Decoupling from place? Telework and firm relocation in the Lisbon Metropolitan Area

This paper examines how the adoption of telework reshapes the relocation intentions of single-establishment office-based service SMEs (information/communication and digital services, financial and insurance services, professional/scientific/technical services, and administrative/business-support services) in the Lisbon Metropolitan Area. Structural equation modelling is used to examine the relationships among telework propensity, satisfaction with the current location, and classic relocation drivers. Results show that telework propensity is associated with smaller firms, highly educated management, and ICT-intensive sectors, and is negatively correlated with a preference for agglomeration. Relocation effects associated with telework appear in sectors with greater spatial flexibility, such as architecture, engineering, and design. At the same time, firms in central and dense areas, where car accessibility, parking, green spaces, and affordable rents are harder to achieve, report lower satisfaction with their location. Conversely, higher satisfaction with these attributes – more often associated with peripheral areas – acts as a significant pull factor, thus reducing relocation intentions, as do anchoring factors such as ownership and the age of management. Overall, the results provide conditional support for the hypothesis that, under telework, agglomeration economies become less important, leading to relocation (H1), and strong support for the hypothesis that locational dissatisfaction promotes relocation when agglomeration benefits no longer compensate for it (H2). These findings highlight how telework may reshape office location considerations within the sampled segment of office-based service SMEs, contributing to ongoing efforts to update location theory to reflect contemporary work practices. • Telework reshapes how single-establishment office-based service SMEs evaluate location, reducing reliance on agglomeration economies and enhancing the role of locational satisfaction as a pull factor. • Telework propensity is associated with smaller firms, educated management, and ICT-intensive sectors, and correlates negatively with agglomeration preferences. • Relocation effects associated with telework appear in sectors with greater spatial flexibility, such as architecture, engineering, and design. • Lower satisfaction with car accessibility, parking, neighbourhood quality, and affordability in central areas increases relocation intentions. • Higher satisfaction with these attributes in peripheral areas serves as a pull factor.