Meanwhile, many stores and restaurants have shuttered or are barely hanging on due to the loss of the business crowd. Residential rents have dropped and multifamily investment prices have also taken a hit as many workers do\u00a0 not need to pay higher rents to live in the city. Hotels are welcoming a fraction of the business travelers they once did.\u00a0\u00a0<\/p>\n
Kastle Systems, a technology security company, offers a complex and evolving picture of office occupancy. Average occupancy across 10 major cities tracked by the company stood at only 28.1 percent as of the week of May 19. Yet that figure also showed signs of upward movement: a 30 basis-point uptick compared to the previous week and a 160 basis-point increase since late April.<\/p>\n
Occupancy remained under 20 percent in San Francisco (16.2 percent) and New York City (16.8 percent). On the other side of the spectrum, three Texas markets\u2014Houston, Dallas and Austin\u2014recorded occupancy north of 40 percent. These trends hint at regional variations in the momentum of major CBD office markets.<\/p>\n
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READ ALSO:<\/strong> NYC\u2019s Office Landscape Is Changing Fast. What\u2019s Next?<\/a><\/p>\n Those numbers will rise, but how quickly is hard to predict. Major financial services firms and tech giants alike have proven eager to leave remote work behind, with Goldman Sachs and JP Morgan Chase & Co. asking employees to return to the office by June or July and Google setting a deadline of Sept. 1.<\/p>\n San Francisco. Image by Free-Photos\/Pixabay.com<\/p><\/div>\n Provided that workers return in sufficient numbers, that process could drive the revitalization of formerly bustling CBDs that have suffered business closures and reduced retail demand. But other, longer-term threats may continue to weigh on the viability of downtown areas.<\/p>\n \u201cI think the challenges of the central business district are the same today as they were before,\u201d said Diane Hoskins, co-CEO of Gensler, during the Urban Land Institute\u2019s virtual spring conference in May. \u00a0She cited traffic congestion and neighborhoods that lack opportunity as chronic problems.<\/p>\n \u201cThere\u2019s such an outcry, and I think it\u2019s a universal outcry, for walkability, for access, for services\u2014to be within a humane distance, if you will,\u201d Hoskins added. \u201cThis idea of the hour, hour-and-a-half commute is something that people are questioning.\u201d<\/p>\n However, some observers view this time as an opportunity for the CBD to make a major transition, like Richard Florida, a noted urbanist and University of Toronto professor. \u201cAs I see it, the Central Business District will evolve into a hub in a system of more decentralized Neighborhood Business Districts that\u00a0span from the city center out to the suburbs and rural areas,\u201d he wrote for Bloomberg CityLab in May. \u201cFar from being dead, the CBD is perhaps the single best place to be transformed in this way.\u201d Florida calls CBDs ideally suited \u201cto be remade as more vibrant neighborhoods where people can live and play as well as work.\u201d<\/p>\n Another factor shaping the issue is a remarkable migration pattern that has emerged over the past year. The disruptions of the past year also prompted a modest urban exodus, with 82 percent of urban counties recording more move-ins than move-outs during COVID-19, according to data compiled by Bloomberg. Over the same stretch, a larger number of suburban counties\u201491 percent\u2014saw more people moving in than relocating out.<\/p>\n Manhattan. Image by Bruce Emmerling\/Pixabay.com<\/p><\/div>\n While Sun Belt states like Florida and Texas gained residents, national migration rates increased just 3 percent between March 2020 and February 2021. Rather than leaving for other regions of the country, relocating city-dwellers tended to stay in their current metropolitan area and move outward from the urban core. Bloomberg found that 84 percent of the moves in America\u2019s 50 most-populous cities were to locations within the same metro area.<\/p>\n As many cities welcome back workers and pandemic restrictions are lifted, it\u2019s possible that urban residents will rediscover the attractions of high-density living. Last August, 39 percent of New York City residents reported that they were exploring a potential move out of the city, according to a survey conducted by Gensler. That number dropped to 26 percent in the latest survey this past February.<\/p>\n The transition from remote work<\/a> is likely to further affect those plans. The adoption of hybrid work models, in which employees report to the office for part of the week, could reshape living arrangements in other ways.<\/p>\n \u201cIf two years ago, you might have thought you wanted to be no more than 45 minutes (from New York City) on Metro-North, now you might take that out to 90 minutes, because you\u2019re only coming in twice a week,\u201d said Nicole Beauchamp, a Manhattan-based agent with Engel & Volkers Real Estate, referring to the commuter rail line that links New York City to the Connecticut suburbs. That, in turn, encourages a commuter to buy a larger house that\u2019s farther from the office.<\/p>\n But it\u2019s unclear whether business districts, which are so heavily reliant on corporate expense accounts and entertaining clients, can thrive when workers are spending much of the week at home.<\/p>\n \u201cMaybe the two days that you are in the city, those are the days that you have your power lunch at the Regency, then you have your dinner,\u201d Beauchamp said. \u201cIf everybody\u2019s kind of staggering these two or three days a week that they\u2019re in the office, will that be enough for these restaurants?\u201d<\/p>\n The pandemic has accelerated growing interest by large firms in suburban office projects, a trend exemplified before the outbreak by companies such as Amazon, which in 2018 chose Arlington, Va.\u2014a neighboring suburb of Washington, D.C.\u2014for its massive HQ2 campus. (The e-commerce giant revealed its proposal<\/a> for the 3.3 million-square-foot second phase of the development in February.)<\/p>\n \u201cThe closer-in suburban locations or cities that have a suburban feel are definitely becoming very active as we look at the tech sector especially,\u201d Hoskins noted. This decentralizing tendency will play out differently in CBDs that rely heavily on suburban mass transit compared to those where most commuters drive. In cities like New York, Chicago, Washington, D.C., and San Francisco, corporations may feel more pressure to locate offices close to where their workers live. \u00a0In contrast, daily commutes may tend to be considered less burdensome in more car-friendly Sun Belt metros like Dallas, Houston, Miami or Phoenix.<\/p>\n One intriguing effect of the crisis has been new interest in suburban coworking locations. Demand for flexible office space\u2014as measured by inquiries to the company\u2019s listings platform\u2014fell 22 percent in New York City in 2020, reported The Instant Group, a workspace innovation firm.<\/p>\n At the same time, demand surged in alternative locations: 60 percent in Greenwich, Conn., an upscale suburb on the Metro North commuter line, and 250 percent in nearby Newark, N.J. \u201cBy and large, the big demand for the suburban areas is coming from corporations \u00a0trying to master their return-to-office plan,\u201d said Joe Brady, CEO Americas of The Instant Group.<\/p>\n Brady added that corporations are exploring a hub-and-spoke office arrangement in which employees can have a \u201cwork-near-home experience\u201d that\u2019s outside the house, complete with an industrial internet connection, a printer and engagement and collaboration with coworkers.<\/p>\n
\n![\"San](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/San-Francisco-downtown.png\")
<\/a>Moving Parts<\/h2>\n
![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/manhattan-1567114_1920.jpg\")
<\/a>Branching Out<\/h2>\n