As cities continue wrestling with myriad problems, most noticeably empty office buildings due to increased working from home, urbanists Edward Glaeser and Carlo Ratti in the New York Times
NYT
What’s the “playground” idea? Glaeser and Ratti say cities should embrace the shift “from vocation to recreation” and make cities more vital and fun to live in—what they call “the Playground City.” Cities should “attract the rich and talented,” reconfiguring neighborhoods into walkable safe spaces with lots of amenities.
The authors look at empty office buildings in New York and other cities, with “occupancy around 50 percent of prepandemic levels, harming landlords and the local economy.” These low occupancy rates are driven by the pandemic-induced increase in working from home (WFH), which now seems to be a more permanent feature of the labor market than many (including me) expected.
Analysts like Nicholas Bloom at Stanford think this represents a permanent shift in job location for many, especially higher-paid and more educated service workers. Other experts, like Wharton School professor Peter Cappelli, argue WFH isn’t settled yet, as it presents many problems to both employers and employees, ranging from supervision to productivity to onboarding new workers.
But however WFH ultimately plays out, there’s no question about the contraction facing commercial real estate (CRE), especially office buildings. Banks with large CRE portfolios are being battered in the markets, as refinancing comes due in a time of rising interest rates and falling occupancy.
So what should cities do? There’s a lot of interest in repurposing office buildings for residential space, although that’s a costly and sometimes difficult process. Anecdotal evidence suggests we haven’t tipped into full-scale conversion, in part because building owners and banks haven’t accepted that WFH and depressed office demand is a long-term problem.
But are the pessimists right about WFH and its long-term impacts on commercial offices and downtowns? Some data support their argument. Office occupancy continues lagging—the Kastle “barometer” measuring keycard swipes in ten major metros still hovers around 50%, up somewhat from 43% in March of last year, but not rising sharply.
But as Glaeser and Ratti point out, mobile phone traffic in the same office zip codes is not down nearly as much, signaling more people in the downtowns than are going to offices. Other data point in a similar direction. In contrast to office occupancy, restaurant reservations, Broadway theater attendance, and direct spending on travel in the US are now close to pre—pandemic levels.
Glaeser has long been a proponent of cities as experience hubs for the affluent. His 2011 best-selling book Triumph of the City, has a chapter entitled “Is London A Luxury Resort?” arguing cities like London and New York attract “skilled people” who “provide the ideas that fuel the local economy,” so catering to their interests is a viable economic strategy.
The current piece is explicit. The authors say New York and other cities need to “view the city as a for-profit real estate development company wholly owned by a nonprofit poverty alleviation-entity.” The city should be kept “attractive to the rich” and use revenue for education and “support for the poor.”
But that’s what American cities often were becoming well before the pandemic, with the growth of affluent, white government-subsidized suburbs surrounding core cities. As I argue in my recent book, Unequal Cities, America’s metropolitan form has a single regional economy with a core city surrounded by literally hundreds of politically independent and often hostile governments.
American suburbs were built and sustained by tax breaks on home mortgages, zoning that prevented racial integration and construction of multifamily housing, transportation policies favoring cars over public transit, and political hostility to cities from state and federal governments. Funding for public education rests on local property taxes, where wealthier suburbs capture the lion’s share even while depending on the core city’s economic vitality.
If working from home permanently shifts a significant amount of higher-paying work to wealthier suburbs, that will hurt city tax bases and also lower-paid service jobs in building cleaning and security services, restaurants and hospitality, and other sectors. That in turn will further reduce city spending on essentials like police, sanitation, and education, to say nothing of amenities for the wealthy.
So the “Playground City” idea isn’t so new. It’s what many of our cities have experienced for decades, through a toxic combination of economic neglect, suburban dominance and hostility, and structural racism in housing, education, and employment. Overcoming these forces is now even more challenging for cities with the increased pressures on their offices and downtowns.
Glaeser and Ratti have some good ideas for making city neighborhoods more attractive and policies for more rapid conversion of offices into residences. But their neglect of structural economic forces and our fragmented metropolitan political geography makes their “playground” solution inadequate for full economic recovery, or progress on inequality.