Why US City Downtowns Are Seeing A Revival of Office Workers, Residents, Tourists

Despite reports of their decline - increasingly viewed as premature and even inaccurate - many urban downtowns in the US are reviving, with a significant number having surpassed pre-pandemic levels of residents and visitors. 

Office occupancy is at 65-75% of pre-Covid levels but residents and visitors have flocked back to cities because they offer entertainment, fine dining, excitement - and people watching. Even those cities considered laggards like San Francisco and Portland, Oregon are seeing improvement. These data suggest that cities will remain attractive venues for young adults, retirees and tourists for the foreseeable future. JL 

Richard Florida reports in Bloomberg:

America’s downtowns are home to more residents than before the pandemic - 111% of pre-Covid levels. 25 of  26 downtowns have more residents than in early 2020. Office activity is higher, at 65% of pre-pandemic levels. San Antonio, Nashville, San Diego, and Midtown Manhattan have 75% of  pre-Covid levels. Visitors are the driving force of America’s downtown rebound, filling restaurants, museums, art galleries, concerts and sports venues. On average, visitors downtown comprise a 62% share, compared to 11% for residents and 27% for office workers. 16 downtowns, including Philadelphia, Manhattan, Los Angeles, Boston and Seattle have rebounded to 75% of 2020 levels. San Francisco, Washington, DC, Portland and Denver have recovered to 70% of pre-pandemic levels.

After struggling in the wake of the Covid pandemic, downtowns across America are turning a corner. Even though workers have been slow to return and office vacancy remains high, residents have surged back and visitors and tourists have helped to fill much of the gap.

Those are the key takeaways of a new study of 26 of America’s largest downtowns by Paul Levy and his team at Philadelphia’s Center City District. It tracks downtown recovery patterns from the second quarter of 2019 before the pandemic struck to the second quarter of 2023. Using detailed cell phone tracking data from Placer.ai, it charts downtown activity patterns for three key groups: non-resident workers who commute to work in downtown, residents who live downtown and visitors who travel downtown to enjoy cultural and entertainment amenities.

Downtown Offices are Seeing Modest Recovery

Offices in downtowns across the nation have struggled to recover. Kastle’s often-cited back-to-work barometer continues to peg office occupancy at roughly half of what it was before the pandemic, relying on key-card data from a subset of office buildings within the metro areas they track.

 

But this new analysis finds that office activity is significantly higher, at roughly 65% of pre-pandemic levels. Several downtowns — San Antonio, Nashville, San Diego, and perhaps surprisingly, Midtown Manhattan — have recovered to more than 75% of their pre-Covid levels. San Francisco, Portland and Denver continue to lag with roughly half the level of non-resident workers they had before the pandemic.

More Residents Than Before

When the pandemic struck, the media was rife with reports of a mass exodus of urbanites forever fleeing downtown neighborhoods for the safety and space of outlying areas. Three years later, America’s downtowns are home to more residents than before the pandemic, having recovered to 111% of pre-Covid levels. Indeed, 25 of the 26 downtowns studied have more residents today than in early 2020.

Interestingly, Portland has the highest rate of residential recovery, despite lagging on return-to-work and its much-publicized struggles with homelessness and urban disorder. San Francisco, Chicago, Washington, DC, Seattle, Denver, and both of New York City’s downtowns all are home to more residents today than in 2019.

Visitors Drive Recovery

It’s not residents or workers, but visitors who are the driving force of America’s downtown rebound, filling restaurants and bars, museums and art galleries, concerts and sports venues. On an average day, the vast majority of people downtown are visitors, comprising a 62% share. Compare that to 11% for residents and 27% for office workers.

 

Nashville tops the list on this score with more downtown visitors than before the pandemic. Two other downtowns have visitor levels that exceed 90% of pre-pandemic levels, and 18 others had visitor levels that were 75% or more above their early 2020 baseline. Just San Francisco and Portland, had visitor rates that were below 70% of what they were three years ago.

The study breaks down visitors by location, identifying people who come downtown from outside versus inside the local region. San Diego has as many local visitors to its downtown as it did before the pandemic, while an additional 16 have bounced back to 80% or more of 2020 levels. San Francisco was the least-recovered downtown by this metric, with local visitors at 71% of pre-pandemic levels.

When it comes to visitors and tourists coming from elsewhere, Nashville performs the best, at 117% of its pre-pandemic level. Phoenix and San Jose also have more outside visitors than before the pandemic. A dozen or so downtowns have bounced back to 80% or more of their 2020 levels, while Portland and San Francisco again lag.

The Next Downtown

Putting together visitors, residents and workers, the report suggests the future of America’s downtowns looks much better than the doom that colors too much of the conversation. Nashville is fully back to where it was before the pandemic. San Jose and San Diego are at 90% of pre-pandemic levels. And 16 downtowns more, including Philadelphia, Midtown Manhattan, Los Angeles, Boston and Seattle have rebounded to 75% or more of 2020 levels. Even the downtowns that have lagged the most — San Francisco, Washington, DC, Portland and Denver — have recovered to around 70% of pre-pandemic levels.

The downtown recovery is far from complete. Much more needs to be done to ensure America’s downtowns survive and thrive, and challenges like repurposing office space may not be easy.

 

But as the report shows, visitors are key. They drive more downtown foot traffic than residents and workers combined, and their role will continue to grow. To bring more people in, downtowns must up their game with more and better attractions. “They have been living off of their laurels and too many of the attractions downtown leaders have seen as strong and unique have in fact lost their luster and a significant amount of their magnetism,” writes downtown guru David Milder in a recent report.

Once given up for dead, downtowns across America are recovering and changing. Among the most resilient of urban neighborhoods, they have evolved and changed countless times over the past century, surviving the economic collapse of the Great Depression, deindustrialization, mass suburbanization, the urban economic and fiscal crises of the 1970s and 1980s and more.

It’s a huge mistake to equate downtowns with offices and office workers — they are so much more. Occupying the most central locations with the best transportation connections and the greatest density of entertainment amenities, they are morphing into centers of experiences and social connection much more so than outmoded central business districts. Rather than kill off these districts, the pandemic has accelerated their ongoing evolution into more vibrant mixed-used neighborhoods as residents and especially visitors are coming to fill the gap left by the decline of office work.