Martynas Katauskas

The Public Square

Ted Alcorn

June 26, 2024

A dire prediction throws American cities for a loop.

A dire prediction throws American cities for a loop.

We’re a long way from page 33 of a November 2022 economics working paper, where Columbia professor Stijn Van Nieuwerburgh (featured in this issue) first introduced those three words to describe a cycle in which the pandemic-spurred work-from-home revolution reduced demand for commercial real estate and shrank municipal property tax revenue, and with it, public investment in government services that keep residents and firms anchored in cities.

The idea touched a nerve and debates about urban policy quickly coalesced around it, as pundits and policymakers argued about whether the prophesied downward spiral applied to their cities. Predictably, the discourse came untethered from its academic underpinnings, often serving as a convenient partisan cudgel to bash the party or person in charge of municipal government. And in a backlashm, as many features of life that were disrupted in the pandemic have returned to equilibrium, some people are brushing off the fears and insisting on their cities’ resilience.

Here’s a quick tour of the conversations sparked around the country.

Ominous beginnings

When Van Nieuwerburgh’s piece appeared, two years into the COVID-19 pandemic, Americans were primed for bad news. And people always love a totalizing slippery-slope argument, particularly if it validates anecdotes from their own lives, has a catchy moniker and suggests a simplistic if divisive solution.

To be fair, Van Nieuwerburgh never meant to convey that the doom loop was inevitable (“We have our destiny in our own hands. I believe that firmly,” he told Gothamist), although applying the word “doom” and its attendant sense of irrevocable destiny may have been a poor choice. (Other premature rumors of New York City’s demise went viral without it).

There were urban theorists who took a rosier view, like Richard Florida (featured in this issue), who early in the pandemic wrote for the Wall Street Journal that remote work would level the playing field for American cities, strengthen the tax bases of many, and foster competition to invest in public services and amenities. Bruce Schaller, a former New York City deputy commissioner of traffic and planning, authored a report that found the pandemic had narrowed the gap between fast-growing Sunbelt metros and denser, older cities.

Patrick Sharkey emphasized how the cycle could be reversed, since “investments in the people and institutions of cities are effective in creating safe, thriving public spaces” but conceded he was concerned about “where those investments will come from.”

Supply and demand are real

The unbalanced supply and demand for downtown office space was one of the easiest sections of the loop to validate. The New York Times identified San Francisco’s as the “Most Empty Downtown in America” — and researchers predicted vacancies there would increase through 2024. In Portland, where the vacancy rate of downtown office space had hit an all-time high of 31.5% by late 2023, the alt-newspaper Willamette Week combed property records and identified 16 buildings in severe financial distress — and warned that the worst was yet to come. In a fraught decision that summer, Nike finalized the closure of its community store that had operated in the northeast of the city since 1984, citing safety and security issues. (In addition to pandemic-related economic stresses, Portland was weathering Oregon’s short-lived drug decriminalization.)

Some optimists saw the glut of commercial real estate as an opportunity to address another longtime urban woe: the lack of affordable housing. Schaller made the case that “the problem isn’t reviving the city — it’s making room for the people that want to be here.” He showed that the economic performance of cities’ downtowns declined with each increase in the share of land devoted to surface parking, and calculated that New York City was missing out on $225 billion in economic output thanks to its scarcity of affordable housing.

With excitement stirring about converting commercial buildings into residential spaces, the New York Times issued an impeccable visual explainer of what it takes to turn an office building into apartments. But in Boston, Tufts urban planning professor Jonathan Witten argued that new housing alone wasn’t enough to anchor people to downtown without a thriving ecosystem. “Building more housing will satisfy developers, speculators and bankers, and those who argue that all we need to do to fix our housing problem is build more housing. But housing for who?” he told the university’s news site. “It’s a marketing ploy — because where are people going to work? Not in downtown anymore.”

In a Q&A with Bloomberg’s CityLab, Schaller agreed that housing was just one use for empty buildings. “I think the answer to the office sector is probably there’s not an answer, there are like at least half a dozen answers.”

Commentators in some cities pointed out that the forces driving an urban doom loop did not start with the pandemic. The editor of San Francisco’s Mission Local wrote that San Franciscans hadn’t enjoyed visiting their downtown even in the best of times: “Downtown is this city’s economic engine and, at present, San Francisco is a very pretty, well-upholstered car with a growing colony of possums under the hood in lieu of a functioning motor. Sooner or later, this will affect our ability to operate the vehicle — and pay for its upkeep.”

Witten, the planning professor, somewhat similarly argued that Boston has been in a decades-long doom loop “because the state refuses to think regionally and recognize that for Boston to thrive, the suburbs and the remaining rural portions of the state must do so too.”

Cities as partisan piñatas

With the specter of cities (overwhelmingly run by Democrats) floundering, some who were eager to tar all progressive policies broadened the critique from its original focus on cycles of property taxation and investment.

That included provocateurs with the biggest platforms. Elon Musk wrote on X, the platform he owns: “The disaster that is downtown SF, once beatiful [sic] and thriving, now a derelict zombie apocalypse, is due to the woke mind virus.” In this view, commuters and thriving business districts would be supplanted by homeless encampments and drug dens.

Others offered a slightly more erudite spin. The Manhattan Institute’s Jordan McGillis told the Christian Broadcasting Network: “It’s a bad situation made worse by progressive policy decisions, such as defunding the police … Add to that eliminating enforcement of drug laws, of allowing public camping.” Similarly, the Mackinac Institute for Public Policy’s James Hohman said: “Our Democratic city governments really need to respond to residents’ needs and make sure that city government is run on their behalf and not on behalf of some strange ideology that only a portion of their population holds.” Conservative writer David Strom colorfully posited that Portland’s “tolerance for riots, crime, homelessness, drug use, and street camping had made the urban core look like the third world.”

Others began to note that the “doom loop” critique was sticking in cities that were the most apt punching bags for these ideological foes. “Why does San Francisco attract all this vitriol, which is so disproportionate to the conditions on the ground?” inquired New York Times reporter Jesse Barron, before answering: “It’s a symbol as much as a city.” Pushing back on some of the data that had prompted the whole discourse in the first place, public affairs strategist Frank Holland wrote in the San Francisco Examiner that the doom loop narrative “has become an empty vessel into which people can put their grievances — and ambitions."

Was it all a dream?

As time has passed and postpandemic indicators have further stabilized, some of the country’s most prominent cities no longer look so doomed. New York Times opinion writer David Wallace Wells examined trends in crime, homelessness and drug use, and concluded that “some of the doom loop fears were illusions at the time — or perhaps it would be better to say propaganda.”

By the beginning of 2024, even population growth and business startups were on the uptick in San Francisco, leading the city’s chief economist Ted Egan to say: “There hasn’t ever been a lot of evidence of a real downward spiral or doom loop in San Francisco.” Cue a run on screen-printed t-shirts reading “SF is DEAD.”

Ever the cheerleader for the Big Apple, President and CEO of the Partnership for New York City Kathryn Wylde wrote: “Once again, the city’s economy has proven far more resilient than doom loop prognosticators would have us believe. … New York City is back.”

Still, the specter of calamity, even one narrowly avoided, will haunt the city a while yet. Take Gov. Kathy Hochul’s eleventh-hour U-turn on congestion pricing, the long-anticipated change that had been set to take effect at the end of June. On June 5, even as she declared that the “doomsayers have been proven wrong,” she argued that a $15 fee on driving a car into the heart of Manhattan might keep workers remote, deter tourists and prompt residents to rethink living in the city. “I won’t allow this delicate recovery to be jeopardized,” she stated.

In less-attended-to cities, the fears of a doom loop remain unquestionably real — and have been for years. The Wall Street Journal dug into “the real estate nightmare unfolding in downtown St. Louis,” where a skyscraper that sold for $200 million in 2006 just went for $3.5 million. 

But hope is never entirely lost. In a second installment, the paper explored the revival of Detroit, where the city bucked the conventional thinking of urbanists and reinvented its vacant downtown by adding casinos and sports venues. “It sounds odd to say this,” Richard Florida told the paper, “but in a way their downtown looks more like a Miami or Las Vegas.” Perhaps Americans all need a little more Sin City.