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The Death of Density?

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The Death of Density?

To survive and thrive, cities will have to overcome a number of formidable trends. March 29, 2021
Cities
Covid-19

After vanquishing everything from newsprint to retail stores, the pulverizing, inescapable power of the Internet has its sights set on cities, or, more precisely, density—aided and abetted by its accomplice, Covid-19.

If this future—call it the death of density—comes to pass, it spells the unraveling of physical urbanity as we know it, placing cities, especially high-cost cities, in grave danger of descending into a vicious circle of depopulation, followed by de-commercialization, de-monetization, declining services, and so on.

The events of 2020 crippled the machinery that undergirds density. Taxpaying workers, revenue-generating shoppers, free-spending tourists—the people and activities that finance the infrastructure, mass transit, and municipal workers—are disappearing. And as they head for the exits, we’re left with an urbanism that’s coarser, less forgiving, more dangerous, more radical, and more expensive. If cities won’t dematerialize overnight, they risk, like General MacArthur, slowly fading away.

The fallout would be profound. If the demand for density declines—with consequent declines in population, commerce, and tax revenues—cities will operate in a perpetual state of fiscal crisis. Once the federal stimulus subsidies and stop-gap measures run out, how will cities fund mass transit, to say nothing of capital construction, schools, police, and the multitude of other services city dwellers rely upon? The service-laden system of governance that has long defined the American metropolis is in for a cataclysmic unraveling.

Take, for example, New York’s gleaming new Moynihan-Penn Station (on whose board I once served). Built to handle the largest volume of passenger traffic in the Western Hemisphere—500,000 people a day—the station has drawn only a trickle of riders since opening in January. It’s just the latest costly addition to our increasingly unsustainable urban infrastructure—and an example of the promise of a city going unfulfilled (in this case, unused), as urbanist Fred Siegel suggested in his book, The Future Once Happened Here.

New York’s high-rent office buildings are also being repurposed for residential use, raising questions about lost tax revenues from the businesses that have abandoned those buildings—and about where the affluent residents to occupy those buildings will come from if the high-end jobs that make them affluent disappear. It’s no surprise that the average office-occupancy rate for America’s top ten cities is a disheartening 24 percent, per Kastle Back-to-Work Barometer.

In January, the New York Times speculated that the “defining characteristic” of the creative workforce “may not be where it lives, but its ability to live anywhere it wants. . . . Buildings in many traditional employment districts will have to compete more fiercely, and a small but significant percentage of office space will most likely have to be repurposed into housing, e-commerce fulfillment centers, delivery-only kitchens, health care centers, meeting spaces, event spaces and other uses. . . . The main office will remain important for most companies, but fewer employees will be expected to be there all day, every day.”

By this March, speculation was already reality, with the Times proclaiming that “The pandemic has upended America’s commercial property sector.” But the depopulation of office towers and train stations are only symptoms. Consider: it was just a few years ago that global terrorism was seen as an existential threat to cities. September 11 changed the way we safeguard everything from office buildings to airports and touched off years of warfare. But the impact of 9/11 was minor and temporary compared with the long-term, density-destroying impact of Covid-19. The national pandemic accelerated the process of Internet-enabled remote work, which had already been underway for years. The difference is that in 2020, vast numbers of businesses had no choice but to convert to a “cloud office” model. And now, a year after the pandemic hit the United States, business owners find that the cloud office works just fine and saves scads of money, poking a big hole in the conventional notion that a pricey office in a densely populated central city is a good value proposition. In fact, under the new remote-work paradigm, that office is vastly overpriced.

Covid-19 has made people wonder how much physical interaction is needed in a world defined by social distancing and elbow-bumps. Why operate your business from an expensive midtown office when all you need is a smartphone and laptop, a tasteful backdrop for your video calls, and Amazon Prime? Ask the same question on a societal level, and one begins to wonder why it’s necessary to pour billions into a staggeringly expensive system of urban infrastructure when all you need to keep the wheels of commerce turning is Zoom, Signal, and a reliable, super-fast wireless network.

It brings me no pleasure to raise these points. As a lifelong New Yorker who spent half his career working for the city in the hope of making it a better place for millions of people to live, prosper, and fulfill their dreams, the whole thing breaks my heart. That’s why I, like so many other lovers of cities, relish every news story suggesting signs of revival in urban real estate, in the marketplaces of commerce and culture that define city life. In any case, the de-densification process will take time. As the Covid inoculation is broadly deployed, workers and tourists will steadily return to cities like New York, Chicago, and Los Angeles. But it will never be quite the same.

The tale of the tape for New York speaks volumes: in the last year, the city lost 500,000 private-sector jobs. Its office buildings are only 15 percent occupied. Ninety percent of the city’s restaurants failed to pay their December 2020 rent, and 5,000 have shut down altogether. Employment in the city’s arts and entertainment sector has plummeted 66 percent. And, perhaps most alarming: 300,000 New Yorkers from high-income neighborhoods have filed change-of-address forms with the Postal Service.

According to the Partnership for New York City, less than half of Manhattan’s 1 million office employees will return to work in-person by September 2021. Only 22 percent of the city’s top employers will require their employees to work on premises. Roughly 66 percent of the city’s largest companies will embrace the hybrid model that gives employees the option of working in the office or from home. Only 10 percent of Manhattan office employees have returned to the workplace as of early March 2021.

The Internet and Covid are ruthless disciplinarians. So, too, of course, is the dollar, more portable and less tethered to the physical world than ever before. But other powerful corrosive forces are also at work, conspiring against density.

Crime. After Covid, nothing defined 2020 more than an explosion of crime across urban America, even though there were far fewer people outdoors to victimize. In all, New York saw 463 murders in 2020, a 44 percent rise over 2019. The murder rate across 34 U.S. cities rose by an unprecedented 30 percent in 2020, according to the National Commission of Covid-19 and Criminal Justice. The sudden reemergence of raw danger in America’s cities—after decades of relative safety—is now a major negative for those considering a city life, and a major spur for city dwellers to head for the exits.

Urban intermediation. Intermediation is what the urban physical environment is all about. Cities are giant human-brokerage machines designed to bring people together in physical proximity so that they can generate goods and services by day and then congregate in entertainment venues by night. Today, however, the need for people to be together physically is no longer a given. In fact, the word “together” has a different connotation now that people can gather together on Zoom, collaborate together on Google Drive, and text together in disappearing electronic ink on Signal. No wonder all those glittering office towers are emptying out, mass transit use is plummeting, and newspapers lament the advent of “ghost town” cities. As for after-work socializing—are nightclubs as much of a draw when dating can be now conducted online?

Equity markets. Tech companies ranging from Amazon to Zoom are swiftly monetizing the situation. The trend has been profitably confirmed by equity markets, which price in the enormous value these companies bring to our ever-dematerializing world. In the 12 months since Covid-19 redefined our reality, companies that enable the virtualization of life and work have seen their stock prices skyrocket. And then there’s the equity markets themselves, threatening to exit the big city in the face of rising taxes and empty trading floors.

Retail. The Internet’s granulating impact on bricks-and-mortar retail has been evident for years. Covid has served as a potent accelerant, speeding the further demise of retail stores over the last 12 months—especially those in high-rent, high-crime cities.

As CNBC reported in January: “Rents for retail space in New York City have tumbled to historic lows, dropping as much as 25 percent from 2019 levels, as troubled retailers like Neiman Marcus and Century 21 closed stores and vacancies soared.” The story concludes that “pressure on landlords to fill their empty storefronts” is “intense.” According to Mark Dicus, executive director of the Soho Broadway Initiative business improvement district, “Recovery is going to take years, not months.” Think of it as the revenge of Jeff Bezos, who the city’s political establishment thought it had subdued after it torpedoed his plan to build a mega-headquarters in Queens just a few years ago.

Entertainment. Just as the conjoined forces of Covid and the Internet have subverted the financial underpinnings of urban office buildings and retail, they are also doing heavy damage to the entertainment venues that are the soul of city culture—from museums and concert halls to sports stadiums and arenas to theaters and neighborhood cinemas. They are all under assault, not just from the ravages of pandemic-induced social-distancing, but also from technologies such as streaming video and virtual events.

Environment. Another potential threat to density is the green movement and its determined quest for a zero-emission world. The manufacture of density’s core ingredients, steel and cement, produces some 15 percent of the world’s carbon emissions. The traditional environmental view favors density, which promotes efficient mass transit and inhibits suburban sprawl. But the movement may conclude that going virtual is, in the end, an even better choice for the environment.

Urban policy. The fates of major metropolises are hanging precariously as they grasp at untested policies predicated on borrowed stimulus dollars, short-term business bailouts, non-eviction mandates, and other spit-and-glue measures that are most likely unsustainable. As the New York Post warned: “New York’s entire political class needs to adjust to the new reality and stop looking to milk businesses large and small—and start finding ways to support them before Gotham becomes a permanent Ghost Town.”

All these challenges will be made even greater as the politics of cities grow increasingly polarized. It will be necessary to construct a coherent urban, pro-density policy around these realities if cities are to survive and thrive. Until then, get ready for new concepts such as “cloud offices” and “cloud cities.” We may be hurtling toward a world defined by social and commercial transactions that are almost entirely virtual.

And yet, there’s always hope for cities. Thirty years ago, an army of reformers, backed by competent political leadership, rescued cities from fiscal crisis, crime, dependency, and dysfunction. This time around, many of the same problems are once again plaguing America’s urban enclaves. But the challenge is different, too, as the Internet and the Covid pandemic gnaw away at the physicality of what makes a city a city. Big ideas will be needed—whether from universities, think tanks, business chiefs, or even political leaders—if cities hope to come through this crucible.

Photo by Cindy Ord/Getty Images

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