020, April 2019, Albany NY: OSC, p 75, Table 3.2. See also Chapter 7 later. Martin, Antoinette (2002) ‘Waterfront offices are seen as Hoboken harbinger’, New York Times, 28 July.

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Shakespeare, William (1623) King Lear, IV: iii Pinker, Susan (2015) ‘The secret to a long and happy life’, essay in The Guardian Review, 21 March, p 20. Granovetter, Mark (1973) ‘The strength of weak ties’, American Journal of Sociology, 78, pp 1360–80. Storper, Michael and Venables, Anthony (2002) ‘Buzz: Face-to-face contact and the urban economy’, paper presented to the Center for Globalization and Policy Studies, UCLA, March 2002. Cook, G.A.S., Pandit, N.R., Beaverstock, J.V., Taylor, P.J. and Pain, K. (2007) ‘The role of location in knowledge creation and diffusion: evidence of centripetal and centrifugal forces in the City of London financial services agglomeration’, Environment & Planning A, 39, pp 1325–45. Leamer, E.E. and Storper, M. (2001) The Economic Geography of the Internet Age, Working Paper 8450, Cambridge, MA: National Bureau of Economic Research, p 15. McCann, Philip (2007) ‘Sketching Out a Model of Innovation, Face-to-Face Interaction and Economic Geography’, Spatial Economic Analysis, 2(2), pp 118–19. Von Thünen, Johann Heinrich (1826) The Isolated State (Der isolierte Staat in Beziehung auf Landwirschaft und Nationalökonomie): see Schumacher, H. (1983) J.H. von Thünen, ein Forscherleben, 2nd edn, Rostock. McCann, Philip (2007), op cit (note 7), pp 117–34 and n 9. Currid-Halkett, Elizabeth (2007) The Warhol Economy: How Fashion, Art and Music Drive New York City, Princeton University Press. Ibid. Storper, Michael and Venables, Anthony (2002) op cit (note 4). Hall, Peter (1998) Cities in Civilization, London: Weidenfeld & Nicolson Ltd, p 963. Currid-Halkett, Elizabeth (2007) op cit (note 10), p 99. Jones, B., Spiegel, B. and Malecki, E.J. (2009) ‘Blog links as pipelines to buzz elsewhere: the case of New York theatre blogs’, Environment & Planning B, 37(1), pp 99–111 (February). Financial Times (2018) ‘WeWork becomes C London’s biggest office occupier’, 23 January. Ramidus Consulting (2016) Clusters and Connectivity: The City as a Place for SMEs, London: City of London Corporation.

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Kynaston, David (2001) The City of London, Vol IV, A Club No More 1945–2000, London: Chatto & Windus. Boden, D. and Molotch, H. (2004) ‘Cyberspace meets the compulsion of proximity’, in S. Graham (ed), The Cybercities Reader, Abingdon: Routledge, pp 101–5; reprinted from Journal of Urban History (1987). Hall, Sarah (2007) ‘Relational marketplaces and the rise of boutiques in London’s corporate finance industry’, Environment and Planning A, 39, pp 1838–54. Keeble, D. and Nachum, L. (2002) ‘Why do business firms cluster?’, Transactions of the Institute of British Geographers, 27(1), pp 67–90. Polanyi, Michael (1966) The Tacit Dimension, New York: Doubleday. Asheim, Bjørn, Coenen, L., and Vang, J. (2007) ‘Face-to-face, buzz and knowledge bases: sociospatial implications for learning, innovation and innovation policy’, Environment & Planning C, 25, pp 655–70. See also Moodyson, J., Coenen, L. and Asheim, B. (2008) ‘Explaining spatial patterns of innovation: analytical and synthetic modes of knowledge creation in the Medicon Valley life-science cluster’, Environment & Planning A, 40(5), pp 1040–56. Asheim, Bjørn et al (2007) op cit (note 23). Ibid, p 661. Ibid, p 663. Currid-Halkett, Elizabeth (2007) op cit (note 10), p 7. Rogers, Adam (2014) ‘Wrinkles in Spacetime: The Warped Astrophysics of Interstellar’, Wired, October, https://www.wiredncom/2014/10/astrophysicsinterstellar-black-hole/ Mintel (2018) ‘From dating through apps and online shopping to working from home, it seems Millennials prefer to do nearly everything from the comfort of their couch’, Mintel Press Office, 5 June. Lepore, Jill (2019) Review of Oppenheimer A. (2019), The Robots Are Coming! The Future of Jobs in the Age of Automation, New York: Knopf Doubleday, in The New Yorker, 4 March. Gawande, Atul (2018) ‘The Upgrade’, in The New Yorker, 12 November. Ibid. Charlot, Sylvie and Duranton, Gilles (2006) ‘Cities and Workplace Communication: Some quantitative French evidence’, Urban Studies, 43, pp 1365–94. Gordon, Ian (2015) ‘Ambition, Human Capital Acquisition and the Metropolitan Escalator,’ Regional Studies, 49(6), pp 1042–55. Ibid. Glaeser, Ed and Maré, David C. (2001) ‘Cities and Skills’, Journal of Labour Economics, 19(2), pp 316–42. Hutton, Thomas A. (2008) The New Economy of the Inner City: Restructuring, Regeneration and Dislocation in the Twenty-first Century Metropolis, Abingdon: Routledge, p 93. Currid-Halkett, Elizabeth (2007) op cit (note 10), p 113. Ibid, p 84. Quoted in ibid, p 159. Cairncross, Frances (1997) The Death of Distance: How the Communications Revolution will Change our Lives, London: Orion Business Books, pp xi–xvi. Friedman, Thomas (2005) The World is Flat, New York: Farrar Strauss & Giroux. Hall, Peter (1998) op cit (note 13), p 962.

232

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2

3

4

5

6

7

8

9

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11

12 13

14

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17 18

19

Pepys, Samuel (1664 [1971]) The Diary of Samuel Pepys, Volume  V: 1664, eds. Latham, R.C. and Matthews, W., London: G. Bell & Sons, entry for 14 November 1664. The profile of our interviewees was as follows: 63% identified as male; 85% identified as White British, 6% as BAME British and 9% other nationalities and ethnicities; and the junior/senior split was 22% : 78%. Twenty-five separate SIC (Standard Industrial Classification of sectors of activity) categories were represented. Hall, Sarah (2007) ‘Relational marketplaces and the rise of boutiques in London’s corporate finance industry’, Environment and Planning A, 39, pp 1838–54. Pecha-kucha: for older readers = rapid ‘storytelling’ presentation with 20 seconds per slide for 20 slides. Boden, D. and Molotch, H. (2004) ‘Cyberspace meets the Compulsion of Proximity’, in Graham, S. (ed), The Cybercities Reader, pp 101–5 (reprinted from Journal of Urban History, 1987). Leamer, E.E. and Storper, M. (2001) The Economic Geography of the Internet Age, Working Paper 8450, Cambridge, MA: National Bureau of Economic Research. Scott, Walter (1890 [1972]) The Journal of Sir Walter Scott, ed. Anderson, W.E.K, Oxford: Clarendon Press, entry for 20 February 1828. Daum, Kevin (2013) ‘5 reasons to schedule more business lunches’, Inc.5000 website, 18 January 2013. Heady, Carson (2018) ‘The Importance of the Business Lunch (Written By Someone Who Formerly Disliked Them)’, carsonvheady.wordpress.com, 5 January 2018. Storper, Michael and Venables, Anthony J. (2004) ‘Buzz, face-to-face contact and the urban economy’, Journal of Economic Geography, 4(4), pp 351–70. McCann, Philip (2007) ‘Sketching Out a Model of Innovation, Face-to-Face Interaction and Economic Geography’, Spatial Economic Analysis, 2(2), pp 118–19. Foster Wallace, David (1996) Infinite Jest, New York: Little, Brown, p 144. Christaller, Walter (1933 [1966]) Central Places in Southern Germany, 1966 translated edn, New Jersey: Prentice-Hall. Cook, Dave (2020) ‘Five workplace trends that will shape life after lockdown’, The Conversation, 7 May, https://theconversation.com/five-workplace-trends-willshape-life-after-lockdown-138077 Centre for Cities (2020) City Talks: Face-to-face interaction and why cities still matter in the information age, Podcast, 28 May, https://www.centreforcities.org/podcast/ city-talks-face-to-face-interaction-and-why-cities-still-matter-in-the-informationage/. The podcast billing reads: ‘Many expect the Coronavirus pandemic to bring about a working from home revolution. In this podcast Jonathan Reades and Martin Crookston join Andrew Carter to discuss face-to-face interaction and why cities still matter in the information age.’ Lepetit, Bérangère and Beneze, Erwan (2020) ‘Révolution du télétravail: le bureau à la maison va-t-il devenir la règle?’, Le Parisien, 3 June. Tube: London’s Underground = metro or subway. “My worry is that the world afterwards will strongly resemble the world before, but worse”; Le Drian, Jean-Yves, quoted in Le Monde, 20 April 2020. Markusen, Ann (2020) ‘Will the COVID-19 drive us further apart or bring us together?’, Grand Rapids Herald-Review, 11 April, www.grandrapidsmn.com

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Chapter 7 1 2

3

4 5 6 7

8

9 10

11 12

13 14 15

16

17

18 19

20

21

22

23

24

Cobbett, William (1830) Rural Rides, London: Penguin Classics. Kollewe, Julia (2020) ‘UK office demand is “shifting to the suburbs” amid Covid-19 crisis’, The Guardian, 5 August. Bosetti, N. and Brown, J. (2019) ‘Head Office: London’s Rise and Future as a Corporate Centre’, Centre for London, May 2019. Greater London Authority (2016) Economic Evidence Base, p 57, Table 2.3. Ibid, p 62, Map 2.9. Bosetti, N. and Brown, J. (2019), op cit (note 3). ‘The City’ is used interchangeably to mean both the City of London as an administrative area/body and the finance-sector concentration which it houses. Greater London (often just ‘London’) is the much larger administrative area comprising the 32 London Boroughs plus the City, bounded by the M25 orbital motorway. The Central Activities Zone (CAZ) is the employment-dense core of London, in the City, much of Westminster, and inner parts of other Boroughs: broadly, the Central Business District (CBD) identified in many cities. Knight, Tom (2011) London’s Jobs History – A Technical Paper, GLAEconomics WP52, London: Greater London Authority; City of London Department of the Built Environment (2019) Employment Trends in the City of London; and City of London Economic Research Department (2018) ‘February 2018 Update’. Ibid. Ramidus Consulting (2016) Clusters and Connectivity: The City as a Place for SMEs, London: City of London Corporation. Greater London Authority (2016) op cit (note 4), pp 85–6. Office for National Statistics Business Demography, referenced in Greater London Authority (2016) op cit (note 4), Fig 2.2 Greater London Authority (2016) op cit (note 4), p 228, 6.1 ‘Key Points’. Ibid, p 233, Fig 2.6. NYC Planning (2015) ‘Current and Projected Populations’, www1.nyc.gov/ planning NYC Planning (2013) ‘Projecting the Future - Briefing Booklet’, www1.nyc. gov.uk/assets Office of the New York State Comptroller (2019) New York City Employment Trends Report 1-2020, April, Albany, NY: OSC. Ibid. Llewelyn-Davies, UCL The Bartlett and Comedia (1996) Four World Cities: A comparative study of London, Paris, New York & Tokyo, for the Government Office for London. London: Llewelyn-Davies. INSEE (2020) ‘Tableau de Bord Conjoncture: Ile de France’, 28 April, Paris: INSEE, Fig 1, ‘Emploi salarié total’. CCI Paris Ile de France (2019) ‘Chiffres-clés de la Région Ile de France 2019’, 27 June, Paris. Darbéra, Richard (1995)’ The Market Effective Size: A Criteria for Comparing Transport Systems Efficiency Between Mega Cities’, Paper to European Transport Forum Annual Meeting 1995, Paris: OEIL. IAU (Institut d’Aménagement et d’Urbanisme) (2018) Logement et Emploi dans la Métropole du Grand Paris, Paris: IAU. The CCI Paris-Ile de France defines the Quartier Central des Affaires as the 8th arrondissement plus parts of the 1st, 2nd, 9th, 16th and 17th.

234

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25 26 27 28

29

30 31 32 33 34 35 36

37 38 39

40 41 42 43

44 45 46

47

48 49

50

51

52 53

54

CCI Paris Ile de France (2020) ‘Le quartier d’affaires de La Défense’ IAU (2018) op cit (note 23). Ibid. INSEE (2017) ‘La population de  Paris à l’horizon 2050’, Paris: INSEE Flash no 20, November. Greater London Authority (2016) op.cit (note 4), ch 6; Ramidus Consulting (2017) London Office Policy Review 2017, London, GLA, paras. 4.1.1–4.1.2. Ramidus Consulting (2017) op cit (note 29), para 3.2.24. Greater London Authority (2016) op.cit (note 4), p 28. Ibid. Ramidus Consulting (2017) op cit (note 29), para 3.2.14. Ibid, para 3.1.22. Ibid, para 3.1.40. Prynn, Jonathan (2016) ‘Boutique hotel-style offices launch for those put off by hipster-style co-working’, London Evening Standard, 21 November 2016. Ramidus Consulting (2017) op cit (note 29), paras 3.1.50, 3.2.29–3.2.30. Ibid, paras 3.1.50–3.1.52. West, Beth (Land Securities), speaking at Centre for London event, ‘Head office: London’s rise as a corporate centre’, 22  May 2019, 22  Bishopsgate, London EC2N 4BQ. Greater London Authority (2016) op cit (note 4) p 260. Ibid. Ibid, p 258. Chemla, Guy (2004) Les ventres de Paris: géographie de l’alimentation à Paris’, in Michaud, Y. (ed), Université de tous les savoirs: Paris, Paris: Odile Jacob, p 169. Greater London Authority (2016) op cit (note 4), p 258. Office of the New York State Comptroller (2019) op cit (note 17). Mercer, Knight Frank, in Greater London Authority (2016) op cit (note 4), pp 265– 6 and Fig 6.11. CBRE (2015) ‘Occupancy costs advance despite growth hiccups’, in CBRE Global Prime Occupancy Costs Report June 2015, https://www.cbre.com/research-andreports/global-prime-office-occupancy-cost-june-2015 Mercer, Knight Frank, in Greater London Authority (2016) op cit (note 4). Miller, Marine (2019) ‘Hier, les jeunes cadres seraient allés dans les banlieues chics de Paris. Aujourd’hui, c’est les capitales régionales’, Le Monde, 28 February. Lösch, August (1954 [1973]) The Economics of Location, 6th  edn 1973, Yale University Press. Christaller, Walter (1933 [1966]) Central Places in Southern Germany, 1966 translated edn, New Jersey: Prentice-Hall. Berthelier, Pierre (2016) Bourges à l’ombre de Paris, Paris: L’Harmattan, p 28. Office for National Statistics (2018) ‘Labour Market Profile – Shrewsbury and Atcham Parliamentary Constituency’, London, NOMIS Official Labour Market Statistics, gives sectoral figures as follows: Health & Social Work 21.6%, Warehousing & Retail 17.6%, Professional/Scientific/Technical 9.8%, Tourism 8.8%, Education 7.8%, Manufacturing 6%, Information/Communication 2.5%, Financial Services 1%. Shropshire County Council (2018) ‘Shropshire Commuting Patterns and Travel to Work’, Shrewsbury: SCC Information Intelligence & Insight team, July.

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55

56 57

58 59 60

61 62 63 64 65

66 67 68 69 70

71

72 73

74 75

76

77

78 79

80 81

82

83 84

Oxford Economics (2016) ‘Productivity Growth Forecast’, available at: https:// shropshire.gov.uk/planning-policy/local-plan/ Office for National Statistics (2018) op cit (note 53). Granovetter, Mark (1973)‘The strength of weak ties’, American Journal of Sociology, 78, pp 1360–80. Shropshire Council (2011) ‘Adopted Core Strategy CS13’, pp 93–7. Shropshire Council (2017) ‘Economic Growth Strategy for Shropshire 2017-2021’. BE Group (2007) Shrewsbury Offices Study, Shrewsbury: Shrewsbury & Atcham Borough Council. Shropshire Council (2011) op cit (note 58), para 6.8. BE Group (2007) op cit (note 60). Berthelier, op cit (note 52) (‘A middle-ranking town for many centuries’). Pays de Bourges website, www.paysdebourges.fr Vidal de la Blache, Pierre (1911) Histoire de France Illustrée, Paris: Hachette, p 378, Carte 62, ‘Voies Romaines …’. Ibid, p 158. Berthelier, op cit (note 52), p 342. Pays de Bourges website, op cit (note 64). Ibid. L’Encyclopédie de  Bourges (2020), www.encyclopedie-bourges.com (as at 18 March 2020). Martinat, Patrick (2017) ‘A Bourges, le lent déclin du centre-ville’, Le Monde, 8 December. Ville de Bourges (2018a) ‘Plan Local d’Urbanisme’, www.maps.bourgesplus.fr Ville de  Bourges (2018b) ‘Demain Bourges – Trajectoires 2050’, www.villebourges.fr City of Lancaster, www.cityoflancaster.com/history/ ExplorePAHistory.com (2019) Crossing the Alleghenies, Chapter 1, Early Turnpikes and the Old State Road, https;//explorepahistory.com/stories Hollway, Don (2013) ‘People of the Muddy River: the Susquehanna, the Europeans and the Balance of Mid-Atlantic Power 1608–1673’ in Muzzleloader magazine, Jan & March 2013, map of ‘Indian Paths of Pennsylvania’. Russell, Howard S. (1980) Indian New England Before The Mayflower, Hanover, NH: University Press of New England, p 201. www.towncharts.com US Census Bureau (2020) ‘Quick Facts Lancaster County, Pennsylvania’ (populations for 2010 Census and 2019 estimate), https://www.census.gov/ quickfacts/fact/table/lancastercountypennsylvania Ibid. Mobyus.com (2020) ACS Commute Map (sourced from American Community Survey 2006-10 Tract-to-Tract Data, www.bigbytes.mobyus.com/commute.aspx, and Eichel, Larry and Budick, Seth (2018) ‘Reverse Commuting in Philadelphia Mirrors Other Large Cities’, Washington, DC: Pew Research. Lancaster Economic Development Company (2016) Locate Lancaster brochure, available at: www.edc.lancaster.com www.fig.lancaster.com Lancaster County (2020) ‘Lancaster Central Market – Country’s Oldest Farmers’ Market’, https://lancasterpa.com/shopping/central-market/

236

Notes

85

86 87 88

89

90 91 92

93 94

95

96

97

98

99 100

101 102

103

104 105 106 107

108 109

110

Lancaster Economic Development Company (2020) ‘A Great Place To Live’, www.edc.lancaster.com Ibid. Lancaster Economic Development Company (2016), op cit (note 82). City of Lancaster (2020) Zoning Map, https://lancaster-pa.maps.arcgis.com/ (NB The City also has a ‘Strategic Plan’ but this is essentially a corporate management document.) Wikipedia (2018) ‘Hamilton Watch Complex and Conestoga Cork Works Building’, accessed 27 May 2020. Carlisle Economic Partnership (2013) ‘Economic Review of Carlisle’. Preston Guild City (2019) ‘Preston Statistics’. Eaton, George (2018) ‘How Preston – the UK’s “most improved city” – became a success story for Corbynomics’, New Statesman, 1 November 2018. Centre for Cities (2020) Wigan factsheet, www.centreforcities.org Cox, Ed and Longlands, Sarah (2016) The Role of Small and Medium-Sized Towns and Cities in Growing the Northern Powerhouse, Manchester: IPPR North. GLA Intelligence (2014) ‘Commuting in London’, July, https://londondatastoreupload3 Moodysson, J., Coenen, L. and Asheim, B. (2008) ‘Explaining spatial patterns of innovation: analytical and synthetic modes of knowledge creation in the Medicon Valley life-science cluster’, Environment & Planning A, 40(5), pp 1040–56. Currid-Halkett, Elizabeth (2007) The Warhol Economy: How Fashion, Art and Music Drive New York City, Princeton University Press. Florida, Richard (2002) The Rise of the Creative Class – And How It’s Transforming Work, Leisure, Community and Everyday Life, New York: Basic Books. Lösch, August (1954) op cit (note 50). Note: the literature is full of classifications of types of city relationship: Independent vs. Isolated vs. Dependent vs. Inter-dependent; or Core vs. Overshadowed vs. Freestanding; or Commuter SMCs vs. Hub SMCs vs. Economic Cluster SMCs. See: Northern Way (2009) City Relationships: Economic linkages in Northern cityregions, Newcastle, www.thenorthernway.co.uk; Pike, A., Rodrigues-Pose, A. and Tomaney J. (2017) Local and Regional Development, 2nd edn, Abingdon: Routledge; Cox, Ed and Longlands, Sarah (2016) op cit (note 94). Cox, Ed and Longlands, Sarah (2016) op cit (note 94), p 16. Overman, Henry (2013), quoted in Cox, Ed and Longlands, Sarah (2016) op cit (note 94), p 13. McCann, Philip (2016) The UK Regional/National Economic Problem: Geography, Globalisation and Governance, Abingdon: Routledge. Cox, Ed and Longlands, Sarah (2016) op cit (note 94), p 14. McCann, Philip (2016) op cit (note 103). Cox, Ed and Longlands, Sarah (2016) op cit (note 94), p 4 Jones, R. (2020) ‘Homebuyers “plotting move to country” amid increased home working’, The Guardian, 8 May, https://www.theguardian.com/money/2020/ may/08/homebuyers-plotting-move-to-country-amid-increased-home-working Kollewe, J. (2020) op cit (note 2). Chait, G. (2020) ‘’To survive, shops in Britain will have to move to where the commuters are now’, The Guardian, 23  July, https://www.theguardian.com/ commentisfree/2020/jul/23/shops-commuters-high-streets-workers Hall, Peter (1998) Cities in Civilization, London: Weidenfeld & Nicolson, p 989.

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111 112

Lenin, Vladimir Ilyich (1902) ‘What Is To Be Done?’ – title of pamphlet. Spufford, Peter (2002) Power and Profit: The Merchant in Mediaeval Europe, London: Thames & Hudson, ch 2 passim.

Chapter 8 1

2

3

4 5

Evelyn, John (1818 [1995]) The Diary of John Evelyn, ed. G. de la Bédoyère (1995), Woodbridge: Boydell Press, p 150, entry for 6 February 1666. Davies, Harry and Garside, Juliette (2020) ‘Revealed: NHS denied PPE at height of Covid-19 as supplier prioritised China’, The Guardian, 20 July, https://www. theguardian.com/world/2020/jul/20/revealed-nhs-denied-ppe-at-height-ofcovid-19-as-supplies-sent-to-china-coronavirus Dryhurst, Mat (2020) ‘I haven’t done anything particularly novel with GPT-3 yet …’, https://twitter.com/matdryhurst/status/1284990494146211841?s=21 Ibid. Menzel, M.P. and Fornahl, D. (2010) ‘Cluster Life-Cycles: Dimensions and rationales of cluster evolution’, Industrial and Corporate Change, 19(1), p 205.

238

Image credits Figure 1.1: The end of the city? New York, 1975. © Getty Images. Figure  2.1: Neolithic hub: Skara Brae, Orkney Isles. By consent of Historic Environment Scotland. Figure 2.2: Transatlantic trades: in goods and information: detail from Barr, Chas. B., Telegraph Stations in the United States, the Canadas and Nova Scotia [S.I. 1853] Map. Retrieved from the Library of Congress, www.loc.gov./item/97683602/ Figure 5.3: The Manhattan world-view: “Everyone I know lives from 14th to Canal”. © The Saul Steinberg Foundation/Artists Rights Society (ARS), NY/DACS, London 2020. Figure  7.1: Heat map of co-locating firms in selected sectors in London’s Central Activities Zone, 2013. TBR Observatory, 2015. QGIS Development Team, 2015. QGIS Geographic Information System. Contains National Statistics data and Ordnance Survey data © Crown copyright and database right 2015 (TBR ref: W11/M1). Image taken from Trends Business Research Ltd (2016) The changing spatial nature of business and employment in London, GLA Economics Working Paper no 73. Figure  7.5: England’s North West. Contains Ordnance Survey and National Statistics data © Crown copyright and database right 2020; Contains Royal Mail data © Royal Mail copyright and database right 2020. Figure 7.7: London’s ‘penumbra’: the South East of England. Contains Ordnance Survey and National Statistics data © Crown copyright and database right 2020; Contains Royal Mail data © Royal Mail copyright and database right 2020. (All other photographs taken by Martin Crookston, Andy Crookston and Jonathan Reades.)

239

Index A

Aberdeen 77 advanced producer services (APS) 34 agglomeration benefits for firms 78, 217 and clusters 75, 219 concentration of jobs 78 costs and diseconomies, in business and social terms 179, 185, 203, 212, 222 and firms’ spatial strategies 75 ‘horizontal’ and ‘vertical’ 78 localization, economies of 75, 76, 203 of management functions at strategic locations 85 urbanization, economies of 77, 78, 203 AI – see artificial intelligence Airbnb 88, 106, 176 air travel aerotropolis 16, 29, 32 airfares 1946, 2015 23 global airport nodes 20 ‘hub and spoke’ operations 20, 23–4, 27 low-cost airlines 23, 30 UAE investment 17, 30 Amdahl’s Law 26 APS – see advanced producer services artificial intelligence (AI) and competitiveness of low-cost locations 63, 167, 181 commercial law sector 110, 139–40, 221 construction project management 111–12 impacts in accountancy, audit, insurance, property 110, 221 medical sector 111 parallels with Industrial Revolution 109 replacing human input 63, 87, 109, 139–40, 168, 210–11, 220–21

sectors less likely to be affected 110, 221 threat to smaller cities 181, 187, 213 autonomous vehicles (AVs) 19

B

Boston (MA) 23, 31, 81, 200, 201 boundary of the firm 70, 83–4 Bourges 182, 183, 189–90, 193, 198, 200, 212, 214 Brighton (Sussex) 89, 117, 199 ‘bumping into’ people 115–16, 143, 147, 181, 219 ‘buzz’ as way of doing business 55, 98, 148–49 bar-chat vs. e-chat 99, 220 and confidence 55 F2F interactions surveyed 128–31 not important for everyone 87, 102 not just in ‘creative’ sector 97 and live social networks 220 trend to looser affiliations 131

C

Cairncross, Frances 117 Cambridge (England) 35, 76, 201, 202, 208, 223 Carlisle 193–5, 198, 204, 212, 214 central place businesses freed from reliance on 90, 112, 140, 221 ‘escalators’ 113 hinterlands/catchments 183–4, 189–93, 196, 198, 224 informational advantages, F2F 65, 75, 90, 91, 93–4, 145, 217 instability 116–17, 148 key concept 34 and markets 37, 62 and networks 34, 62, 145

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reasons for locating in 94, 113–14, 140, 145, 148–9, 218 and scale 182 sectoral differences 112–14, 163, 181 Christaller, Walter 4, 34, 62, 145, 184 City of London Bank of England 115, 121 concentration of finance sector 76, 95, 115, 167 growth associated with communications 53 history, historic location 13, 100 non-finance sectors, growth of 55, 166–67 clusters definition 79, 82 diversity 82, 85 CMSA – see New York: Consolidated Metropolitan Statistical Area ‘codified’ knowledge 103 confidence and ‘buzz’ 56 distinguished from ‘trust’ 56, 102, 131, 147 ‘enough to judge’ 131 ‘conversations’ vs. ‘handshakes’ 93 coronavirus pandemic approach and follow-up survey 5, 7, 122, 149–50 catalyst or accelerant 5, 157–8, 209, 223 F2F absence: response on effects 151–4 incidence, lockdowns, social distancing 149–50, 223 response on expectations of change 154–7 response on immediate impacts 151–2 sectors where working from home (WFH) not an option 157, 210–11 WFH and ‘e-only’ work world 149–52, 155–7, 206, 210, 223 co-working growth in London 174 impact of coronavirus 156–7, 174 Currid-Halkett, Elizabeth 60, 80, 96, 99, 107, 114, 115, 201 COVID-19 – see coronavirus

D

‘death of distance’ 3, 11, 43, 117, 217 Detroit 76, 78, 82, 100 docks: Europoort, Tilbury 29 Drucker, Peter 7, 86 Dubai 30, 180

E

e-commerce, growth 17, 19 ‘edge city’ 31–2 Edinburgh 89, 127 ‘escalator’ effects in labour market 113 Eurostar 21 experience goods characteristics 49 and costs 68, 69 consultancy as an experience good 69

F

F2F (face-to-face), alternatives to e-mail 136, 138, 220 gender impacts and stereotyping 139, 144, 155, 219 other digital: text, chats 138 substitution or complementarity 113, 136, 138, 217 telephone 137, 138 video-calling/video-conferencing (vc) 108–9, 134–6, 220 F2F (face-to-face) interactions surveyed in advertising 123, 141–2, 147, 156 ‘business lunch’ vs. ‘dinner debate’ 128–9, 142, 219 ‘buzz’ and schmooze 128 client-facing 126, 219 in consultancy 126, 133, 135, 139–40 expectation of F2F’s future importance 139 external to organization 101, 126, 128, 219 frequency of contact 144, 148 in insurance 129, 163 in internet businesses 115, 124–5, 132 intra-organization 122–5, 153, 219 in journalism 129, 137 in law firms 110, 126, 130, 133, 139–40 one-to-one meetings 130 in PR 122–7, 129, 132–6, 138, 141–2, 145, 147, 163 in publishing 125, 134, 142, 163 recruitment and work search 131–2 short quick meetings as essential component 129, 147, 219 social life and working life 128, 140–2, 147 what respondents missed in lockdown 152–4 why F2F preferred 93, 132, 134, 153

242

INDEX

Facebook 9, 20, 42, 81, 82, 99, 106, 131, 175 Florida, Richard 4, 77, 201 Foster Wallace, David 135, 138 Frankfurt 136, 167, 180

G

Glaeser, Ed 77, 88 Glasgow 76, 77, 78, 100 Goddard, John 88 Google 28, 106, 121, 131, 165, 175 Gordon, Ian 59, 113 Granovetter, Mark 92, 185

H

Haig, R.M. 44, 61 Hall, Peter iv, 9, 33, 81, 98, 118, 213 Hampshire, commuting 198 ‘handshakes’ vs. ‘conversations’ 93 Heathrow 17, 20, 27, 33, 95, 145, 182, 199 Heathrow Express 27, 34 high-frequency trading 41 Hollywood 55, 61, 86, 114

I

IAU – see Paris: Institut d’Aménagement Urbain ICT – see Information and Communications Technology industrial floorspace trends in London and Paris 177, 178 industries cultural production 61, 62 cultural sector and diversity 84 cultural sector clustering 84, 96, 107 and the ‘culture’ of production 104 film industry 86 protecting cheap accommodation 117 software production 42–3 sectoral tendency to decentralize 117, 163 steel manufacturing 38–0 ‘tech’ industry in London 47 Information and Communications Technology (ICT) and business practice 7, 17, 62, 63, 65, 73, 108, 165, 176, 182 and ‘buzz’ 57, 99 and delocalization tendency 41, 62, 87, 89, 165, 186– and firms’ choice of location 7, 18, 212, 213, 217, 220 and knowledge base 104–5 and markets 51–2, 86, 91, 218

and travel 24, 26–7, 31, 89 as a ‘ubiquity’ 17, 26, 32, 58, 75, 88, 213, 221 effects on sectors 72, 111, 117, 138, 189 reinforcing strength of centres 47, 62, 165, 190, 192 substitutions, choices, between F2F and ICT 74, 87, 90, 96, 117, 181, 217, 219–20 ‘Information Revolution’ 11, 17–18, 99, 108, 212, 220 internet 1990 and 2001 17 and intranet- and internet-based forums 104 businesses, patterns of F2F contact reported 124, 125, 132 purchases via 17, 19 ‘Victorian’ 18 interview programme, content and nature 121–2 IPPR North 197, 204–5

J

Jacobs, Jane 12, 13, 51, 77

K

knowledge base: analytical, symbolic, synthetic 103–08, 128 knowledge workers 7, 86, 89, 218

L

labour market and Central London 59, 115, 143–4 Lancaster (PA) 182, 191–3, 212 Leeds 89, 127 legal services concentration in London 46 F2F patterns reported 126, 130, 133 impact of AI 110, 140 Legal Services Board 46 patent lawyers 45, 70 Liverpool 13, 15, 53, 195, 196, 197 Lloyd’s 115, 121, 142 logistics, warehouses, sheds 61, 177, 214, 221, 224 London as entrepôt 13 Central Activities Zone (CAZ) 146, 148, 165, 166, 174 City – see City of London decentralization and net growth 168 employment, concentration in core 167

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WHY FACE-TO-FACE STILL MATTERS

N

employment growth record and forecasts 166–8, 177 office growth forecasts 168, 173 ‘outmover’ businesses 88–9, 168 population change 2, 3 retail floorspace trends 169, 178 ‘Tech City’ 80, 114, 116 London, locations in Bloomsbury 95, 114, 144 Canary Wharf 62, 80, 130 Clerkenwell/Farringdon/Holborn 114, 115, 116, 139, 142–3, 166, 174, 175, 218 EC3 129, 142, 145, 148 Fleet Street 13, 62 Hackney/Hackney Wick 3, 114, 116, 125, 127, 177, 207 King’s Cross 20, 33, 62, 106, 166 Limehouse/Wapping/Bow 116, 125, 177 London Bridge/Bankside 62, 144, 146, 148 Mayfair 6, 60, 143 Old Street/‘Silicon Roundabout’ 33, 55, 115–16, 142, 165, 166, 174 Paddington 27, 148, 165 Shoreditch 33, 114, 115, 116, 131, 145, 148, 165, 174, 177 Soho/Charlotte Street/Fitzrovia 3, 7, 55, 79, 114, 116, 143, 148, 154, 174, 182, 183 Spitalfields/Brick Lane 95, 148, 174 West End 55, 95, 114, 116, 122, 123, 126, 145, 166 Los Angeles (LA) 28, 116, 122 Lösch, August 46, 62, 78, 182, 184, 201

M

National Endowment for Science Technology and the Arts (NESTA) 47, 49, 89 ‘networking’ 9, 56, 79, 102, 108, 128, 129, 130 networks centrifugal and centripetal effects 31–3, 83, 112, 212, 221 characteristics 17, 24 ‘higher-order’ and ‘lower-order’, premium 27, 28 ‘new economy precincts’ 114 New York 1970s decline attracts artists 116 as entrepôt 53 Brooklyn/DUMBO/Williamsburg 3, 114, 117, 165, 177, 207 concentration in Manhattan 170 Consolidated Metropolitan Statistical Area (CMSA) 170 crime rate 3 East Village 115, 116, 218 employment growth record 89, 169–70 Hoboken 90, 117 Lower Manhattan 13, 170 Manhattan 29, 89, 90, 95, 115, 142, 148, 170, 173, 201 Midtown 6, 62, 89, 95, 111, 169, 170, 179 on-street F2F interactions 143, 181 population turn-round 169 retail floorspace trends 178 SoHo 3, 7, 55, 114, 116, 182 Wall Street 13, 53, 76, 170, 172

O

Maidenhead 33, 34, 95, 164 Manchester 19th-century industry 15 BBC relocation 76 F2F contacts with London 127, 134 relationship with surrounding towns 195, 196, 197, 204–5 Markusen, Ann 81, 158 Marshall, Alfred 65, 75, 79 McCann, Philip 94, 134, 203–4 Metcalfe’s Law 24 MGP – see Paris: Métropole de Grand Paris Mondragon 196, 212

office space trends 174–5, 188 offshoring 87, 112, 164, 222 opaque markets 37, 49, 50–4, 58–1, 63, 98, 163, 165, 185, 187, 218 Oracle 95, 199 Orkney Isles 12, 13 Oxford (England) 35, 143, 145, 181, 208

P

pandemic – see coronavirus Paris as entrepôt 13 Belleville-Nation-Bercy 114, 166, 182 deconcentration of office jobs 89, 172 density and transit network coverage 59, 172

244

INDEX

employment growth record 89, 171 forecast population and employment 172–3 former markets (Bercy, La Villette, Les Halles) 178 graduate employment, dominance 89 importance in French economy 171 industrial floorspace policy 178 Institut d’Aménagement Urbain (IAU) 172 La Défense 80, 172 mediaeval boom 213 Métropole de Grand Paris (MGP) 172 ‘Petite Couronne’/proche banlieue 89, 173 Quartier Central des Affaires (QCA) 172 regional employment growth 89 Rungis ‘pôle alimentaire’ 178 World City attributes 171 young professionals 180 personal judgement for quick evaluation 93 processes to avoid ‘groupthink’ 93, 219 unconscious bias 219 policy, national (UK) and regional 204, 215 Preston (Lancashire) 193, 195––196, 204 ‘Preston model’ 195–196, 205, 212, 224 productivity: of manual and knowledge workers 86 proximity accessibility, relationship with 162 functions of 144 no guarantee of interaction 83 opaque markets, importance in 162, 220 role of F2F, link to 128, 162

Q

QCA – see Paris: Quartier Central des Affaires

R

railways 19th-century rise and ‘Mania’ 15 great interchanges 20 high speed rail (HSR), TGV 27–28 importance to locational choice 59 range (of a good) 45, 52 Reading (Berkshire) 33, 95, 144, 183, 208, 223

rentals and land values expectation of rentals postcoronavirus 156–7 high rentals for high-access places 94 willingness to pay 62 retail floorspace trends: London, New York 169, 178 risk and availability of information 48–51, 61 F2F time invested to lessen risk 100, 132 reduced by meeting in person 100, 134, 219 reducing transaction costs 69 Route 128 (Boston) 81, 85

S

San Francisco 102, 106, 165, 176, 180 201 Sardinia lifespans 92 Schiphol 17, 20, 32 search goods characteristics 57 and ICT 72 and search costs 58, 68, 222 and value of easy-access locations 74, 84 Seattle 2, 30, 182 server farms 61 serviced offices 174, 175 Shanghai 3, 180 Shrewsbury location and economy 184, 212, 214 quality of life 185–6, 187, 205 national policy context 204 real estate potential 188–9 scale: benefits and costs 185, 193 sectoral potential 187–9 signalling ‘brand load’ of specific places 114 cultural production 60 office location as signal 54, 55 ‘prestige’ locations 55, 115, 143, 144 role of ‘handshakes’ 93 screening large numbers of partners 84 university degree as signal 54 signifying locations 55, 114, 116, 143–5, 148, 215, 218 Silicon Valley and ‘buzz’ 79, 80, 102 engineers 43 lessons for elsewhere 80, 181, 214

245

WHY FACE-TO-FACE STILL MATTERS

small firms and open-ness 81 Singapore 20, 180 Skype 8, 10, 23, 96, 122, 134, 135, 138, 153, 163 Slough 33, 95, 183, 198, 223 smaller cities and towns (SMCs) agglomeration, role of 203 catchment and scale in location theory 183 distinctiveness, importance of 205 former industrial towns, prospects 223, 224 ICT, impact of 212 ‘penumbra’ towns 198–00, 213, 223 urban and regional relationships 197–8, 204 small and medium enterprises (SMEs) 102, 168, 174 ‘sneakernet’ 22 Soho – see London SoHo – see New York SohoNet 28, 87, 153 Southend (Essex) 117, 198 specialization 44, 62 Storper, Michael 78, 93, 97, 127, 131 ‘strong’ ties 92

T

U

ubiquities 41, 53, 58, 62 uncertainty and distance 61, 63 information 48, 54, 61 mitigation and management of 48, 50, 134, 219 university towns Bath 201, 202 Cambridge – see Cambridge (England) economic contribution of 79, 201–2, 223 Newcastle 201 Preston (UCLAN) 195 Princeton 202 Upas tree effect 76, 85

V

venture capital (VC) locational choice 60 opaque market 59 video-calling (vc) replacing F2F 73, 94, 104, 108–9, 122, 125, 134–6, 163, 220

W

‘tacit’ knowledge definition 103 increasing importance to firms 104 long-distance sharing 103 and offsite information flows 112–13 and what is not said 93 technopoles 80 telecommuting/télétravail 3, 150, 213 telecoms networks 3, 10 telegraph: cables, networks, stations 13, 15, 52, 53 Thames Valley, high-tech arc, ‘Western Arc’ 33, 85, 95, 145, 183, 198 Thurrock, commuting 198 transactions and firms’ spatial strategies 84 implementation costs 68–9 and proximity 84 risk and uncertainty 69–70, 84, 134 routinized 83 scale and intensity 67 search costs 68, 132 standardization and stability 67, 68 transparent markets 51, 52, 58, 62 TripAdvisor 50, 51 Twitter 9, 57, 99, 106, 176

‘weak’ ties 92, 185 Weber, Alfred 1, 37–1 WeWork 99, 100, 174, 176, 206 Wigan 193, 196, 197, 198, 204, 214 working from home (WFH), telecommuting 3, 5, 150, 153, 157, 206, 208, 210, 215, 217

Z

Zoom 5, 8, 123, 134, 152, 153, 163, 206 Zürich 143, 180, 181

246

“Highly readable and endlessly thought-provoking, this book helps us understand how towns and cities can continue to prosper in the wake of COVID-19 and galloping technological changes.” Shaun Spiers, Green Alliance

“Amidst the fog of the pandemic this book, eight years in the making, provides a timely and powerful light to guide towns and cities into the new future.” Chris Brown, igloo Regeneration

“An important contribution to the enduring debate on the importance of place. The global pandemic has halted most of our face-to-face interaction, but the authors demonstrate that, while Zoom may alleviate some of their necessity, in situ interactions remain indispensable and the cities and urban infrastructure in which they occur will thrive again because they must.” Elizabeth Currid-Halkett, University of Southern California

Jonathan Reades is an Associate Professor in the Centre for Advanced Spatial Analysis at UCL. Martin Crookston is a strategic planning consultant, with experience ranging from London and Abu Dhabi to Prague and the Paris region.

What makes a great city? Why do people and businesses still value urban life and buildings over a quiet life in the suburbs or countryside? Now might seem a difficult time to make the case for social contact in urban areas – so why is face-to-face contact still considered crucial to many 21st-century economies? In a look back over a century’s-worth of thinking about cities, business and office locations, this accessible book explains their ongoing importance as places that thrive on face-to-face meetings, and in negotiating uncertainty and ‘sealing the deal’. Using interviews with business leaders and staff from knowledge-intensive, innovation-rich industries, it argues for the continuing value of the ‘right’ location despite the information revolution, the penetration of artificial intelligence (AI), and the COVID-19 pandemic. It also explores why digital systems have transformed businesses in cities and towns, but in fact have changed surprisingly little about the challenges of business life. This timely book gives readers, including developers, investors, policy-makers and students of planning or geography, essential tools for thinking about the future of places ranging from market towns to great World Cities. ISBN 978-1-5292-1600-4

@BrisUniPress BristolUniversityPress bristoluniversitypress.co.uk

@policypress

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