They are the kinds of challenges cities will have to take on in the coming years as they seek to remain relevant and viable places of commerce, culture and living, said urbanists, planners and others attending the recent Urbanism Next Conference in Portland, Ore.
“Downtowns are essentially dead, and a lot of downtowns are becoming deader,” Sucharita Kodali, vice president and principal analyst at Forrester Research, told the conference attendees during the opening session April 27.
Kodali was reflecting on the state of employment in downtowns where work-from-home has replaced decadeslong commuter patterns and the many economies this supported.
Before the pandemic, 4 percent of workers worked from home, said Nico Larco, director of the Urbanism Next Center at the University of Oregon. Today, post-COVID-19, some 29 percent of workers work from home.
“The idea of a three-day or four-day in-person workweek is kind of taking root in our culture. And this has a tremendous amount of implications,” said Larco, pointing to the impacts on commercial real estate. In the United States, there’s an 18.7 percent vacancy rate in the commercial real estate sector.
“There’s even more of that that’s not being used,” Larco said. “It is tremendously worrisome, especially what’s happening in the next few months, the next year as firms are not re-upping their leases. This has huge impacts for our downtowns.”
“This will transform our cities. It is already transforming them,” he added.
In some cities where retail activity has returned as only a shadow of its former self, the outlook is dim.
“This is a big problem for all of those cities where you have essentially office space, without that mixed-use, without the residential real estate. And tourism is another issue as well,” said Kodali, characterizing the situation as a “downtown downturn.”
Aside from dealing with the effects of surplus commercial real estate, city officials must also address the commerce happening on streets where people live. In 2021, some 21 billion e-commerce packages were delivered in the United States, working out to 165 packages per household.
“That’s one every other day. Think about the implication that has for warehousing, for our streets, for the staging that happens through this process,” said Larco.
This trend is causing cities to rethink the way they organize parking, curb management and other concerns like traffic in response to a $1 trillion-a-year industry.
“This could really transform our urban and suburban areas,” said Larco.
“So 2020 was essentially a sugar high” in e-commerce, said Kodali, pointing to the growth of businesses like GrubHub, Blue Apron and Wayfair. But expect to see a leveling off.
Projecting out a few years, analysts in the United States anticipate e-commerce will “probably just normalize back to where it was prior the pandemic,” said Kodali.
