[Real Beat] Reasons for Revitalizing Residential Areas Around Major US Cities... Spread of 'Remote Work'

How Changes in the Workplace Have Transformed Cities⑤

Editor's Note[Jjinbit] is a shortened form of 'Jung Hyunjin's Business Trend' and 'Real Business Trend,' a segment that showcases trends in changes in work.

Since COVID-19, as remote work has become the default working style for some companies in the United States, traditional major cities like New York and Chicago have experienced hollowing out, while residential areas around major cities have been revitalized.

The Wall Street Journal (WSJ) reported on the 30th (local time) that although the downtown areas of major U.S. cities are experiencing intensified hollowing out with empty offices and stores unable to find tenants, the surrounding residential areas have regained vitality. The center of urban commercial activity has shifted from downtown to residential areas.

Manhattan view [Image source=AP Yonhap News]

A prime example is New York. As various large corporations are concentrated in New York City, the spread of remote work has increased the time workers spend at home, leading to increased sales at restaurants, convenience stores, and gyms in residential areas like Brooklyn rather than downtown Manhattan.

WSJ also reported that in Washington DC, where many government employees reside, the local commercial district of Georgetown has revived.

Los Angeles (LA) has also seen a decrease in downtown foot traffic. According to Pacer.ai, a company that analyzes people's movement patterns using big data related to mobile phone usage, the number of pedestrians in downtown LA has decreased by 30.7% compared to before COVID-19. The number of pedestrians in downtown Chicago also decreased by 27.2% compared to pre-pandemic levels.

However, residential areas such as South Glendale and Highland Park in LA, and Logan Square, a representative residential area in Chicago, have seen foot traffic recover to pre-COVID-19 levels.

As the number of residents in residential areas near downtown increases, demand for housing rentals has also expanded. The median rent in Greenwich Village, a well-known residential area near Manhattan's commercial district, rose by 30% as of April this year compared to 2019. The median rent for housing in Brentwood, a residential area in LA, increased by 63%.

The phenomenon of office workers, who were concentrated downtown, moving to nearby areas due to changes in work styles has had a negative impact on downtown but a positive effect on the surrounding areas. While residential areas see a revival of commercial districts, downtown office spaces experience hollowing out, which also brings problems. From the perspective of local governments, a reduction in property taxes levied on downtown buildings is inevitable.

Richard Florida, a professor of urban planning at the University of Toronto, evaluated, "It has returned to the real image of the city. A city is not a container for work," adding, "It is a space where people live and can connect with each other." However, he added, "No matter how much the economy of downtown residential areas is revitalized, it is insufficient to cover the loss in property tax revenue caused by empty offices."