A looming urban crisis

Mayors missing a window to address the remote-work revolution

ONE of the most surprising things I learned by writing a book about failure is how often people remain inert in the face of even obvious catastrophe. Sure, the plane has crashed; sure, smoke is filling the room. But people act as though everything were normal — finishing their beer, taking a moment to gather their things.

This might help explain why U.S. cities are failing to address a looming crisis with the necessary urgency. But I confess I am still surprised that they aren’t treating the remote-work revolution like the five-alarm fire it is.

For more than a decade, the great problem facing the mayor of any major coastal city was how to manage surging demand for real estate. City leaders could — and did — get complacent about attracting residents. Why agonize about providing top-notch services, or beautiful surroundings, or minimal crime? The people would come, regardless, because the great urban boom of the past 20 years was driven mostly by agglomeration: People moved to coastal cities because that’s where the good jobs were. The deep local labor pools enabled companies to start or expand, creating even more good jobs that drew still greater numbers of people to the city.

This went on so long that the appeal of central cities came to seem almost a law of nature, effortless and eternal. Unfortunately, the pandemic broke the virtuous cycle. Just as the automobile changed urban dynamics by making it easier to live outside the city limits and work downtown, the remote-work revolution is making it less valuable to live near an urban office building. And if people move away, companies will feel less pressure to expand in the pricey urban centers.

That midcentury shift led to the devastation of urban cores, which took decades to revitalize. Yet even with experience as a guide, local officials still seem somnolent. Sure, one hears of sporadic efforts to convert office buildings into residential space and sees the occasional panel discussion on the post-pandemic future. But they seem not to have gotten down to the serious work of reimagining cities for a world where people go into the office only a few days a week — if that.

I suspect cities have fallen prey to the same delusion as those people who carefully pack up their laptops while the plane fills with smoke: They are looking around at other people, most of whom seem to be acting pretty normally. This makes it hard to believe there is any immediate mortal danger.

Yes, downtown might be eerily quiet and the bar-lined streets strangely subdued come Saturday night. Yes, transit systems might be half-empty and hemorrhaging money. Yes, crime might have risen and residents might be darkly muttering about moving to the suburbs. But when haven’t city dwellers threatened to move to the suburbs if the mayor didn’t fix their pet problems right away? Mostly, people have muttered, and stayed put.

Mostly people are staying now. San Francisco, the hardest-hit city, lost 6.3 percent of its population during the first year of the pandemic — which means it kept 93.7 percent of its residents. And that was before businesses reopened. Downtowns and office parks might be somewhat quieter than they were before the pandemic, but they are no longer deserted. Commercial real estate might have lost some of its value, but urban home prices have remained fairly steady.

It would be understandable for mayors to look at all the people who have stayed and thought, “Well, that’s not so bad.” But it would also be a mistake because agglomeration effects can work in reverse: Each person who leaves your city makes it less attractive to everyone else. This can lead to cascades, as in the mid-20th century, because the folks who stayed are at least partly betting that their neighbors will stick around, too. If they discover people are leaving, their own desires might shift.

For that matter, they might already have shifted, but invisibly, masked by the strange state of the housing market. Soaring post-pandemic interest rates have put homeowners in a bind: Even if they sell their house and buy another of similar value elsewhere, they lose money because they have to take out a mortgage at today’s rates, rather than whatever ultra-low sweetheart deal they refinanced into during the depths of the pandemic. Just to break even, they need someone to pay a premium for their urban real estate — and no one is doing that at the moment.

It’s impossible to say how many such people there are. But no matter their number, they are buying mayors time to figure out what a desirable post-pandemic city looks like. This time is not unlimited. Mortgage rates have already come down and will probably fall further as inflation does. The clock is ticking. Mayors need to act like it.

Jeff Chiu The Associated Press file San Francisco lost more than 6 percent of its population during the first year of the pandemic. The popularity of remote work could push that total even higher and threatens many of the country’s urban centers.