Driven partly by fear of infection, and by the liberating rise of remote work, Americans have been increasingly freed from locational constraints. Work continues apace in suburbs and particularly in sprawling exurbs that surround core cities, while the largest downtowns (central business districts, or CBDs) increasingly resemble ghost towns.
This shift has made it more practical for individuals and particularly families to migrate to locations where they can find more affordable rents, and perhaps even buy a house. . . .
This suggests that the downtown cores of U.S. cities will continue to struggle. Since the pandemic began, tenants have given back around 200 million square feet of commercial real estate, according to Marcus & Millichap data, and the current office vacancy rate stands at 16.2%, matching the peak of the 2008 financial crisis. Between September 2019 and September 2020, the biggest job losses, according to the firm American Communities and based on federal data, have been in big cities (nearly a 10% drop in employment), followed by their close-in suburbs, while rural areas suffered only a 6% drop, and exurbs less than 5%. Today our biggest cities—Los Angeles, New York, and Chicago—account for three of the five highest unemployment rates among the 51 largest metropolitan areas.
The rise of remote work drives these trends. Today, perhaps 42% of the 165 million-strong U.S. labor force is working from home full time, up from 5.7% in 2019. When the pandemic ends, that number will probably drop, but one study, based on surveys of more than 30,000 employees, projects that 20% of the U.S. workforce will still work from home post-COVID.
And even when they return to work, things aren’t the same: Always. Be. Casual. As workers return to the financial district, longstanding dress codes have been relaxed. Right now, almost anything goes. Even jeans.
h/t Glenn