What Happens to Downtown?

[Brainster]

I've been thinking about this for quite awhile and found some discussion of it in the news and in scholarly papers. The Covid year caused many changes in society, notably the work-from-home revolution. Companies are having trouble getting people back to the office full-time, and adjusting by downsizing their office needs. A LOT. If you allow your employees to work from home one day out of five, you can reduce your office size needs by about 20%. Granted, you might have to rotate the days (it can't be Monday or Friday off for everybody every week).

Sounds great for companies that rent a lot of office space, but of course the whole city has been built up based on all those people coming in every day. The ground-floor retailers and restaurants need the lunchtime crowds to pay rent. The transit systems need the daily riders, or they will need more subsidies, just as the city's tax collections start to crater from reduced commercial real estate values and decreased sales taxes.

How bad are things? Consider these stats from a January article:

Retail and restaurant spending in Boston’s Financial District was down 20 to 25 percent last year, compared to 2019. The number of workers showing up downtown remains more than 40 percent below pre-pandemic levels in New York, Philadelphia and Washington. The number of workers showing up in Pittsburgh’s downtown is down by half.

In San Francisco, office space vacancy was officially at about 24.9% as of the end of last year, but that understates the reality, as the space that is occupied is less occupied than usual due to continuing layoffs this year and fewer people working at the office. It also doesn't consider space that is officially leased but will turnover in the next year or so. And this is not some usual recession-induced vacancy; if we actually go into recession soon things will get worse before they get better.

Here's where people will argue that this represents a great opportunity to provide affordable housing by converting office space to residential. Let's just say that they have never looked at the costs. Generally the assumption is that you might as well tear down and rebuild, which means a whole lot of tearing down and not much rebuilding, because there won't be much demand for the space from the young and upwardly mobile, since the trendy bars and restaurants are all gone. Meanwhile city governments will be unable to maintain the level of services with drastically reduced revenues.

 

[lobosrul5]

I've been thinking about this for quite awhile and found some discussion of it in the news and in scholarly papers. The Covid year caused many changes in society, notably the work-from-home revolution. Companies are having trouble getting people back to the office full-time, and adjusting by downsizing their office needs. A LOT. If you allow your employees to work from home one day out of five, you can reduce your office size needs by about 20%. Granted, you might have to rotate the days (it can't be Monday or Friday off for everybody every week).

Sounds great for companies that rent a lot of office space, but of course the whole city has been built up based on all those people coming in every day. The ground-floor retailers and restaurants need the lunchtime crowds to pay rent. The transit systems need the daily riders, or they will need more subsidies, just as the city's tax collections start to crater from reduced commercial real estate values and decreased sales taxes.

How bad are things? Consider these stats from a January article:



In San Francisco, office space vacancy was officially at about 24.9% as of the end of last year, but that understates the reality, as the space that is occupied is less occupied than usual due to continuing layoffs this year and fewer people working at the office. It also doesn't consider space that is officially leased but will turnover in the next year or so. And this is not some usual recession-induced vacancy; if we actually go into recession soon things will get worse before they get better.

Here's where people will argue that this represents a great opportunity to provide affordable housing by converting office space to residential. Let's just say that they have never looked at the costs. Generally the assumption is that you might as well tear down and rebuild, which means a whole lot of tearing down and not much rebuilding, because there won't be much demand for the space from the young and upwardly mobile, since the trendy bars and restaurants are all gone. Meanwhile city governments will be unable to maintain the level of services with drastically reduced revenues.

Given thats its San Francisco and new construction is much more expensive due to earthquake regulations, I have my doubts on that. I bet it would be cheaper to gut the building and put in apartments. But you are likely correct in most parts of the country.

ETA: and if its for cheap homeless shelter could they not say leave in the current plumbing and just put in dorm style rooms? Wouldn't that be better than living on the street? Or is that not acceptable for some reason and they have to put in actual apartments with kichens and bathrooms?

ETA2: in Albuquerque they converted the old Albuquerque HS (built in 1914) to apartments and it was apparently cost effective. But, they may have essentially knocked the building down and just left the facade for all I know. And a 3 story building is not exactly a high rise.

https://en.wikipedia.org/wiki/Old_Albuquerque_High_School

ETA3: the article mentions Highland High... of Beavis and Butthead fame.

 

[Brainster]

Given thats its San Francisco and new construction is much more expensive due to earthquake regulations, I have my doubts on that. I bet it would be cheaper to gut the building and put in apartments. But you are likely correct in most parts of the country.

ETA: and if its for cheap homeless shelter could they not say leave in the current plumbing and just put in dorm style rooms? Wouldn't that be better than living on the street? Or is that not acceptable for some reason and they have to put in actual apartments with kichens and bathrooms?

ETA2: in Albuquerque they converted the old Albuquerque HS (built in 1914) to apartments and it was apparently cost effective. But, they may have essentially knocked the building down and just left the facade for all I know. And a 3 story building is not exactly a high rise.

https://en.wikipedia.org/wiki/Old_Albuquerque_High_School

ETA3: the article mentions Highland High... of Beavis and Butthead fame.

According to a discussion on NPR, one of the big problems is that office buildings have gone to very big floorplans, which makes it difficult to subdivide in a way that all units would have some exposure to natural light (i.e., windows). People are willing to work in a cave, but not live in one. Might not be as much an issue for the homeless, but housing the homeless isn't going to solve the other problems downtowns face and will quite likely bring new problems with it.

 

[dann]

Excerpts:

... The Covid year ...

Lucky you! We have had three so far, and it isn't over yet.

The ground-floor retailers and restaurants need the lunchtime crowds to pay rent.

This is not just a question of commuters staying in the suburbs and working from home. Many people still avoid restaurants and other public indoor spaces even though the pandemic is supposed to be over. Some of us know that it isn't, no matter how desperately restaurants, cafes and travel agencies tell us that it is.

Retail and restaurant spending in Boston’s Financial District was down 20 to 25 percent last year, compared to 2019.

Again: That retail and restaurant spending is down isn't just due to people working from home. Some restaurant owners and entertainment venues expected to start earning money again when things got back to normal, so whenever there's an opportunity (and whenever there isn't), they claim that we are already back to normal. Some people are fooled by that, many people aren't.

Here's where people will argue that this represents a great opportunity to provide affordable housing by converting office space to residential.

The thing about affordable housing is that it's competitive. And the owners of expensive apartment blocks don't like competition. Housing is not supposed to be available to people who don't serve the purpose of making landlords rich. And the tenants don't make those landlords rich if cheaper alternatives are available. It's called capitalism. And it isn't fond of affordable housing.

Let's just say that they have never looked at the costs. Generally the assumption is that you might as well tear down and rebuild, which means a whole lot of tearing down and not much rebuilding

So room for more parks?! Many cities and the people living in them could do with some more of those.

 

[Brainster]

Excerpts:

Lucky you! We have had three so far, and it isn't over yet.

Not gotten the vaccines yet?

So room for more parks?! Many cities and the people living in them could do with some more of those.

A profoundly unserious answer. Keep in mind that many cities are facing major budgetary shortfalls already; where is the money going to come from to tear down the buildings and replace them with parks. And what about mass transit? I've never met an anti-capitalist who wasn't a big proponent. But unless we get people back downtown, mass transit may be doomed.

Here's a good article on the problems facing Public Transit in the Bay Area.

In an apocalyptic vision of Bay Area public transit, BART cancels its weekend service and shutters nine stations just to keep the lights on elsewhere. Trains run once an hour, instead of every 15 minutes. San Francisco’s Muni buses crawl around on life-support, and the East Bay’s AC Transit eliminates “numerous local lines.” Ferry service across the bay is halved.

This is not a doomsday fantasy, conjured up on a paper napkin. These are real scenarios drafted by the region’s transit agencies in a series of federally mandated planning documents obtained through a public records request by the Bay Area News Group. The grim projections come as the region’s commuter trains, buses and boats struggle to recover from massive ridership declines during the COVID pandemic and burn through the remaining federal relief funds that have helped keep them operating.

“People don’t understand the transit system is so close to collapse,” said Ian Griffiths, who heads Seamless Bay Area, a transit advocacy group. “They’re on the brink.”

With ridership way down revenues to the systems are also way down, putting in place a grim scenario where the systems cut back on services while raising price, making it likely that ridership will decline yet further, putting mass transit in a death spiral.

 

[novaphile]

Some restaurants and coffee shops immediately switched to take-away and delivery business models and are doing just fine.

The coffee shop in my former building closed permanently in April 2020. Still vacant.

A local restaurant (near me) decided to switch to a dine-in only model.

(They went broke, and their former building is still vacant.)

Note that the city (Adelaide) has been building masses of apartments, and has a sizable population of residents. But clearly those residents can make coffee and sandwiches at home.

 

[dann]

Not gotten the vaccines yet?

Oh, yes! Don't worry about us in that respect. It didn't really hit the fan until one of the best vaccinated countries at the time decided to tell the population that it had to live with the virus because now we were all vaccinated and Omicron was mild. Besides, since it wasn't airborne face masks were unnecessary. (Kinda ruins the dining-out experience!) That lunacy tripled the death toll.
But all in all, don't worry about us in that respect.

The propaganda was pretty intense: The vaccine was supposed to have made us resilient enough to render the infection harmless; instead of making us sick or even killing us, it was supposed to give us super immunity). A new, rosy dawn was on the horizon.
However, in spite of the attempts to convince us that the pandemic was over and in spite of many people believing the lie, enough people knew (and still know) that it isn't over to make them stay away from cafes, restaurants, pubs and conferences.
After (!) the pandemic: In spite of a rise in tourism, meetings, fairs and conventions still lagging behind (Finans, Aug 1, 2022). You can fool some of the people some of the time etc.

A profoundly unserious answer. Keep in mind that many cities are facing major budgetary shortfalls already; where is the money going to come from to tear down the buildings and replace them with parks. And what about mass transit? I've never met an anti-capitalist who wasn't a big proponent. But unless we get people back downtown, mass transit may be doomed.

A profoundly unserious answer because it wouldn't be a problem if the pandemic was actually over. That would be the way to "get people back downtown." You need to address the real problem instead of pretending that it isn't there anymore.
It isn't as if people all of a sudden lost interest in eating out or going to the movies etc. But it is obvious that pretending that the pandemic is over isn't nearly as good as the real thing. You may have been fooled, cf. "The Covid year" from the OP, but enough people didn't believe the lie, and now they're on to you. A formal declaration that it's over won't make much of a difference. At this point, only the dimwitted will be fooled a second time, and many of the dimwitted are already dead or suffering from sequelae, which also tends to make them stay at home rather than go to the pub.

Here's a good article on the problems facing Public Transit in the Bay Area.

With ridership way down revenues to the systems are also way down, putting in place a grim scenario where the systems cut back on services while raising price, making it likely that ridership will decline yet further, putting mass transit in a death spiral.

Indeed. So stop pretending that the pandemic is over and start taking it seriously.

 

[Dr. Keith]

I am a part of the problem. Between work and family, I spent close to a thousand dollars a week on average at restaurants in my area through the pandemic, but left for the country when it became possible.

The reasons were many, but the main reason I don’t eat out now is exactly what dann is talking about. I was just sick for close to three weeks despite being fully vaxed and being careful. No steak is worth that.

 

[The Atheist]

I've been thinking about this for quite awhile and found some discussion of it in the news and in scholarly papers. The Covid year caused many changes in society, notably the work-from-home revolution. Companies are having trouble getting people back to the office full-time, and adjusting by downsizing their office needs. A LOT. If you allow your employees to work from home one day out of five, you can reduce your office size needs by about 20%. Granted, you might have to rotate the days (it can't be Monday or Friday off for everybody every week).

The other problem is the downturn in productivity, and people have been suckered into thinking it's not happening.

This study is used as the benchmark to show working from home is more productive, but given the survey is self-reported and the people know they're being monitored, I believe the whole survey is bogus.

The reality of companies who have allowed working from home is the exact opposite of what the BoL says.

 

[dann]

Yes, nothing improves productivity more than getting staff and customers infected, spreading the virus with wild abandon! Everybody knows that, don't they?!

 

[Steve]

Worked in a downtown office for years, with one day per week working from home. The beginnings of the pandemic and related (temporary) closing of our office was the deciding factor in my long-considered retirement. So the pandemic caused my both my personal productivity for my firm, and my contributions to the downtown economy, to plummet instantly to zero.

 

[The Atheist]

Yes, nothing improves productivity more than getting staff and customers infected, spreading the virus with wild abandon! Everybody knows that, don't they?!

Hey, great point! Everyone should lock themselves in their houses and never go out. No viruses, and screw the economy and jobs.

Brilliant!

The funniest thing about lockdown-work-from-home johnnies is they're elitist wankers. The guy building your roads can't work from home, nor the bloke picking up your rubbish, pumping your gas, or working in hospital. Firemen can't put your fire out from their home office, and I'm sure crooks would be really concerned about getting caught by a cop sitting in his lounge.

 

[The Atheist]

Worked in a downtown office for years, with one day per week working from home. The beginnings of the pandemic and related (temporary) closing of our office was the deciding factor in my long-considered retirement. So the pandemic caused my both my personal productivity for my firm, and my contributions to the downtown economy, to plummet instantly to zero.

You and a couple of million others: https://www.usatoday.com/story/mone...e-millennials-gen-x-bank-america/11436716002/

As Brainster noted in the OP, a sudden change like this creates massive shortages of revenue for cities and local authorities. That will come back in the form of increased rates and inflation.

No big deal.

 

[FatherLukeduke]

The funniest thing about lockdown-work-from-home johnnies is they're elitist wankers. The guy building your roads can't work from home, nor the bloke picking up your rubbish, pumping your gas, or working in hospital. Firemen can't put your fire out from their home office, and I'm sure crooks would be really concerned about getting caught by a cop sitting in his lounge.

Not to mention the factories all full of workers churning along to stop civilisation collapsing. As one of the "laptop class" (or elitist wanker, as you put it) I cheered on the lock-downs at the time. I got to sit at home writing code, while the non-laptop classes toiled away in factories, kitchens and warehouses making and distributing the nice things I like. While another class scooted around on mopeds delivering the said things right to my door.

Now I think they were a massive mistake. Not only because we collectively spent trillions on them (money that could have solved so many other problems), but that I'm sceptical they even did anything to the overall death rate. In the west 43% of those who died were in care homes, so in terms of protecting the most vulnerable it was a disaster.

But it's not just the money, I think we've affected our economies and societies in profound ways that we are only just starting to realise. My wife is a vice-principal in a inner-city school, and she says that the social contract between pupils, families and the school has been significantly damaged. Behaviour is poorer and absenteeism (not due to illness) is way up - a picture supported by data nationally across the UK.

One of these profound affects has been on our city centres, many of which feel like they are in a death spiral - people just stopped going into them during lockdowns and haven't got the habit back. I'm not even sure what can be done.

 

[Suddenly]

I've been thinking about this for quite awhile and found some discussion of it in the news and in scholarly papers. The Covid year caused many changes in society, notably the work-from-home revolution. Companies are having trouble getting people back to the office full-time, and adjusting by downsizing their office needs. A LOT. If you allow your employees to work from home one day out of five, you can reduce your office size needs by about 20%. Granted, you might have to rotate the days (it can't be Monday or Friday off for everybody every week).

Sounds great for companies that rent a lot of office space, but of course the whole city has been built up based on all those people coming in every day. The ground-floor retailers and restaurants need the lunchtime crowds to pay rent. The transit systems need the daily riders, or they will need more subsidies, just as the city's tax collections start to crater from reduced commercial real estate values and decreased sales taxes.

(looks around my rust belt factory town that has literally had movies filmed in it because it looks like 1978)

Maybe they need to adapt rather than whine about change.

This hand-wringing is about the worry property values will drop and way too many extremely rich people have been investing / hiding money in urban real estate because of all the loopholes and gains it offers.


Unless I miss my guess any increased media hand-wringing over work from home policies will leave a trail of breadcrumbs back to those holding tons of urban real estate. It smells way too much like manufactured media concern. Like the absurd shoplifting pieces from a few years ago. Likely some of those consultants that like to claim the NCAA tournament costs offices billions every year in lost productivity will get in on it.

 

[Myriad]

Yes, nothing improves productivity more than getting staff and customers infected, spreading the virus with wild abandon! Everybody knows that, don't they?!

During lockdown a hefty portion of those displaced office workers were bringing their entire families to the Lowe's where my wife worked (open because it sells essential items). It was great for them to get out of their crowded McMansions for some climate-controlled indoor recreation, letting the kids use the aisles as race courses and the shelves as jungle gyms while they gawked at "essential" floor tiles and patio furniture. Good thing there wasn't any staff or (actual) customers there to get infected.

 

[Steve]

During lockdown a hefty portion of those displaced office workers were bringing their entire families to the Lowe's where my wife worked (open because it sells essential items). It was great for them to get out of their crowded McMansions for some climate-controlled indoor recreation, letting the kids use the aisles as race courses and the shelves as jungle gyms while they gawked at "essential" floor tiles and patio furniture. Good thing there wasn't any staff or (actual) customers there to get infected.

Never met an actual office worker, have you?

 

[Myriad]

Never met an actual office worker, have you?

Middle managers and executives don't work in offices?

 

[Steve]

Middle managers and executives don't work in offices?

They would be a minority of office workers, yes. If you meant "displaced highly paid managers" that is what you should have written.

 

[The Atheist]

... the "laptop class" (or elitist wanker, as you put it) I cheered on the lock-downs at the time...

Just to put that comment into context, I'm firmly one of the elitist wankers, and so much so that I got to sit in my nice, warm, disease-free house while I told people to go and work in factories producing the food and goods that kept me and mine in our house.

I can't say I enjoyed the experience.

Now I think they were a massive mistake. Not only because we collectively spent trillions on them (money that could have solved so many other problems), but that I'm sceptical they even did anything to the overall death rate. In the west 43% of those who died were in care homes, so in terms of protecting the most vulnerable it was a disaster.

I agree the lockdowns didn't have a major affect on deaths, but what it did do was smooth out the gigantic surge that would have happened if we hadn't had them.

I think that with the infectiousness of covid, we'd have seen a near-total shutdown of all services due to the number of people sick. No hospitals, no cops, no food. That could have turned out pretty badly.

But it's not just the money, I think we've affected our economies and societies in profound ways that we are only just starting to realise. My wife is a vice-principal in a inner-city school, and she says that the social contract between pupils, families and the school has been significantly damaged. Behaviour is poorer and absenteeism (not due to illness) is way up - a picture supported by data nationally across the UK.

Ditto NZ - absenteeism is the highest ever. We look like having lost a generation of kids. That\ll be positive for the future, for sure.

There wasn't really an answer, though. Teachers are an older demographic and the number who croaked in USA is a guide that not closing may have been worse.

I'm happy to blame the parents.

One of these profound affects has been on our city centres, many of which feel like they are in a death spiral - people just stopped going into them during lockdowns and haven't got the habit back. I'm not even sure what can be done.

I think it may well be terminal.

Unless I miss my guess any increased media hand-wringing over work from home policies will leave a trail of breadcrumbs back to those holding tons of urban real estate. It smells way too much like manufactured media concern.

Think it through, and leave out the bias against the rich for a moment.

Inner-city businesses create a massive amount of tax and property rates.

If that disappears, you'll be paying the difference.