Article from The Sunday Times, Sunday, 16th August 2020
“A slow return to the office for the south coast resort’s financial services giants spells trouble for the local and national economies.
On a normal lunchtime, an army of office workers would descend on Jo and Guy Verney’s sandwich bar. Financial services professionals and creative types queue outside Sands2 in Bournemouth, waiting to get their hands on favourites such as chicken, bacon and avocado baguettes and chicken and chorizo wraps with melted cheddar cheese.
Unfortunately for the couple, both 49, there has been nothing resembling an ordinary lunchtime for months. With offices largely empty in the seaside town, weekly sales are down by more than 25%, and the Verneys, who have run the shop for 20 years, have had to make three of their seven staff redundant. In half an hour last Wednesday at lunchtime, just a handful of people came into Sands2. “I’m trying to remain optimistic,” said Jo. “But deep down, there is a real concern for the whole country.”
The pain the couple are experiencing is being felt across the rest of the town — and the UK. Office workers are staying at home, despite Boris Johnson’s entreaties. The delicate ecosystem of urban centres, in particular those such as the City of London and Canary Wharf in Docklands, is in danger of collapse as white-collar workers stay at home.
In recent years, Bournemouth has made its name as an unlikely financial services hotspot, especially for insurance and tech. Big employers include the American banking giant JP Morgan and Nationwide Building Society, plus insurers LV, Vitality and Health-on-Line, owned by Axa. Guarantor lender Amigo Loans was founded there. Barclays has a wealth management division in nearby Poole. The sector employs 8,000 in Bournemouth, about as many as tourism.
The arrival in 1986 of JP Morgan, lured away from a proposed hub in Swindon after council leaders wooed the Wall Street bank’s bosses with the promise of incentives for developing a big site, heralded a professional revolution in the town. It helped Bournemouth shrug off its reputation as a place for the elderly — and stag parties. According to census data analysed by the Centre for Towns, there were 45.7 pensioners for every 100 people of working age in Bournemouth in 1981, but that fell to 26.2 over the following three decades. Today, 18.1% of the population is aged over 65, according to the Office for National Statistics.
That influx of youth — including more than 22,000 at Bournemouth’s two universities, many of whom stay in the town after graduating — has also helped to create a tech and digital scene nicknamed Silicon Beach. The economy in Bournemouth, Poole and Christchurch is worth £12bn a year, with average weekly earnings of £498.79 putting it in the top half of urban centres.
Bournemouth provides a snapshot of post-lockdown Britain. While pictures of its crammed beach in June sparked outrage, the potential damage to the Dorset town from the slow return to office working is far more serious.
The Centre for Cities estimates that every office worker sustains an average of 1.7 jobs in other sectors — such as in bars and cafés — but pandemic-induced changes in behaviour mean that is shrivelling. “We are seeing the opposite now,” said Paul Swinney, the think tank’s research director. “Because these jobs are being done at home, people aren’t going out to spend money in those areas. That creates a big short-term challenge.”
As elsewhere, empty shops pock-mark Bournemouth’s retail quarter. Beales, the department store, closed its doors in March, and more than a dozen other shops on the high street are abandoned. Several, including a barber’s and a vaping store, have closed since lockdown, locals said.
Things look set to worsen the longer office workers stay away. Just 15% of staff at the big finance employers are in the office. JP Morgan is Bournemouth’s largest private-sector employer, with more than 4,000 at its operations and technology centre; only 20% of them were back in the office last week. Its two-metre social distancing rule — the most cautious interpretation of the guidance — has halved available desks, so the bank cannot get more than 50% of workers back on site for the foreseeable future.
Nationwide and Vitality have offices facing each other in the town centre. Of a combined Bournemouth workforce of 1,450, just 220 are regularly in the office. The car parks were virtually empty last week. Nationwide, which has a specialist lending operation in the town, said it would not change its arrangements before the end of the year.
The consequences are quickly becoming visible. Down the road from Vitality and Nationwide, two popular cafés have closed for good. Michael Delahaye, a barber at Bond’s hairdressers in the town centre, said his working day now consists of “a lot of sitting around”. Delahaye, 24, has worked at the shop for four years. He said that office workers were “our bread and butter”, but without them he is idle: “Either the missus is cutting their hair, or they are growing it out.” Near the railway station, dry-cleaner Ricky Kirwan, 28, said footfall was down by half as professionals did not bring in work clothes.
The absence of office workers could also have a severe impact on owners of commercial property such as Canada Life, which owns LV’s Bournemouth office. Should remote working take root, many employers will look to shed costly office space. Steve Carr, operational resilience director at LV, said it was “inevitable” that companies would look at their “estate strategy”. Just 34 of the insurer’s 864 Bournemouth staff are at its office.
The trend is not confined to big businesses. Andy Headington, founder of website developer Adido, gave up his lease at a town-centre office and struck a deal to share with the company on the floor above, as he does not expect his 15 staff to return full-time. If offices are emptied across the country, it could have a devastating effect on pension pots — fund managers are among the biggest owners of commercial property. Here in Dorset, it could impact the Meyrick family, which has assembled a £132m fortune by developing commercial, residential and leisure properties in Bournemouth.
Some say the commercial space could be repurposed into housing, as John Lewis is planning at some of the stores it is closing. “They will become residential communities,” said Paul Kinvig, chief operating officer of Bournemouth’s business improvement district. “But that throws up a load of planning issues for local authorities.” A scheme by Beales’s landlord to convert the store’s top four floors into 76 flats four years ago was quashed due to a lack of car parking.
Despite the gloom, there are reasons to be cheerful in Bournemouth. Maximillian De Kment, boss of local estate agencies Saxe Coburg and Lovett International, said house prices had ticked up by at least 10% thanks to a surge of Londoners wanting to move to the area. “We are not salesmen at the moment — we are just receptionists taking calls and doing viewings,” said De Kment, 54.
Kris Gumbrell, co-founder of pub chain Brewhouse & Kitchen, with 23 sites across the country and three in Bournemouth, said the hot weather meant that he was beating last year’s sales — although one shopkeeper complained that the beach was thronged with day-trippers bringing their own food and drink, starving local retailers of sales.
Hoteliers have capitalised on the heatwave and a staycation boom. Tim Seward, operations manager at the Holiday Inn and chairman of the local hospitality association, said the price of some rooms had doubled to £400 a night.
However, as autumn approaches and the beaches empty, Bournemouth could turn into a ghost town if office workers do not return to their desks. Seward, 42, said that, for the first time, some hotels plan to close for winter and make staff redundant before trying to reopen next spring.
Entrepreneurs such as the Verneys will hope for more bosses like Nathan Revill. The co-founder of software developer Dorset Creative has been encouraging his 12 staff back into its office across the road from Sands2, because they are able to do “so much more [in person] than we can on [Microsoft] Teams”. His team regularly buys sandwiches from Sands2 as Revill, 40, tries to help the local economy. “But we need to get more people back to their work environments,” he said.”
Find the entire article here: https://www.thetimes.co.uk/edition/business/storm-clouds-gather-over-bournemouth-the-city-by-the-seaside-n7vbpnpfc