The delta wave of COVID-19 has delayed many cities’ and companies’ grand reopening plans. However, an expert in urbanism claims canceled is a more apt description of what has happened.
“Large, transit-dependent central business districts” are being hammered by a “reluctance among commuters to ride public conveyances,” wrote Joel Kotkin, executive director of the Urban Reform Institute, in the American Mind magazine.
And this isn’t simply an American thing. “This is a worldwide phenomenon — occurring in New York, Hong Kong, Paris, London, and other financial centers — and accompanied by a marked decline in business travel, with conventions and meetings particularly devastated,” Kotkin said.
The longer this goes on, the deeper the likely long-term effects are, Kotkin argued. He pointed out that the current office vacancy rate is over 16%, about where it was during the last financial crisis. And the vacancies are growing, not shrinking, as of August.
Moreover, with remote work on the rise, many workers are picking up and moving, making it harder for managers to reel them back into offices later.
“The shift towards dispersed and remote work suggests the beginnings of a new geographical and corporate paradigm. … With the rise of remote work, proximity to the physical workplace has lost more of its advantages,” Kotkin wrote.
The Washington Examiner asked several experts on urbanism if he is right about that. Has COVID-19 deepened remote work to the point where it looks like it will be closer to the norm in the future? And, if so, will this hollow out the downtown areas and business districts of many cities?
The experts who replied said the situation cities face right now is serious but not insurmountable.
Michael Hendrix, director of state and local policy at the Manhattan Institute, told the Washington Examiner, “Cities can no longer take growth for granted when workers can vote with their feet.”
Hendrix added, “The share of remote workers quadrupled during the pandemic, according to one estimate” by the National Bureau of Economic Research.
“The OPTION of working remotely will be the norm for many workers. Skilled workers want flexible schedules, and in a tight labor market, they’re more likely to get what they want than at any time since the Great Recession,” Hendrix said.
This geographic flexibility is great for tech workers and lousy for many service workers.
“Fewer workers in downtown and midtown Manhattan means less need for Subway sandwich makers and shoeshiners,” he said. “According to economist Enrico Moretti, each new high-tech job in the U.S. creates five additional jobs in the service economy. The multiplier of innovation jobs has an outsized impact for good when they’re growing and the opposite effect when they’re shrinking.”
This dynamic can be seen in low-tech Washington, D.C., as well. “The city lost a net of nearly 19,000 households to moves in 2020, according to U.S. Postal Service permanent change-of-address data. That was more than every state in the U.S. except California, New York, Illinois, and Massachusetts,” the Wall Street Journal reported.
As for where the long-term effects of COVID-19 will leave most cities, Hendrix predicted, “Downtowns will bounce back — the only questions are when and what they will look like.”
Greg Brooks, president of the Better Cities Project think tank, had some ideas about what they might look like, as well as a few words of advice for city planners grappling with the recent structural changes in the economy.
“Downtowns may lose office dwellers in some quantity, but downtown is still generally vibrant and a center of entertainment, arts, and cultural activity in any major city. That’s not likely to change. If anything, the freed-up commercial space offers some additional opportunities,” he told the Washington Examiner.
Brooks added that commercial-residential use rules could become a stumbling block in some cities.
“Commercial buildings that are under a mortgage are virtually impossible to change to residential use,” he said. “However, a lot of these buildings are wholly owned — or may be wholly owned after going through a bankruptcy process. To the extent that a city can make it as painless as possible to convert high-density commercial into high-density residential, they’re solving two problems at once.”
Brooks predicted that if city policies will “allow for flexible repurposing of these buildings, the market absolutely will find high-value uses for them.”
He also warned, “The worst thing that could happen is for this to become an excuse for billions of dollars in economic development subsidies. We shouldn’t build a crony capitalism empire on top of one of the biggest workforce shifts in decades.”
