You can also find out more about You’d have to be asleep not to notice the generational change that’s happening in just about every US city. Our downtown offices are largely empty. New York, Chicago Atlanta, Los Angeles Denver Philadelphia San Francisco Houston Dallas and many other large cities experience record office vacancies. This is because workers continue to work at home while companies allow them.
Let’s face it: the downtown office market has changed significantly and permanently. Companies – such as Comcast in my home town of Philadelphia – can demand that their employees come back to the office, but they’re fighting against the tide. Work attitudes are changing. The technology is improving. Remote working is acceptable. Some face-time is necessary but we’re never going to go back to a 100% in-the-office policy, and companies that attempt this will lose talent to those that adapt to the shift.
The result is that large areas of space in the high-rise office towers in many major cities will be left empty. Owners of these buildings are feeling pressure to meet higher debt payments with less lease income, and many may default. Numerous small businesses are shutting their doors in areas with less traffic, especially downtown. And unless something is done, those empty buildings – after the banks have repossessed them from bankrupt borrowers – will become derelict, inviting even more crime and homelessness. It’s already happening.
Now what? Entrepreneurs have many options.
For instance, you can turn existing offices into cheaper single units that will allow startups to be able to claim a central address. Some buildings in cities with a vibrant and residential downtown – like Philadelphia – could be turned into residences. Other cities that have older buildings, which are unsafe and not air-conditioned, could use this space to create classrooms. Maybe all of the homeless sleeping outside these structures with no air conditioning could get a place to sleep, along with counselling and medical support.
With the continuing boom in e-commerce, warehouse space remains costly but could become more affordable – and logistically accessible – in a downtown structure. A better location would make it easier for workers to find the manufacturing space. Alternatives to these buildings are already in consideration, including vertical farming, gyms, film sets and storage facilities. Why not take the “red pill” and knock down these structures to create open areas, museums, and parks that will be better suited for this new age of urban life?
You’re probably thinking, “Wow! That sounds amazing!” But who’s going to pay for all of this?
Converting downtown office buildings to farms, incubators for startups, warehouses, or homes would be expensive. The revenue streams from these ventures are dubious and – specifically if used for public housing or education – would probably be non-existent. It would be a huge and probably fruitless task to attract private investment. Atlanta, Chicago New York, Philadelphia and other downtowns will need a large amount of government money from the pandemic era to make a successful transition into this new post-pandemic era. But it’s going to be asked. How will the voters react?
Those living in suburban and rural areas – many of which are booming thanks to those work-from-home employees who are now paying more rents and spending more money in their neighborhoods than downtown – aren’t going to be too thrilled. The suburban and rural areas will be less than thrilled. They’ll wonder why taxpayers money is spent to prop up downtowns that are in decline instead of supporting their schools, police forces, or municipal services. The local government is most likely to decide this issue. And it’s going to play out over the next few years.
But if you’re running a business in a downtown area that’s reliant on the office worker coming back to the office, my advice is you’re going to have to do something quicker. You never know, maybe public money will fall one day and help you start new projects to generate foot traffic. You should not delay. It’s time to reconsider your location and your business model if you want to survive.