Why Downtowns and Central Business Districts Matter

Joining CUI’s Mary W. Rowe on “Why Downtowns and Central Business Districts Matter” are Craig Alexander, Chief Economist & Executive Advisor, Deloitte Canada; Richard Barkham, Global Chief Economist, CBRE; and Richard Florida, Professor, Urbanist, and Writer.

5 Key
Takeaways

A roundup of the most compelling ideas, themes and quotes from this candid conversation

1. Cities will survive – but the office as we know it will not come back.

Cities have survived many shocks throughout history. The pandemic marks a great reset, but cities will survive. Two types of factors are shaping how and where we live: “pull” factors are drawing some people out of downtowns, while “push” factors are concurrently attracting others to central areas. Reimagined downtowns will have more integrated live-work neighbourhoods with more social and recreational functions. Physical office space will still be critical as an arena for social interaction and for onboarding new talent. There will be increased demand for coworking spaces in suburban areas as some employers pursue a “hub and satellites” model.

2. The time employees spend in the office will decline and this will affect downtowns – but the demand for space is affected by several factors.

Downtowns have been challenged by the effects of Covid-19, as centrifugal forces draw people and economic activity outwards. Stagnant rental rates and elevated vacancy will likely endure for some time, and this will affect downtowns. The amount of time that employees spend in physical office locations each week will drop compared to pre-pandemic — but this will not translate into a one-to-one decrease in the demand for office space. There may be a de-densification effect where more space is allocated per employee compared to the pre-pandemic office configuration. Employers may also plan for occasions such as teambuilding events when many employees might be in the office at the same time.

3. The crisis is a catalyst to chart a course for future prosperity.

The economic contraction brought on by Covid-19 is much more severe than previous downturns. The impacts are uneven: larger cities have been hit harder than smaller cities, lower-paid workers have been more affected by job losses, and the impact has not been uniform across industries. Pre-pandemic, Canada’s economic outlook was tempered by weak investment. As health risks diminish, there is potential for a strong recovery, which can put the country on a new trajectory for future prosperity. Cities will be a crucial part of the recovery.

 4. Signs point to the potential for a strong recovery.

Government transfers supported households and helped to maintain consumer confidence during 2020. The level of collective savings of Canadian households increased significantly during the pandemic, and pent-up demand could help fuel a strong economic recovery. There is an opportunity to build our downtowns back better. A “Roaring 2020s” decade may lie ahead – however it will be crucial to mitigate and redress inequalities as this unfolds.

5. Policy is required for downtowns to come back in a way that is more inclusive.

Without intentional policy choices, the risk is that future downtowns could end up being more exclusive than the pre-pandemic condition. It is unproductive to frame the argument in terms of economic growth versus equity: growth and equity are both necessary and can be compatible. Institutional investors could deploy capital towards affordable housing if governments can create the policy to support it.