Remote work didn't wipe out big cities - it made them even bigger

• Superstar cities like NYC and San Francisco are just getting bigger during the remote work era.
• Famous economist Enrico Moretti said urbanites will still go into the office, meaning they need to live within traveling distance.
• So instead of spelling the end of the big city, remote work has moved its borders to the edge of the metro area.

Instead of wiping out big cities, remote work seems to be making them even bigger.

When urban dwellers fled for the suburbs as the pandemic first spread across the US last year, many were quick to write it off as the end of the era of "superstar cities". But Enrico Moretti, the economist who (literally) wrote the book on superstar cities, told Bloomberg's Justin Fox not to get carried away.

"I think the notion that you read a lot in the media, that the workplace and cities have changed forever in profound ways, that's a little bit naive," said the Berkeley professor, who analyzed how superstar cities had led to a "great divergence" in his 2012 book "The New Geography of Jobs."

Citygoers' relationship with the office likely won't change that much, with a day or two working from home and three to four days in the office, and that means big cities won't wither away.

"It means that for places like New York or San Francisco, if you want to have access to the types of careers and jobs and employers that are there, you still need to have a physical presence in the metro area," he said. "Maybe not next to your employer, given that you don't have to commute every day, but in the same metro area."

In this sense, the era of remote work has moved the city's borders to the edge of the metro area, a reflection of an expanding regional labor market.

Those who moved didn't go very far

Several findings this year revealed that the narrative of mass migration bordered on exaggeration. Stephan D. Whitaker, an analyst at the Federal Reserve Bank of Cleveland, said that while migration did increase in many urban neighborhoods, it hasn't been to the extent that would fit the definition of an exodus.

In fact, the urban exodus was more myth than reality, according to a Bank of America Research note from May, which anticipated an economic reopening would spark a return to superstar cities such as New York City and San Francisco "given their status as economic, financial, and cultural centers."

Consider NYC, which has already been making a comeback. USPS data found that more Manhattanites moved to Brooklyn than anywhere else between March 2020 and February 2021. Of the 19,000 Manhattanites who moved to Florida, only 10,000 plan to stay permanently.

And the ones who moved? They did just what Moretti predicted, largely remaining in the same metro areas. Zillow's 2021 Consumer Housing Trends Report showed that some changed neighborhoods or cities, 19% moved to a new city within their metro area, and nearly 40% stayed in the same city but switched neighborhoods.

Superstar cities in a remote work world

Rather than drastically changing superstar cities, remote work has subtly reimagined city life by giving more workers more flexibility.

Urbanism expert Richard Florida told Insider back in February that big cities would thrive in the era of remote work, predicting a resurgence as vaccines rolled out. He said post-pandemic cities will be reshaped and revived by a newfound focus on interpersonal interaction that facilitates creativity and spontaneity.

"Even as offices decline, the community or the neighborhood or the city itself will take on more of the functions of an office," he said. "People will gravitate to places where they can meet and interact with others outside of the home and outside of the office."

To be sure, big cities aren't quite what they were before the pandemic. Unemployment and vacancy rates remained high in cities like NYC and San Francisco over the summer. And the highly contagious Delta variant is squashing the US's forecasted economic boom. But workers are already returning to NYC and San Francisco, which are both seeing hot real estate markets, a positive sign for their economic recovery.

Remote work will settle into a new level, higher than pre-pandemic but lower than the present, according to a Brookings analysis of the USPS migration data. Such a hybrid-work environment is pushing people to live within traveling distance near work, but not quite as close as they used to.

As Moretti put it, "There's been so much emphasis on the idea that if people don't have to go into the office every day, more will move out to the exurbs. But it really just seems to mean that people can more easily sort themselves into the part of the metropolitan area where they want to live in. I mean, I'd rather live in the city."