Excellent summary of what is happening in CBDs! Thanks, Towgunner.Possibly. Regarding remote working, it goes like this. Central Business District (CBD) office space, i.e. Park Ave Manhattan or downtown SFO, is very expensive. They call it AAA space. Also, the contracts are long-term, nearly a decade or more in some instances. This is a very substantial line item in the balance sheet. Covid revealed to us that conventional technologies make it possible to work, pretty much, from anywhere, this presents an irresistible opportunity for corporate CFOs to minimize this liability. And, in fact, possibly remove it entirely. I've seen a couple of companies that are 100% remote. Even if productivity goes down that can be offset by how much money the company can save, plus, the increase in equity value due to the fatter operating margins.
As it pertains to repurposing latent office space etc, that's a good idea and perhaps that will happen. And perhaps it will reduce or lessen homelessness, heck, even eliminate it. Again, the incentive to not purchase CBD real estate is compelling and, furthermore, even if company's don't go entirely remote they will partially go remote. It only takes one high-value hire that insists to be remote to sway that dynamic. I could see companies using remote as a signing bonus. So, overall physical footprints should go down. Also, if the location is irrelevant, then, why bother with CBD in favor of less expensive CRE outside of the city?
I think CBD and, for that matter, cities are going through a fundamental disruption. The necessity to be in the center of it all isn't there and the money you can save from not being there is even more compelling. You really don't need a massive CRE footprint any longer.
This points towards a disappointing future for cities and I think we're seeing it take shape right now. As remote work entrenches itself fewer commuters will go to the cities. Fewer companies renting office space, fewer people, less tax revenue means more dysfunction and you have a systematic decline. Even if all the homeless find shelter in a once-bustling office building, don't expect it to be pleasant and nice.
Its already a literal hellscape and its only going to get worse.
It is strange that it took this long for the internet to hit "downtown" so hard. People have been able to work remotely for years, but CV forced the situation. Now, the inner CBD decay is real. You can only have so many soy latte shops, especially in proximity to office spaces repurposed for homeless.
Although CBDs seem to get hit hard, does that hit extend to the greater "MSA" Metropolitan Statistical Area? Meaning, if Boston CBD gets hit, are people going to move to suburbia Boston or are they going semi-remote in New Hampshire, or truly remote in western Iowa?? I don't see the last happening.
I know the topic is "Inexorable decline of American cities," but, bluntly, in my region it is the "Inexorable decline of American Rural Life." Inner Urban Rot is real, the cities are in decay, but people keep moving to "the city" (mostly suburbia) and I drive through many dwindling small towns when I'm on the road. I hate this development, but it is real in my region. Suburbia is sprawling, home prices are sky-rocketing there, people know "what parts of the city to avoid," and the drain from small towns is real. It may not be exactly what the "planners" want (bug-burger eaters in high-rises), but it is a hell of a step toward it.
All that said, I do believe the place to be is in red county, red state America. It may not be the best for economic through-put, for now, but it is the best to insulate your loved ones from the POZ. Even in these areas, there is enough through-put for an industrious man to make a decent, maybe even excellent, living.