To achieve a rebirth, cities must attract middle-class families, upwardly mobile immigrants, and entrepreneurs. And they must cultivate neighborhoods.
To achieve a rebirth, cities must attract middle-class families, upwardly mobile immigrants, and entrepreneurs. And they must cultivate neighborhoods.
T alk of the future of (some) cities these days can bring out the pessimists, who warn of an “urban doom loop.” Yet just as the urbanistas overestimated the “back to the city” movement, they also may be underestimating the possibilities for an urban resurgence.
Cities can achieve a rebirth, but only if they make two critical realizations. One, they have to see their primary challenge as making themselves attractive to middle-class families, upwardly mobile immigrants, and entrepreneurs. Second, they have to redirect their efforts away from the giant steel-and-glass downtown towers that have much less to justify themselves than in the past and instead turn their attention to cultivating the richness of urban neighborhoods.
At the very least, this requires expunging the myth that big cities, particularly their dense cores, possessed an unchallengeable hold on the future. In 2018, Neil Irwin of the New York Times argued that where “a small number of superstar companies choose to locate” would dominate the economic future, leaving the spaces between them as desolate flyover zones thinly populated by society’s losers.
The Office Disaster
If that was ever the case, it is not now. Virtually every major downtown in America, including San Francisco, Chicago, Boston, Philadelphia, Washington, Los Angeles, and New York, is suffering from record levels of vacancy, with downtown street traffic in some cities down by 30 to 40 percent since 2019. In San Francisco, some 100 downtown businesses have closed, and nearby Union Square has lost roughly half its tenants.
Some hope that the fanciest class-A buildings will recover, but the overall picture is dismal indeed, as evidenced by Blackstone’s decision to sell a prestigious Broadway tower at half price. If we face another financial crisis, downtown real estate — bad commercial real-estate loans are now larger than loss reserves of the largest U.S. banks — will likely stand at the core of it. Faced with a credit crunch worse than during the financial crisis, the vast majority of real-estate investors, notes Bloomberg, believe the office market is destined for a steep crash.
Cities, of course, have overcome harder challenges in the past — bombings, influenza, race riots, and labor unrest — and found a way to heal themselves. But it would be fanciful to suggest that downtowns will come back, as New York City’s did after 9/11. Today new technologies allow much of the urban workforce to work remotely. A Covid-era study from the University of Chicago suggested that one-third of the total workforce could work online; that share rises to 50 percent when one looks only at Big Tech. A more recent study found that a majority of workers could work from home, either part-time (46 percent) or full-time (19 percent).
Despite elite CEOs demanding a full-time return to the office, American workers — particularly more-seasoned employees — are refusing to be frog-marched back into their cubicles; this is even true of downtowns in places like Texas. In fact, according to the Flex Report, the share of people in the office full-time dropped from 49 percent in the first quarter of 2023 to 42 percent in the second quarter. Big multinationals, a key part of the office market for cities like New York and Chicago, are, notes the Financial Times, planning to reduce their office footprint by 10 to 20 percent in the coming year.
The pandemic accelerated but did not start the downward trend. The country’s three biggest core cities — New York, Los Angeles, and Chicago — have been either losing population or increasing very slowly. But within just three months after the beginning of lockdowns, as estimated by the demographer Wendell Cox, New York lost as many people as its net gain since 1950, with the affluent heading either to the suburbs or country homes, or even out of state. Remarkably, Los Angeles, once a magnet for newcomers, now leads in losing population: By 2060, according to the State Department of Finance, L.A. is on track to losing 1.7 million residents.
The New Urban Hierarchy
The falloff in urban populations reflects what the CEO of Zillow calls “the great reshuffling,” which includes not just the move to the periphery but one between cities. The most impressive urban growth now takes place in dispersed and lower-density regions. Indeed, since 1950, as Judge Glock, now of the Manhattan Institute, noted in 2021, the average density of the largest American cities (the cited data are for “urban areas,” which is the physical definition of the city — urbanization — having no relationship to municipal boundaries) has dropped in half — from 6,000 people per square mile to 3,000. Lower-density cities have been growing fastest.
Glock notes that while New York and San Francisco may have 50 percent more people than in 1950, Houston, Dallas, and Jacksonville have 500 percent more. Atlanta, Phoenix, and Austin have almost 1,000 percent more. In 2022, New York, Los Angeles, Chicago, San Francisco, and Portland, Ore., all lost population while Dallas, Orlando, Charlotte, San Antonio, Tampa, Atlanta, and Miami all gained.
A similar pattern can be seen in jobs. Over the past five years, job growth has been faster in Austin, Orlando, Raleigh, Phoenix, Nashville, Salt Lake City, and Dallas than in Silicon Valley and Seattle, and it’s been more than twice as fast as in New York, Los Angeles, and Chicago. Smaller cities are also outperforming the traditional elite cities in the growth of both tech jobs and professional business services. These are now the places — Salt Lake City, Dallas–Fort Worth, Houston, Nashville, Raleigh, and Charlotte — where millennials are headed, as shown in recent reports from the think tank Heartland Forward.
The new urban hierarchy is epitomized by Dallas–Fort Worth. Now home to 7.7 million, the DFW metro area’s population continues to grow, gaining 1.3 million residents over the past decade, a rate of expansion almost three times the average for the nation’s 50 largest metros. Much of this growth has come from net domestic migration — Dallas–Fort Worth has had the fourth-highest rate of net inbound migration, including Millennials, among America’s top 20 metros — while also from a massive surge in its foreign-born population. In the last decade, the percentage of the DFW population that is foreign-born has increased more than in traditional immigration centers like New York, Chicago, and Los Angeles (according to Census data). Demographers project that the DFW population will reach 10 million by sometime in the 2030s, passing Chicago to become America’s third-largest metro area.
More impressive, the DFW metro is now home to 24 Fortune 500 company headquarters, ranking behind only New York and Chicago. Forty years ago, the metro area had fewer than five. The North Texas hub also has already passed Los Angeles and Chicago as financial centers. Yet, as the hub grows, Dallas is not developing to look like a traditional city. Profoundly multi-centered and dispersed, it is seeing job centers such as Las Colinas slowly evolving into mini-downtowns, with residential and cultural centers — an “urban suburb” phenomenon increasingly widespread in U.S. metropolises. As of 2017, the Dallas central business district contained only 11 percent of total DFW office space and only 5.2 percent of office space under construction.
The Political Conundrum
The form that cities are taking is partly a matter of politics, which is shaping the new urban hierarchy. Most traditional cities, rather than healing themselves, have become the playthings of progressive activists abetted by green nonprofits and public-employees’ unions. Their agenda of artificially high wages, endless regulation, staggeringly high taxes, as well as utopian notions of cities without cars and police, have wreaked enormous damage. San Francisco, for example, the center of high-tech urban progressivism, has the second-highest crime rate of any county in California, while its public schools are particularly poor, particularly for black students, whose test scores are the lowest of black students in the entire state.
As in San Francisco, in New York, Chicago, Los Angeles, and elsewhere, long underperforming public schools are now afflicted by a radical takeover, with the imposition of teaching materials saturated in identity politics and accompanied by attempts to cut back on math and science education and to suppress the concept of merit.
In many cities, such as Los Angeles, teachers’ unions fight reform and the growth of charter schools, assuring continued decline. Illinois has worked to all but eliminate charters despite the fact that the Chicago area is home to dozens of schools where not one student can do grade-level math and 30 where none can achieve this in English. Evidently, the fact that Chicago’s spending per student since 2019 is up nearly 40 percent has had little impact.
All this reflects the perverse role of the politics of resentment. As occurred in Boston early in the 20th century under Mayor James Michael Curley — the so-called Curley effect — hostile policies, this time against WASP business elites, froze investment for a generation. Much of the same occurred in Detroit under Mayor Coleman Young, elected in 1973 and then for a total of four terms. His radical anti-business legacy still haunts that city. Even after some urban reform efforts, Detroit’s population (620,000) is only one-third of the 1,850,000 counted in 1950, according to Census Bureau data.
Today this pattern of urban decay is evident even in our most fabled cities. The rot brought on by progressives affects virtually every critical aspect of urban life. Progressive DAs have fostered an atmosphere of lassitude toward enforcing the laws, while, after 2020, many cities sought to reduce policing under the guise of social justice. In New York, San Francisco, Los Angeles, and other cities, crime, particularly against property, and disorder are now commonplace. Oceanside Plaza, a residential high-rise in L.A. whose completion has been delayed for years, stands scarred with graffiti.
San Francisco’s population, as Wendell Cox notes, has dropped from 880,000 in 2018 to 808,000, approaching its 1950 population of 775,000 (according to Census Bureau data). The city’s disastrously high office-vacancy rate, now surpassing 35 percent, is the highest in its history. The growth of AI firms and the announced intention of Ian Jacobs, a scion of the famous Toronto-based Reichmann real-estate clan, to buy upwards of $900 million in San Francisco office space gives some grounds for hope. Yet Jacobs faces an environment in which tech firms like Google, Salesforce, Meta, Amazon, and Lyft are announcing major cutbacks in their white-collar workforce, warning that these positions are unlikely ever to return.
More recently, big cities have also reaped an unpleasant harvest from their “sanctuary city” policies. Portrayed as an expression of humanitarianism, such policies have led to an influx of undocumented and often lower-skilled migrants. While most may come here in search of better opportunities, the lack of control over the inflow of illegal immigrants has allowed for the growth of criminal gangs in New York and other cities while placing an enormous strain on often limited city resources.
Can This Be Turned Around?
Just three decades ago, as cities faced seemingly inevitable decline, a group of reform mayors began to turn things around, emphasizing law enforcement, actively courting business, and making efforts to revive failing education systems. Mayors like Rudy Giuliani and Michael Bloomberg in New York, Richard Riordan in Los Angeles, Bob Lanier in Houston, Steve Goldsmith in Indianapolis, and Rahm Emanuel in Chicago began luring both businesses and new residents, particularly young professionals. These mayors were elected by broad coalitions of white ethnic groups, middle-class minorities, professionals, and businesses.
Many cities experienced significant neighborhood regeneration. Brooklyn, to take one prominent example, rose from near purgatory to become the hot and trendy place for young New Yorkers to live. Elsewhere, universities expanded, students flocked in, and immigrants looked to start new businesses while a new generation of urban professionals promised a moderating middle-class presence. Growth continued to favor the suburbs, but the gap between suburban growth and the urban core did not seem destined to widen ever further.
Even today, New York, barring a total collapse of public order, will remain irresistibly compelling for parts of the population and critical for certain industries. The biggest concentrations of wealthy households remain in place, particularly in New York, the Bay Area, and Los Angeles. But a broad comeback is not possible without reversing the progressive tide. Today’s progressives, as Nicole Gelinas points out in City Journal, differ from their early-20th-century forebears, who did much to improve urban life through building parks, enforcing building codes and laws, and improving sanitation; progressives today are more accurately described as “regressives,” with an apparent policy agenda consisting of high taxes, high spending, and “a kind of luxury anarchy.”
Fortunately, there are signs of pushback, not from the political parties but largely from businesses and people in urban neighborhoods. As in the 1990s, it is highly unlikely that reform will come from Republicans alone, who are barely visible in most large cities, but from a coalition with moderate Democrats and independents. There have been some promising signs, including the election of New York’s pro-law-enforcement mayor, Eric Adams, some new willingness to take on hard-drug use in generally addled Portland, as well as San Francisco’s recall of progressive school-board members and the famously anti-law-enforcement prosecutor Chesa Boudin in San Francisco.
The degree of pushback in San Francisco may be measured this year, as six of the eleven supervisor seats are open amid continuing revelations of corruption in the city administration. Big Tech, once sanguine about progressive policies, seems ready to finance alternative candidates, leading some on the left to warn of a “hostile takeover” of the city. Across the bay, in hard-pressed Oakland, crime has been so bad that the largest employer, Kaiser, advises its employees to eat lunch inside. Governor Newsom has had to dispatch 120 California Highway Patrol officers to the city, where a strong movement is building to remove the Soros-backed DA and the mayor, Sheng Thao, who has been a sort of icon for California socialists. In Chicago, ultra-progressive mayor Brandon Johnson is also losing popularity, not only among whites and Hispanics but among his African-American base.
Blunting the progressive push is only the first necessary step. City leaders need to shift their focus from urban grandiosity and downtown offices to neighborhoods. Even with higher costs, talented people will continue to be attracted to great urban neighborhoods like San Francisco’s Sunset, Richmond, the Mission, or Noe Valley. “You melon scoop out downtown,” veteran real-estate investor John Sanfilippo told me, “and the rest of the city is doing well. Downtown is increasingly irrelevant.”
Ultimately, cities need to look upon their neighborhoods not as constituencies to be mollified but as their most prized customers. Improving public services, schools, and law enforcement will require, particularly in cities with severe budget deficits, like San Francisco and New York, a sustained change in direction.
Critically, unlike the downtowns, the neighborhoods are not compromised by the work-at-home movement. Indeed, many of the areas with the highest percentage of remote workers are found in places like the Bay Area, Puget Sound, Austin, and Washington, D.C. Critically, creative workers, in particular, can work at home, or in shared office space, without needing to go daily to downtown offices.
The new volitional urbanism requires a very different approach to governance that focuses on people who choose to be in the city, with attention to the core concerns of parents in particular — improving the schools — and residents in general — reducing crime and disorder. Those cities that recognize the new competitive dynamic, who see their futures as shaped by people who want to be there, will recover first and, in the process, open a new era of urban growth full of possibilities.