Reinventing Cities Post-COVID-19

By Margaret Jackson Saturday, October 24, 2020

The renaissance US cities have enjoyed over the past few decades is likely to slow in the coming years as people responding to the coronavirus pandemic seek jobs and housing in lower-density suburbs, according to a recently published report from the Urban Land Institute (ULI).

Central cities also could face more fiscal challenges related to COVID-19 than suburban areas, according to 2021 Emerging Trends in Real Estate, a report published by ULI in conjunction with international accounting firm PwC.

The slowdown in central city population growth rates coincides with the leading edge of the millennial generation turning 30 and wanting more space to start families. The growth rates are likely to continue to stay low as the work-from-home experiment continues to succeed, and millennials will continue to make up the bulk of the demographic shift to the suburbs.

“They’re looking for bigger places to live and schools, so there is that move going to the suburbs,” said Anita Kramer, ULI’s senior vice president of capital markets. “That is something that we think would have happened anyway but is accelerated by COVID[-19].”

Rethinking the Public Realm

But the shift to the suburbs could give cities the opportunity to reinvent themselves, Kramer said. They’ve already adapted to the pandemic by permitting street dining and designating more public space for non-vehicular use. Many cities have expanded or created new bike and pedestrian ways, most of which have been well-used because biking and walking have been substitutes for public transportation.

Over the past few decades, cities have also begun to recognize the value of parks and green space, and adding green space would likely help prevent population erosion in cities, Kramer said.

“Open space and green space creates a lot of value for urban living and it’s one of the attractive features of suburban living,” Kramer said. “That may be an opportunity and a challenge for cities to find more ways to incorporate amenities that people have in the suburbs. Cities have been aware of this, but there will be more of a push for that — the same way that suburbs are making it attractive for people with an urban sensibility.”

Cities should be creative when adding open space. The head of a national landscape architecture firm suggested that when cities recreate or rebuild bridges and other infrastructure projects, the work also should include open-space enhancements. Perhaps a new bridge will include open space or maybe stairs leading to an overlook.

“Infrastructure that’s original from the 1950s and 1960s is going to be completely reimagined now,” the design leader said. “It’s infrastructure with landscape and open space.”

New York City recently decided to allow restaurants to use streets, sidewalks, and public places permanently. Other locales are likely to follow for dining and other open space-oriented programs.

“We need to rethink the public realm — streets, sidewalks, open space,” a New York-based regional head of a major real estate services firm told ULI and PwC for the report. “Residential buildings should have loading areas and not use sidewalks. [We should] rethink bike storage on streets/sidewalks. Sidewalks are burdened and too small. [We have to] rethink and rezone all retail space — much of it is no longer relevant.”

Retailers and shopping centers were struggling before COVID-19, so now it’s more important than ever for them to reinvent themselves. People still buy most of their retail products and services in stores, so some of the setbacks will be temporary, and activity is bound to increase when people can return to their normal routines. But the industry will see millions of small businesses and familiar brands shut down, leaving landlords grappling with how to preserve viable shopping centers or resurrect dying ones.

The report predicts that the physical retail sector will be smaller in the future, with department stores taking the biggest hit. Nearly every department store chain is closing stores, particularly the traditional mid-priced brands that have anchored most malls in the United States.

“We are seeing acceleration of the right-sizing of the retail industry, particularly in the mall space,” a research leader for a leading shopping center real estate investment trust (REIT) said.

About the Author

Headshot for author Margaret Jackson

Margaret is an award-winning journalist who spent nearly 25 years in the newspaper industry. She has covered a variety of business topics, including residential and commercial real estate, technology, telecommunications, and cannabis.

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