Posted on 08/28/2023 10:28:01 PM PDT by SeekAndFind
We’ve covered the idea of an urban doom loop in places like San Francisco and New York. Today the Washington Post has a story up which argues that it’s actually midsized cities which are in the most danger of falling into a doom loop.
In Indianapolis, the technology giant Salesforce is paring back a quarter of its office space in the tallest building in Indiana, where it has been a key tenant for the past six years. In Atlanta, the private investment giant Starwood Capital defaulted on a $212 million mortgage on a 29-story office tower. And in Baltimore, a landmark building sold for $24 million last month, roughly $42 million less than it fetched in 2015…
Ever since the pandemic drove a boom in remote work, hubs such as New York and San Francisco have drawn attention for their empty offices in previously bustling skyscrapers. But many economists are even more worried about midsize cities that have fewer ways to offset the blow when a major company slashes office space, the sale price of a building craters, or a downtown turns into a ghost town.
In case you’ve forgotten, there are basically three steps to the doom loop:
It’s called a doom loop because all of these steps potentially feed back on one another. Less revenue for the city could mean things are dirtier or less safe over time or that trains don’t run as often. That becomes another reason for people to avoid the area, which leads to more businesses closing, etc.
No city has completely fallen into this yet (though San Francisco is arguably getting close) but midsize cities are struggling more than big cities in general:
The average delinquency rate across the 50 largest metro areas in the country is about 5 percent. But in places like Charlotte in North Carolina or Hartford in Connecticut, it is almost 30 percent, according to data from the real estate analytics company Trepp.
Likewise, occupancy rates average about 87 percent. But in Oklahoma City, it is just 71 percent, and 76 percent in Memphis and St. Louis.
Of course the market is going to respond to this lack of demand. Rents go down and property valuations drop until they reach a point where they become attractive again. However, resetting the cost structure at a much lower rate doesn’t help cities which still have to provide nearly the same services at the same prices. Police and firefighters won’t be taking a 20% pay cut just because revenue stops coming in to city coffers.
What will eventually happen in a lot of places is what we’ve already seen in San Francisco a few times. Owners will simply walk away from properties and turn them over to the bank. That will leave banks holding a lot of downtown real estate that isn’t worth nearly what it was when they loaned the previous owners the money to buy it. National banks will likely be okay but regional banks could be in big trouble.
You can sort of see how big cities might have a little bit easier time of it. San Francisco, despite its problems, is a beautiful place which attracts tourists from all over the country and around the world. It can fall back on some of that revenue when other sources dry up. But Hartford, Connecticut just doesn’t have the same profile. I’m sure it’s a nice place but there are no travel posters for Hartford in foreign airports.
Some enterprising individuals even tried to profit off the trend by creating a San Francisco doom loop street tour. It was canceled at the last minute.
The Downtown Doom Loop tour charged $30 to show the “doom and squalor of downtown San Francisco,” including its open-air drug markets, vacant office and retail spaces, and “outposts of the non-profit industrial complex.”
The organizer of the tour, who purported to be a city commissioner and the co-founder of a large neighborhood association, hoped to remain anonymous. Which is why, they said, they could no longer hold the event.
In its place someone held a tour of the Tenderloin that was intended to put a positive spin on things. The New York Post reports they got an eyeful anyway.
Some of the homeless men and women laying on the street corners looked up in confusion as the tour group walked past them.
Serena, a group member who brought snacks and water in her bag, stopped to give some of the homeless men and a woman some of her food.
The woman, who was passed out on the ground, was so high on drugs that she couldn’t even lift her head to say thank you.
Another man took a long deep breath out of a pipe and blew smoke into the air.
San Francisco is still the poster child for dysfunction because of the homelessness and crime going on there but it sounds like many midsize cities are in a worse crunch and may be closer to a real doom loop.
They were already dying before WW2 gave them an economic boost.
Technology innovations, in communications and transportation in particular, made cities less feasible for industry. Other than possibly being congregation points for health care, cities are relegated to industries such as government or the Grievance Industry.
Totally agree. Firefighters are relics of a bygone era but get paid because they’re union.
Wherever democrats run things the doom loop is inevitable.
20% police department vacancies should result in the same "savings". It also contributes to the urban "death spiral".
Since George Floyd/"Defund the Police"/BLM, urban police departments have had problems retaining and recruiting police officers.
Why wouldn't they? And the police officers that they do retain/recruit are going to be less likely to police.
Urban homicides have increased significantly, and urban traffic deaths have also increased, because traffic laws in cities aren't being enforced, either.
(This has been called "The Retreat to the Donut Shop")
The doom loop started BEFORE The pandemic. This article attempts to rewrite history.
10 acres with a pond, more than 1 day's walking distance away from any city.
You either pay for firefighters through taxes or through increased insurance premiums on your mortgage.
Firefighters in recent decades have also picked up the additional duties of EMTs to offset their costs.
I worked in an engineering office in DC for 9 years. I don’t know why they had stores and shopping, I went to work on a train not the Metro, I got on a shuttle went to my office spent the bulk of the workday in the building and left my office to reverse my commute. I never shopped downtown, I never got out for a decent walk went out to eat a couple times for some going away luncheons, that was it. Pretty sterile if you ask me.
The train commute was nice got to socialize because trains are totally different than the Blank Stare metros and people actually like to talk... and I got to catch up on the news because I had time to read the paper.
A path I see is for the vacated commercial space to be turned into housing which would allow workers to live near their jobs. Other space could be made into parks and the like that would make the city a decent place to raise a family.
This plan would counter the time consuming, expensive commutes, clogged massively expensive freeways, gasoline consumption, and for some the CO2 emissions.
I never once paid extra on a mortgage because of no firefighters (back when I had a mortgage). That must be newer. Taxes pay for firefighters in the city but being in the city is why they’re union. They do seem to have other duties now. Where I live they show up at auto accidents.
Your mortgage holder that requires you to have insurance knows what fire protection your town has.
Like I said it must be newer. I moved from a town with a taxpayer fire department to a rural area with a volunteer one 15 miles away. The mortgage rate was the same (same credit union did both).
bkmk
Spot on.
And it gets worse.
Just wait until the retirees from state and local governments discover that their pensions have been taken over by the Pension Benefit Guaranty Corporation (PBGC), and that their “defined benefit” pensions will be capped at $12,780 a year.
I agree with the sentiment, but the target is much too small. Don’t start with the salaries. That’s the last car on the train.
Start with the programs and activities. At least 40% of the people employed by the average city are in make-work or jobs or programs that are not core functions for a US city. Anything that is not physical infrastructure or health and safety related should be eliminated.
My guess, from experience with the federal government, is that payrolls could be cut 50-60%, and essential functions could still be done.
I am for doing both to useless government parasites, fire at least half of them and then cut the salaries of the remainders.
p
That works for me!
I have a small piece of God’s country too.
Portland maine has turned into a sh++hole. Was a great small city and the leftists took it and ruined it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.