While office towers sit idle and adjacent businesses struggle to make ends meet, residential neighborhoods in America’s largest cities are reviving.
Foot traffic and rent data demonstrate that the pandemic and remote employment have had no effect on the general attraction of cities such as New York, Chicago, and Los Angeles. Instead, the pandemic has pushed the urban center of gravity away from generally antiseptic office districts and toward residential neighborhoods with apartments, bars, and restaurants.
“We’re now back to what cities really are—they’re not containers for working,” said Richard Florida, a University of Toronto specialist in urban planning. “They’re places for people to live and connect with others.”
At the height of the pandemic, several analysts projected that big cities would sink downward as remote workers sought greater space and lower-cost housing. That occurred to some extent early on, but it did not last. According to a Brookings Institution review of census data, while major urban regions lost population during the first year of the epidemic, this was due in part to a decline in immigration from overseas, the losses have subsequently slowed or reversed.
Remote work benefits many residential neighborhoods. As people spend more time at home, they visit local businesses, gyms, and restaurants, strengthening the economies of neighborhoods such as Ditmas Park and Williamsburg in Brooklyn, N.Y., and Georgetown in Washington, D.C.
Placer.ai data, which records people’s activities based on mobile usage, reveals a clear distinction between workplace and residential zones. Visitor foot traffic in Downtown Los Angeles is 30.7% lower than at prepandemic levels, while it is 27.2% lower in Downtown Chicago. In contrast, visitor foot traffic in the Los Angeles suburbs of South Glendale and Highland Park, as well as Chicago’s residential Logan Square district, has been increasing and is virtually back to pre-pandemic levels.
Food delivery is another example of the transition. According to the food-ordering service Grubhub, about 95% of corporate lunch orders in New York City came from the city’s commercial area in 2019. This year, it is estimated to be around 85%.
Meanwhile, rent data shows that city living is in high demand. According to Jonathan Miller, CEO of real-estate assessment firm Miller Samuel, the typical dwelling rent in Manhattan’s Greenwich Village was 30% higher in April 2023 than in April 2019. The typical rent in Los Angeles’ Brentwood district has increased by 63%.
Large cities continue to face significant issues. Vacant office buildings leave downtown stores and restaurants with an insufficient number of consumers, while dropping commercial building prices jeopardize property-tax income.
“The increased vibrancy of great urban neighborhoods will never be enough to offset the decline in property-tax revenues caused by remote work and falling values of commercial office buildings,” Florida added.
Rents have risen as a result of housing shortages. Long-term, replacing offices with residences can help rejuvenate metropolitan areas, but it will take time. Conversions are also frequently difficult and costly. In many regions, crime is on the rise. San Francisco, in particular, has been slower to recover, and its retail sector has suffered.
Still, anyone searching for a deserted hellscape will be disappointed if they walk through Jackson Heights in New York or Silver Lake in Los Angeles.
According to real-estate services firm Cushman & Wakefield, the epidemic sparked a retail revival in Manhattan’s Soho district, with availability there now at its lowest level since 2014.
“Before the pandemic, there was a disconnect between landlord expectations and what tenants could pay,” said Steven Soutendijk, executive managing director of the company’s retail sector. “Covid sort of shook that up a little bit, in a good way.”
Andrea Loscalzo, proprietor of the Upper West Side Italian restaurant Salumeria Rosi, said business is as good as it was before the pandemic. Many regulars left and never returned, but he added that young professionals in their 30s and 40s stepped in to replace them.
“Even as families flee, New York’s magnetic pull on the young and talented is stronger than ever,” Florida said.
According to Stone Real Estate, a local brokerage, retail vacancy in Chicago’s central business area reached a record high of 28% last year, up from roughly 15% in 2019. Crime in the city remains a concern, and Walmart announced in April that it will close four of its eight Chicago shops after annual losses nearly doubled in five years.
The city’s residential and tourist districts are faring much better. According to John Vance, principal of Stone Real Estate, retail vacancy declined by more than 2 percentage points in River North, which comprises a mix of residential, commercial, and hotel space.
“The city closed some streets to traffic so we could expand our outdoor dining,” Vance explained. “River North feels alive.”
Lakeview, a suburb near Lake Michigan and Wrigley Field, is busy with young inhabitants, families, and Cubs fans, according to resident Naomi Polinsky. On a recent Saturday night, its restaurants and bars were filled.
“When we went next door to the sports bar, there was no place to sit. “We walked across the street to the wine bar, which was completely packed,” she explained.
