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Breaking the ‘urban doom loop’: The future of downtowns is shared prosperity

In 2019, the skylines of many American downtowns were sparkling with new construction. Hudson Yards in New York, the Frost Tower in San Antonio, San Francisco’s Salesforce Tower, the futuristic Amazon Spheres and surrounding towers in Seattle, and thousands of other buildings were all part of the more than 100 million square feet of new office space built in the United States just before the onset of the COVID-19 pandemic.1 Demand for cities seemed stronger than ever.

Flash forward four years. By now, COVID-19 has claimed the lives of over 1 million Americans and raised new questions about another potential casualty: Is the pandemic, particularly its impact on the nature of work, taking down the American city? Nowhere is this fear more pronounced than in the nation’s “superstar” cities and their shiny downtowns.

This specter of an office real estate apocalypse, “urban doom loop,” transit death spiral, or “ghost towns” is filling some urban observers with existential dread. So too are reports of rising crime and unsheltered homelessness in downtowns. However, this fear is not new, nor is it destiny.

But this dread should prompt public and private sector leaders to reassess. In fact, they have an opportunity to seize this moment to chart a new future for American cities—one that reimagines downtowns as prosperous and inclusive places that advance shared prosperity across all neighborhoods.

A group of public and private sector leaders in some of the nation’s largest cities—New York, Chicago, Philadelphia, and Seattle—have come together at Brookings Metro to do just this. These leaders were at the forefront of inclusive growth before the pandemic, and are now working with Brookings Metro and each other to identify policy, practice, and governance solutions that can be the seeds for the next generation of shared prosperity in downtowns, cities, and regions.

Ghost-town downtowns: An old narrative with a new twist

Only a generation ago, white flight and suburban sprawl left many cities as partial ghost towns. Anti-city rhetoric around “blight” and “inner-city crime” was used to justify the most negative aspects of urban renewal and, later, the war on drugs, which had significant consequences for the economic and social fabric of American cities. Suburbanization spread the fruits of growth out over more land area and jurisdictions, while public and private sector abandonment of center cities both concentrated poverty and increased the overall cost of services—weakening city and regional economies and exacerbating racial and economic segregation.

The villainization of American city centers began to reverse in the early 2000s, as highly educated young workers and some employers returned, lured by proximity to jobs, amenities, walkability, and a sense of place that downtowns offered. For instance, in 35 of the top 45 U.S. downtowns by job count, the share of the regional population living in the commercial core (Table 1, Columns 5 and 6) grew between 2000 and 2020. And in a select few downtowns, regional job market share grew between 2011 and 2019 (Table 1, Columns 2 and 3), with Boston leading the pack.

Notes
CC = commercial core, AC = Activity Center

Data sources
2019 U.S. Census Bureau Longitudinal Employer-Household Dynamics (LEHD) Origin-Destination Employment Statistics (LODES), available online.
2020 U.S. Census

The urban “downtown resurgence” of the 21st century provided a new boost for urban cores that had been in decline, but it also created economic cleavages within cities and regions. In cities across geographic and economic spectrums—from Chattanooga, Tenn. to Detroit—subsidized development downtown ushered in newcomers while other (often predominantly Black and Latino or Hispanic) neighborhoods continued to lack basic amenities like grocery stores. At the same time, suburban poverty rates climbed. While not an entirely new phenomenon, on the eve of the COVID-19 pandemic, there was a public consensus in cities that the benefits of downtown growth weren’t extending to many other parts of the city and region.

Chicago: “The most obvious challenge that Chicago has struggled with—and has such a reputation for—is the segregation. Literally being able to draw the line from north and south, you see where it changes…You see it at the street level. All of that is just very visible. And it’s happened for so long.”   

Over the last three decades, then, city centers went from being perceived as dangerous and declining (a reason for white flight and suburbanization) to increasingly unaffordable and exclusive (a driver of urban inequality) to being “dead” once again (due to the retreat and slow return of office workers, increasing business closures and vacancies, and fear of crime and unsheltered homelessness).

This reversal is forcing local and regional leaders to ask: What does the future of downtowns look like? How can downtowns adapt to become less reliant on commuters and office space? What purpose should our downtowns fulfill? And most importantly, how can downtowns be more inclusive, safe, and productive for all residents as they evolve and recover from the pandemic? The timing of these questions—combined with a fire hose of federal relief aimed directly at cities—presents local leaders with a material opportunity to “think big.”

New York: “I think we’ve moved the conversation from ‘I’m scared of getting Covid and giving it to my loved ones’ to ‘I’m generally not feeling okay going back to the office because I’m seeing all of this crime, or what we perceive as crime, on the street and I don’t want to go back.’”

Methods

This brief is part of a mixed-methods research project that seeks to understand the future of downtowns through interviews, spatial data analysis, and direct engagement with local leaders. To understand perceptions of downtown health and recovery, in fall 2022, we spoke with nearly 100 stakeholders in New York,2 Chicago, Seattle, and Philadelphia, including business leaders, major employers, public sector officials, residents, place governance associations, and other nonprofit and civic leaders.3

 

We then juxtaposed our qualitative findings with quantitative spatial analysis of population, employment, travel, and real estate data impacting downtown recovery. To do so, we first needed to develop a definition for “downtown” that is both consistent and comparable across cities, but precise enough to distinguish downtowns from adjacent submarkets. (This is because perceptions of what “downtown” is can vary significantly, and multiple cities have distinct commercial submarkets that have varying dynamics within a single city center.)

 

To define “downtown,” we began by identifying each metro area’s central business district (CBD) as the census block with both the highest job density in the region and the largest absolute number of jobs; this is similar to the approach the International Downtown Association used in prior research. We then identified all adjacent blocks with a live-work quotient (ratio of residents to jobs, shown in Table 1, Column 8) of less than 0.1.4 We defined a metro area’s “commercial core” as the broader area of contiguous census block groups characterized by moderate- to high-density development with more jobs than residents (live-work quotient < 1).5

 

This essay includes an analysis based on these definitions for the 45 largest U.S. downtowns (by job count, as shown in Table 1, Column 1). It is the first in a series of research products designed to inform the conversation—and local decisionmaking—on contemporary issues impacting American downtowns, from housing and adaptive reuse to perceptions and realities of public safety. 

Downtowns’ challenges didn’t start with the pandemic

To help local leaders “think big” about center city recovery, it’s important to understand the pre-pandemic spatial distribution of cities’ jobs, opportunities, and amenities. Prior to the pandemic, the country’s economic geography was already evolving, and there was a need for downtown leaders to understand and adapt to these trends.

First, even during the “urban resurgence,” downtowns were not the only game in town. In fact, the knowledge and innovation economy’s demands on place did not favor only the urban core. With so many jobs already suburbanized and with rising demand for new, collaborative, green, and amenity-rich work environments (which some older downtowns could not adapt fast enough to supply), a constellation of activity centers both adjacent to downtowns and their suburbs emerged to meet new demand for density. As many have pointed out, even before the pandemic, office-dominated places like San Francisco’s downtown were not places residents liked to frequent unless they had to.

Figure 1. The Seattle region’s activity centers

For example, Figure 1 shows the Seattle region’s activity centers (areas where economic, social, and civic assets cluster), which include downtown but also other increasingly desirable neighborhoods such as University District, Bellevue, and Capitol Hill, which have witnessed population and economic growth largely driven by knowledge economy workers.

At the same time regions were witnessing the growth of new activity centers, only one-third of U.S. downtowns were gaining job market share in the years between the Great Recession and the pandemic’s arrival. Another one-third were growing only enough to hold steady, while the last third were in decline. Almost all regions were threatened by widening income inequality between neighborhoods.

Some cities were responding to their changing economic realities. For example, even prior to the pandemic, Phoenix built a downtown strategy adapted to its relatively low downtown job market share and weak office demand (Table 1) with creative placemaking and by both attracting new anchor institutions and investing in transit connections to other activity centers. Chicago’s pre-pandemic Neighborhood Opportunity Fund aimed to link the wealth generated by downtown development with small businesses in underserved commercial corridors. But others were stuck in an old mindset—overlooking the importance of placemaking, blocking new housing development, limiting the growth of anchor institutions, or failing to invest in transit.

While the pandemic did not create the origins of downtowns’ challenges, in its wake, the persistent and likely structural weakening of downtowns’ productivity could become a closed, reinforcing cycle: a doom loop. Some say that given suburbanization, the growth of activity centers, and remote work, downtowns simply no longer matter in the same way they once did (or, worse, that they are smoking craters that people should avoid). Others say downtowns have gotten all the spoils in recent decades, and it’s high time that public dollars focus on investment in neighborhoods. But it’s not that simple.

From ‘downtowns versus neighborhoods’ to downtowns supporting neighborhoods

Both the “downtowns versus neighborhoods” and “cities versus suburbs” viewpoints present false dichotomies that hold all residents of a region back.

First, downtowns are extremely important to their regional economies. As a rule, downtowns are the most intense clusters of jobs in their metro areas—concentrating both higher-wage jobs (such as those in finance, insurance, law, or public administration) and lower-wage jobs (such as those in the arts or hospitality). Drawing on our mapping of regional activity centers, we compared the pre-pandemic job density of downtown activity centers to all other activity centers in their respective regions. For all of the 45 largest U.S. downtowns, downtown activity centers concentrate more jobs than other regional activity centers by a factor ranging from a low of 1.4 in Birmingham, Ala. to a high of 27.5 in Chicago (Table 1, Column 4). With few exceptions, even if 50% of jobs did not return to U.S. downtowns and 100% of jobs returned to every other job center (an extreme and unlikely scenario), downtowns would still be the densest job centers in their relative regions. Their well-being matters to the whole economy.

Downtowns also matter to city residents, including workers and small business owners. Jobs in downtowns are generally more physically accessible to city dwellers than those in far-flung suburban areas. Beyond that, downtowns’ draw as regional job centers helps support local businesses. Every day, when suburban commuters arrive at jobs in a city center, the fiscal damage done by suburbanization is partially mitigated by their local spending. To summarize Table 1, the suburban commuter workforce increases the average city’s daytime population—and thus the market for goods and services—by an average of 19% (Table 1, Column 7). In a few notable cases, this boost is 50% or more, as in Washington, D.C. (50%); Boston (56%); and Hartford, Conn. (60%). In cities with a much higher daytime population relative to their resident population, the loss of sales tax and local employment in services and hospitality are likely acute.

Finally, downtowns matter to cities’ fiscal health. A typical U.S. downtown such as Chicago produces more than 7 times its tax assessable value relative to land area, as shown in Figure 2. In the rest of the city, this relationship is inverted, with land area producing less than three-quarters of its share of taxable value. The biggest U.S. cities with major office real estate footprints are still anticipating future revenue shortfalls as the “fiscal time bomb” of commercial real estate valuations adjusts to the new market reality and federal aid is used up. The well-being of all parts of these cities depends on maintaining a balanced budget—and an essential part of that is keeping downtowns productive.

[Figure 2: The productivity of downtowns is illustrated by the ratio of land area to tax assessed value]

While the challenges facing downtowns must be addressed to ensure a prosperous future for American cities, investing in strong downtowns does not have to come at the expense of supporting disinvested neighborhoods. Past policies and practices have created a perception (or reality) that downtowns prosper while neighborhoods stagnate. There is an obvious moral and economic mandate to invest in neighborhoods, but downtowns are a critical part of this solution—for example, through the revenue they generate, which can be used to fund neighborhood improvements and create a positive loop where downtowns benefit from healthy neighborhoods as neighbors. This is shared prosperity, but as we consider the future of downtowns and cities, it is not a given.

Philadelphia: “Until you fix Kensington, Philly can never be a world-class city. Philly could be a world-class city, but only if it fixes communities like Kensington. No question. You can’t just make Center City shiny.”

Actions local leaders can take to advance both downtown and neighborhood recovery

In 2021, we wrote that to recover from COVID-19, downtowns would need to adapt by modernizing their office product, diversifying their land use mix, and prioritizing livability (such as quality public spaces, arts, traffic safety, etc.). As public and private sector leaders consider these adaptations (such as in panels like “New” New York), it is critical that all parties resist falling into false dichotomies and forced tradeoffs, and instead work together across silos to create win-win solutions.

What kinds of win-win solutions could unlock another generation of value from our most historically productive places? And how might these solutions broaden who benefits from the productivity and prosperity that downtowns produce? In the coming months, Brookings Metro will continue to work with New York, Seattle, Chicago, and Philadelphia to explore and synthesize innovative policy solutions for the future of downtowns across the following domains:

  • Inclusive workforce development and job recovery, including best practices on how to support a diverse workforce pipeline that helps employers find the talent they need and connects residents of all educational backgrounds to good and accessible jobs.
  • Entrepreneurship and small business development, including how to maximize the survival of existing small businesses while cultivating new and diverse small business ownership downtown.
  • Public safety and its impact on downtown recovery, including how to address both the perceptions and realities of crime in cities, with a focus on preventative, place-based solutions and the role of economic development professionals and the business community in promoting safety.
  • Homelessness and its impact on downtown recovery, including understanding the costs and benefits of revising tax structures and adaptive reuse ordinances to build new housing, as well as policy changes to prevent homelessness and displacement and increase the supply of permanent affordable housing.
  • Play and placemaking downtown, including strategies to make downtowns 24-hour destinations through arts, events, and programming, as well as how to measure the inclusivity of such placemaking interventions.
  • Collaborative governance, civic partnerships, and capacity building, including identifying which partnerships are needed to sustain downtown recovery and the key public and private sector actions needed to facilitate supportive capital flows between downtowns and historically disinvested neighborhoods.

As Brookings Metro and the four-city cohort delve into policy and practice solutions for each domain over the coming months, we will publish findings and guidance for other city and downtown leaders nationwide to learn from.

Conclusion

As we experience yet another rhetorical onslaught predicting the decline of cities and their downtowns, it is important to remember that cities have faced their share of crises before. From suburbanization and white flight to the rise of crime in urban centers in the 1990s to the 9/11 terrorist attacks on New York, cities and downtowns—and most especially, the people who activate them— have proved their resilience.

The COVID-19 pandemic is no different, except that city leaders are facing a task that is two-fold: 1) ensuring a strong downtown recovery to restore the fiscal and economic well-being of their city and region; and 2) promoting a recovery that intentionally confronts the challenges and inequities that plagued downtowns prior to the pandemic.

As the heart of our nation’s economy, downtowns have the unique potential—and imperative—to act boldly and inclusively to rebuild stronger than before. Rather than seeking to return to the pre-pandemic status quo, this is a pivotal moment for downtowns to build equity into revitalization by implementing policy solutions that connect downtown prosperity to more neighborhoods and more people. Only then can cities and regions realize their full potential.

The authors would like to thank DW Rowlands for her excellent research assistance on this piece. They also extend their sincere gratitude to Fred Cerullo (Grand Central Partnership), David Downey (International Downtown Association), Anne Fadullon (City of Philadelphia), Paul Levy (Center City District), Julie Stein (City of New York), and Jennifer S. Vey for reviewing earlier drafts of this piece. Any errors that remain are solely the authors’.