The Reason Downtowns Have To Change To Survive

Approximately 25% of office workers are now working remotely, down by half from the height of the pandemic. Hybrid work schedules are by far the most popular with the workforce, and given the exceptional demand for skilled talent, they are likely to get what they want. 

This means that urban downtowns are also going to have to adapt and go hybrid. This means there is an opportunity to turn underutilized office space into housing to reduce the cost crisis while other spaces devoted to parking and moving cars or to permanent installations no longer in demand can be converted both to meet current and future needs as well as revitalize cities. JL

Tracy Loh reports in The Atlantic, image, Entrepreneur.com:

Over half of U.S. workers went remote when the pandemic arrived. That share has declined to 25% today. Surveys and studies have found a majority of workers prefer a hybrid model. Downtowns can go hybrid too. In public spaces that means committing to how cities adapted streets during the pandemic to create more outdoor room, reallocating space from cars to gathering people. Changing land use (means) evaluating zoning, permitting, building codes, tax codes incentives to ease the conversion of obsolete office buildings into things we do need, such as housing, schools, and care facilities. There is also a huge amount of pent-up demand for experiences we want to bring  this activity downtown.

If you’ve stood on the right block in the Golden Triangle district of Washington, D.C., or inside the Loop in Chicago, or in San Francisco’s Financial District at 9 a.m. on any recent weekday, you might have experienced the creepy feeling that you had missed the Rapture and been left behind. America’s downtowns have not recovered from COVID-19, and they won’t—at least not to what they were before the pandemic hit.

For two years, federal dollars have buoyed local governments, transit agencies, and downtown businesses. But as we enter the third year of the pandemic, we can see that more fundamental change is needed. The public and private entities that depend on downtown money are going to need a path to a new normal. This future will require plenty of office workers—but also more residents, shoppers, visitors, tourists, students, and seniors.

People will still work in offices in cities. Though Gallup estimates that just over half of U.S. workers went fully remote when the pandemic first arrived in March 2020, that share has gradually declined to one-quarter today. In the long run, a significant number of these remote workers will remain fully online. However, Gallup’s polling and many other surveys and studies have found that a majority of these workers prefer a hybrid model with some in-person work, and that remote workers’ preferences and productivity vary greatly by sector, age, gender, and race. The share of workers who wish to be fully remote for their entire career is likely small, and this share may further shrink as even more workers return to the office, which may entice more of their colleagues to come back too.

Read: Another truth about remote work

But even though the percentage of workers who will remain fully remote is relatively small, a big majority of office workers will likely be partly remote for the long haul. That has significant implications for employers and cities. Every owner or user of an office building is going to end up either paying the same or more for less usage of space or reconfiguring to use fewer square feet per worker. It’s just a matter of time before every U.S. office market gets in on the trend.

So what should the new office look like? For office buildings, employers and landlords can search for inspiration in all of the “third places” (not home, not the office) where we know people like to do independent work: libraries, campuses, and coffee shops. They can also provide appropriate facilities for convening and collaboration. Workers can acknowledge that employers need them in person for culture building and the sharing of tacit knowledge—the kind of information that is hard to write down in a document or learn from reading, and that boosts collaboration and innovation.

Employers can also provide for workers some of the homelike features that have preserved productivity and supported resilience over the past two years: comfort (e.g., furniture and dress code) and care (e.g., food and personalization). Commercial-real-estate innovators such as WeWork, which have mainstreamed new leasing models and floor plans that make it easy for not just multiple workers but multiple employers to share space, have already figured a lot of this out, and will continue to push the boundaries of what works. And watch for other start-ups to emerge that offer other office-space models that are even more appealing to a wider range of employers in an age of hybrid work. The bottom line is that workers want to get out of their homes, but they absolutely do not want to return to the old office. In a tight labor market, mandating “return to work” in sterile, stale offices will produce costs to recruitment and retention that should be weighed against the costs of modernization.

While employers rethink office buildings on the micro scale, cities and regions need to grapple with how to efficiently use their office-dominated downtowns, which are their most central and easy-to-access places. They also need to consider what to do about the ecosystem of businesses, residents, and infrastructure that depends on hundreds of thousands of people surging into them every day.

America’s downtowns can go hybrid too. In public spaces and rights-of-way, that means fully committing to how cities adapted streets during the pandemic to create more outdoor room, reallocating space from storing and moving cars to gathering people. Changing land use—such as mixing in other kinds of buildings with offices—will take more time and money, but is equally necessary and doable. Cities must get to work evaluating the policy frameworks that guide construction—zoning, permitting, building codes, tax codes and incentives, and more—to ease the conversion of obsolete office buildings into things we do need, such as housing, schools, and care facilities. There is also a huge amount of pent-up demand for things and experiences we want. Concerts are selling out, events and street festivals are packed, and in-person shopping is recovering from its pandemic collapse. Let’s bring all this activity downtown.

Some employers and cities may hope to duck this challenge by mandating a return to the 2019 baseline from their own workforces. Both are reluctant to invest in big, structural policy or capital changes after navigating two years of uncertainty and anticipating more to come. This is a short-term perspective that overlooks that hybrid work was becoming more popular even before the pandemic, and is certainly here to stay now. Avoiding action renders both cities and firms vulnerable to being outmaneuvered by smaller, more agile competitors. And it’s also instinctively off-putting to workers who have experienced trauma and transformation over the past two years, making the idea of “going back” to anything, much less the old office, pretty unappealing.

Read: The most surreal aspect of returning to the office

For cities, hoping to return to the old normal also misses an opportunity to solve multiple problems with one solution. The people and places hurt by the pandemic can help one another recover. Downtowns are incredibly valuable assets that cities can leverage to meet the structural needs of people left behind after federal aid is spent. Bold cities are forging strong downtowns with a more diverse mix of buildings and activities whose prosperity is co-invested with that of the rest of the city. In Chicago, increased development entitlements in downtown areas are linked to neighborhood commercial-corridor revitalization, while Seattle is investing in open-space preservation and New York will use congestion pricing to improve transit. Such reforms can both energize downtowns and expand their moral, political, and geographic relevance far beyond the pandemic era.

After a time of great isolation and division, can we reach for a scenario in which everyone wins? Both businesses and employees, service and essential workers and white-collar ones, and suburbs and cities can benefit from reconnecting downtown. Being present, face-to-face, has value. And downtowns are still the most highly accessible locations in their regions, even after decades of suburbanization. These fundamentals remain strong. Now imagine office buildings and their districts rethought, rearranged, and redeployed in a way that is not just functional, but also delightful, educational, accommodating, and accessible, not just to workers as producers, but to workers as whole people and to their families, including both children and elders. We can all meet there.