[PUBLICATION] Future of Inner City

Unknown: A City of Fantasy (1909) // Public domain
Unknown: A City of Fantasy (1909) // Public domain

The COVID-19 pandemic has had a major impact on inner cities. For the longest time, meeting friends at a café, going shopping in the high street or going to see a play or a movie was all but impossible. Those activities seemed to belong to a different era. Now, the delta variant has caused uncertainty about whether renewed restrictions are on the cards in the coming months. The inner cities would once again be hard hit.

Calls to save the inner city are understandable, but they fall far short of what is required. They ignore the defining feature of inner cities: they are engines of innovation. Doing everything possible to conserve our inner cities in their present form won’t be enough in the long run. Instead, the focus should lie on activating the potential for innovation of the inner city stakeholders.


This is why the Friedrich Naumann Foundation for Freedom commissioned the Fraunhofer Institute for Industrial Engineering (Fraunhofer IAO) to write a study on the future of the inner city. The study shows that despite COVID-19, the prospects of the inner city are bright – provided that the innovative concepts proposed by city administrations and retailers are translated into action.

The study begins by analysing the core challenges faced by the inner city. These include the digital transformation of the brick-and-mortar retail trade, rising traffic and increasing demands on the logistics infrastructure, as well as – in part – an inadequate quality of stay. The analysis shows that transformation is not a new phenomenon in the inner city; COVID-19 merely accelerated it.

The main section of the study focuses on domestic and international best practice examples that illustrate the many development opportunities for our inner cities. In addition to practical applications, the study also showcases current research projects and makes them accessible to municipal decision makers. The Fraunhofer IAO researchers identify four areas of innovation:

  • Local value creation and inner city trade: Digital marketplaces allow traditional specialist shops to join the world of online trading. Hybrid retail trade combines e-commerce with on-premise trade to offer a superior shopping experience. Urban manufacturing and urban agriculture open up new markets for the inner cities.
  • Urban transport: Digital delivery zone systems allow delivery vehicles to check the availability of loading zones in real time, helping them avoid congestion. Intelligent route and order management for delivery bikes and temporary reloading points reduce the traffic load caused by large transport vehicles. Data-driven municipal parking space management systems improve the utilisation of available parking areas.
  • Stay and experience: Pop-up street cafés allow restaurant operators to make temporary use of adjoining parking spots. To support workers in the creative industries, commercial spaces can be repurposed for different usages at different times of day or in different seasons to achieve higher intensity of use. Augmented Reality Navigation allows users to explore the inner city independently.
  • Identity and image: A comprehensive social media strategy provides a cost-effective way to market the attractions of the inner city. To boost the supply of inner-city housing, higher population densities must be achieved by efficiently repurposing brownfield sites and disused industrial premises. Co-housing projects can leverage the sharing culture as a housing concept.


The inner city has always been a site of change and innovation. In times of COVID-19, the inner city has an opportunity to exploit its strengths – with digital retail concepts, innovative mobility solutions, and pragmatic site usage. The Fraunhofer IAO researchers see the inner city of the future as an innovation lab for developing and testing new concepts.

But inner cities can only perform this role if city administrations provide an appropriate framework and where cities fulfil the structural prerequisites for the concepts to be executed. However, if these conditions are met, we can do more than just save our inner cities – we can make them better.

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