James Kergon

Covid-19 has triggered a shift in the way people work, interact, and shop. As businesses in some sectors prepare for employees to spend two to three days a week working from home on a permanent basis, existing office space capacity could potentially increase by as much as 40%, according to a the ‘New working patterns and the transformation of UK business landscape’ report.

Smaller towns and cities with a large proportion of the workforce working partially from home are also expected to benefit. Areas including East Dunbartonshire, Clackmannanshire and East Renfrewshire are all expected to see local demand grow with greater numbers now working from home on a regular basis.

Meanwhile, less dense business areas could see a decline in employment and may need to be transformed into more residential, leisure, retail and other uses.

As the business landscape consolidates, KPMG analysis also found the change could boost overall UK labour productivity by 0.5%, thanks to businesses being able to tap into a larger pool of workers, suppliers, and clients.

James Kergon, senior partner, Scotland at KPMG UK, said: “Over time, the shift in business location could support the rise of several commercial hubs across Scotland. The increase in the concentration of firms and workers has the potential to make those companies located there more productive and enable these areas to serve as the engines of economic growth.

“Cities like Glasgow, Edinburgh and Aberdeen all stand to benefit from the consolidation of business locations. They will need government to work closely with local leaders to ensure the transition is smooth and any barriers to growth are quickly ironed out.”

Yael Selfin, chief economist at KPMG UK, commented: “As we emerge from the pandemic, businesses need to adapt to the new environment they will be facing. Some may choose to relocate to larger business hubs to boost profitability, while others in less central areas could see their local customer base profile change.

“While the overall impact on the UK economy is expected to be positive, the changes ahead could prove challenging for those businesses already saddled by the pandemic.”

The report examines how local high streets in residential towns and neighbourhoods are expected to reap the benefits of greater homeworking through increased demand by residents during the week. But the impact on high streets across the UK is unlikely to be uniform.

Some places may be hit relatively hard by the loss of office workers due to their proximity to a larger business hub, which may be compounded by the loss of commuter footfall among remaining employees due to the prevalence of working from home.

Yael Selfin added: “As people spend more time working from home and less time in the office, we could see a revival of the local high street.

“They will need to transform into places of purpose to meet demand for community-based services, hospitality, culture, as well as retail. High street offering in smaller towns and cities may need to become more focused on residents’ needs and less focused on businesses and commuters.

“This transformation will require local government, residents and businesses to work together to map their future shape and make concrete plans to support and enable the necessary changes to make the most of the new post-Covid business reality.”