How might cities be able to get out of the dreaded “real estate doom loop”?
How might cities be able to get out of the dreaded “real estate doom loop”?
This week, we’ve been looking at some of the ways cities are changing to meet the future of how we work and live. A lot of those changes have come as a result of the pandemic, and the prevalence of remote work.
In some cases, cities are struggling with a so-called “real estate doom loop,” which is when fewer people work downtown, therefore fewer people hang out downtown, and then more things close.
But it’s not all doom and gloom. Karen Chapple is director of the School of Cities at the University of Toronto, which has been tracking how cities are recovering economically. She spoke with Marketplace’s Nova Safo. The following is an edited transcript of their conversation.
Nova Safo: In our series, we’ve explored a number of cities, but especially striking are the problems in St. Louis. It’s in the middle of a doom loop, right? How do cities find themselves in such a situation? And how do they get themselves out of it?
Karen Chapple: I’m generally cautious with the use of the term “doom loop,” because I think it applies to very few cities. Very few cities are so dependent on their commercial tax revenues that they’re actually going to have to reduce the level and quality of their services. Yet St. Louis, a few other cities are really struggling. So I think we need to look to the success stories and learn from those. I think, you know, the Clevelands of the world that have kind of come roaring back, a lot of it due to kind of strategic office-to-residential conversions, targeted investments, trying to make sure that there’s a core or a node of residential, commercial and entertainment and retail uses where people want to go, and then kind of building up from there.
Safo: We’re catching you when you’re visiting Chicago for another data project, but I’m curious about what you’re seeing there because of the office vacancies and the problems in commercial real estate.
Chapple: So when we look at Chicago, and one of the things we’ve done recently is compare afterwork hours activity to work-hour activity, and Chicago really stands out because its activity is nearly back to normal. Yet its work-hour activity Monday to Friday, 8 to 6 is around 60%. So it’s really struggling to get that workforce back.
Safo: And so what does the successful growing city of the future look like?
Chapple: I think we need to crack the retail nut. So you know, maybe we didn’t need so many big chain drugstores and Targets in downtown. Especially the drugstores we’re seeing, they are folding right and left. So you know, what are we going to do with those types of spaces? And how can we just get activity in those storefronts? I think it’s gonna be really important for cities.
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