Doing business in the city is looking like a lose-lose proposition for many

“Fifteen days to flatten the curve” is what politicians and health officials told us was needed in mid-March of 2020 at the start of COVID-19. More than three years later, the curve continues to point downward for owners and lessees of commercial real estate in big cities.

Downtowns in major U.S. and Canadian cities are proverbial ghost towns compared to before the pandemic. The University of Toronto School of Cities compared cell phone activity in several hubs in 2019 and late fall 2022. While maybe not the perfect measurement, it’s as good a way as any of seeing how many people are in town and out and about on the average workday.

Los Angeles is faring the best, but it’s not a pretty picture: The City of Angels is about two-thirds as busy as it was in 2019. Cell phone activity there is currently at 65% of where it was three years ago.

The numbers are worse for the following cities:

• Atlanta, 61%
• Denver, 59%
• Boston, 54%
• Chicago, 50%
• Vancouver, British Columbia, 47%
• Seattle, 44%
• Portland, Oregon, 37%, and
• San Francisco, 31%.

Retailers are one sector that’s unlikely to help fill the voids in vacant downtown facilities. For example, Whole Foods just closed a grocery store it opened only a year ago due to rampant shoplifting and assault in the neighborhood.

And of course, many tech companies that turned Seattle into a boomtown 30 years ago are planning moves to the suburbs if they haven’t pulled up stakes already.

Cities struggling to bring businesses back

The old adage “location, location, location” remains the same. Companies that sold properties in high-tax or high-crime cities three or more years ago avoided the headaches others are suffering from.

Cities are raising taxes on homeowners to make up for the money lost from business taxes. Philadelphia recently doubled property assessments in blue-collar neighborhoods to make up for a gaping tax loophole. Center City Philly skyscrapers are struggling to bring back tenants since the lockdowns and George Floyd riots of 2020.

Remote work will continue to make cities unable to lure back some businesses. Fewer workers in cities leads to “vacant office blocks, decreasing ridership on public transport and less money spent on lunchtime or after-work activities, decreasing business revenue and in turn, the cities’ tax income,” according to Statista.

The remote trend hit western U.S. cities the hardest. “Only four out of 62 analyzed [by the University of Toronto] downtowns surpassed their 2019 activity levels: Salt Lake City, Bakersfield and Fresno in California as well as El Paso, Texas,” notes Statista’s Katharina Buchholz.