COVID-19, Economics, Top Stories

Towards a Better Urbanism

The pandemic has brought panic to the once-confident ranks of urbanists promoting city density. At a time when even the New York Times is noticing that density and transit pose serious health risks for any potential re-opening, such people attack their critics as “anti-urbanist” or “sprawl lovers” or “urban gadflies.” Preferring theology over data, some advocate ever-greater density and crowding in cities and mass transit.

But wishful thinking cannot alter the fact that the pandemic has hit core cities with particular force. The concentration of the worst outbreaks in major urban areas—the New York region alone accounts for more than 40 percent of all US fatalities—is a global phenomenon also seen in Japan, Korea, the United Kingdom, France, Belgium, Italy, and Spain. This has cast a pall on traditional downtown-centric employment, dependent on massive subway systems, crowded apartments, and packed workspaces.

Such places promote what demographer Wendell Cox calls “exposure density.” This is particularly lethal for low-wage workers forced to take packed transit lines from crowded apartments to packed workplaces. It is not surprising that, in the shadow of the pandemic, a recent Harris poll found that almost two-in-five urban residents are considering a move to a less crowded area. The latest consumer survey from the National Association of Realtors also found that households are “looking for larger homes, bigger yards, access to the outdoors and more separation from neighbors.” Even many diehard city residents, suggests the New York Times, are now putting bids on suburban houses further from the city.

The demise of the high-rise office tower

Economic necessity has long defined how cities are organized. In the pre-industrial past, they grew up near coastal ports, rivers, or along trade routes such as the Silk Road. They housed those needed to run the state and maintain trade as well as servicing the luxury needs of the rich. Later, the industrial revolution forced cities to grow radically, as manufacturers depended on easy access to vast numbers of workers, who often suffered from severe social and health effects as documented by Friedrich Engels in his influential book, The Condition of the Working Class in England.1

The past 50 years has seen the demise of the industrial city as production has shifted to developing countries or more remote locations, and the rise of an urban economy based on elite “producer services.” These industries, including finance, media, software, accounting, and law, depend on the migration of talent from elsewhere, both domestically and abroad. In modern times, the most prominent physical expression of urban greatness—once cathedrals or great public works—has been the office building. This same pattern has extended outside the West, notably in the Middle East and East Asia, which now boast most of the world’s tallest buildings.

But this configuration is now faced with the challenge of “social distancing.” Before the pandemic, companies coped with high urban rents by using far less space per new job—down from 175 square feet of space per new employee in the 1990s to 125 in the late 2000s and barely 50 square feet today. Social distancing requirements will force employers to offer more space per employee, which will in turn see their costs rise. Elevator traffic will slow, and private offices, once considered passé, may soon be in demand, as executives seek greater isolation from their employees.

This will be a major challenge to an office market that had already experienced a decline over the last few years. Now, the prospect of packing people into trains, elevators, and offices is likely to be even less appealing. “If you’re working in a downtown high-rise, it’s hard to socially distance on the elevator, where somebody might cough or sneeze,” says housing economist Brad Hunter, managing director at RCLCO Real Estate Advisors. “On the other hand, in the suburbs, you can pull into your driveway and go straight into your house.”

The rapid rise of telecommuting seems like one logical answer to office density. A University of Chicago study suggests that as many as 34 percent of American workers could do their jobs remotely. The OECD estimates that there are approximately 641 million people in the office workforce. If 20 percent of them incrementally move to working from home, then approximately 128 million people will eventually no longer need office space. This could lead to a reduction of 2.3 billion square feet per year—not a number likely to put a smile on the faces of many building owners.

Critically, the telecommuting shift covers a large part of the workforce that historically filled the high-rise offices—media, analysts, programmers, marketeers, designers. These workers, notes a 2020 study, appear to be more able to pay their rents and mortgages during the pandemic than those who cannot work from home. This will also be the preference for many. According to Gallup, about 60 percent of US telecommuters wish to keep working at home for the foreseeable future. Globally, some 80 percent of global workers expressed the desire to work from home at least some of the time.

The shift to remote work is also gaining surprising acceptance among CEOs. In two recent focus group sessions we conducted with CEOs in the United States, executives universally acknowledged that working from home would increase. They acknowledged that it remains important to have some level of face-to-face interaction in order to build teams and affiliation with the company. But virtually all executives observed an increase in productivity and employee satisfaction from working from home.

Unsurprisingly, the CEOs we spoke with were attracted to the potential cost savings that would come from accelerating remote work. They felt that they would still need some office space, but only for a fraction of their workforce at any one time, and could therefore eliminate as much as half of their space with no negative impact. If they needed to do “all-hands meetings,” they could either rent space in a public facility (like a hotel) or conduct those meetings virtually. Some companies, such as mortgage giant Nationwide, have already announced plans to close several “brick and mortar” offices in favor of home-based work. Other major financial institutions—Barclay’s, Morgan Stanley, Citigroup, and JPMorgan Chase—have also decided to reduce their large office footprint.

The financial fallout of this development could be significant. Particularly vulnerable will be mega-dense developments like Hudson Yards, the proposed new development in Sunnyside, Queens, and other similar efforts in Chicago. A massive $3.9 billion, 190-acre Google-led development project in Toronto has already been cancelled, a casualty of both the weaker urban market and concerns about the surveillance involved in the project. Two largely Chinese-financed projects are also in trouble—one in downtown Los Angeles is already in distress, and another in San Francisco may never be completed.

The emergence of “smart sprawl”

Firms that continue to need office workers may well be forced to flee to less costly areas. “Our national crash course in video-conferencing is already persuading some businesses they really don’t need to locate so many staff in the most expensive corner of the country,” writes James Kirkup, director of the influential Social Market Foundation. “Some of the offices now standing empty in gleaming towers in the City of London will remain quiet for years to come.”

The great cities like London will no doubt retain “hip” dense creative districts, attractive to young, often unmarried, and childless people. But in the United States at least, high-end job growth has been shifting over the past five years to sprawling, low density metropolitan areas like Austin, Nashville, Orlando, Charlotte, Salt Lake City, and Raleigh. Rather than rely on transit, which is in steep decline around the world, places like these are where telecommuting is most widespread, and these sprawling metros are likely to dominate future growth, according to a recent analysis from Moody’s. They project the easiest recovery for largely suburban regions that combine a dispersed economic environment with a vibrant high-tech economy. These also tend to be areas with a strong appeal to millennials.

In the competition to attract new workers and companies, some suburban communities are working to offer a modicum of urban amenities where retail, entertainment, services, and housing are blended into the design of the place. This can include restored main streets as well as newly constructed “town centers.” Places like the Domain outside Austin, Houston’s Woodlands, Valencia north of Los Angeles, Moreton Bay and Springfield in Australia, or Britain’s venerable “new towns” like Milton Keynes that provide opportunities for work and recreation without requiring a trip into the central core. These areas often feature townhouses and retail space in the center, surrounded by single family homes.

Equally important, these communities could appeal to young families seeking a workday that combines personal and business responsibilities. That means people will not want to drive long distances to reach services or entertainment venues. They are going to want the ability to get back home to take a call or to “swap out” their personal time with their money-earning time.

These emerging communities have been dubbed “smart sprawl” by Los Angeles planner Wally Siembab—a way to reduce long-distance commuting and create a safe family-friendly environment. Such developments reprise some of the ideas espoused by the great British urban theorist Ebenezer Howard. His famous advocacy for “garden cities” sought to combine “town and country” with settlements outside the urban core, surrounded by parks and with ample workplaces. Such ideas were widely endorsed by a wide range of luminaries including HG Wells, Thomas Carlyle, and Fredrich Engels.2

The revival of small towns

In the coming post-pandemic era, places like these are likely to gain, in part because they are far more likely to reopen early than the dense coastal cities. But we may also be witnessing new growth in even smaller cities—places with under a million people—which are now gaining migrants faster than any other area in North America.

As we found in a recent study for Heartland Forward, there is growing migration by millennials to select second- or third-tier metropolitan areas like Fargo, Des Moines, Fayetteville, and Grand Rapids. These areas are gaining migrants, notes Brookings, even as some big cities like New York, Los Angeles, and Chicago have actually lost millennials over the past five years.

Not all such places—particularly those without attractive physical and urban amenities—will be a part of this movement. But those that retain economic vitality are now, according to a new report from Richard Florida, attracting technologists and entrepreneurs, who find enough cultural amenities to satisfy their requirements but without sacrificing safety, family friendliness, or affordability. This shift is most evident in the revival of many small city downtowns that are largely located in states with low levels of exposure to COVID-19.

In part, this is something of a revival of the thriving small towns and cities that so impressed Alexis de Tocqueville with their civic spirit and enterprise in his travels in the United States in the 1830s. Now the once largely abandoned cores of these towns are being revived, attracting newcomers, both from abroad and the coasts. Even ethnic food can be found in suburbs or smaller towns; in downtown Fargo, you can find such things as a Thai sweet shop and boutiques catering to sophisticated metropolitans.

These environments have benefited from the migration of tech and other professionals, many of them too young or urban-centric to settle down in the single-family neighborhoods that predominate in these areas. Two decades ago, for example, downtown Fargo was both dull and largely derelict; now it boasts loft apartments, a fine boutique hotel, and a panoply of cultural attractions. This has increased the appeal of the area to young tech workers, says Peter Chamberlain, founder of Walkwise, a Fargo-based start-up. “It’s a great community, both vibrant and cheap—which is great for entrepreneurs,” he told us. “I miss Portland and Boston, but we have a lot to offer in amenities here now.”

What about the core city?

The core city can also thrive in the future, but only if it embraces significant change. Great cities need to become more decentralized, and less dependent on mass transit. Transportation needs to adapt so that people can get around by walking, biking, and driving (eventually in sterile autonomous vehicles). Cities have made similar changes in the past. After repeated epidemics—most notably the devastating Spanish flu, which also hit dense cities and crowded places like trenches and mines—urban visionaries worked to make their cities healthier and less dense. This occurred not only in the United States, but in the larger cities of Europe, including London and Paris.

Manhattan, for example, was home to 2.3 million people in 1910. The lower east side was among the most crowded places on Earth, and consequently particularly susceptible to all sorts of contagions. Yet over the next 50 years, the core emptied out and became more widely commercial. Manhattan’s population dropped to 1.5 million as the population headed to the outer boroughs and to the surrounding suburbs which now make up more than 60 percent of greater New York’s population.

This de-densified core will be expensive to maintain, with streets, subways, buses, and elevators that will need to be cleaned regularly and monitored for overcrowding. Even with high costs, these core cities could well retain the elite functions for those who earn enough to live there. Well over a century ago, HG Wells predicted this transformation of the urban core from the center of city life to what he referred to as “places of concourse and rendezvous.” City centers, he wrote, would contain a relatively small percentage of the overall population, and would be dominated by the affluent and childless. They would, he waggishly predicted, become places of “luxurious extinction.”3

Of course, de-population and expanded surveillance at places of work will create a very different kind of globalized city. In an era where many people purchase much of what they want and need online, the shopping environments once only found in cities may become less unique. At a time when anything, including food, can be sourced almost everywhere, core cities will remain the favored places for well-financed chains and elegant elite restaurants, even as they witness the continuing decline of institutions like pubs in London, bistros in Paris, kosher delicatessens, and the once ubiquitous Greek diners in our native New York.

The core city will retain its appeal, but to stay safe, “social distancing” will likely curtail the once boisterous streetscape with its capacity for casual contacts, unique shops, and restaurants. Under the new hygienic regime, Western core cities may come to resemble Singapore, a brilliantly, if somewhat oppressive, “Potemkin city,” as Rem Koolhaus described it—a place where the population is cowed and surveilled, but also safe and affluent.

Can the pandemic create a better urbanism?

Throughout history, crises have been the forge for difficult, but often ultimately positive, social change. Problems with fire, sanitation, and lack of water created the conditions for Rome’s great innovations with its cloaca, or sewer system, and its massive systems to bring water from the mountains to the thirsty metropolis. Repeated exposure to infectious diseases, including the Spanish flu, led to the great urban reforms that started in the late 19th and carried through to the mid-20th century.

Today’s pandemic crisis offers us a similar opportunity. The interrelationship between urban density, mass transit, and inequality has been made evident in the spread and ferocity of the virus. We cannot simply double-down on urban planning directives that promote an environment widely perceived as presenting a potentially deadly challenge to their health. But nothing need go to waste; we can take advantage of increasingly redundant office and commercial space to build human-scaled housing in all sorts of environments. Rather than seeing the core city as civilization’s destination, we need to accommodate people’s aspirations and allow them to spread out. This will help to create conditions in which the core city too can thrive in the emerging era.

 

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His new book, The Coming of Neo-Feudalism, is now out from Encounter. You can follow him on Twitter @joelkotkin.

Marshall Toplansky is a clinical assistant professor of management science at Chapman University’s Argyros School of Business and Economics. He is a research fellow in the school’s Hoag Center for Real Estate and Finance and is formerly managing director of KPMG’s Lighthouse Center for Advanced Data and Analytics.

References:

1 Arnold Toynbee, The Industrial Revolution, (Boston: Beacon Press,  1956, p. 10–11; Friedrich Engels, Condition of the Working Class in England, translated by W.O. Henderson and W.H. Chaloner, (Stanford CA: Stanford University Press, 1968), pp.57–61
2 Joel Kotkin, The City: A Global History, (New York: Modern Library, 2005), pp.115–116
3 H.G. Wells, Anticipations of the Reaction of Mechanical and Scientific Progress Upon Human Life and Thought, (Mineola, NY: Dover, 1999), pp.20–37, pp. 75–6

Photo by Sean Pollock on Unsplash.