Dealing with Certain Uncertainties
“There are a bunch of things that will change at the margin. And changes at the margin can have huge impacts on the use of real estate.”
One of the most oft-mentioned themes that we heard was that COVID-19 did not create new trends but accelerated those that were already underway. Some of those turbo-charged trends were mentioned in prior versions of the report, but some were not. While we agree with the overall theme of acceleration, our take is a little more nuanced. COVID-19 did accelerate many existing trends, but at varying rates as well as in some new directions. It also spawned some new trends, while stopping other existing trends dead in their tracks.
Many of the trends that COVID-19 boosted rose to the level of a top-10 trend for this year’s Emerging Trends report. Those will be fully examined later in this chapter.
Also interesting are the trends that were slowed or stopped by the coronavirus. One of the biggest trends that lost momentum due to COVID-19 is the rising appeal of big cities. After decades of revitalization and population growth, many of the largest U.S. cities have been hit the hardest as tourism, use of office buildings, mass transit ridership, and live entertainment have been curtailed. Some residents (with much debate as to how many) decamped to second homes or to live with parents or other relatives, leaving quieter streets and commercial establishments behind.
While large cities are likely to struggle (with both their fiscal viability and private-sector activity) for several years, the COVID-induced pause in their appeal is not likely to be permanent. Almost all the interviewees believe that the gateway markets of Boston, Los Angeles, New York City, San Francisco, and Washington (and other locales, particularly the 18-hour cities discussed in chapter 2 will eventually regain their broad appeal and vivacity (some say they never lost it) due to their dominance in entertainment, finance, technology, and education. The next three to five years could be difficult as demographics favor suburban locations, and restrictions on public transit, office and retail/restaurant density, and live entertainment—and individuals’ concerns about them—make big-city life less appealing. But, like many of the changes that have occurred due to the pandemic, the ultimate impact on the desirability of large cities will be on the margin. Some companies and residents will choose smaller cities or the suburbs, but, in response, cities will likely creatively adapt, perhaps adding more green space and outdoor activities, and continue to improve livability to retaining and attracting residents who continue to value an urban lifestyle.