Hidden in the noise this week are a few gems. Here are some thoughts on them.

Ben Page from Ipsos Mori published a chart showing US labour productivity booming under the COVID19 lockdown. ‘No more commuting for millions’, he proclaimed. Staggering at first sight and must have had the commercial real estate property (remember, that’s the structurally racist one) trembling with fear.

Then someone pointed out that if productivity was equal to output/hours worked across the economy, then this could be influenced by a temporary closure of hospitality sectors and a rebalancing towards service sector people working from home.

This would make this productivity burst temporary and like everything else under COVID, we’ll know more when we get more data.

There may of course be other things going on.

In January 2019, Citymetric published a piece attempting to explain, in a UK context, how poor public transport affected the productivity puzzle. There are lessons to be learnt here on the shape and size of cities and productivity.

Big cities are generally more productive, the piece argued, but not in the UK.

Many economists argue that larger cities are more productive than smaller cities and become ever more productive as they grow due to something called ‘agglomeration benefits’. The same economists argue that the UK is an outlier when it comes to this model. Turns out that the UK’s large cities (Birmingham, Manchester, etc.) see no significant benefit to productivity from size, especially when London is excluded.

The piece also suggests that poor public transport in the UK’s larger cities makes their effective size smaller, and thus sacrifices the agglomeration benefits that would be expected from their population. Coincidentally, these are the same cities that appear to have suffered early from the onset of a second COVID wave.

The piece asks readers to consider that if Birmingham has a population of 1.9m, and then assume that agglomeration benefits should work in the UK to the same extent that they work in France, then Birmingham has a 33% productivity shortfall.

We have all seen the drop in commuting, and pollution, that accompanied lockdowns. We know that the Coronavirus is changing the way we live in cities with many people continuing to work from home and spending more time in their local communities.

If cities continue to become smaller (15 or 20-minute city and all that), and thinking about my own city Brighton and Hove, where bus usage is only now hitting 50% of that it was pre-COVID, then what other lessons can we draw on productivity, agglomeration and the commercial real estate industry?

If then agglomeration is the reason our cities have densely concentrated networks of offices and financial centres, and why people in London spend an average of 81 minutes a day commuting into the office, what next for the commercial real estate industry? Is the big crash inevitable? And is this why investors are hedging their bets on climate change? After all, you might think that the finance industry is about to save the planet. Why?