America’s downtowns were on a roll. Starting to revive in the 1980s and ’90s after years of decline, they had grown to become regional engines again: destinations for entertainment, residential neighborhoods in their own right, and homes to growth in business sectors as industries like technology startups began to cluster there.
Some downtowns were downright booming. A recent Brookings Institution study found, for example, that the population of downtown Chicago had grown from 18,000 in 1980 to 110,000 in 2018. Even in smaller cities, growth in downtown populations had completely changed the look and feel of former parking lots and under-utilized urban spaces.
But the coronavirus puts these impressive gains at risk. While a return to the bad days of the 1970s seems unlikely, America’s downtowns have just undergone a sudden and serious reversal that puts a cloud over their future.
The pandemic has dealt American downtowns severe blows across multiple dimensions. The first is the impact on tourism and visitor-related spending. The convention and events business is a big pillar of economic activity in many downtowns, and some of them rely heavily on tourism as well. This supports not just the hotel industry but also restaurants, clubs and other attractions. This industry has all but been shut down, and there’s little prospect of an immediate bounceback. This puts a lot of the businesses that depend on visitors at risk of shutting down permanently.
A secondary impact will be felt fiscally, by local governments. Special downtown fees targeting visitors, such as hotel taxes and supplemental downtown food and beverage taxes, provide revenues that pay for things like debt service on facilities and the local convention and visitors bureau. This will necessitate some kind of bailout for them, and may also reduce tourism marketing spending, further inhibiting a comeback.
Another challenge will be from increased working from home. Whether or not there will be a major permanent uptick in remote work remains to be seen, but it’s hard to imagine the share of people working remotely doing anything other than going up. This will reduce downtown office demand and employee headcount.
What is very clear is that many large corporate employers have decided not to have workers return to the office in the near future, in some cases not until 2021. These workers are a key constituency that patronizes restaurants, retail and cultural institutions downtown. Some establishments that might survive the loss of tourism business won’t be able to overcome the loss of office-worker customers as well. And when these major companies finally do summon their employees back to the office, they may discover that it’s to an environment denuded of many of the amenities that made downtown an attractive corporate location.
In America’s largest cities, transit-dependent downtowns are at particular risk. Workers may want to avoid riding transit or being in other dense environments perceived as riskier, at least for a period of time. But the bigger risk is from fiscal problems that undermine services such as public transit, reducing service and reliability. These downtown areas are much more dependent on public services to sustain their functioning and attractiveness than suburban communities or the downtowns of smaller, more automobile-centric cities. Public transit agencies have lost much of their ridership, and thus fare revenue. Federal aid is helping to cover the gap for now, but if ridership remains depressed, that will create real problems.
Property destruction accompanying some of the protests in the wake of the deaths of George Floyd and other African Americans at the hands of police adds to the uncertainty and risk of downtown investment. This seems likely to increase business insurance costs, for example. While the number of people who will avoiding downtowns over the long term on account of this is likely very small, any negative impact will be particularly felt in this precarious business environment.
All of these factors mean that many American downtowns risk getting set back a decade or more in the course of only a few weeks. This has created a new dynamic. Development from rising downtowns has typically spilled over into adjacent neighborhoods in the urban core, but many of those neighborhoods have weathered the pandemic much better than downtown. Now part of the challenge is to reignite downtowns in part by reversing the process — drawing on vitality from surrounding neighborhoods.
Regardless of how or whether this is accomplished, many cities find themselves with a downtown that is now in danger of an extended period of decline. Finding a way to bring their downtowns back quickly is part of the post-coronavirus challenge they face.
Also see “The Office Will Come Back“