America’s Downtowns Are Empty. Fixing Them Will Be Expensive.

[Midpack]

Just an informative article on a phenomenon we’re all aware of. I’ve been wondering if I should hold on to my REIT fund, but I suspect this is already baked in.

We had dinner with some Chicago friends last night who just went to San Francisco. They said it’s much the same down near the piers but downtown is shockingly different in a bad way - they don’t plan to visit SF ever again…

https://apple.news/A8amOSIHzS4KVvR-fQJMJLw

Stores, fast-food spots, bakeries and barber shops lined the covered, temperature-controlled walkways, which linked new glass skyscrapers sprouting one after the next. Workers racing to cubicles in the morning kept to the right to avoid crashing into each other, recalled convenience store clerk Monica Bray.

Bray sees only a trickle of passersby these days and lots of empty storefronts. Downtown streets also are quiet, leaving plenty of room for homeless people, police and the occasional tourist. “It’s spooky,” she said.***

For decades, downtown office districts across the U.S. powered local economies, generating commerce, tax revenue and an aggregation of ambition, talent and disposable income. Many cities riddled with half-empty office buildings hope to survive the new remote-work era without bulldozing swaths of downtown and starting from scratch.

Experts say American downtowns instead face the biggest urban makeover in 50 years. Even optimists estimate it will take years and cost billions to complete the large-scale changes to usher central-city office districts into a new role—busy neighborhoods where people live, work, raise families and find entertainment.

 

[DrRoy]

There has been a lot of improvement in parts of downtown Detroit since the bankruptcy. Still, we went to an Eagles concert at Little Caesars Arena, and because of the volume of people, even at 5:30, we struggled to find a place to eat dinner within walking distance. In Hartford, CT a couple years ago, on just a random day there we found very few restaurants near our downtown hotel.

 

[MarieIG]

My REIT fund just took a nosedive. It was not unexpected due to the issues commercial real estate is facing - including office buildings. I would not be surprised to see it fall further. The question for me is whether there will be a re-entry point sometime down the road - and if so when.

 

[Fermion]

This is part of the reason we don't do downtown Seattle as often as we once did:

 

[Midpack]

This is part of the reason we don't do downtown Seattle as often as we once did:

The YouTube videos I've seen from downtown Portland are scary. Along with the homeless, shoplifters who don't make any attempt to hide their thefts are a daily occurrence. I read an article where a shopkeeper said one of the shoplifters with arms full of merch, said "I'll see you tomorrow" on the way out the door. Merchants have just closed shop...as their hands are somewhat tied.

 

[38Chevy454]

It's a self fulfilling prophesy. Proliferation of crime, don't prosecute that crime, let homeless take over, lax drug enforcement, lack of support for the police, and politicians that won't help. Does anyone actually think a different result is going to happen?

 

[Midpack]

It's a self fulfilling prophesy. Proliferation of crime, don't prosecute that crime, let homeless take over, lax drug enforcement, lack of support for the police, and politicians that won't help. Does anyone actually think a different result is going to happen?

Totally agree. The question to me is why (some) cities are letting this happen? Hopefully other cities, seeing what's happening in Portland, San Fran, Seattle etc., will be pro-active? Shouldn't be partisan in any way (he says naively)...

 

[Fermion]

Even our small town in Washington addressed the problem in a bad way (I guess). We had a few run down RVs which would park on the streets near the main park for days or weeks. The city fenced in and graveled a 1/2 acre area just on the side of town and established it as the place to go for these with a stated maximum of three weeks. The area is now full, maybe 60 RVs and tents and I have noticed many of them have not moved for over a year.

I don't think it worked the way they wanted.

 

[Gumby]

...In Hartford, CT a couple years ago, on just a random day there we found very few restaurants near our downtown hotel.

Hartford started emptying out in the 90s and has long been largely a ghost town. If it weren't for the state government being there, it probably would be totally empty. It is one of the poorest cities in the country with more than 100k people. https://worldpopulationreview.com/us-city-rankings/poorest-cities-in-america

 

[Closet_Gamer]

I was in NYC recently. I saw three turn style jumpers in four stops. I'd never seen that level of fare theft before. It was clearly totally routine. No one even blinked.

The area around my city office is a shambles. Used to be super vibrant and quite safe. The commuters kept everything humming. No longer. Between people just not coming in, unaffordable prices for food, and it simply being upleasant to steer around people passed out on the sidewalk (literally), I don't see how they turn it around quickly.

And the hit to the tax base is huge. The city is using its tax powers on commuters to hold it together, but at some point people will simply decline to work in the city.

 

[Time2]

In our 34k population city, downtown was about dead and then in 2018 we had hurricane Micheal, destroying our local Mall.
Since then, there has been redevelopment of the downtown. [-]Government[/-] Taxpayer money has gone into sidewalk and road reconstruction.
We will have to wait and see if it all pays off. Mall was about 2.5 miles from downtown.

 

[Sunset]

It's interesting how in the past and still, one can hear talk about the Urban sprawl of suburbs and how suburbs are bad for the environment.

Yet, during Covid folks fled the Cities to get more space... and now the thought of being cramped up with others doesn't seem so appealing.

Besides Covid isn't gone, people are to some degree ignoring it, but the idea of being on a commuter train car with 80 other people daily would really turn me off..

 

[COcheesehead]

We were in our smallish, 65,000 population, downtown yesterday. It was busy. It’s homecoming weekend at the local college. I don’t think there is one vacant storefront - all local businesses. We left the big city three years ago and from what our friends that live there tell us, it’s only gotten worse.
We still have an arts and music scene. Good dining and I can park almost right in front of our favorite spots. We miss nothing of big urban living.
Yes, we have homeless folks. I don’t think a town with any size doesn’t. No one really seems to have that one figured out. Our police don’t seem to put up with much. There was a tent that appeared in a ravine near us. The police showed up and took it down.

 

[Lsbcal]

Totally agree. The question to me is why (some) cities are letting this happen? Hopefully other cities, seeing what's happening in Portland, San Fran, Seattle etc., will be pro-active? Shouldn't be partisan in any way (he says naively)...

Many big cities with big problems. I am hopeful that the political winds will shift. Not expecting agreement as this controversy is too useful a way to get votes but possibly a move towards a centrist view?

Our city is north of SF. We have only gone into SF for the museums located in parks. Just attended a talk by our police chief who discussed among other things getting RV's off the streets. The city has built tiny house accommodations to get transients off the streets. Lots of drug related crime.

Some of the laws are state related and will have to be addressed at that level. I agree with others that responsible citizen attitudes need to change.

 

[friar1610]

Hartford started emptying out in the 90s and has long been largely a ghost town. If it weren't for the state government being there, it probably would be totally empty. It is one of the poorest cities in the country with more than 100k people. https://worldpopulationreview.com/us-city-rankings/poorest-cities-in-america

I grew up in a town not far from Hartford and my father worked in the downtown Hartford area. I don’t know how much of it was just being young and impressionable, but it always seemed to me that Hartford was a decent city with a vibrant downtown shopping district. When I went to college in Rhode Island in the mid-1960s, downtown Providence struck me as the lesser of the two cities by far. Fast forward all these years and Providence has come a long way - a foodie destination, a great regional theatre, major development, nice hotels, etc. I haven’t been to Hartford in many years but most of what I’ve read has been negative. Providence, which I’ve been to a few times annually, is treated much more favorably in travel articles.

 

[Chuckanut]

This is part of the reason we don't do downtown Seattle as often as we once did:

Seven seats on the Seattle city council are up for grabs in the next election. We will see whom they elect. Their choices will send a message as to what the citizens want. In particular this election will send a message to potential new police officers. They've lost 600 officers since 2020.

The city’s police staffing crisis, now in its third year, has resulted in only 937 police officers available for deployment in the city as of August 31, 2023, the lowest number of in-service officers since 1991 and significantly below per-capita staffing relative to similarly situated jurisdictions,” the 2024 mayoral budget proposal read.

What I also find odd is that the council is majority women (six out of nine members), yet, it's women who express the most fear and concern about the increasing number of homeless drug addicts who populate the streets and hang out on mass transit vehicles.


I really do hope that the local and state elected officials can get a handle on this problem.

 

[Markola]

There is no way I would live downtown. My small, Midwestern city is a tolerant, educated, high tax/high service metro, with lots of amenities that we pay good money for, which I no longer want to use, because they are a classic Tragedy of the Commons.

I’ve visited SF, LA, Portland and Seattle and I see exactly where this trend goes for my own town. We’re trying a new rent control measure, universal basic income and rent subsidies for families with children.

It is not attractive to live downtown and now the offices are mostly vacant, which is just sad.

 

[Midpack]

We very seriously considered moving into a downtown city in retirement, thought a highly walkable community would be ideal. Thank goodness we didn’t go that route!

 

[jazz4cash]

It’s very sad but I am optimistic. We probably are not at rock bottom, though. It’ll take a generation or more to resolve these issues so I won’t be around. Also, there are many, many infrastructure systems that have been neglected.

 

[MC Rider]

We don't have a downtown. It's not big enough for that. Not very walkable. Suits me.

 

[FlaGator]

After extensive work travel to NYC (90's) and SF (2008-12), I fell in love with those places. Big step for a guy from AZ with a modest background. Perhaps a sign of how interesting and vibrant they were then. Also spent time in the LA area and downtown Chicago.

Today, I'd rather drive to Dothan AL for the annual Peanut Festival than get on a plane to go to any of them. Stunning what the local political leadership has allowed them to become.

Glad I was there when things were safe and interesting. Hope they get back to that point again while I'm still interested and able to return.

 

[oiseux]

The 9 western states are somewhat limited by the 2018 Martin vs. Boise ruling, which prohibits governments from enforcing outdoor camping rules on public land unless a shelter bed is available. Very few cities are testing the limits. In California, there are a litany of laws that make it difficult to compel people to accept treatment for mental and substance abuse issues, this is a significant portion of those on the streets. Those without major issues, families, women and children and others have priority on available services (and are able to use them effectively).

Pioneer Square is in a terrible way -- I went to a meeting in an office right above the worst of it --- the constant scream of sirens made a lasting impression. Other parts of the city are less impacted, but the downtown core definitely shut down early relative to the past. San Francisco's once great retail core has been greatly impacted, with a mall completely existing and major retailers closing their doors.

 

[LateToFIRE]

I spent 40 years living and working in NYC and have seen its fortunes rise and fall multiple times. When I arrived in the 80's it was bad, but to my youthful eyes, it was also glittering and exciting and full of opportunity. Today's New York is vastly more civilized now - almost unrecognizably so compared to those early days. And it remains quite viable as a place to live and work - of course your mileage is going to vary greatly depending on your neighborhood and financial wherewithal. It remains, and has always been, a difficult place to survive on multiple levels, especially if you are not well-prepared, well-funded, and skilled at navigating it. You need to be highly motivated to put up with it - but it will pay you back in terms of creative and commercial energy and opportunity (if it doesn't eat you alive). As a landlord with property in NYC, I can tell you there is no lack of well-heeled, trust-funded, tech-finance-employed youngsters seeking their fortunes and building their lives in the city. What is telling is that even the work-from-anywhere types are still drawn to city-living. Many who left, have been returning in droves even with kids in tow - apparently suburbia was not all it was cracked up to be for many. I'm charging more rent than I ever have being fortunate to own in one of the most desirable residential parts of the city.

Am I worried about the future of commercial office space in NYC? Absolutely! Most of the larger buildings are not well-suited to housing conversion or mixed uses. And I think at least hybrid work is here to stay as a trend. Am I worried about NYC? I've always been worried about NYC, now no more than past predictions of its imminent demise.

 

[HawkeyeNFO]

DC office space is mostly leased by the gov't to provide offices for the federal workers and contractors. The mayor was on the bandwagon in 2020 telling everyone to stay home, and out of the office. Well today, only about half of the workers are in the office any given day, and now the mayor is begging Joe Biden to force everyone back to work, because the tax revenue from restaurants, bars, etc. has dried up. That's in addition to all the increased crime, especially carjackings. Even members of Congress have been assaulted and carjacked in 2023.

I used to enjoy going into the district up until recently.

 

[Chuckanut]

FWIW, according to an article in today’s WSJ, many office building are not suitable to be converted into housing. It seems that people want windows in most of their rooms, especially bedroom, and these buildings don’t offer much opportunity to put a window in nearly every room. They have the square footage, but are too wide to allow many windows.