Embracing the Zoom Town

The silver lining for small towns in the wake of the COVID-19 pandemic.

Welcome to issue #4 of Brick + Mortar. If you aren’t subscribed, join other change makers looking to drive downtown revitalization in their towns by subscribing here:

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⏱️ By the numbers

$5B

The amount President Biden has proposed, as part of his American Jobs Act, to spur jurisdictions to “eliminate exclusionary zoning and harmful land use policies.” In particular, POTUS aims to target single-family zoning, a component of ‘new redlining’ that unfairly discriminates against the working class. (New York Times, 12 min)

88

The number of jobs added downtown in Water Valley, Mississippi (pop. 3,500) as a result of the town’s revitalization efforts. A true success story, this should be watched by anyone interested in seeing their town through a revival. (YouTube, 27 min)

+16.7%

The percentage increase in median sale price for a US home over the past year. Detroit, MI saw the greatest jump of 48.7% year-over-year. Vermont hovered around the national median at 17.5%. (Redfin, 1 min)

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Church Street in Burlington, VT, a haven for remote workers during the pandemic. Source: NPR.

The surge of COVID refugees

Remote work during COVID-19 has opened up doors for some folks, many of whom have high paying jobs in larger cities. Companies like Facebook, Coinbase, and Dropbox have committed to allowing remote work indefinitely for some, if not all, of their employees.

Understandably, this has prompted workers to re-evaluate where they live:

Why pay $3,000 a month for a shoebox in Manhattan when you could spend half as much upstate and arguably get a better quality of life?

Areas with lower cost of living and more intimate connection to the community have become an attractive alternative for the new COVID refugees.

Just anecdotally, this shift was clear to me as I split my time between NYC and Vermont over the past year while getting Village Ventures off the ground. Walking around downtown Manhattan, it was like a ghost town. One in four retail spaces were empty and gathering dust.

Not only that, but landlords have been giving unheard of concessions for apartments, too. One friend scored a deal with three months of free rent. And we even just got offered to renew our lease at a 25% discount below last year’s rent.

On the other hand, the Vermont real estate market is booming. An already acute housing shortage has been worsened by out-of-staters bidding up houses. Sight unseen, all cash, over asking — all common adjectives when describing a recent sale.

Even now, a beat-up lake house gutted down to the studs in my town asking $600,000 just went under contract in less than a week. It’s like a feeding frenzy from Jaws but with thousands of Bruces.

By one estimate, Vermont has seen an increase of 10,900 new residents in 2020 on a population of 623,989. Compared to prior years of population decline, that’s a huge win for the state. Burlington, VT — the state’s largest city — saw a twofold increase in net migration this spring versus last.

In fact, Vermont’s state-funded relocation program that paid $10,000 to new residents became oversubscribed by October 2020.

One of the more extreme examples of this seems to have been in Winhall, VT. In the summer of 2020, Winhall saw its population surge from 736 to over 10,000 in only a few months. The post office ran out of available P.O. boxes in mid-June. Electricians and plumbers were booked out until Christmas. Complaints about bears quadrupled.

Or, as one local puts it, “the closest word I can tell you is sheer pandemonium.”

The emergence of COVID refugees is a mixed bag for small towns.

On one side, many smaller towns are not equipped to handle a sudden flood of new residents. Schools, local stores, and municipal water and sewer infrastructure can quickly become overbooked, understocked, and overused without the right planning.

However, with the right planning — and barring a sudden 10x increase in population — there’s a real growth opportunity for local economies.

But, will it last?

Things will just return to normal once the vaccine is rolled out though, right?

There’s a big debate over the extent that work will fundamentally change emerging from COVID-19. And the anti-remote argument usually hinges on productivity or company culture.

Granted, there’s some merit to both — but a lot of that is highly dependent on the individual and company. Some will inherently be better suited to adapt long-term to a remote work environment. Others will return to their old ways.

But the vast majority will split the difference. A Harvard Business Review survey recently showed that 72% of workers would prefer a hybrid remote-office model after the pandemic. Without a doubt, the demand is there.

As far as whether companies will give in to this demand, a McKinsey report estimates that up to 40% of the US workforce can work remotely at least one day per week. Furthermore, a survey of 248 US chief operating officers found that one-third plan to reduce office space in the coming years as leases expire — a good indicator that remote work is here to stay.

Going back to the Vermont example, take a recent report from the University of Vermont where they surveyed COVID refugee workers. Of the 226 individuals surveyed, over one-third indicated that they were “likely” or “very likely” to stay in Vermont following a return to normalcy.

This is pretty significant. And then couple that with a recent Gallup study showing 48% of Americans now prefer to live in a town or rural area, up from 39% in 2018.

In other words — all signs point to long-term growth in remote work. And, with residential preferences continuing to push towards smaller towns, the opportunity won’t be fleeting for the so-called Zoom Towns.

Focus on the individual, not the company

Traditionally, small towns have been focused on recruiting manufacturing or larger retail companies to set up shop in town. And, some days, it feels as if this is still the case.

I’d argue that this is a losing battle. Strategies to attract manufacturers are short-sighted at best — the economics just don’t pencil out over the long haul when the global labor markets are so readily accessible. Furthermore, larger retailers are rarely ever a boon to local economies.

Rather than lobbing Hail Marys into the ether and trying to score a one-in-a-million touchdown, towns should really rethink their strategies. Instead, they should be looking to capture this growing market of remote workers by taking a prescriptive and targeted approach. And you do that by appealing to the individual, not the company.

There are two types of remote worker that small towns should be focused on attracting:

1. Corporate back-office employees like software engineers, accountants, and project managers

2. Creative entrepreneurs like artisans, designers, and film makers

With today’s advances in internet technology, both groups are well-positioned for remote work. That said, each has distinct needs that don’t fully overlap.

For example, corporate employees relocating to smaller towns will likely spend most of their workweek interacting with colleagues in other remote locations. This naturally leaves less opportunity to integrate themselves within the community. To help alleviate this, towns may want to curate additional social activities aimed at welcoming new residents and acclimating them to the community.

Creative entrepreneurs, on the other hand, may be more in need of developing business and IT skills to enable their eCommerce sales channels. An online presence is a must-have for any business these days, and creative entrepreneurs are not exempt.

To promote a thriving entrepreneurial environment, towns should push to expand the capabilities of their local economic development or small business association. Not only can these provide critical learning opportunities for small business owners but they also serve as great networks for local entrepreneurs.

Capturing and appealing to the creative entrepreneur market should be top priority for small towns. Source: TRORC.

With the right programming and coordination, small towns can start to re-position themselves as havens for remote workers seeking a new place to live. If successful, this could start to bring in additional sources of revenue, both for the town (taxes) and businesses (patronage and use of services).

Furthermore, this level of focus on the individual rather than the large business builds resilience. Maybe even enough to achieve the anti-fragile local economy and community theorized by Nassim Taleb.

The need for speed

The obvious impediment here is internet connectivity.

Again, just comparing NYC to Fairlee, VT, we’re getting 250 Mbps versus 1.5 Mbps. And that’s for the same price of $60 per month. Just to get up to 100 Mbps in Vermont, you’re looking at a monthly payment of $180.

In fact, according to Vermont’s Department of Public Service, more than three-quarters of the state is served by internet speeds below 100 Mbps.

Vermont broadband availability. Source: Vermont’s Department of Public Service.

That just won’t fly. Remote workers are going to demand higher internet speeds. Sure, you can Netflix & Chill on a couple Mbps. But try collaborating on a large Powerpoint presentation while on a Zoom call with your whole team. All while the rest of your household is doing the same thing. Dealing with the constant lag is the fastest way to a rage quit followed by a trip to the unemployment office.

Internet providers have been making moves, though. Take ECFiber that advertises “Big city internet without the big city.” They’re on a mission to bring up to 800 Mbps broadband to the Upper Valley in Vermont, and they’re ahead of schedule. 2021 should see broad strokes made in this arena.

Then, there’s the government. Vermont Governor Phil Scott recently announced a $20M broadband package as a part of his $210M in “bold new investments to strengthen the economy, create more and better paying jobs, and address big priorities, like downtown revitalization, infrastructure, broadband and climate change.”

While $20M may be a drop in the bucket of the $284M needed to bring better internet services to underserved areas in Vermont, it’s a start.

The future is bright

Granted, there’s still a long road ahead. In fact, many towns have likely not yet even started to consider how to attract this new wave of talent.

But, with the right leadership, the upcoming years could prove to be very advantageous for downtown revitalization and local economic growth.

From that same University of Vermont survey, a few recommendations for towns to consider:

• Develop a branding campaign as a leading “work-from-home” community. Each town will have different assets that they should double down on marketing.

• Conduct a needs assessment of this population of new residents to determine what will keep them here. It might not be as cut and dry as you think.

• Consider how to recruit and organize this new potential wave of in-migrants to meet goals of downtown renewal. This ties into the section above — focus on creating a great place to live with plenty of opportunity for social activity and networking.

Ultimately, it will all come down to action and policy on the local level.

Thanks for reading.

Until next time,

Jonah