The Communist Manifesto

• Major retail chains are closing stores, and even prestigious properties are having a hard time retaining tenants.
• The shuttering of a Whole Foods market after only a year in downtown San Francisco in May 2023 received widespread coverage.
• Over more than 50 years of researching urban policy, I have watched U.S. cities go through many booms and busts.
• In my view, traditional downtowns are dead, dying or on life support across the U.S. and elsewhere.

Decades of overbuilding

• Today’s overhang of excess commercial space was years in the making.
• When the economy is booming, individual developers decide to build more – and the collective result of these rational individual decisions is excess buildings.
• In the 1980s, the Reagan administration allowed a quicker depreciation of commercial real estate that effectively lowered tax rates for developers.

The pandemic push

• During pandemic lockdowns, many people worked from home and became comfortable with virtual meetings.
• A range of businesses, including restaurants, retail stores and services, rely on downtown office workers.
• At least 17% of all leisure and hospitality sector jobs are in the downtowns of the 100 largest U.S. cities.
• Now, with nearly 150,000 fewer office workers commuting downtown, about 33,000 people in the service and retail sectors have lost their jobs.

Terminal decline?

• The District of Columbia government projects that city revenues will decline by US$81 million in fiscal year 2024, $183 million in 2025 and $200 million in 2026.
• Washington’s Metropolitan Transit Authority faces a $750 million shortfall because of a sharp decline in ridership.
• Now, traditional downtowns may be in similar terminal decline.

Repurposing office space

• Other options include converting commercial space into residences or more specialized applications such as biotech labs.
• Many office buildings have large internal floor spaces that makes it expensive to divide them into individual residential units that all receive outdoor light.
• The nation no longer needs so much office space.
• The downtown filled with acres of banal office blocks, with accompanying ground-level retail stores and shopping malls, is a relic of the 20th century.