Telework and Fixing the central City

Since I last checked on the post-Covid impact on central offices, the trend appears to be stabilizing. It appears that, nation-wide, chronic central city office vacancies are running about 50%. And there’s the rub. The situation may be fine for telecommuters and their employers but it’s bad news for the commercial real estate business and for the impacted cities themselves. A fix for central cities clearly is needed.

This situation is a result not of fear of covid but of the attraction of telecommuting. Well-paid, that is valuable, information workers prefer to work from home at least half-time. And they are insisting on it. Their employers have discovered that their bottom line actually does improve rather than suffer when their staff telecommutes at least part time.

In addition to the productivity jump, part of this improvement is the result of reduced facility costs. Downtown office space is expensive so the best strategy is to use as little of it as is necessary. Sometimes a wait is required before renewing/dropping the lease for space but the reduction is clearly happening.

What to do?

Fixing the center

There are many stakeholders in this fix for central cities, other than those making the change decisions, They include the local governments, real-property owners, owners and workers in business and personal services, restaurants, bars and entertainment facilities, and telecommuters themselves, among others. Many of these stakeholders are tied to the cities’ location, others may be more geographically flexible. Here are some of the approaches being taken.

Convert offices to apartments

At first thought this may seem like a great idea: just transform the old office into new, desirable apartments. On second thought a host of difficulties emerge. Foremost among these is the fact that office space typically rents at a higher rate than apartment space so either the landlord must take a loss or the tenants must be well-heeled. Apartment dwellers like windows in each room, a problem with buildings that have multiple thousands of square meters of windowless space for each floor. Multiple bathrooms may be needed for each apartment. And so on. So conversion of office space to attractive, affordable housing is a challenge. Here is one example for Manhattan.

Planning for mixed use

Cities need to develop plans for a combination of residential, office, entertainment and other business use in central areas, including changes in zoning and permitting. The current focus on big business must be diverted. There must be goals for including more dwelling units soon. There must be mixed residential and retail space in large, multistory buildings. In short, large buildings need to evolve from single use locations to vertical village-like places. All the while remaining solvent.

All this requires serious rethinking of architectures that reflect a whole new set of demands. The economics of this are complex. If the crucial tax base of central business districts is to be maintained, then cities and landlords need to think of ways to attract individuals and organizations with sufficiently high incomes to relocate there.

Unfortunately this is not likely to happen overnight. But now is the time for government, business and the larger community to seriously envision a future in which central cities are still vibrant, attractive, safe and profitable 24/7. We’re already late starting.

One thought on “Telework and Fixing the central City”

  1. We are witnessing California state government central city office buildings for exactly the mixed uses mentioned by Jack. True, futures take a while to evolve – witness the evolution of telework when the idea first emerged. Thank you, Jack and others for laying the groundwork for this to happen.

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