Neoliberalism · Banking · Commercial real estate

Neoliberalism

Banking

Commercial real estate


Fig. 1. “The iconic Crescent stands as recognizable landmark in the upscale neighborhood of Uptown, Dallas.” Photograph by Dallasedits [pseud.], July 5, 2016, via Wikimedia Commons, CC BY-SA 4.0.


Fig. 2. Along Smithfield Street, underneath Mellon Square, in Pittsburgh, Pennsylvania. Photograph by author, June 2, 2023.

One of the outcomes of the COVID-19 was that workers discovered 1) they could work from home, and 2) they preferred it to coming into the office. A battle has raged ever since,[1] as bosses prefer seeing their minions slaving away.

“One of the questions businesses are asking is ‘How am I going to get my employees back into the office?’” says Mike Slattery, director of tristate research at CBRE. “Part of that is providing light and air, more attractive amenities, and a really good location. On the other hand, if you can’t offer your workers all those bells and whistles, at least you can give them an office close to transit.”

Rock-climbing walls, Equinox-caliber gyms and rooftop bars are nice, but what workers really want, it seems, is an easier commute.[2]

As it happens, public transportation is one factor in a “doom loop,” a destabilizing feedback in which downtowns, suddenly empty from the pandemic, lost retail shops as well as office tenants, then lacked the office worker base to support replacement businesses, so downtowns become less attractive, lower activity places, increasingly taken over by the problems of poverty, so people stop coming downtown, hurting the shops that remain, hurting parking facilities, hurting public transit. So more businesses close, rinse and repeat, while cities simultaneously lose the revenue base to respond.[3]

See also:

Karen Heller, “How San Francisco broke America’s heart,” Washington Post, May 21, 2019, https://www.washingtonpost.com/lifestyle/style/how-san-francisco-broke-americas-heart/2019/05/21/ef9a0ac0-70ea-11e9-9eb4-0828f5389013_story.html

Adam Brinklow, “SF election results: Vacant stores tax Proposition D leads,” Curbed San Francisco, March 4, 2020, https://sf.curbed.com/2020/3/4/21164603/election-results-prop-d-vacant-store-tax

Dominic Fracassa, “SF’s Prop. D vacant storefront tax wins; so does Prop. E, tying office space to housing,” San Francisco Chronicle, March 6, 2020, https://www.sfchronicle.com/bayarea/article/SF-s-vacant-storefront-tax-measure-Proposition-15112228.php

Heather Kelly, “Twitter employees don’t ever have to go back to the office (unless they want to),” Washington Post, May 12, 2020, https://www.washingtonpost.com/technology/2020/05/12/twitter-work-home/

Ishaan Tharoor, “The pandemic may forever change the world’s cities,” Washington Post, May 20, 2020, https://www.washingtonpost.com/world/2020/05/20/pandemic-may-forever-change-worlds-cities/

Paul Schwartzman, “Downtown D.C.’s struggles mount as many workers remain remote,” Washington Post, January 27, 2023, https://www.washingtonpost.com/dc-md-va/2023/01/27/downtown-dc-office-buildings-remote-workers/

Roland Li and Noah Arroyo, “Cities are struggling. San Francisco could be in for the biggest ‘doom loop’ of all,” San Francisco Chronicle, March 30, 2023, https://www.sfchronicle.com/sf/article/city-economy-doom-loop-17846412.php

Biz Carson, Karen Breslau, and John Gittelsohn, “Bank Turmoil Collides With Tech Slump in Battered San Francisco,” Bloomberg, April 2, 2023, https://www.bloomberg.com/news/articles/2023-04-02/san-francisco-s-feeling-the-pain-of-the-banking-crisis-big-tech-layoffs

Alena Botros, “Morgan Stanley analysts are forecasting something ‘worse than in the Great Financial Crisis’ for commercial real estate,” Fortune, April 4, 2023, https://fortune.com/2023/04/04/how-bad-commercial-real-estate-banking-crisis-svb-morgan-stanley-outlook/

San Francisco Chronicle, “San Francisco could be on the verge of collapse. What should California do about it?” April 4, 2023, https://www.sfchronicle.com/opinion/editorials/article/downtown-san-francisco-17852552.php

Eric Platt and Harriet Agnew, “Charlie Munger: US banks are ‘full of’ bad commercial property loans,” Financial Times, April 30, 2023, https://www.ft.com/content/da9f8230-2eb1-49c5-b63a-f1507936d01b

Jake Blumgart and Chris A. Williams, “Philly-area workers prefer to work from home, leaving millions of square feet of office space vacant,” Philadelphia Inquirer, May 2, 2023, https://www.inquirer.com/real-estate/commercial/office-building-vacancy-hybrid-work-sublease-20230502.html

Garrett Leahy; “Downtown San Francisco: Human Waste Increasingly Found in Westfield Mall Elevators, Staff Say,” San Francisco Standard, May 16, 2023, https://sfstandard.com/business/downtown-san-francisco-human-waste-increasingly-found-in-westfields-elevators-staff-say/

Roland Li and J. D. Morris, “After Nordstrom store closures, what can San Francisco do to stop the retail exodus?” San Francisco Chronicle, May 3, 2023, https://www.sfchronicle.com/sf/article/after-nordstrom-closures-s-f-stop-retail-exodus-18074794.php

Kevin Truong, “Downtown San Francisco Office Tower Likely To Sell at Massive Discount: Sources,” San Francisco Standard, May 8, 2023, https://sfstandard.com/business/downtown-san-francisco-office-tower-to-sell-at-massive-discount-sources/

Kevin Truong, “Union Square: Empty Powell Street Gets $6M Plan to Lure Shops Back,” San Francisco Standard, May 16, 2023, https://sfstandard.com/business/vacancy-ridden-street-near-sfs-union-square-gets-6m-investment/

Biz Carson, “San Francisco Gets a $1 Billion Bet That Workers Will Return,” Bloomberg, May 17, 2023, https://www.bloomberg.com/news/articles/2023-05-17/san-francisco-transamerica-pyramid-is-being-remade-in-bet-remote-work-will-fade

Tabby Kinder and George Hammond, “What if San Francisco never pulls out of its ‘doom loop’?” Financial Times, May 18, 2023, https://www.ft.com/content/71d8013d-9d94-441e-b2d1-3039c04397d6

Tim Henderson, “A few cities are regaining residents after shrinking during the pandemic,” Stateline, May 18, 2023, https://stateline.org/2023/05/18/a-few-cities-are-regaining-residents-after-shrinking-during-the-pandemic/

Lizzy McLellan Ravitch, “Hybrid work is here to stay. These Philly business leaders say ‘we should stop complaining,’” Philadelphia Inquirer, May 18, 2023, https://www.inquirer.com/news/philadelphia-hybrid-work-executives-women-business-20230518.html

Maryann Jones Thompson and Shelley D. Fargo, “Nearly Half of Storefronts in San Francisco’s Union Square Have Shuttered Since 2019,” San Francisco Standard, May 18, 2023, https://sfstandard.com/research-data/san-francisco-union-square-store-closures-pandemic-fallout/

Ximena Conde and John Duchneskie, “Most large U.S. cities reversed or slowed pandemic population drops. But not Philly,” Philadelphia Inquirer, May 19, 2023, https://www.inquirer.com/news/philadelphia/philadelphia-population-census-data-us-cities-pandemic-20230519.html

Konrad Putzier and Kate King, “American Cities Are Starting to Thrive Again. Just Not Near Office Buildings,” Wall Street Journal, May 30, 2023, https://www.wsj.com/articles/american-cities-are-starting-to-thrive-again-just-not-near-office-buildings-d839798f

Telis Demos, “Commercial Real Estate Can Be a Problem for Banks, and Also a Solution,” Wall Street Journal, June 1, 2023, https://www.wsj.com/articles/commercial-real-estate-can-be-a-problem-for-banks-and-also-a-solution-cb88eb5

Dror Poleg, “The Next Crisis Will Start With Empty Office Buildings,” Atlantic, June 7, 2023, https://www.theatlantic.com/ideas/archive/2023/06/commercial-real-estate-crisis-empty-offices/674310/

Carol Ryan, “Property Loans Are Starting to Crack,” Wall Street Journal, June 9, 2023, https://www.wsj.com/livecoverage/stock-market-today-dow-jones-06-09-2023/card/heard-on-the-street-property-loans-are-starting-to-crack-0tae3dxXRfn1hWR5jqar

Kate King, “Hotel Owners Start to Write Off San Francisco as Business Nosedives,” Wall Street Journal, June 12, 2023, https://www.wsj.com/articles/hotel-owners-start-to-write-off-san-francisco-as-business-nosedives-e84c64ef

Caroline O’Donovan, “Workers want to stay remote, prompting an office real estate crisis,” Washington Post, June 12, 2023, https://www.washingtonpost.com/technology/2023/06/12/office-real-estate-san-francisco/

Kevin Truong and Noah Baustin, “Westfield Gives Up Downtown San Francisco Mall,” San Francisco Standard, June 12, 2023, https://sfstandard.com/business/westfield-gives-up-downtown-san-francisco-mall/

Mike Ege, “Plan To Save Downtown San Francisco From Doom Loop Approved by Lawmakers,” San Francisco Standard, June 13, 2023, https://sfstandard.com/politics/city-hall/plan-to-save-downtown-san-francisco-from-doom-loop-approved-by-lawmakers/

Kim Velsey, “What Really Brings People Back to the Office? The Easiest Commute,” New York, June 13, 2023, https://www.curbed.com/2023/06/grand-central-offices-return-to-office-commutes.html

Emma Goldberg, “Return to Office Enters the Desperation Phase,” New York Times, June 20, 2023, https://www.nytimes.com/2023/06/20/business/return-to-office-remote-work.html

Natalie Wong et al., “The World’s Empty Office Buildings Have Become a Debt Time Bomb,” Bloomberg, June 23, 2023, https://www.bloomberg.com/news/articles/2023-06-23/commercial-real-estate-reset-is-causing-distress-from-san-francisco-to-hong-kong

James Mackintosh, “How Scared Should You Be About Commercial Real Estate?” Wall Street Journal, June 30, 2023, https://www.wsj.com/articles/how-scared-should-you-be-about-commercial-real-estate-1ba0f913

Ryan Deto and Justin Vellucci, “Downtown Pittsburgh is rebounding, but less smoothly than some would like,” July 2, 2023, https://triblive.com/local/downtown-pittsburgh-is-rebounding-but-less-smoothly-than-some-would-like/

Matthew Kupfer, “From Tech Haven to Has-Been: San Francisco’s Once-Thriving SoMa Neighborhood Struggles To Find Footing,” San Francisco Standard, July 3, 2023, https://sfstandard.com/community/san-francisco-soma-doom-loop-drugs-homelessness/

Anne D’Innocenzio and Janie Har, “Diversify or die: San Francisco’s downtown is a wake-up call for other cities,” Associated Press, July 16, 2023, https://apnews.com/article/san-francisco-downtown-retail-exodus-6c956f6f219a25aafd292f567a45a302

Andrew Rice, “New Glut City,” Curbed, July 17, 2023, https://www.curbed.com/article/nyc-office-real-estate-rechler-rxr-project-kodak.html

Mark Belko, “A new Downtown? More residential, retail a must as concerns grow over possible office building defaults,” Pittsburgh Post-Gazette, July 23, 2023, https://www.post-gazette.com/business/development/2023/07/23/downtown-pittsburgh-residential-retail-office-building-defaults-jones-lang-lasalle-real-estate-pittsburgh-downtown-partnership-downtown-neighbors-alliance-vacancies/stories/202307230124

Stephanie Ritenbaugh, “’There’s a mismatch’: Office vacancies continue to climb in Pittsburgh region,” Pittsburgh Tribune-Review, July 24, 2023, https://triblive.com/local/regional/theres-a-mismatch-office-vacancies-continue-to-climb-in-pittsburgh-region/

Jake Blumgart, “Here’s why Philly’s empty offices likely won’t become apartments anytime soon,” Philadelphia Inquirer, July 25, 2023, https://www.inquirer.com/real-estate/real-estate-market-changing-office-buildings-apartments-20230725.html

Jim Carlton and Katherine Bindley, “Can San Francisco Save Itself From the Doom Loop?” Wall Street Journal, August 13, 2023, https://www.wsj.com/articles/san-francisco-crime-downtown-doom-loop-e5fcd7ba

Jeffry Bartash, “Most businesses plan to stick to current work-from-home arrangements,” MarketWatch, August 16, 2023, https://www.marketwatch.com/story/most-businesses-plan-to-stick-to-current-work-from-home-arrangements-195d1827

Mark Belko, “Pittsburgh is not alone when it comes to empty office space. But what will it take to bridge the gap?” Pittsburgh Post-Gazette, August 27, 2023, https://www.post-gazette.com/business/development/2023/08/27/downtown-pittsburgh-office-vacancy-sublease-san-francisco/stories/202308270082

Rachel Siegel, “How the ‘urban doom loop’ could pose the next economic threat,” Washington Post, August 28, 2023, https://www.washingtonpost.com/business/2023/08/28/commercial-real-estate-economy-urban-doom-loop/

Aldo Svaldi, “Denver, already facing a glut of office space, may soon find itself with too many apartments,” Denver Post, September 22, 2023, https://www.denverpost.com/2023/09/22/denver-glut-office-space-apartments-rentals/

  1. [1]Javier E. David, “Remote work may not be working any more,” Axios, June 5, 2022, https://www.axios.com/2022/06/05/work-from-home-elon-musk-remote-office-meetings; Andrea Hsu, “The idea of working in the office, all day, every day? No thanks, say workers,” National Public Radio, June 5, 2022, https://www.npr.org/2022/06/05/1102744672/remote-work-from-home-return-to-office-covid-pandemic-workers-apple-google; Hope King, “Musk’s WFH warning amplifies threat level for workers,” Axios, June 1, 2022, https://www.axios.com/2022/06/01/musks-wfh-warning-amplifies-threat-level-for-workers; Rani Molla, “Tell your boss: Working from home is making you more productive,” Vox, May 30, 2022, https://www.vox.com/recode/23129752/work-from-home-productivity; Kim Velsey, “What Really Brings People Back to the Office? The Easiest Commute,” New York, June 13, 2023, https://www.curbed.com/2023/06/grand-central-offices-return-to-office-commutes.html
  2. [2]Kim Velsey, “What Really Brings People Back to the Office? The Easiest Commute,” New York, June 13, 2023, https://www.curbed.com/2023/06/grand-central-offices-return-to-office-commutes.html
  3. [3]Jake Blumgart and Chris A. Williams, “Philly-area workers prefer to work from home, leaving millions of square feet of office space vacant,” Philadelphia Inquirer, May 2, 2023, https://www.inquirer.com/real-estate/commercial/office-building-vacancy-hybrid-work-sublease-20230502.html; Biz Carson, “San Francisco Gets a $1 Billion Bet That Workers Will Return,” Bloomberg, May 17, 2023, https://www.bloomberg.com/news/articles/2023-05-17/san-francisco-transamerica-pyramid-is-being-remade-in-bet-remote-work-will-fade; Tabby Kinder and George Hammond, “What if San Francisco never pulls out of its ‘doom loop’?” Financial Times, May 18, 2023, https://www.ft.com/content/71d8013d-9d94-441e-b2d1-3039c04397d6; Garrett Leahy; “Downtown San Francisco: Human Waste Increasingly Found in Westfield Mall Elevators, Staff Say,” San Francisco Standard, May 16, 2023, https://sfstandard.com/business/downtown-san-francisco-human-waste-increasingly-found-in-westfields-elevators-staff-say/; Roland Li and Noah Arroyo, “Cities are struggling. San Francisco could be in for the biggest ‘doom loop’ of all,” San Francisco Chronicle, March 30, 2023, https://www.sfchronicle.com/sf/article/city-economy-doom-loop-17846412.php; Roland Li and J. D. Morris, “After Nordstrom store closures, what can San Francisco do to stop the retail exodus?” San Francisco Chronicle, May 3, 2023, https://www.sfchronicle.com/sf/article/after-nordstrom-closures-s-f-stop-retail-exodus-18074794.php; San Francisco Chronicle, “San Francisco could be on the verge of collapse. What should California do about it?” April 4, 2023, https://www.sfchronicle.com/opinion/editorials/article/downtown-san-francisco-17852552.php; Paul Schwartzman, “Downtown D.C.’s struggles mount as many workers remain remote,” Washington Post, January 27, 2023, https://www.washingtonpost.com/dc-md-va/2023/01/27/downtown-dc-office-buildings-remote-workers/; Ishaan Tharoor, “The pandemic may forever change the world’s cities,” Washington Post, May 20, 2020, https://www.washingtonpost.com/world/2020/05/20/pandemic-may-forever-change-worlds-cities/; Kevin Truong, “Union Square: Empty Powell Street Gets $6M Plan to Lure Shops Back,” San Francisco Standard, May 16, 2023, https://sfstandard.com/business/vacancy-ridden-street-near-sfs-union-square-gets-6m-investment/