as the pandemic trends of hybrid and remote work have persisted, hollowing out urban centres that were once bustling with workers.
Since the pandemic, cities across the US have benefited from an economic rebound and an infusion of billions of dollars in federal relief money that was disbursed through the American Rescue Plan of 2021. That left municipalities so flush with cash that they were giving city workers raises, refurbishing basketball and tennis courts and upgrading sewage systems.
Gupta compared the dynamic to the conundrum that Rust Belt cities experienced in the 1960s and ’70s when manufacturers shuttered and local governments struggled to balance their budgets. Glen Seidlitz, principal and founder of the Washington-based commercial real estate advisory firm Six23, said many building owners and investors were trying to restructure their loans and in some cases looking for new capital. But for the most part, because of lower occupancies and higher borrowing costs, the sector is in decline.
“The shift to more work away from the office, compounded by the pre-existing trend of increased online purchasing, has peeled a substantial amount of spending away from business districts,” Moody’s analysts said in the report.Thomas Brosy, a research associate at the Urban Institute’s Tax Policy Centre, noted that declining valuations tend to be a “lagging indicator”, as new leases fetch smaller rents and owners appeal tax assessments when other buildings sell for low prices.
In Washington, where the office vacancy rate topped 20 per cent at the end of last year, the fiscal situation is also dire. Signs advertising leases are emblazoned on some of the capital’s prime office buildings, while downtown retail spaces sit empty.
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