Settlements have been around for more than 5,000 years. Originally centres of culture and learning, they are now dominated by Mammon. Conjure up a picture of a typical city and it will have a central core crowded with shiny office blocks, fed by hoards of workers commuting daily from suburban homes. Close to half the people in the UK work from offices, so their future will be crucial to the shape of the city of tomorrow. Two factors dominate: costs and rising aspirations for a better quality of life.

Office buildings are long overdue for the sort of revolution already seen in manufacturing, says Bruce Lloyd, head of strategic and international management at South Bank Business School, London. They are grossly inefficient. Take away the empty nights, weekends and holidays and you have an enormously expensive asset utilised for 21% of the year - equivalent to 76 out of 365 days. Illness, lateness - even the lunch break - can be deducted as well. And if you strip out the socialising, time-wasting outside visits and so on, effective use is somewhere between 5 and 10 per cent.

No manufacturer would survive if their factory ran at this level. Power would be inordinately expensive if generators worked so inefficiently. Sooner rather than later there will be changes which affect demand for office space. Service industries will have to respond to competition by cutting costs. The reappraisal of office use could lead to more 24-hour operations. Office productivity could soar by at least 50%: in fact, the service sector is likely to be the single main source of productivity improvement in the coming decades. The value of buildings will change, relying much more on their flexibility and whether they can be subdivided. Office buildings consume vast amounts of energy; so do commuters pouring in on trains and in cars. New legislation will expose and control these costs.

If we need a taste of what could happen, it is worth looking at how some occupiers have already attacked the problem. BET, one of Europe's largest companies, has taken a sharp knife to its holdings, says property director Andrew Cripps. In three years it has shed almost 350 premises and has another 170 still to deal with. BET is not a city-centre occupier, concentrating instead on locations around the fringes of towns and cities to service its core businesses of industrial cleaning, distribution, plant services and guarding. But by the next century this ruthless approach to buildings will be commonplace as business takes a harder look at costs and location, says Mr Cripps.

The driving factor for occupiers will switch from "location, location, location" to "flexibility, location, flexibility". They will need to know they can change premises to meet new needs. Otherwise these buildings will be discarded. Another factor is the financial risk companies may face if they are seen to occupy expensive or inefficient premises, adds Mr Lloyd. This would be explosive ammunition for any corporate predator seeking to take them over.


A more sophisticated workforce will shun the life of perpetual commuting and congested city centres. An ageing population will demand more flexibility on where and how it works - particularly as more women attain positions of power and seek to combine work and parenting. By the next century an office could be as vital in the home as a kitchen. Main growth areas in employment will be services like education and management, which are suited at least partly to homework.

Most experts believe working from home will increase, but few agree about the impact. Horace Mitchell, chairman of Management Technology Associates and an adviser to the British government's Department of Trade and Industry on telework, believes it will swell to a level which will fundamentally alter towns and cities.

Office blocks will survive, but in the long term companies will only want a 'token presence' in a central, prestige address.

If environmental issues cause travel to become relatively expensive while competition makes telecommunications cheaper, then travelling 50 miles to sit at a desk or attend meetings may seem ridiculous.

We may see a switch from few, large, centralised office blocks, to many, small, distributed workplaces, so that most people only travel a mile or two to work. Up to 8.5 million of today's jobs are potentially 'teleworkable' in the UK. The proportion will increase to perhaps 60% but even the remainder will be needed where the CUSTOMER, not the employer, wants them to be.

Few will work at the traditional 'office' or 'factory' site . If some need high capital cost equipment they may have to go to wherever that is. Others will work on services where the customer is prepared to pay a premium for personal contact. But wherever possible, services will be delivered very close to the customer's home.

The key question is what proportion of people will choose to live in cities, or will have no option but to do so? A high proportion will always prefer to 'go to work' - but probably to 'work centres' rather than employers' premises.

The first affected will be longer-distance commuters. They will be priced and/or regulated out of business. Long-distance commuting will disappear. Employment in sales and marketing will continue to rise, but the processes will require less face-to-face 'physical presence'. Much employment in sales and marketing is already telework based.

For example when a UK reader replies to a newspaper advert for a new shaving cream, chances are the person answering the phone is working in a British Telecom regional telesales centre, not for the advertiser.

Companies in the Philippines are using satellite links to service computer systems in Europe. AMEX has centralised its European card services around Brighton, on the south coast of England, shedding several hundred jobs in other European locations.

But there is plenty of dissent over the impact of homeworking on our city centres - or even whether such a wholesale switch is likely. David Hunter, property investment director for Scottish Amicable and a major investor in UK city centres, believes the upsurge of discussion on teleworking is more a fashion than an indicator of lasting change. The attractions will pall once people realise they would earn less., he says.

"It is not necessarily more efficient for employers, as the cost of office occupation is not expensive - even in central London, otherwise tenants would not be signing leases today."

In provincial towns and cities, the cost of centralised offices is even less significant. And any savings would need to be set against the extra costs of communication and management of a dispersed workforce.

He points to relocation trends, often held up as a sign that firms have been fleeing London in droves. Yet the numbers involved represent only a small fraction of companies in the UK capital.

Technological advance will certainly affect work, but a lot of this has already happened via computers, faxes and mobile phones, and has not led to wholesale dispersal. Dislike of urban life has also been with us for centuries, and London has been miserable for years, says Mr Hunter, with the confidence of a Scottish investor.

Quality of buildings will change if employers are unable to recruit staff. But it can be even harder to get staff if tenants disperse to area where there are fewer facilities. Homeworking may also carry a rude awakening for staff looking for a better quality of life, adds John Whalley, property director at AMP Asset Management, an Australian-owned group with a growing UK investment base You don't get a better life being stuck in front of a computer screen at home, he says.

Underlying changes in the nature of work will also help protect city centres, says Hamish McRae, economic commentator for The Independent newspaper and author of The World in 2020, an eclectic look at the future which is understood to have caught President Clinton's eye when he visited the UK.

McRae sees a return to a pattern similar to medieval craftsmen living over their workshops and more use of contract workers and freelances. But as new technology opens the floodgates to information, many workers will be experts, packaging those facts in a way businesses can digest.

While computers and modems mean they could do this job anywhere, they will probably need face-to-face contact to work with clients. Sales, marketing and senior management will also retain city centre locations, because much of their work is through semi-social interaction.

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