Revisiting The Urban Doom Loop
I wrote about this once before:
Basically, the “Urban Doom Loop” is the idea that remote and hybrid work arrangements will kill downtowns. As they kill urban cores, cities will have a harder time collecting taxes, so cities will then tighten belts and core elements of a city’s infrastructure will suffer (I suppose this is in the absence of “public-private partnerships”).
Per Planet Money recently:
Nearly 20% of office space across the U.S. is sitting empty, a milestone that exceeds the vacancy rate following the 2008 financial crisis. It’s worse in downtown Los Angeles and San Francisco, where 28% and 29% of spaces were registered vacant in the first quarter of 2023, respectively.
Analysts worry that this trend could set off a domino effect: If companies continue to give up their office leases, their landlords may not be able to keep up with mortgage payments, increasing the risk of defaults and foreclosures. The unraveling of the office sector also poses risks for regional banks and the ecosystems of downtowns in cities around the nation.
The regional banks thing is obviously troubling. You probably remember a few waves of news headlines about bank collapses and bailouts, no? Planet Money continues in this way:
Office owner Columbia Property Trust defaulted on $1.7 billion in debt tied to seven buildings in San Francisco, New York City, Boston and Jersey City, N.J…
