Nobody is singing about going 'Downtown' anymore
Back in our first year in the U.S., Petula Clark reached the top of the charts with a great tune called "Downtown": "When you're alone, and life is making you lonely, you can always go Downtown."
As a side note, my mother liked the song, but she could never understand why they called it "downtown" rather than the shopping district. I think she was thinking about Havana.
Downtown is in crisis these days, because no one wants to go or work downtown anymore. So get ready for lots of empty offices. This is the story:
Some Morgan Stanley financial analysts say the commercial real estate industry could be headed for a crisis worse than the 2008 great recession. This comes after businesses have left downtowns across the country with an increase in remote work and higher interest rates.
Worse than the 2008 recession? I remember that one, and it elected Obama.
The numbers are scary:
According to CBRE Global Commercial Real Estate Services, in New York City there has been a 7.6% increase in empty office space since the pandemic. In Seattle, an 8.2% increase and in San Francisco, a whopping 25.4% increase.
Empty offices translate into a few problems: less taxes collected, and the investment firms who own these buildings may not have enough money to pay off their loans to the banks. Also, think of all those restaurants that feed employees at lunchtime, or the flower shops where you pick up flowers for your wife, or the laundry that brings your pressed suits to your office before you go home, and lots of other people who make a living because you go downtown.
My guess is that we won't be as impacted here in Dallas/Ft. Worth because many service businesses began their transition to satellite offices years ago. It's true of banks that cannot get women to work downtown because they'd rather work at the branch in their neighborhood.
So get ready for the empty office version of the economy.
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Image: Nicholas Henderson.