How Empty Offices Are Ruining American Cities

Major American cities such as New York and San Francisco face serious problems — mass migration, empty offices and declining tax revenues. These trends have had a direct impact on cities, which rely on tax revenues for funding, a significant portion from commercial real estate. Stijn Van Nieuwerburgh has defined this cycle of spillover effects as the 'urban doom loop.'

Watch the video above to learn more about the so-called 'urban doom loop' threatening American cities, and what local governments can do to avoid falling further into fiscal trouble.

Producer, shot, and edited: Kate Sammer
Supervising Producer: Jeff Morganteen
Animation: Alex Wood, Christina Locopo
Additional camera: Brad Howard, Sean Conolon

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How Empty Offices Are Ruining American Cities

[Fellowtellurian]

Offices are not suitable for conversion because the landlords want to follow minimum square footage laws in order to maximize their gains. So a nice large office building with open floor plans and nice natural light, when divided into the minimum square footage requirements leads to interior windowless units which cannot be sold. So instead of making nice large warehouse style units with open floor plans and plenty of square footage and natural light, they refuse to convert them and complain to their politicians they cannot turn AS MUCH of a profit using the current laws. Greed has no bounds and we all see it.

[nwja]

Office work was largely archaic about a decade ago, the pandemic just knocked over the house of cards. Modern internet speeds and accessibility (especially in urban areas) was just ignored to justify the office space.

My wife works from home, she hasn’t needed to actually visit an office with any regularity for 5 years, but until the pandemic she was doing it for basically no reason. In her current position there isn’t even really even an office to go to and the ones she would go to (if required) wouldn’t have anyone in them for her to “collaborate” with.

My job requires me to be physically present for 30-40% of my work, but an accountant, a programmer, a web designer, customer service… why?

[JeremyGo-GoYears]

This is an unfortunate collateral consequence of our lives improving. Leaving your home for the vast majority of your waking hours to commute to go work in a random building in a downtown never made sense. I'm so grateful technology has caught up and I will never have to do it again (I'm down to once a week). We'll have to figure out what to do with all these buildings, but me going back to work in them is not one of the possible solutions.

[Jhene_Simone]

Every friend I had moved out of New York because it became unaffordable. If my family wasn’t here I would have been gone too. I’m currently at the peak of what I’m willing to pay these people for rent. Another dollar more and I need to pivot because I’m not about to spend my whole life being squeezed into a dirty ass train fearing for my life with every commute and working just to pay to live in an overpriced box.

[jamiebrs]

Part of the problem is people don't want to commute an hour into the city. If the city and companies want to attract people find a way to make living in the city affordable.

[monsieurcondottiero]

If there is an oversupply of commercial real estate and a severe shortage of residential units in most big American cities, it seems like work from home is actually the solution. Just convert more of these buildings into residential units

[playeducate]

Urban Doom Loop – Are We Serious?

It's high time we encouraged people to break free from the daily commute, sparing our environment from the relentless CO2 emissions, especially when remote work is a viable option.

The colossal, soulless office structures that house countless cubicles must undergo a transformation.

Imagine repurposing these massive edifices to alleviate the burdens of rental costs, and offer living spaces to those in dire need of shelter.

[jimv]

Greedy landlords and greedy banks now Government having to live on a budget....welcome to the REALITY that is for the rest of us!

[LauraB.]

What has been impacting suburbs for a long time, finally came to the cities. Online retail has a large part to do with it. COVID just sped it up. Unless people can get creative, I suspect there will be a whole lot of empty buildings (companies, apartments, houses, malls, plazas, etc) all over the U.S.

We need to completely rethink how we live. I’m out of touch with most people, because I’ve never bought all the crap most people do, but I wonder if people are buying as much as they used to. If not, doesn’t bode well for a greedy, capitalistic society, where our economic well-being rests on buying crap we don’t need.

[silflorest]

Zzzzz... corporates and lease owners want to make us go back to the office again, waste our time in traffic to please a micromanager. You know what: NEVER AGAIN!

[jiffyb]

Interesting to learn about. Appreciated his ending comments about how cities have always had to reinvent themselves throughout the ages. This is just another one of those challenges.

[BG-fmod]

And yet all the cities mentioned here have a housing crisis and no affordable housing. Most employees have to commute long distances, wasting gas in heavy traffic. This is karma for companies and real estate companies. Employees take back your rights. If can do the same work from home.

[johnniemiec]

Stijn at the end mentioned only about 10% of offices in his estimation were good candidates for conversion to apartments. He then listed hotels as another possible use. I wish he had briefly detailed why a hotel would be possible in a building where apartments wouldn't make sense. The base infrastructure for either type of building would seem to be pretty similar as far as water, sewage, electrical, etc.

[Ekam-Sat]

Prices remain insane in SF. Greedy landlords don't mind to let stores or buildings sit empty instead of asking normal rents. Whole downtown s turning into a huge dead zone because of the following 1) the city's planners incompetence (not a right mix of residential, small mom and pop shops, office space but either one or the other... and they haven't learned yet), 2) sickening liberal policies that allow people to sell life-killing drugs and that allows people to die of life-killing drugs. 3) greedy Israel supporting landlords who rather let sit property empty than lower the price. Seriously... I don't see how it can be turned around. Greedy people, bad public policy and bad urban planning. SF has it all.

[SeanCrago]

Wait - Building giant single purpose buildings may not have been a flexible long term investment strategy?

[MillenialJoe]

these real estate owners are so greedy they dont even want to make them residential spaces. Imagine how many people they would help and even destroy rent inflation

[diamondsfinest]

The internet has been around for 30 years, the only reason this is an issue is because of complete power tripping by large companies, as well as just awful city design with stupidly expensive infrastructure maintenance, where endless sprawl means generally corporate chains are the only viable option, thus then requiring the big office spaces that are now in trouble.

Constant short sighted goals is blind to the future.

[allennugent]

I do not feel sorry for the industry that with no remorse is making housing prices unreasonable. Like they say. I'm sorry, there is nothing we can do. You should have saved more. Work at home is better for the environment and in some ways better for people. So yes, adjust to the changing world and don't be Blockbuster Video.

[herp_derpingson]

5:30 Unsuitable for conversion to apartments is a shorthand for "apartments for living is too cheap per squarefoot we want higher rent per square foot that can only be generated from cinema halls, hotels etc"

[georgecaplin]

He might be a professor in a business school, but I don’t think he knows much about construction. The fear is usually that creating too much residential real estate crashes the market. North America’s dire need for residential property means that’s unlikely to happen. Those office blocks could be turned into flats in very little time. The big hurdle is planning. If the local government is willing to let millimetre precision go, drylining would repurpose those offices in six to nine months. But then you’d crash the residential property market.