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They have to offer more than office space.
Before the onset of the coronavirus pandemic, there was reason for good cheer about the nation’s downtowns. “Walking around big cities the past few years,” a Brookings Institution report issued in May 2020 stated, “one could sense a reversal underway from the post-WWII norm. . . the downtown boom is real.”
But Brookings’ researchers questioned whether downtowns could survive the pandemic—and that’s a question that has grown ever more important.
“As we went into the pandemic, things got quiet pretty fast,” said Michael Edwards, president and CEO of the Chicago Loop Alliance. As of mid-December occupancy of downtown office buildings was between 10% and 15% of what it had been before Covid-19. The Willis Tower (formerly the Sears Tower) had been populated by 15,000 people before the pandemic, “but it’s closer to 1,500 now,” said Edwards.
The dramatic shift to remote working, coupled with restrictions on restaurants, bars, shops, gyms, movie theaters and other operations, have driven many small businesses to shutter. Others have survived by changing their nature—sometimes aided by alterations in city and state regulations.
Take the KC Daiquiri Shop in downtown Kansas City. It was successful after it opened in March 2019 with a combination of liquor and food. Its owners had high hopes for its second year in operation, when the Big 12 basketball tournament would be held in the T-Mobile Center, just a block away from the Daiquiri Shop.
“The week of the tournament, the first set of games got canceled because of the pandemic,” said co-owner Kinley Strickland, “and no one knew what was going to happen. Here we were, about to celebrate our one-year anniversary and now everything was shut.” The salvation for Strickland and his partner Calvin Vick came when Kansas City Mayor Quinton Lucas permitted to-go alcohol sales. The state followed up with a similar move.
“We had curbside pickups and we’d bring things to the car,” said Vick. “Or people could walk up and get daiquiris. We had social distancing inside and social distancing lines, so no one was too close to the other person.”
While new business plans enabled by regulatory changes, like that which helped save the Daiquiri Shop, have been helpful, they are far from a full solution for downtowns. Even as there’s renewed hope for the future in the form of vaccines that are being distributed now, there’s a general consensus among city leaders that occupancy rates in office buildings are not going to return to previous levels. People who have the opportunity to work from home are likely to want to continue that practice, at least a few days a week, and the corporations that employed them are inevitably going to want to cut down on the expense of maintaining office space.
What are cities going to do?
“The medium term is an incredible challenge, and this speaks to the need for the federal government to provide aid to the cities,” said Brooks Rainwater, senior executive and director of the Center for City Solutions at the National League of Cities.
Longer term, Rainwater said, “downtowns are going to look different. We will see an increased number of experiential entities like places for cooking classes or to taste wine.” One key to the future of downtowns is to grow as destinations for people from the suburbs or residential neighborhoods in the cities by offering services they can’t find on their own tree-lined streets.
“What we've been offering as a downtown is more than office space. It’s easy access to amenities,” says Scott Murphy, vice president for economic development at the Downtown Dayton Partnership in Ohio. For example, the first Friday of every month, Downtown Dayton has offered a free event from 5 p.m. to 10 p.m. that has included—when the pandemic hasn’t made it impossible—“a variety of entertainment options like street performances and roaming entertainers, arts exhibitions, live music, dining and shopping specials,” according to the Downtown Dayton Partnership’s website.
These amenities can help foster another significant hope for the future of downtowns: Getting people to move there, not just visit during their workdays or on weekends. “If we hold onto the majority of our amenity base, like first floor retail, restaurants, pubs, events and so in, even as elements of the office market grow challenging, we’ll be on a positive trajectory for residential occupancy of downtown,” said Murphy.
Leaders in Tulsa, Oklahoma have much the same vision. “Downtown in Tulsa has become more like a 24-hour neighborhood where people live, work and play,” said Clay Holk, the city’s coronavirus relief fund program manager since August and formerly its senior policy adviser for entrepreneurship, small business and economic innovation. “That’s a countervailing trend when compared to the office space that’s sitting empty.”
The future of the nation’s downtowns, unfortunately, can’t be pinned entirely on attracting people from residential areas or bringing them to live there. It appears clear that new kinds of businesses are going to have to emerge in center cities to unlock the doors and open the windows of the shops and restaurants that have closed down in these bleak times.
Tulsa is taking steps to encourage that kind of transition, by providing inducements aimed at attracting the kind of men and women who are inclined to start their own businesses. Leaders there, with philanthropic support, have built a program called Tulsa Remote that has spawned similar efforts in other cities like Topeka, Kansas and Fayetteville, Arkansas. The program pays remote workers or entrepreneurs who live outside of Oklahoma $10,000 and provides them with free desk space if they move to Tulsa.
“Once they move here, they can form a community and enjoy being part of the community here,” said Holk.
“We need to be developing small businesses that are going to grow from four employees to 20 employees,” he said. “Not all of them will make it. But some will.”