The "Urban Doom Loop", And The Experiential Advantage

Chicago is becoming a recognized leader in the adaptive reuse of office buildings for residential use. This image is of the 30 N. LaSalle Street building in Chicago, where a proposal to add 432 apartment units to replace vacant offices is being considered. This is one of several projects on LaSalle Street, the heart of Chicago's financial district, that could add more than 1,600 dwelling units to the Loop. Source: archpaper.com 

Let’s talk about the “urban doom loop”.

There were quite a few pundits who believed that the Covid pandemic would be the catalyst for a profound transformation of cities. Work-from-home opportunities will diminish the demand for office space in downtowns, they said. The loss of downtown office workers would cripple the commercial activity designed to serve them, creating even more building vacancies, they said. The low demand for office space will drive commercial property values down, result in declining property taxes, falling tax revenues for cities, worsening public services, rising crime and the outflow of residents – a downward spiral that would doom cities and favor suburbia, or small and midsize cities.

When I wrote on this topic three years ago, in the midst of the pandemic, I quoted an article from curbed.com written by someone who viewed the pandemic as the last straw:

"My reasons were less dramatic: Mostly, I fulfilled a deep desire for outdoor space. My longing to leave preceded the pandemic. I’ve spent the past eight years — since my second child was born — trying to free myself from our below-market-rate, duct-taped-together-but-beautiful fourth floor walk-up in Brooklyn."

Yet I see cities that are bouncing back. Even with remote work becoming engrained in our economy now, people are returning to cities. Cities are exploring ways to adapt vacant downtown commercial space into new housing, transitioning downtowns from job centers to actual complete neighborhoods.

The urban doom loop phenomenon always seemed more like a wish by anti-urban types than an accurate take on the future of cities. There have been short-term impacts on cities related to the pandemic, but I believe cities have leaned in on their assets to weather the change.

In other words, the adaptability and experiential advantage of cities is preventing any doom loop from spiraling out of control.

Recently a piece in the Washington Post indicates the narrative might be changing somewhat. Stijn Van Neiuwerburgh, a professor of real estate and business at New York’s Columbia University, was one of the early proponents of the urban doom loop narrative at the start of the pandemic. But he’s since amended his views to focus more on midsize cities, rather than large ones:

"Midsize cities “have a much bigger chasm to cross than what New York City has to go through. The situation is worse in those places with so little else in place.” He added, “It is a train wreck in slow motion.”"

I think there’s a tacit acknowledgment by Neiuwerburgh that New York is returning to normal, despite its challenges. But in his mind, cities like Indianapolis and St. Louis, or Memphis and Minneapolis, don’t have the amenities and resources to recover in the same way New York does.

Neiuwerburgh, however, misses an important point. Relative to the hinterlands they serve, these midsize cities actually do have more amenities and resources. They’ve learned to capitalize on them.

If there's anything we've learned over the last 30 years of urban rebound, it's that cities maintain an experiential advantage over suburbs and smaller cities. Cities have learned to play the wealth of commercial, social and cultural amenities to their benefit. And yes, even midsized cities have them.

I even questioned this point three years ago:

"In the end, however, we need to ask the question: is this an issue for New York City, or all large U.S. cities? Are we getting the same reports of people fleeing other cities? If so, I'd argue that it's largely relegated to the wealthiest members of a city, like those in Manhattan's Upper East and West Sides."

It’s worth revisiting the quote from curbed.com above. Immediately after saying she wanted out of Brooklyn, she followed up by saying the following:

"I searched endlessly for a place that somehow had all the best parts of New York — the vibrancy, the culture, the walkability, the people, the food. And fewer of the bad parts — the schlep, the expenses, the competition for resources, the competition for everything."

That’s where midsized cities come in. They offer the amenities that are desired by today’s young professional workers, even if they aren’t at the scale of any of the nation’s superstar cities. They remain job centers in their regions, and hybrid remote work means many of those workers will still return to the office sometimes. A city like Milwaukee offers more of these experiential amenities than its suburbs or the smaller cities surrounding it. Midsize cities are able to do so at a fraction of the cost of a New York or San Francisco.

The desire for experience, and not simply utility, has never been greater. I don't see it retreating anytime soon. Pandemic or not, humans are social creatures. We want to interact with each other, share with each other, socialize with each other. It didn't take long for people to identify the homogeneity, stultifying conformity and isolation of post-war suburbia as significant downsides of the lifestyle. It led to the creation of new generations of people who sought more from their living environment.

Which brings me back to viewing downtowns as complete neighborhoods. The new era of remote work may have already created a path to more urban revitalization. It's certainly conceivable that remote work empties out office towers in our downtowns. But it's also possible that those office towers could be remade into more livable spaces -- mixed use structures with residential as well as commercial and office uses. If so, the adaptation could bring more people into even closer proximity to the amenities and experiences they want and add to the housing stock in ways that make our cities much more affordable.

There have been short-term impacts on cities related to COVID-19. But the experiential advantage of cities is their wild card and will continue to contribute to their rebound in the long term.