From bustling capitals to depressed city centres: How has Covid-19 catalysed the 'doughnut effect'?

Remote working has had an adverse effect on society as a whole, but urban areas have been hit hard, transforming them into ‘doughnut cities’. City centres are left hollow as the concentration of people and businesses shift to the suburban belt. 

What is the doughnut effect?

The ‘doughnut effect’ refers to the development of hollow or empty cities as people and businesses move to the centre to the outskirts. The concentration of the population and businesses that follow as a ring around big cities, like London, has created a suburban belt that has changed the structure and operation of cities.

This phenomenon can be traced back to the 1960s, which saw the beginning of a migration of people seeking bigger, more affordable housing, moving to areas surrounding big cities. Moving away enabled people to avoid inner-city overcrowding but still benefit from being close to the city for work, and over time, businesses gradually followed. Today, we continue to see an economic surge in these suburban areas surrounding big cities, such as Croydon, which has been accelerated by the pandemic.

What’s different in 2020?

The effects of the pandemic have been far-reaching and have indefinitely affected the way businesses operate. Commercial and business districts have little to no housing and are entirely dependent on commuters arriving from the suburbs five days a week. For most of these businesses, employees are now working partially or entirely from home. The money that would be spent by commuters on food, drink, entertainment, is now being spent on the same amenities closer to home.

Similarly, city centre businesses dependent on the retail, hospitality and cultural footfall of foreign and domestic visitors, like Oxford Street and the West End, have been hit hard by government travel restrictions. Since the gradual relaxation of lockdown restrictions, we have seen consumers spend a ‘substantial’ amount in suburban venues or ‘commercial hubs’, which are predicted to have a long-term effect and may outlast the pandemic, even after the development of a safe vaccination. 

A quarterly report from the Centre for London think tank termed this an “uneven economic recovery”, since central London remained depressed while neighbouring suburban high streets recover with greater ease.

Report author Erica Belcher said: “The shift towards those town centre spots is substantial. We have seen the central London economy start to recover, but spending is heavily down.” Footfall in central London is 70-80% down due to the loss of domestic and international visitors, leaving the conversion rate of customers to profitable sales difficult to recover. The area has also seen an 80 per cent drop in annual sales, from £10 billion to £2 billion.

The view from Croydon

This is good news for satellite hubs like Croydon. Residents of these towns on the outskirts of London, who would normally leave five days, are now working, eating and shopping with local businesses. Croydon in particular has grown as a business and tech hub in recent years, and has almost fallen victim to its own success. It’s footfall figures lie between those of central London and the smaller suburbs, with footfall remaining at around half the level of 2019. However, in comparison to central London, Croydon's smaller high streets - which in fact had faced the greatest trading challenges - were more resilient in terms of retaining their footfall.

What’s more, this trend shows no sign of stopping. As workers get used to working from home, or utilising more local co-working spaces, closer to schools, further from the noise and without a lengthy commute, it looks as though the old-fashioned 9-5 may be gone for good. As we move out of lockdown, peripheral office spaces, like Falmer is to Brighton, and Croydon to London, look poised to grow as doughnut effect continues.

Our offices at Falmer and Croydon offer professional, Covid-secure workspaces for people looking to break the monotony of working from home, which are easily accessible on bicycle or foot for anyone wanting to avoid public transport on their way to work.

If you’re not already a member, our Sussex Stars scheme offers flexible co-working and meeting spaces for as little or as much time as you need. Please do not hesitate to get in touch via email (info@sinc.co.uk) or telephone 01273 704400 if you have any further questions.