I am very happy to share this article on downtown multifunctionality/ functional diversity that was recently published in the JURR, a British journal focused on urban renewal and regeneration. It reflects my most recent thinking on this subject, as well as my efforts to add some analytical heft to it while also getting more people to find it of interest and importance.
Here’s the abstract: “In the large downtowns in the US, the adaption rates and impacts of remote work have been strong and sparked efforts to make these districts far more multifunctional, especially by adding lots of new housing. While comparable city centres in Western Europe have not seen remote work have similar impacts on office occupancy, multifunctionalism has long been heralded as a factor that makes them strong. For example, it underpins their two key competitive advantages of dense agglomeration and the generation of many multipurpose trips. While multifunctionalism is a familiar concept and is often mentioned in relevant publications, there is amazingly little written about it theoretically, and little to no empirical research done on it. I took on that topic in a recent paper in which I noted that how downtown multifunctionality is ‘packaged’ in the physical containers in which the venues of these functions are activated, and how they physically relate to each other, are very often the key factors in determining whether efforts to make a downtown more multifunctional will succeed. I also argued that a function must have very magnetic destinations active in these containers. This paper focuses just on the topic of packaging functions and is an expansion of my prior analysis that covers much new ground.”
I am proud to share with you my article “How Our Downtowns’ Three Most Important User Groups Can Help Their Sustained Recoveries” that was recently published in the IEDC’s Economic Development Journal. It focuses on downtown workers, residents and visitors and covers our largest downtowns as well as those of more modest size. It presents several analytical conclusions that counter conventional wisdom. For instance, while the media have focused on the reduced presence of downtown workers in our largest downtowns, the drop in downtown visitors was far larger, and smaller downtowns were less impacted by remote work because they are not usually the primary locations for their cities’ office prone workers.
The article relies heavily on data from the CCD’s Downtowns Rebound project led by Paul Levy, Placer.ai, OnTheMap, and my field experiences, as well as a dataset created by Bill Ryan on all the cities with population between 25,000- 75,000 in seven Midwest states.
I have really had it with the Doomers, those who argue that our large downtowns are doomed to failure and diminishment.[1] It’s time to call them out for being the downtown ignorant Chicken Littles that they are.
Their Covid crisis instigated doom loop analysis has been a considerable worry for many municipal business and political leaders, since it predicts not just the decline, but the end of our large downtowns’ ability to be thriving business districts. It also has been almost as good a story for grabbing public attention for many media outlets as fires, riots, and other serious calamities. Of course, it also has been raw meat for some authors who seek greater notoriety. The legitimacy of this argument seems to mistakenly be seen as deriving from the fact that academics and wannabe urban pundits have been its leading proponents and some even used real data analyzed by sophisticated statistical tools. However, the most worrisome parts of the argument are really based not on any data or fancy statistical tools, but on the Doomers conclusions and assumptions. The Doomers thinking displays an enormous ignorance about what downtowns are really like and how they operate. The media writers and their editors who bought the Doomers’ analysis are little better.
The Conclusion of a Downward Spiral. Doomers cite the very low occupancy rates found in the office clusters in our largest downtowns – too often based often on questionable data, mind you — and predict consequent enormous losses in lease revenues and building values. This they then argue will mean the failure of lots of office buildings. Investing in downtown real estate and leasing downtown spaces consequently will be much less attractive, and this will have very adverse effects on other downtown sectors such as retail and personal services. City tax revenues will also drastically fall, with a consequent reduction in essential services, precisely when quality of life problems are surging. Overall, these downtowns will thus become much less attractive in a continually degrading manner.
Frankly, much of this part of the Doomers analysis is valid. Major downtown office sectors have undeniably been hit hard by the pandemic, and many outmoded buildings are indeed doomed. But that has happened several times in the office sector since the 1980s, if not as strongly. Quality of life problems have surged both in frequency and visibility during the crisis. However, the Doomers turn the current office sector downturn into a unique event by making an unwarranted analytical leap, based on little to no probative evidence: they claimed that these downtowns would fall into an unstoppable downward spiral, AKA the doom loop. They did not entertain any possibility of a recovery of any kind such as:
The downtown’s office sector does indeed shrink, maybe even by 20% to 30%, but then it stabilizes at this new equilibrium point that is still a very consequential 70% to 80% of its prior size. But downtown growth is now engined by other sectors such as housing, personal services, entertainment and culture.
After stabilizing, the office sector starts to grow again.
The Doomers’ data have no probative value for determining whether the doom loop scenario or one of the recovery scenarios is the more probable outcome.
Their major justification for predicting the doom loop seems to have been that quality of life issues — e.g., rising crime rates, more homeless – were occurring along with fewer downtown visits and lots of business closures were occurring early in the crisis. Yes, in the past these issues did cause downward spirals in many downtowns. What is interesting is that these problems often emerged in the 1970s and 1980s in fairly large downtown office clusters that stayed successful in spite of them. Ironically, the fortress designs of these clusters often induced the very fear of crime they were meant to protect against. In time, many districts overcame these problems and the downtowns office sector became more prosperous than ever before! Downtown Manhattan and Charlotte’s CBD are two examples that come to mind.
The Doomers choice of the gloomy scenario also shows an ignorance about many characteristics of our large downtowns and it keeps being eroded by hard evidence of downtown recoveries, some of which appeared early in the crisis:
Historically, large downtowns have proved to be amazingly resilient. They survived the Great Depression, and some like Midtown Manhattan even had trophy projects like the Empire State Building and Rockefeller Center developed during that very stressful era. Many also came roaring back after the mid 1990s after having struggled during the 1970s and 1980s.
Downtowns in some states, such as Texas, have long had their office sectors go through serious boom and bust periods because of overbuilding, exhibiting a kind of cyclical resiliency.
Back around the Great Recession the growing appeal of open offices was supposedly making many older office buildings outmoded, much as remote work is said to be doing today. That was supposedly causing great havoc within the real estate industry. If memory serves me, office growth soon returned with a happy vengeance. The office sector, just like other sectors, will experience periodic serious disruptions caused by capitalism’s process of creative destruction. This process is one of both mass disruption and strong recovery.
Nonresident office workers only account for a relatively small proportion of downtown visits. Almost two-thirds of these visits are accounted for by visitors who neither work nor live in a downtown. These visitors were quick to stay away from our downtowns as Covid became a national emergency, and accounted for a far greater proportion in the drop of downtown visitation than did the office workers, BUT they were also the quickest to return in very substantial numbers.[2] This quick return indicates that the causation of this decline in visitor visitation was situational in nature, not structural. In contrast, the slow return of office workers is consistent with structural causal factors being present. By October 2021, data from Placer.ai was already showing strong signs of recovering downtown visitation. Still, Doomer gloom continued to be published.
Office workers also account for a relatively small portion of a downtown’s retail sales. Tourists and residents are the big retail shoppers and spenders. Many downtown retail problems were existing precrisis, caused by the strong wave of creative destruction that industry has been experiencing for about a decade.
So the ability of a declining office sector to hurt retail sales and decimate downtown pedestrian activity is far more modest than the Doomers suggest.
Downtown return to office rates (RTOs) have risen from about 30% early in the crisis to a median of 65% in our large downtowns. That’s not evidence of a downward spiral, but of a significant partial recovery, though the extent of the final recovery is still uncertain.
Midtown Manhattan, once thought to be a potential victim of an office generated doom loop recently was the “hottest office market” in the US in the first half of 2023 that had “far and away” the most absorption of office space.[3]
In downtown San Francisco, the process of wringing out excessive values from troubled office buildings seems to have started, with prior owners and bankers taking their losses and the new owners attracting new tenants with lower and more affordable rents.[4] This process promises to help increase downtown office occupancy rates, as well raising office worker foot traffic and consumer spends.
Greater downtown visitation is known to help reduce the fear of crime, and drive bad uses out of the area. This is something about which the Doomers appear to know nothing. A recently released terrific report by a Paul Levy led team at the Center City District in Philadelphia found that: “The cumulative average of visitors across the (nation’s largest) 26 downtowns by the end of Q2 2023 back at 79% of Q2 2019 levels; workers of all kinds back at 66%; and residents at 120%.”[5]The direction of downtown visits is obviously strongly upward, not downward. That will help make these areas seem more activated and alive, while helping to reduce the fear of becoming a crime victim. The quality of life conditions in these downtowns are not on any definitive downward spiral, though serious issues certainly remain unresolved.
The title of the CCD’s report, Downtowns Rebound, sends a very important message about our large downtowns. They may not have fully recovered, but they are definitely rebounding. There’s no downward spiral. They are not doomed or dying.
Downtown Doomer proponents seem to mistakenly identify the process of creative destruction that downtown office sectors are going through as a downward spiral to doom.
What does seem to be in a genuine doom loop is the doom loop argument itself!
The Assumption That the Economic Health of All Downtowns is Dependent on the Strength of Their Office Clusters.
The focus of the Doomers is on downtown offices and, in their eyes, the failure of that sector drags the rest of the downtown into a downward spiral with it. Such an analytical connection is perhaps easy when the terms Central Business District or CBD and downtowns are frequently used interchangeably, and CBDs are seen as dominated by large office clusters.
In fact, most downtowns are far more complicated and have three sets of major functions, as displayed in Figure 1: Central Business Functions, Central Social Functions, and Central Support Functions.[6] The Central Social Functions (CSFs) are given short shrift by the Doomers, if they are noticed at all, but they are essential in many ways. First, strong CSFs can help assure that downtowns will keep appearing well activated and magnetic, in spite of any diminished office worker presence.[7] In turn, that helps assure that quality of life problems will not push an office sector downturn into the feared death spiral.
Second, in many small and medium sized downtowns, large office clusters are not their strong points, but CSF venues such as restaurants, bars, hotels, churches, public spaces, arts and cultural venues are.[8] Some of our largest downtowns, if admittedly too few of them, have significant amounts of the venues associated with CSFs such housing, retail, public spaces, entertainment and culture. The CCD in Philadelphia is a great example of this. But the fact that most visitors to our largest downtowns, both precrisis and today, are not coming there to work, means they are coming to shop or visit many CSF type venues, and these venues have a significant presence. Residents are also frequent visitors to CSF venues. Indeed, their presence help make living downtown attractive. That strongly suggests that should a downtown have a failing office sector, it could be offset to a significant degree by developing and growing venues associated with CSF functions. That is contrary to the Doomers’ postulation that if a large downtown’s office sector is badly hurt, the whole downtown must not only hurt, but fail.
The leisure, entertainment and hospitality sectors are filled with CSF venues. The CCD study found that the top three cities in terms of overall job recovery—San Antonio, Nashville and San Diego—are also the three cities with the highest share of leisure and hospitality employment. That’s a very impressive example of downtown resiliency given that in the early part of the crisis they probably suffered the largest employment losses. In these downtowns, non-office CSF functions and venues have a lead economic role. Doomers do not acknowledge the possibility of this type of downtown.
In contrast are the type of downtowns the Doomers focus on with employment largely in office prone sectors – e.g., information technology, finance, insurance, and professional and business services, They have had a lower rate of job recovery, if still a substantial one that the Doomers seem to ignore. One explanation for this may be that their major sectors have high proportions of jobs that can be done remotely.[9] An issue that has emerged in these downtowns is can they become more multifunctional, as evidenced most frequently by discussions about adding more housing to the downtown. Some serious efforts are underway in several of these, e.g., in Chicago and Washington, DC. Doomers when they opine on this argue such efforts are likely to be too small and ineffective or unlikely to happen.
[1] There are many Doomer analysts/authors, here is just one well know Doomer article: Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, “Work From Home and the Office Real Estate Apocalypse” (October 5, 2023). Available at SSRN: https://ssrn.com/abstract=4124698 or http://dx.doi.org/10.2139/ssrn.4124698. Its first draft was in May of 2022. In the media, even the Wall Street Journal, The New York Times, and The Washington Post have had Doomer articles.
[8] N. David Milder, “How Our Downtowns’ Three Most Important User Groups Can Help Their Sustained Recoveries.” IEDC’s Economic Development Journal. Forthcoming.
Contact: N. David Milder, Editor The ADRR — The American Downtown Revitalization Review 718-805-9507 [email protected]
THE CREATION OF THE AMERICAN DOWNTOWN REVITALIZATION REVIEW (THE ADRR)
There currently is no real professional journal for the downtown revitalization field. For many years, that has been strongly lamented by many of the field’s best thinkers. To remedy that situation, a band of accomplished downtown revitalization professionals are creating The ADRR. It will be a free online publication, appearing four times each year. The target date for the debut issue is now set for the June 1-15, 2020 timeframe, with the second issue aimed for the Sept 7-14, 2020 timeframe.
This ADRR is intended to be a lean and mean operation, based totally on the availability of free online resources and the time, energy and elan contributed by its authors, advisory and editorial board members, and its editor.
How to Subscribe to The ADRR
Those interested can now visit The ADRR’s website, www.theadrr.com , where, on the home page, they can sign up to become subscribers. This enrollment places the subscriber on a MailChimp mailing list so that they can receive New Issue Alerts (see below).
How Issues of The ADRR Will Be Distributed.
New Issue Alerts, containing the Tables of Contents of issues and links to their downloadable pdfs of articles are sent to subscribers via a MailChimp email blast and posted to the ADRR’s website. Each issue’s pdf files initially will be stored in a folder in ND Milder’s Dropbox account from which they can be downloaded. Subscribers can download only those articles they want to read and whenever they want to read them. The ADRR also can be found via Google searches.
The Content We Are Aiming For. Only manuscripts about major downtown needs, issues and trends will be considered for publication. They will be thought pieces and not just reports about a downtown’s programs and policies that its leaders want to brag about. Articles must have broad salience and their recommendations broad applicability within the field. The “voice” of The ADRR will be anti-puff, and very factual, evidence driven, though not dully academic. Discussions of problems and failures will be considered as relevant as success stories if, as so often is the case, something substantial can be learned from them. The ADRR will not avoid controversial issues.
Also, the focus of The ADRR will not be overwhelmingly on our largest most urban downtowns, but also provide a lot of content and relevant assistance to those in our small and medium sized communities, be they in suburban or rural areas.
Who Will Write the Articles?
Hopefully, they will be from people in a broad range of occupations – downtown managers and leaders, municipal officials, academics, developers, landlords, businesspeople, consultants, etc. — who have significant downtown related knowledge and experience.
Curated Articles and Wildflowers. Initially, the ADRR will solicit articles to prime the content pump. Once The ADRR is up and running some articles will continue to be solicited on topics deemed a high priority by the editorial board members. Each board member can select a topic to curate an article on and seek the author(s) to write them. However, there still will be a continual traditional general call for submissions (wildflowers) focused on subjects selected by their authors. All submissions, curated or wildflower, must demonstrate sufficient merit to warrant publication in The ADRR. All submitted articles will be reviewed by board members. We hope to see many submissions!
Article Length and Author Responsibilities.
There will be short reads and long reads. Articles of 1,500 to 5,000 words will be considered. Multi-part articles of exceptional merit and salience will also be considered. What counts is their quality, not their length. Authors must have their articles thoroughly proofread prior to submission. Poorly proofed manuscripts will be rejected. Guidelines for submissions may be found on The ADRR website.
Publication Schedule:
Published four times per year, with a minimum of 5 articles in each issue. Given that this is an online publication, from a production perspective, the number and length of the articles is not a particular problem. However, from an editorial and content management perspective, the number of articles and their lengths can quickly become burdensome.
How It Will Be Organized.
The ADRR will be published by an informal group for its first year, with no person or group having ownership.
Editor. During the ADRR’s first year, N. David Milder has volunteered to serve as its editor.
The Advisory/Editorial Board :
Jerome Barth, Fifth Avenue Association
Michael J Berne, MJB Consulting
Laurel Brown, UpIncoming Ventures
Katherine Correll, Downtown Colorado, Inc.
Dave Feehan, Civitas Consulting
Bob Goldsmith, Downtown NJ, and Greenbaum Rowe
Stephen Goldsmith, Center for the Living City
Nicholas Kalogeresis, The Lakota Group
Kris Larson, Hollywood Property Owners Alliance.
Paul R. Levy, Center City District, Philadelphia
Beth Anne Macdonald, Commercial District Services
Andrew M. Manshel, author
N. David Milder, DANTH, Inc
John Shapiro, Pratt Institute
Norman Walzer, Northern Illinois University
Articles in our first issue that will be published in June 2020
Michael Berne, MJB Consulting, Working Title, ” Bringing Downtown Retail Back After COVID-19”
Roberta Brandes Gratz, “Malls of Culture.”
Andrew M. Manshel, “Is ED Really a Problem?”
N. David Milder, DANTH, Inc., “Developing a New Approach to Downtown Market Research Projects – Part 1.”
Aaron M. Renn, Heartland Intelligence, “Bus vs. Light Rail.”
Michael Stumpf, Place Dynamics, “Using Cellphone Data to Identify Downtown User Sheds”.
The Spotlight: “Keeping Our Small Merchants Open Through the COVID-19 Crisis”
Katherine Correll, Downtown Colorado, Inc.
David Feehan, Civitas Consulting
Isaac Kremer, Metuchen Downtown Alliance
Errin Welty, Wisconsin Economic Development Corporation.
On March 4, 2016 Andrew Dane, of SEH, and I will be doing an APA sponsored webinar on “The Central Social District – the Key to Tomorrow’s Successful Downtowns.” We hope you will join us. APA members can register at: http://tinyurl.com/j6m8sek . Non-APA members perhaps have a friend or colleague who is a member and can be convinced to attend.
Andrew and I teamed up on downtown revitalization projects in Sherwood, WI and Gering, NE. Even in those relatively small communities, we found the Central Social District (CSD) to be a compellingly useful concept when assessing a downtown’s assets and liabilities as well as for developing solution paths.
My own interest in CSD functions dates back to the late 1970s, when I tried (alas unsuccessfully) to get a Celebrate Charlotte program going in that city’s CBD. Since then, fostering a strong entertainment niche has been key element in many of the downtown revitalization strategies I helped develop for such communities as Rutland, VT, White Plains, NY, Morristown, NJ and Peoria, AZ.
In recent years, the portion of my research that I have written about here on the Downtown Curmudgeon bog has been almost exclusively related to the entertainment and restaurant components of CSDs, e.g., arts venues’ attendance and funding, the advantages of informal entertainment venues, assessing the impacts of formal and informal entertainment venues, the need to protect our downtown cinemas, restaurants as the cornerstones of vibrant CSDs.
Can’t make the webinar? Email me at [email protected] and I’ll send you a copy of our presentation.
What Are Central Social Districts (CSDs)?
A CSD is that part of a downtown that has venues performing CSD functions. Since antiquity, successful communities have had vibrant central meeting places that bring residents together and facilitate their interactions, such as the Greek’s agoras and the Roman’s forums. Our downtowns long have had venues that performed these central meeting place functions, e.g., churches, parks and public spaces, museums, theaters, arenas, stadiums, housing, etc. However, local leaders often seemed to give higher priority to their CBD related venues – e.g., retail shops, financial institutions, public and private sector offices, hospitals, etc. Indeed, for decades the terms downtown and CBD often have been used interchangeably in common parlance.
Why Are CSD Functions Becoming Much More Important
There are three main reasons:
Since the Great Recession, for many downtowns, especially those with mainly middle income users, retail and office growth have become far more problematical, if not plainly impossible. For them, CBD functions are far less able to sustain a healthy and popular downtown. There is little evidence that this situation will turn around anytime soon.
There has been a major cultural shift and today a significantly larger segment of our population wants to live and play in downtown-type environments than was the case in past decades. In other words, the popularity of downtown CSD venues has grown very substantially, while those associated with the CBD are often floundering
With long working hours and the growth of e-communications, people are increasingly looking for entertaining places to spend scarce quality time with those they care for. More and more they are finding that their downtown’s CBD venues can provide such places.
More Downtowns Should Focus On Strengthening Their CSD
Today, for most small and medium-sized downtowns, CSD development offers the best prospects for economic growth by:
Growing their base of downtown visitors and sense of vibrancy
Maintaining or raising real estate values
Providing the amenities, ambience and customer traffic that makes the district a more attractive location for retail and office tenants.
CSD Development Is No Slam Dunk
One does not have to travel far to find examples of successful CSD development. However, a similar trip might also reveal a theater, PAC, museum, park, public space or other CSD venue that is either struggling financially or finding it hard to attract the numbers and types of users its plan called for.
It is crucially important to choose the CSD components that best fit your downtown from the perspectives of:
— Market demand.
— The ability of the private and/or public sectors to fund the construction of a needed building or facility
— Once built, the ability of the managing organization to earn and/or raise adequate operational funds
— Its potential impacts on the downtown on these dimensions:
Number of users
The revenues and customer traffic of nearby merchants and CSD organizations
Real estate values and taxes
The walkability of nearby streets and pedestrian flows
The physical attractiveness of the area
The ease of finding parking
Traffic congestion
Comparative cost benefits
Quality of life issues: crime, vagrancy and panhandling, noise, litter, smells.
Because another town has successfully developed a particular type of CSD venue does not necessarily mean a similar project will succeed in yours.
Some types of CSD venues have a higher probability of success than others: