Many American cities seem doomed in ways we’ve never seen. This is a terrible and wholly unnecessary crisis. Worse, it’s entirely man-made, a result of terrible city management and awful policies that are driving residents and businesses out, while attracting populations that can’t support the tax base.
Commercial vacancy rates have been rising dramatically since lockdowns. Add crime, rental costs, and inflation to the mix and you have a dangerous situation developing for many cities.
One might suppose that the trend would have reversed itself with the opening, but that hasn’t happened. It has only gotten worse. Many workers discovered that they can do just fine working at home. Indeed, being away from colleagues and freed from the corporate bureaucracy has meant a productivity boost for many people.
Further, commutes have gotten more expensive with high gas prices and flat incomes. And crime and homelessness in cities are deterring a return to normal office life.
And that understates the extent of the problem in the larger cities. Many city skyscrapers are now half-full at best and some are mostly empty, with workers resisting coming back. Commercial leases typically last for years and many will come due in the next few years, which will provoke a widespread rethinking of many commitments. A further dramatic decline could wreck city finances and ruin retail sectors in cities that depend on a daily flow of customers.
“The widespread adoption of remote and hybrid work schedules has drained commercial offices and caused tenants to terminate leases. In many downtowns, office occupancy is at 50 percent pre-pandemic levels. Ripple effects include shrinking lunchtime crowds, slumping retail sales and a drop-off of public transit ridership. For example, New York’s subway is at 65 percent of pre-pandemic ridership as of early 2023.”
The writer raised the prospect of a widespread return of the “donut city.”
“A donut city is defined by out-migration, with the city center losing residents and businesses to the suburbs,“ he wrote. ”This is not a rerun of hollowing out experienced in many U.S. cities in the 1960s. The usual culprits of economic restructuring, racial tensions, shifting consumer preferences and government inefficiency are all still involved, but these forces are now manifest in new ways.”
You can also see the trend based on where millennials are leaving and moving to. They’re leaving New York, Washington, Chicago, Boston, Los Angeles, and San Francisco. They’re moving to Austin, Texas, Denver, Dallas, Raleigh, Salt Lake City, and anywhere in Florida, which remains the top destination for anyone who can afford to pick up and go.
To the untrained eye like mine, I look at the vast numbers of massively huge office buildings in New York and think: Oh, this is no big deal. Just convert the offices to apartments and you solve the housing crisis in a flash.
It turns out not to be so easy. This works for many of the older buildings built before World War II because they were designed before air conditioning was widely available. The windows worked and created a breeze to keep the building cool. Those have a narrow footprint to allow them to be converted to apartments with windows.
The office buildings put up after the war were different. They have windows but they aren’t made to be opened. The buildings are entirely air-controlled in all directions. That allowed massive skyscrapers to go up without windows on the interior, which was seen as fine, and no one particularly cared.
But there’s a major problem. Because of their massive width, a third of the buildings down the central core don’t have windows to the outside. As single-family units, this won’t work since absolutely no one wants to live in a place with no windows at all and only fluorescent lighting. That’s not an apartment but a prison cell.
Some of these buildings have been converted in the city by removing the entire interior of the building and turning it into a large atrium with windows and light. But the expense of that kind of conversion means that the costs have to be recouped in the form of high rents. These then can only become luxury apartments with rents from $4,000 to $10,000, completely unaffordable for the kinds of residents who are attracted to New York today.
In sum, many simply can’t be converted to apartments from offices, at least not in a way that’s economically viable.
This really does raise an awful specter of some of the grandest buildings in the modern world going un-leased and eventually falling into disrepair and being destroyed. What a remarkable thought! But it isn’t out of the question that this will be the fate of many office buildings in 10 to 20 years.
What’s striking about this scenario is that it clearly pertains to some cities but not all. Places such as Dallas, Fort Worth, Houston, and many cities in Florida, Georgia, and the Carolinas seem to be thriving as never before, with new leases and construction. They haven’t recovered yet from the lockdowns, but they’re getting there, even in terms of office occupancy.
What’s the difference? These are relatively low-tax states with low crime, stable legal environments, decent governing structures, and good transportation. You only need to visit Dallas, Houston, or Miami and compare them with what you see and experience in New York or San Jose. It’s like a different decade or a different planet.
Dallas and Houston are gleaming, bustling, clean, beautiful, and exciting places to be just like we want cities to be. By comparison, New York has become a complete dump with a huge problem of refugees, homeless people, and drugged-out zombies controlling the streets. People go because they have to, not because they want to.
Residents living around Central Park on the Upper East and West sides increasingly feel walled in, worried even about getting outside their own safe neighborhoods.
It’s not lost on anyone that the cities into which people are moving are almost entirely in red states, while the places people are fleeing are high-tax blue states. So why isn’t the solution simply to cut taxes, clean up the streets, improve transportation, and crack down on crime? Well, that makes sense, but it’s politically impossible. There’s simply no way any city government is going to be radically reducing taxes in the face of dramatic declines in revenue.
Cracking down on crime is politically dangerous, too, since “woke” philosophy seems to be leaning toward essentially legalizing theft and assault, as crazy as that sounds. As for the refugee problem, no one seems to have come up with a viable answer.
Think about the once-glorious city of Hartford, Connecticut, which was the biggest and brightest in the late 19th century before New York took it over. How to fix it today? Many people are trying but without much success. There’s simply no political consensus that is robust enough to attempt a solution. It’s a genuine tragedy.
Some of America’s greatest cities, then, seem to be doomed. Others are doing spectacularly well. The lesson here is that it’s all about the quality of government. What human hands have built, human hands can destroy. That’s exactly what we’re seeing in so many areas of the country today.
On the other hand, there’s still a beautiful life to be had in the cities of the South and in the heartland.
