How Many Residents Does it Take to Create New Functionally Diverse Downtowns – How to Think About Allocating Scarce Resources to Get There?

Hi All,

Here’s a teaser and a link to an article of mine that was recently published in the American Downtown Revitalization Review –The ADRR : How Many Residents Does it Take to Create New Functionally Diverse Downtowns – How to Think About Allocating Scarce Resources to Get There? Adding more housing to our downtowns is likely to be far more complicated than just converting outmoded office buildings, and many of its anticipated positive benefits won’t happen without a proper strategic approach.

The Challenge[1]

The recent strong impact of remote work in our large downtowns on how many office workers show up in their workplaces has sparked calls for the central business districts within them to be made far more multifunctional. Housing, in particular, has been highlighted as the function most in need of buttressing. On one hand the housing is seen as a possible replacement for unwanted office spaces, and a way to save outdated buildings while recapturing  lost real estate capital values and rental and tax revenues. However, the main focus in this essay will be on another reason to increase downtown housing offered by advocates of greater downtown multifunctionality: the ability of more housing to improve and strengthen how our downtowns function. The inherent aim is to make our downtowns more magnetic places for people to live, relax, play, and connect. It is an objective consistent with strongly improving the balance between a downtown’s Central Social Functions and its Central Business Functions.[2] When both are strong we have our strongest and most magnetic downtowns. 

The owners of downtown office buildings are doing what is economically rational for them to do, to try to regain market share and recapture value. That’s fine, especially since academics are foreseeing a destruction of $413 billion in office values nationally in the near future.[3] Downtown managers and city governments have different objectives. Most importantly, they have responsibilities for the well-being of  our entire downtown. They are the ones whose job it is to think strategically and propose needed interventions and incentives that may vary across the geographies of the downtown. Since resources for adding housing are bound to be limited, it is imperative that they have a well-grounded strategy to guide housing growth. Their attention needs to focus on downtown housing in a manner that goes well beyond just the conversion of outmoded office buildings, and to push the interests and concerns of the whole downtown community to the forefront, not just those of troubled property owners. The discussion below covers a number of analytical points and research findings that should help them formulate the needed well-targeted strategies.

An interesting question that currently is getting too little attention is how these two reasons for more downtown housing are related: will the conversion of outmoded downtown office buildings to residential uses necessarily make their surrounding areas better places to live and play? How many new units are needed to significantly lift downtown foot traffic and shopper spending, while reducing visitor fear of crime? Does it make a difference where the new housing is located within a downtown?

Those critical strategic questions about housing are further complicated by the fact that estimates by real estate experts do not indicate that vast amounts of office space will be converted to residential uses. For Manhattan these estimates  range from 8% to about 14% if new regulatory improvements and appropriate financial incentives are added.  Furthermore, nationally, most of the buildings recently  converted to residential uses were not offices, but had a variety of other uses such as factories, hotels, and even schools and religious – see Table 1. Also, many large downtowns are seeing new housing built in them or on their periphery, and it is often occurring in mixed use multi-building developments, such as Manhattan’s Hudson Yards, and increasingly in new structures that have housing mixed with various combinations of hotel, office, retail, entertainment and personal services spaces, such as the Waterline in downtown Austin. When we think about new housing for our downtowns we need to also think of development paths other than the conversion of outmoded office buildings.


[1] I want to thank Mark Waterhouse for his great editing of this article, and to Paul Levy, Richard Florida, and Andy Manshel for their very helpful comments on an earlier draft.

[2] For more about downtown Central Social Functions and Central Business Functions see:

[3] Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, Work From Home and the Office Real Estate Apocalypse (November 26, 2022). Available at SSRN: or