So, what is the solution? Force everyone back into the pointless office at enormous cost to employees and employers just to keep the status quo for landlords. The bottom line is downtown is a place where people work with information. Since it is possible to work with information anywhere, this place isn't needed (and hasn't been for a long time). Downtown obsolete.
Mixed-use high-rises are really cool. You can go to the mall, the gym, the pool, see a movie, go to the dentist, or go grocery shopping just by taking the elevator. They almost feel like resorts you can live in.
In many, probably almost all US cities any downtown areas is used for "business" - i.e. commercial offices. The living pattern is you wake up, drive anywhere from 10-40 miles, 10 minutes to 2 hours, and you park your car in a parking garage and then walk a block to a skyscraper where you go up into an office area.
After World War II the US built highways that destroyed most cities. Take a look at the 1949 image and then the 1981 to get an idea [1]. The root cause of many of America's continued problems, ranging from racism and classism, to oil and car dependency are linked to what we did over the years.
Most US cities have a central business district that is majority commercial office space, with just enough retail/dining to let workers take lunch breaks. These are the areas that are dying. No workers, so the surrounding retail/dining is failing.
Back in the 50s/60s, white flight was a problem for cities - most of the middle class, white families moved to the suburbs. Most cities didn't have a large tax base that lived inside the city. That started to change over the last 20 years or so. Couple that with off-shoring or moving of heavy industry out of city cores and cities will struggle financially without white-collar/knowledge workers commuting in and spending money.
Western Europe doesn't have the same level of suburban sprawl.
Edit - the white flight I mention is closely related to the inner-city highways mentioned in the sibling comment. Suburban workers needed to get downtown, so (usually minority) neighborhoods were split in two or destroyed to built highways from the outskirts into the CBD.
I grew up in Houston, Texas. As a kid I remember downtown as being 1. Big office buildings with parking garages. 2. Concert halls & auditoriums. 3. City and county facilities. 4. Restaurants catering to the visitors of the above. 5. Sears & Roebuck department store.
Nobody lived downtown, and most of it was dead after working hours. Most of the office buildings had no street-level retail shops at all – there was no reason to go there except to work, or in the case of 2-3 of them, to visit the observation deck on the upper floor. The small area where (2) were concentrated didn't even have much in the way of restaurants or shops open. If you worked there, you drove downtown in the morning, came home in the evening. If you wanted to a concert, play, or ballet, you drove downtown, enjoyed the show, then drove home.
There was, and is, one unique thing about Houston. The tunnels. There is a network of underground walkways and areas connecting many of the buildings. There are some restaurants and shops, and during the lunch hour the area was packed. But you couldn't get to those tunnels without going into one of the office buildings, and they were only open working hours. Most of the stuff in the tunnels opened at 10am and closed at 2pm.
Predominantly, downtowns will have a financial, medical, and government district.
Government: police, city hall, courthouse, administration for city, county, state, and federal agencies.
Medical: usually a major or university hospital with various outpatient services in nearby.
Financial: banks, banking services, property and financial services.
Typically, just these 3 things were enough to compromise over 50% of commercial downtown properties. We're not even approaching cities that have a major HQ or specialty (manufacturing, tech, media, print).
For a lot of cities once a major tenant moved out, they really only had government and medical as the city's economic engines.
My city I've watched transform from being a violent, crack infest dump to a very desirable, fair weather place to be. And because of the loss of so much commercial business in the 90s they managed to avoid the glut of commercial properties. We pivoted to residential/mixed-use development in 2003 and it's really paying off now.
Our downtown doesn't do anything in particular (except maybe crypto) except be a place for socializing.
There isn’t a mechanism to “force” anyone. With few exceptions, companies lease their office space. A few companies may try to force employees to sit in a leased office to feed the sunk cost fallacy, but that won’t last. Only the most incompetent management will renew leases to support employees who don’t want to be there in the first place.
The actual solution is large scale conversion of commercial real estate to residential. Some people like being downtown, with population density, ability to walk to lots of restaurants, etc. And converting ~60% of office space to residential will drive costs down, reducing financial motivations to move out of the city.
Property owners are fucked, and will see much lower returns than they expected. Some will go bankrupt. Buildings financed by banks may see foreclosure/auction, and some banks will lose money. That’s what interest is for.
But eventually these buildings will have new owners that bought them at appropriate prices, and new purposes as residences, and downtown will probably be an even better place to live, with a population that doesn’t go home to the suburbs every night.
tl;dr: probably a good thing for downtown; invest in office-to-apartment conversion companies.
Keep in mind that other alternatives are possible, including “St. Louis and Detroit in the 80s-2000s” style downward spiral into blight.
I have no interest in bailing out billion dollar property holding companies, but we need to do everything possible to encourage positive development. It does seem like many cities get it, the high line in particular seems to have spawned a dozen imitators which is awesome.
Large office towers just do not convert to residential very well. It can be done, it can be tolerated, it's just not a very good or competitive product, while also being very expensive to implement. One example, People walk a few blocks from the parking garage to their place of employment, but in most cities, people will not walk a few blocks from the parking garage to their home.
Adding insult to injury, office towers that have been constructed in the last 50 years are very expensive to maintain, mechanical systems are expensive and complicated, requires a full-time staff to run. They were built for utilization at very different price point.
> It can be done, it can be tolerated, it's just not a very good or competitive product
I agree with everything you said, just want to highlight that this quote is the classic statement of a business opportunity.
There is a VC pitch here: a company that acquired distressed office space at scale, from panicked sellers, and with the expertise to do these conversions in a systematic, cost-optimized way.
Banks are going to want to unload these properties as soon as they appear, for dirt cheap. Someone is going to make a lot of money by approaching the issue as a tech problem.
I work in the adaptive reuse industry converting history office buildings into hotels or apartments. We've looked at a number of modern era office towers, and housing is simply not viable. To your point though.. ironically, urban factories and warehousing seems to me to be the best use. Can you build a small electric vehicle or iPhones with the assembly line going from top to bottom?
Banks are already there for unloading these properties. I can show you million-square-foot office towers today that are essentially free to acquire, but you get to pay tax, insurance, maintenance, keeping the lights on and functioning for any future use, a few million a year minimum, with no revenue.
Some groups thought they could mine bitcoin, but the floor fell out of that. At the end of the day, since there are substantial costs involved with the tower itself relative to a warehouse, the tower should used for something that also requires a large number of people. A datacenter-type use is best if located near cheap electricity - not usually city centers.
Lastly, office towers are usually located amongst excellent mass transit, even in cities with poor transit options, but the typical office tenant (bankers, lawyers, financiers) will not accept mass transit as an alternative to 1 parking space per employee. But factory workers will if it works!
What makes conversion of office towers to housing not viable? It's easy for me to imagine a lot of objections to converting one building, but hard to imagine insurmountable difficulties in converting 1000, where you can amortize R&D and specialized equipment across a huge number of properties.
So, if you don't mind humoring me, can you sketch the worst / most expensive / most technically difficult requirements for converting an office tower to apartments? I suspect you're probably right, given you've got domain knowledge and I don't, it just feels like one of those problems that becomes more tractable at scale.
Think of the layout of a modern office tower. Nearly open floor plans, one or two multi-user bathrooms per floor, one or two kitchenettes per floor. Designs optimized for ingress and egress via a single path. Sound abatement is minimal. Support columns are in the open.
So at minimum, you would need to plumb and power each "apartment" which would require essentially a complete replacement of the plumbing in place, as well as the electricity. And since the units are distinct, you would need to meter and isolate each unit. You would need to ensure that each "apartment" had a reasonable exit for fire safety reasons. You are restricted by architectural/engineering decisions that were based on an open layout (aforementioned supports).
Think of it this way, have you ever seen the progress as a tower is built? Isn't it remarkable how the "shell" or exterior seems to get finished in a blink, but the rest of the "innards" take 4 or 5 times as long to finish? In this case, most of the "innards" would need to be re-worked. Huge capital investment with unclear returns (nobody wants to live among the blight that a lot of west coast city centers are seeing).
All good points, but given the prospect of getting a building essentially for free (minus tax/maintenance) and having substantial one-time costs... that sounds like a pretty good deal.
Many office towers have much higher ceilings than typical apartment buildings. Pretty sure a 12" subfloor would solve many of the issues you raise. And many office towers are designed to support multiple tenants per floor.
I'm not dismissing the difficulty, just saying that the scale economics seem very attractive for a high fixed cost, low variable cost, long term annuity investment. I'm either wrong or ahead of my time, but it's not like I've got the funding to put money where my mouth is.
> the blight that a lot of west coast city centers are seeing
I don't see how that's relevant. The shift to WFH is global; these problems/opportunities are just as real in London or Sydney or Shanghai.
I was being purposeful not to extrapolate out to cities/cultures I do not personally know or have experienced. I can speak only for the Western USA, which is why I tried to limit that comment to that region. I am sure other locales have other unique circumstances.
In fact, there's a need to roll with every change and use the opportunity to improve. We can repurpose old office towers for housing - Houston does it all the time. We can narrow streets that don't see daily commuter crushes - we can use this opportunity to build a better world.
I bet Americans, especially those <30yrs old, will appreciate having a sub 600 USD a month apartment in a big city with no parking, shared kitchen, and share bathroom. Because the alternative is having a roommate and paying 1000 USD+.
