The ADRR

Author’s Note. An earlier version of this article appeared in my Downtown Curmudgeon Blog. The current version expands upon it by looking more closely at the types of data and reasoning Doomers would need to make their doom loop conclusion sound and evidence-based, as well as providing more details about the current state of remote work and downtown housing.

Introduction. I have really had it with the Doomers, those who argue that our large downtowns are doomed to failure and diminishment.[1] It’s time to call them out for being the downtown ignorant Chicken Littles that they are.

Their Covid crisis instigated doom loop analysis has been a considerable worry for many municipal business and political leaders, since it predicts not just the decline, but the end of our large downtowns’ ability to be thriving business districts. It also has been almost as good a story for grabbing public attention for many media outlets as fires, riots, and other serious calamities. Of course, it also has been raw meat for some authors who seek greater notoriety. The legitimacy of this argument seems to mistakenly be seen as deriving from the fact that academics and wannabe urban pundits have been its leading proponents and some even used real data analyzed by sophisticated statistical tools. However, the most worrisome parts of the argument are really based not on any data or fancy statistical tools, but on the Doomers conclusions and assumptions. The Doomers thinking displays an enormous  ignorance about what downtowns are really like and how they operate. The media writers and their editors who bought the Doomers’ analysis are little better.

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The Conclusion of a Downward Spiral. Doomers cite the very low occupancy rates found in the office clusters in our largest downtowns – too often based often on questionable data, mind you — and predict consequent enormous losses in lease revenues and building values. This they then argue will mean the failure of lots of office buildings. Investing in downtown real estate and leasing downtown spaces consequently will be much less attractive, and this will have very adverse effects on other downtown sectors such as retail and personal services. City tax revenues will also drastically fall, with a consequent reduction in essential services, precisely when quality of life problems are surging. Overall, these downtowns will thus become much less attractive in a continually degrading manner.

Oft Cited Doomer Data and Conclusions Also Fit Some Recovery Scenarios. Frankly, much of this part of the Doomers analysis is valid. Major downtown office sectors have undeniably been hit hard by the pandemic’s growth in remote work, and many outmoded buildings are indeed doomed. But such declines have happened several times in the office sector since the 1980s, if perhaps not as strongly. Quality of life problems reportedly have surged both in frequency and visibility during the crisis. However, the Doomers turn the current office sector downturn into a unique event by making an unwarranted analytical leap, based on little to no probative evidence: they claimed that these downtowns would fall into an unstoppable downward spiral, AKA the doom loop. They did not entertain any possibility of a recovery of any kind such as:

• The downtown’s office sector does indeed shrink, maybe even by 20% to 30%, but then it stabilizes at this new equilibrium point that is still a very consequential 70% to 80% of its prior size. But downtown growth is now engined by other sectors such as housing, personal services, entertainment and culture.
• After stabilizing, the office sector starts to grow again.

The Doomers’ data have no probative value for determining whether the doom loop scenario or one of the recovery scenarios is the more probable outcome. Take the huge losses in downtown office real estate values, and the high office vacancy rates they make so much fuss about. Their data do support that conclusion, but how do those findings then justify the downward spiral conclusion?

If the Great Depression Did Not Doom Manhattan’s Office Clusters, Doomers Need to Provide Solid Evidence and Strong Analysis to Show That The Covid Crisis Will Do That.  One would think that these findings would merit a close comparison with what happened in the Great Depression when  real estate prices in Manhattan, for example, fell by 67% at the end of 1932 compared to their 1929 levels, and then hovered around that value  through rest of that crisis.[2] While how the prices of Manhattan’s office buildings specifically fit into this pattern is unknown, given their dependence on employed office workers, it seems likely enough that they  had fairly similar declines. Certainly, if the overall market dropped by 67%, a decline in office building prices at least equal to the 30% to 40% Doomer analysts foresee for today’s downtown office buildings would not be an unreasonable guesstimate.

That conclusion, however,  presents a potential lesson learned for the Doomer analysts that is contrary to their doom conclusion: the worst economic crisis in the nation’s history probably did severely damage Manhattan’s major office clusters, but over time and with a changing economic environment, they were not only able to fully recover, but to grow enormously! Recovery in this scenario took time, but it was from a terribly strong crisis, and recovery still happened. Given the need to employ a guesstimate, this argument can only claim to establish the strong possibility that downtowns can recover from deeply devalued office buildings and high vacancy rates, but that is a stronger case than that presented for the inevitable doom loop. The Great Depression temporally destroyed real estate values but did not destroy our large downtowns. Why, then should we conclude that today’s loss in office buildings’ value will do so?

The downward spiral doom loop conclusion by Doomer analysts is just an opinion for which they really offer no supportive data, and their findings of substantial office building vacancies and potential devaluations cannot conclusively prove because they are consistent with either a doom loop, or an office sector stabilization, or a turn around possibly happening. To provide evidence for such a linkage Doomer analysts must: 1) identify a number of downtowns that have fallen into a doom loop; 2) identify the levels of office building devaluation and vacancies at which they entered the doom loop; 3) identify the causes of this entry, and identify current downtowns that fit with those prior findings .

Remote Work Is Going in the Wrong Direction for the Doomers’ Analysis. To my knowledge no example of a doom looped large downtown has been ever mentioned. That may be because some Doomers claim that remote work has made the current situation unique and for the first time a true doom loop is possible. Remote work is seen as reducing office worker needs and desires for legacy office space and thereby reducing the frequency of the social interactions that are so often the basis of creativity and team operational effectiveness within organizations. However, the actual trend in remote work counters such a gloomy outlook. The research by the WFH Research team has shown a consistent decline in remote work from its peak early in the pandemic that has now stabilized into this pattern: about 41% of the workers it sampled work totally remote (12%) or in a hybrid mode (29%).[3] Moreover, about 33% of the paid full days were worked from home in our largest cities. So yes, remote work has reduced the number of hours office workers are in our downtowns, but most are still working there. Notably, only a relatively small proportion work at home fulltime, most remotes work for firms using a hybrid model that brings them to their offices two or three days a week. Moreover, the WFH surveys find that workers want these days in the firm’s offices because they recognize and appreciate the ability to interact with their coworkers there. Engaging in these highly social forms of work is important to them.

Unless another crisis appears, there is little reason to believe that the use of remote work will again surge anytime soon. What is now well established in the real world is that though remote work is the mechanism through which there has been a significant, but far from complete reduction in the demand for office space, there is no evidence that it is the mechanism through which a doom loop will be hatched. Later in this article I will show how the Doomers view about the importance of downtown office clusters and remote work is distorted because they have an erroneous view of downtowns being monofunctional.

Another  major Doomer justification for predicting the doom loop  seems to have been that quality of life issues —  e.g., rising crime rates, more homeless – were occurring along with fewer downtown visits and lots of business closures were occurring early in the crisis. Yes, in the past these issues did cause downturns in many downtowns. What is interesting is that these problems often emerged in the 1970s and 1980s in fairly large downtown office clusters that stayed successful in spite of them. The problem was that other downtown fucntions suffered because of the offices. The fortress designs of these office buildings often induced the very fear of crime they were meant to protect against. In time, many districts overcame these problems by becoming more multifunctional and walkable, and their office sectors became more prosperous than ever before! Downtown Manhattan and Charlotte’s CBD are two examples that come to mind.

The Doomers Choice of the Gloomy Scenario also Shows an Ignorance About Many Characteristics of Our Large Downtowns.

Moreover, it keeps being eroded by hard evidence of downtown recoveries, some of which appeared early in the crisis:

• Historically, large downtowns have proved to be amazingly resilient – they can take a licking and keep on ticking. They survived the Great Depression, and some like Midtown Manhattan even had trophy projects like the Empire State Building and Rockefeller Center developed during that very stressful era. Many also came roaring back after the mid 1990s after having struggled during the 1970s and 1980s because of white flight to the suburbs and ensuing problems. Downtowns with large office clusters have long periodically faced strong challenges and declines, yet few if any went into a perpetual doom loop to socio-economic triviality. So why will it happen now? Remote work alone cannot explain it.
• Downtowns in some states, such as Texas, have long had their office sectors go through serious boom and bust periods because of overbuilding, exhibiting a kind of cyclical resiliency.
• Back around the Great Recession the growing appeal of open offices was supposedly making many older office buildings outmoded, much as remote work is said to be doing today. That was supposedly causing great havoc within the real estate industry. If memory serves me, office growth soon returned with a happy vengeance. The office sector, just like other sectors, will experience periodic serious disruptions caused by capitalism’s process of creative destruction. This process is one capable of both mass disruption and strong recovery.
• Nonresident office workers only account for a relatively small proportion of downtown visits. Almost two-thirds of these visits are accounted for by visitors who neither work nor live in a downtown. These visitors were quick to stay away from our downtowns as Covid became a national emergency, and accounted for a far greater proportion of the drop in downtown visitation than did the office workers, BUT they were also the quickest to return in very substantial numbers.[4] This quick return indicates that the causation of this decline in visitor visitation was situational in nature, not structural. In contrast, the slow return of office workers is consistent with structural causal factors being present. By October 2021, data from Placer.ai was already showing strong signs of recovering downtown visitation. Still, Doomer gloom continued to be published.
• Office workers also account for a relatively small portion of a downtown’s retail sales. Tourists and residents are the big retail shoppers and spenders. Many downtown retail problems were existing pre-crisis, caused by the strong wave of creative destruction that industry has been experiencing for about a decade.
• So the ability of a declining office sector to hurt retail sales and decimate downtown pedestrian activity is far more modest than the Doomers suggest.
• Downtown return to office rates (RTOs) have risen from about 30% early in the crisis to a median of 65% in our large downtowns. That’s not evidence of a downward spiral, but of a significant partial recovery, though the extent of the final recovery is still uncertain.
• Midtown Manhattan, once thought to be a potential victim of an office generated doom loop recently was the “hottest office market” in the US in the first half of 2023 that had “far and away” the most absorption of office space.[5]
• In downtown San Francisco, the process of wringing out excessive values from troubled office buildings seems to have started, with prior owners and bankers taking their losses and the new owners attracting new tenants with lower and more affordable rents.[6] This process promises to help increase downtown office occupancy rates, as well raising office worker foot traffic and consumer spends.
• Greater downtown visitation is known to help reduce the fear of crime, and drive bad uses out of the area. This is something about which the Doomers appear to know nothing. A recently released terrific report by a Paul Levy led team at the Center City District in Philadelphia  found that: “The cumulative average of visitors across the (nation’s largest) 26 downtowns by the end of Q2 2023 back at 79% of Q2 2019 levels; workers of all kinds back at 66%; and residents at 120%.”[7] The direction of downtown visits is obviously strongly upward, not downward. That will help make these areas seem more activated and alive, while helping to reduce the fear of becoming a crime victim. The quality of life conditions in these downtowns are not on any definitive downward spiral, though serious issues certainly remain unresolved.
• The title of the CCD’s report, Downtowns Rebound, sends a very important message about our large downtowns. They may not have fully recovered, but they are definitely rebounding. There’s no downward spiral. They are not doomed or dying.
• Downtown Doomer proponents seem to mistakenly identify the process of creative destruction that downtown office sectors are going through as a downward spiral to doom.

 What does seem to be in a genuine doom loop is the doom loop argument itself!

 The Assumption That the Economic Health of All Downtowns is Dependent on the Strength of Their Office Clusters.

The focus of the Doomers is on downtown offices and, in their eyes, the failure of that sector drags the rest of the downtown into a downward spiral with it. Such an analytical connection is perhaps easy when the terms Central Business District or CBD and downtowns are frequently used incorrectly as interchangeable, and CBDs are seen as dominated by large office clusters. This is a confusion too often suffered by economists.

In fact, most downtowns are far more complicated and have three sets of major functions, as displayed in Figure 1: Central Business Functions, Central Social Functions, and Central Support Functions.[8] The Central Social Functions (CSFs) are given short shrift by the Doomers, if they are noticed at all, but they are essential in many ways. First, strong CSFs can help assure that downtowns will keep appearing well activated and magnetic, in spite of any diminished office worker presence.[9] In turn,  that helps assure that quality of life problems will not push an office sector downturn into  the feared death spiral.

Downtowns Can Be Strong Without Being Dominated by Large Monofunctional Office Clusters. Second. in most small and medium sized downtowns, especially in their strongest,  large office clusters are absent, but CSF venues such as restaurants, bars, hotels, churches, public spaces, arts and cultural venues have a major presence.[10]  Some of our largest downtowns, if admittedly too few of them, have significant amounts of the venues associated with CSFs such as housing, retail, public spaces, entertainment, education and culture. The CCD in Philadelphia is a great example of a strongly multifunctional downtown. The fact that most visitors to our largest downtowns, both pre-crisis and today, are not coming there to work, means they are coming to shop or visit many CSF type venues, and these venues have a significant presence. Residents in and near the downtown are also frequent visitors to CSF venues. Indeed, the presence of such venues help make living downtown attractive. That strongly suggests that should a downtown have a failing office sector, it could be offset to a significant degree by developing and growing venues associated with CSF functions. That is contrary to the Doomers’ postulation that if a large downtown’s office sector is badly hurt, the whole downtown must not only hurt, but fail.

In Some Large Downtowns CSFs, Not Offices, Have the Economic Lead.  The leisure, entertainment and hospitality sectors are filled with CSF venues. The Downtowns Rebound study found that the top three cities in terms of overall job recovery—San Antonio, Nashville and San Diego—are also the three cities with the highest share of leisure and hospitality employment. That’s a very impressive example of downtown resiliency given that in the early part of the crisis they probably suffered the largest employment losses. In these downtowns, non-office CSF functions and venues have a lead economic role. They, too, have office clusters, but they are not the dominant use. Doomers do not acknowledge the possibility of this type of downtown.

In contrast are the type of downtowns the Doomers focus on with employment largely in office prone sectors – e.g.,  information technology, finance, insurance, and professional and business services, They have had a lower rate of job recovery, if still a substantial one that the Doomers seem to ignore. One explanation  for this may be that their major sectors have high proportions of jobs that can be done remotely.[11]

Our Large Downtowns Will Likely Become More Multifunctional as Their Residential Units Increase, But That Will Take Time to Reach Significant Levels. An issue that has emerged in these downtowns is can they become more multifunctional, as evidenced most frequently by discussions about adding more housing. Some serious efforts are underway in several large cites, e.g., in Chicago, Boston and Washington, DC. However, the emphasis has been on producing units by converting outmoded office buildings. Doomers, when they opine on downtown housing, argue such efforts are likely to be too small and ineffective or unlikely to happen.  Yet in a study by Moody’s Analytics, strong evidence emerged by 2022 that the residents in our large downtowns were not only staying, but also paying the highest rents in their regions.[12] The Downtowns Rebound study found that such growth was already happening: “Residential recovery is the most advanced. Within the greater downtown area, the residential population in 2023 exceeded that of 2019 in every downtown except Phoenix, and ranged as high as 134% in Portland. The median city residential population stood at 111% of the pre-pandemic level.”[13]

Strengthening the housing sectors in our large downtowns will take a lot of time and resources, and new construction is likely to be the source of many more units than the reuse of outmoded office buildings. The demand for such units has been demonstrated. The declining value of downtown office properties may make more potential sites available for such development, and make the ROI of such projects more competitive. More downtown housing units probably means a lot more people who live and work in the downtown, and those workers are more likely to work in their company’s offices. So more housing can also be good for blunting local doom loop forces in the office sector.

Downtowns are not only resilient, but capable of reinventing themselves when necessary. One might argue that such a reinvention, not a doom loop, is what is now happening. The emerging downtowns will still have important if perhaps somewhat smaller office clusters, but they will be much more multifunctional, with considerably more housing, reinvigorated arts and cultural organizations attracting new market segments, far more outdoor dining, retailing and entertaining, and strong ad hoc seniors and start up communities. Such downtowns would be more animated, appealing and energetic than ever before.

I think the evidence overwhelmingly supports the conclusion that today our large downtowns are heading more in the direction of greater multifunctionality than toppling into a doom loop that has never previously been seen or experienced. What do you think?

N. David Milder is the president of DANTH, Inc. and can be contacted at info@danth.com .

ENDNOTES

[1] There are many Doomer analysts/authors, here is one well know Doomer article: Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, “Work From Home and the Office Real Estate Apocalypse” (October 5, 2023). Available at SSRN: https://ssrn.com/abstract=4124698 or http://dx.doi.org/10.2139/ssrn.4124698.  Its first draft was in May of 2022. One with a less academic style, though written by an academic is: John Rennie Short. “Traditional downtowns are dead or dying in many US cities ? what’s next for these zones?” The Conversation, Sept. 25, 2023. https://theconversation.com/traditional-downtowns-are-dead-or-dying-in-many-us-cities-whats-next-for-these-zones-213963   In the media, even the Wall Street Journal, The New York Times, and The Washington Post have had Doomer articles.

[2] Nicholas, Tom, and Anna Scherbina. “Real Estate Prices During the Roaring Twenties and the Great Depression.” Real Estate Economics 41, no. 2 (Summer 2013): 278–309.

https://www.hbs.edu/ris/Publication%20Files/Anna_tom_59f6af5f-72f2-4a72-9ffa-c604d236cc98.pdf

[3] Jose Maria Barrero, Nicholas Bloom, Shelby Buckman, and Steven J. Davis. SWAA July 2023 Updates. WFH Research 5 July 2023 https://wfhresearch.com/wp-content/uploads/2023/07/WFHResearch_updates_July2023.pdf

[4]   Center City District. “Downtowns Rebound: The Data Driven Path To Recovery.” Oct 5, 2023. Page ??. https://centercityphila.org/downtownsreport. Hereafter referred to as Downtown Rebound. N. David Milder. “More Visitors, Not the 100% Return of Office Workers, Are the Key to the Full Recovery of Our Downtowns.” The Downtown Curmudgeon Blog ,September 5, 2023. https://www.ndavidmilder.com/2023/09/more-visitors-not-the-100-return-of-office-workers-are-the-key-to-the-full-recovery-of-our-downtowns

[5] Justin Fox. “The Hottest Office Market in America Is … Midtown Manhattan?” Washington Post July 25, 2023. https://www.washingtonpost.com/business/2023/07/25/the-hottest-office-market-in-america-is-midtown-manhattan/b9517c7c-2ad7-11ee-a948-a5b8a9b62d84_story.html

[6] Peter Grant. “San Francisco Office Market Shows Signs of Life: Sales slowly materialize as some sellers finally accept much lower prices.” WSJ Sept. 17, 2023. https://www.wsj.com/real-estate/commercial/san-francisco-office-market-shows-signs-of-life-93a95515

[7] Downtowns Rebound, Page 14.

[8] N. David Milder. “A Search for a Clearer and More Useful Vocabulary for Talking About and Analyzing

Downtowns.” The Downtown Curmudgeon Blog. December 2021. https://www.ndavidmilder.com/wp-content/uploads/2021/12/A-Search-for-a-Clearer-and-More-Useful-Vocabulary-for-Talking-about-and-Analyzing-Downtowns.pdf

[9] N. David Milder. “Strong Central Social Districts: The Keys to Vibrant Downtowns.” The American

Downtown Revitalization Review, Volume 2, 2021.  https://theadrr.com/wp-content/uploads/2021/07/Strong-Central-Socia-LDistricts-__-the-Keys-to-Vibrant-Downtowns__-Part-1-FINAL.pdf

[10] N. David Milder, “How Our Downtowns’ Three Most Important User Groups Can Help Their Sustained Recoveries.” IEDC’s Economic Development Journal. Forthcoming.

[11]  Downtowns Rebound, Page 22.

[12] Lu Chen & Ricardo Rosas & Thomas Lasalvia. “Loyalty to An Urban Lifestyle: A Study of CBD Apartment Demand during the Pandemic.” Moody’s Analytics. March 8, 2022. https://cre.moodysanalytics.com/insights/research/loyalty-to-an-urban-lifestyle/

[13] Downtowns Rebound, Page 5,

Introduction to A Place At The Table

What is it? A 3600 square foot breakfast/lunch cafe in downtown Raleigh, NC.

Who runs it? Founder Maggie Kane, now Executive Director of its 501(3)(c) nonprofit

Why we’re writing about it: It’s a “pay what you can” cafe with a paid staff, a volunteer staff, “pay it forward” donations, and a mission that serves a critical need in any major urban downtown that is experiencing a homeless crisis.

It’s just turning 8 a.m. on a Wednesday morning, and the line has already formed at this unassuming cafe on West Hartgett Street in downtown Raleigh. But instead of it being a line full of just one type of client (student, hipster, business executive), the line instead is a melange of all the above, also including homeless individuals, some of whom have their belongings with them.

Going inside, the place is cheery from the outset, as the cafe employs a “greeter;” it’s also got quality linens, nice lighting, flowers on tables, good fonts, and signs with not only the menu, but also with the philosophy and practices of the cafe.

And what a model–it’s essentially three-tiered, with an option to pay the suggested price, paying less than the suggested price, or volunteering an amount of time at the cafe to cover the cost of your food. You can also pay for additional “pay it forward” cards if you want to sponsor someone else’s meal or make a donation on top of your meal.And all of these things are noted on boards around the cafe–how many volunteer hours, how much has been collected in “pay it forward” donations, how many cups of coffee the cafe has served, etc.

All in all, it’s a bustling, friendly place with both a paid staff and a volunteer staff, and with 4.8 ratings on both Google and Yelp going back five years, it’s obviously considered a staple of the neighborhood, as opposed to just a quirky little project that someone dreamt of.

Of course, A Place At The Table IS a quirky little project that someone dreamt up-her name is Maggie Kane, and as we spent more time with her, we became increasingly impressed with both her and her model, as it’s essentially an Anarchist Cafe operating in a downtown American city. Below is her story.

Being Maggie Kane

Maggie graduated from North Carolina State University in 2013; in college, she worked at a day shelter “for people experiencing homelessness.” The shelter served about 100 people a day, serving coffee and basic sandwiches. But she made such a connection with the patrons that about ten of them came to her college graduation–and she knew then that food could be a connection through which advocates could connect with folks in need.

She also realized that most soup kitchens and shelter food services did not offer much choice. She made two key observations:

1. People have more empowerment when they can make choices about their food
2. People feel more seen and acknowledged when they are given choices about their food

So Maggie decided to work on a new concept in Raleigh, creating a space where formerly “invisible” people could come together and experience being acknowledged, instead of being ignored. She visited the F.A.R.M. Cafe in Boone, NC, and saw the “pay what you can” model working there, and she found more than thirty other places around the country running similar models.

The Process Begins: 2014-2018

Maggie developed the following principles as part of her research, and outreach:

• Pay as you can model
• Offer “good food for all regardless of means”
• Don’t make the restaurant feel different from other restaurants
• All menu prices are suggested. People can pay less, or more, or can work to pay.
• A family can’t come any time if it can’t pay.
• You have do so something in order to eat there. It is a “hand up” not a “hand out.”

Next, she gathered a team of people who had experience with poverty, and visited a different non-profit every month, pitching her concept. She also did many pop-ups to test different elements of the program, including Saturday setups at different restaurants with a “pay as you go” model. She kept testing the ideas and slowly built word-of-month; at the same time, both “fundraising” and “friendraising” was started, and she had raised $500,000 by 2017.

For Maggie, she believed that the model would only work if it was financially viable–not that it necessarily “turned a profit,” but that the funding was appropriate and consistent between actual money earned at the cafe, supplemented by donations and grants that kept the operation consistently open. She held finance meetings monthly and realized that the right space would be key–eventually sourced by York Properties, who had a long history of working with non-profits in the area. Additionally, Maggie got help from local restaurants such as BUKU, who helped with the pop-up model and are on the board, as well as friends that called many landlords, almost all of whom passed on the opportunity.

2018: The Cafe Opens

When Maggie finally opened the cafe in January 2018, she was paying full market rent, with a space half the size that it is today, 5 years later. Originally it was 6 paid staff, which has now grown to 20. She was finally able to quit her other job, which she had had until 2017, but from the very beginning, the cafe exhibited many of the traits that Maggie had originally planned: that it looked the same as any other restaurants, that the menu prices were suggested, that people could “work off their meal” by volunteering, or that they can “sponsor” a card to pay for someone else’s meal. Corporate partners can also buy cards to pay for other meals, and they have access to the cafe, as well as the cafe’s other non-profit partners.

Naturally, this project had fully consumed Maggie for 5 years, and now she knew that to keep it going, she’d have to hire more staff or experience burnout, including 2 main chefs, baristas, a manager for the volunteer, staff, and more. Then the pandemic hit.

Ironically, it turned out that the pandemic wound up being a catalyst for increasing the square footage from 1500 sq ft to 3600 sq feet, and having the business go from 100 customers a day to 250-300 a day–prompting the need for a true commercial kitchen to be installed. It also meant that the cafe needed a security guard, and that its insurance premiums also rose as a consequence (including insurance for volunteers, liability, and health insurance for staff).

2023: The State of the Union

Going into the cafe today means being greeted by a well-oiled machine that involves more than 100 daily volunteers, many of whom work a weekly shift, and some of whom pay for their meals. All the volunteers work alongside actual paid staff, including Cheyanne,a community and de-escalation specialist who is the cafe’s community manager and volunteer door greeter (and conflict de-escalator).

The cafe’s goal is to treat people with love and respect, and all new staff are required to work alongside the volunteers, to ensure that they are a good fit. The staff begin at $19/hr, pegged as a “living wage” for this part of the country. Rent is also still at market rate. Consequently, only half of the cafe’s operating budget comes from receipts–the other half is still from individual, corporate, and religious donations. A yearly gala and daily fundraising at the cafe are also part of the model.

The Clientele

The cafe’s clientele are split down the middle–half pay the menu price or donate even more than their meal by doing a “pay it forward,” and half pay less or work off their food credits. The cafe has high ratings on both Google Maps and Yelp (the aforementioned 4.8) because Maggie continues to insist that it needs to compete as a restaurant and not just as a social endeavor.

More importantly, the clientele is made up of many returning customers, all of whom are made to feel cared for, by being greeted and acknowledged. Volunteers chat with everyone who comes in the door, explain the model, lead you to the counter where you can order, and bring you your food. Conversations happen constantly, while, at the same time, staff are trained to be alert for any potential arguments or difficulties. Communal eating, staff remembering the names of patrons, and all patrons being thanked and said goodbye to when they leave–these are all specific techniques that the cafe employs to keep its mission on point.

One of the key experiences of the cafe, according to Maggie, is that the poor and isolated, many of whom are invisible to all but a few aid workers on a daily basis, are now seen and acknowledged by the general population. While “creating a sense of community” is many times stated as an (eventually empty) goal that gets bandied about by urban planners, architects, and activists in proposals and mission statements, A Place At the Table has been able to do just that–by realizing that actual work by staff, and actual training of staff, are the only ways to create a community; you can’t just build out a “cool space” somewhere and hope that a community will magically adopt it. Maggie has chosen food as her tool to reach people and create a community; however, food isn’t the only tool that can create community.

There is a deeper challenge at work here, as well. With the greater popularity comes additional situations that require awareness and tact; for the cafe, Cheyanne is the key person–she uses kindness as her first and foremost tool, but lets other staff intervene when necessary, always with the goal of de-escalating any potential dangerous situation–especially since substance abuse and alcohol addiction are very prevalent.

Nonetheless, the cafe has seen many success stories, where volunteers and others in transition acquire transferable skills, can use the cafe as a reference, and simply gain confidence by their association with the cafe. The cafe offers culinary internships, not all of which work out, but some do. There is no silver bullet except hard work and dedication to the mission–and, even then, there are folks that don’t respond to the cafe’s mission.

Notes on the Future

As 2023 draws to a close, Maggie is looking forward to feeding more people, perhaps with a food truck or by helping others launch their own operation–always with the goals of solidifying and expanding the existing community that the cafe has fostered. But she cautions that every new venture needs to adjust to its local environment, and that every venture needs all kinds of partners and supporters–financial, physical, spiritual and otherwise.

This will be the challenge going forward in every major city that is struggling to “contain” or “ameliorate” its homeless and at-risk population challenges–how to bring these populations back into “mainstream” society, where they have the chance to feel self-worth, to interact again with society at large (since many of them had such interactions in the past), and to hopefully move beyond their current situation.

A Place At The Table is just one building block in a much more multifaceted solution, but there’s no reason that it can’t be duplicated in dozens of Downtowns in the country. It’s reducing the fear of “downtown blight” by not hiding, or removing, disadvantaged folks, but by bringing them out in the open and having them interact with people who might normally have a fear of interaction, or otherwise consider their presence to be a stain on the city, instead of an opportunity for interaction and community.

We wish Maggie all the best and we’d love to know what you think!

Links:

A Place At The Table: https://tableraleigh.org/

Maggie Kane TedTalk: www.ted.com/talks/maggie_kane_food_for_thought_choice_and_dignity

Boone’s F.A.R.M. Cafe: https://www.nccommunityfoundation.org/

List of other places with this model:  https://www.oneworldeverybodyeats.org/find-a-cafe

Michael J Berne blogs as the Retail Contrarian and N, David Milder blogs as the Downtown Curmudgeon. They both are unafraid of questioning conventional wisdom about downtown revitalization, taking fresh looks at downtown challenges and opportunities, or engaging in friendly debates about these subjects. This column reflects the email give and take they have been engaging in for several years now.

NDM: Mike, I’ve been working on an article about how to bring Midtown Manhattan into a full recovery mode, and from several analytical directions I keep coming to the conclusion that for it, tourism, especially foreign tourism, will probably be a far more important factor than new housing. Yet, I feel very uncomfortable with that conclusion.

One reason is that I had been feeling that Manhattan’s attractions were suffering from a bad case of overtourism for years before the pandemic. For example, tourists accounted for between 65% and 88% of the visitors to its legit theaters and major museums. That has meant sky high theater tickets, e.g., $500 per seat at the box office, thousands on the secondary market, and overcrowded museums that make it impossible to view their holdings properly and enjoyably.

I also have become much more concerned generally about overtourism, and wrote about it in a 2021 article in the IEDC’s Economic Development Journal (N. David Milder. Determining if Your Town, Downtown, or Main Street Tourist Industry Needs a Program to Become More Sustainable Economic Development Journal / Summer 2021 / Volume 20 / Number 3 ). Overtourism basically is a problem resulting from success, not failure, and involves tourist flows becoming so large and unruly that they endanger or seriously damage the geese that are laying the golden eggs. Many major cities in Europe (e.g., Paris, Barcelona, Dubrovnik)  and several in the US like Key West, Charleston, Palm Springs and Miami Beach have dealt with this situation.

Overtourism is not new, but significant awareness of it as a public issue is. For example, back in 1965-1966, I lived in Paris while doing research for my PhD dissertation. When we told our French friends how much we were enjoying Paris, we were inevitably warned about how that would change toward the end of May when the tourists arrived. The city they felt would no longer be theirs, and too often would be taken over by cultural barbarians. Of course, that prediction proved to be absolutely on target, and I regret having to report how frequently we were embarrassed by the behaviors of our fellow Americans in restaurants, museums and even the Metro. Nevertheless, French leaders did not see they had a tourist problem they had to respond to at that time, though quite a few looked down their cultural noses at all foreigners. That is not the case today. Overtourism is a recognized problem.

BTW, even back then, the Louvre could be unbearably crowded, with the area around the Mona Lisa like a crowded zoo. However, there were distinct times when the crowds eased considerably, even around the Mona Lisa, and most savvy Parisians knew of them.

That said, despite my often personal dislike of tourist behaviors, I am very aware of and cannot ignore the revenues that tourism brings to all sorts of places, large and small. To help me get a better grip on this tourism issue I am asking myself questions like:

• What can be done to better manage the levels of tourist flows? A new art museum, Glenstone, seeks to create a serene and contemplative environment and limits how many people can visit at any one time. The Barnes Museum in its prior location had done omething similar for decades, though in a manner many visitors found very unfriendly.. Too often today these venues aspire to being world class, and that translates into trying to get the highest attendance possible, never mind overcrowding and not being able to fully appreciate the art.
• What can be done to better manage tourist behaviors? Some downtowns that complain about tourist behaviors are also those who advertise that they are party friendly, and a little naughty, and intentionally market to those market segments likely to create a problem. Spring break, anyone? What happens here, stays here?
• What is the right balance between the desire of residents to maintain the character of the town they live in and love and the wants and needs of visitors who are spending money in the town and aiding its economy? Mike, we started to get at this issue in an earlier column, and I think we need to dig much deeper into it in this one.

MJB: Thanks for kicking this one off, David.  And before I say anything, let me recommend to our readers your extensive discussion of tourism and cities in that Economic Development Journal article last summer.

I have a number of thoughts on the subject.  The level of us-versus-them snobbery with regard to tourists often rubs me the wrong way.  You noted how “quite a few [Parisians] looked down they cultural noses at all foreigners. That is not the case today.”  I have a hard time believing that, and I also do not believe it is singular to Paris – it just seems like human nature, to try to make oneself feel better as an insider by casting aspersions at the rubes on the outside.  Just like the club-goers who believe they are cool because only they know the real article.  I find it tiresome, and especially noxious when it is written into policy and regulation, as it so often does through other guises.

It is especially rich when these insiders are materially benefiting from such notoriety.  When one is fortunate enough to own property in a famous place, they can charge a premium for it (or borrow more against it).  In other words, they are deriving value from the fame.  To then complain about the inconveniences that accompany such good fortune – or worse yet, to whine about the barbarians at the gate – reads as clueless and entitled to me.  The same holds for those who live in a university town and rant about the students.  Sorry, but you don’t get one without the other.  You don’t get to enter the castle and then lift up the drawbridge.

Yes, sometimes things do get out of hand, and the barbarians really do act the part.  Antisocial behavior should not be tolerated.  But all too often I detect the faint whiff of subjectivity and judgement in the tourist backlash.  Don’t get me wrong: I feel that sense of judgement myself at times, the belief that I deserve preference because, unlike the heathens, I know how to appreciate and enjoy this gem.  But in the end, no one – not the homeowners and taxpayers, nor the intellects and the sophisticates – owns such places.  The wonders of this world – whether they be natural or human-made – belong to everyone on some level, as a sort of public trust.

Sorry for going so philosophical from the get…

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Downtown Multifunctionalism: An Old, Often Cited, Though Largely Ignored Concept[1]

Downtown multifunctionality is a topic that has been around at least since the mid 1970s when I started working on downtown revitalization projects, and first heard the term. Though oft used, and cited as being of significant importance, there has been surprisingly little related analytical thinking or research about it. The usual way to explain or illustrate the concept is to simply provide a list of functions/uses that can be found in a downtown such as retail shops, corporate offices, government offices, arts and entertainment venues, transportation hubs, health care facilities, educational institutions, etc. This essay will show that this concept is far more important than that, and integral to a proper understanding of how our downtowns can and should work. While this essay does not aspire to be either exhaustive or definitive on this subject, it hopefully it will spark further interest, consideration and use of this concept, and a fleshing out analytically of its action implications. That said, it also does aspire to provide some useful guidance for those making plans and  investment decisions about downtown housing.

Today’s Relevance

The current travails of many downtown office sectors have sparked calls to make these districts much more multifunctional and less dependent on office activities, especially by increasing the amount of housing. Many cities – e.g., Chicago, Washington, DC, and NYC — are consequently fashioning large new programs or updating inadequate old ones to convert now outmoded office buildings into housing.  A few, like downtown Austin, are even seeing new housing being built as a result of market forces. However, in a recent article I showed that the simple addition of new units does not guarantee that they will have significant positive impacts on nearby surrounding areas. [2]  Their locations, numbers, strength relative to other uses in the surrounding area, and the specific type of impact in question, can significantly shape the ability of new housing to have meaningful positive impacts. Consequently, while the conversion of outmoded office buildings may prevent property owners from having significant losses in asset values and revenues, and keep local governments from having significant reductions in property tax revenues, they may have little positive impact on the areas surrounding them in terms of increasing pedestrian traffic, making people feel safer, or increasing expenditures in local restaurants, retail and entertainment establishments.

Multifunctionality is the Foundation for Downtown Competitive Advantages

Perhaps nothing demonstrates the essential importance of multifunctionality more than the necessary foundation it provides for two of our downtowns most important competitive advantages: multi-purpose trips and dense agglomeration.

Multi-Purpose Trips. In successful downtowns, visitors tend to go to more than one “destination.” A shopper visiting a department store in a shopping mall, for instance, also is likely to shop at other stores located in the mall. But successful downtowns offer more than multiple shopping destinations. The downtown office employee not only can shop at various stores but also can go to a restaurant, attend a concert, visit a museum or doctor’s office, or even live nearby. Similarly, someone going downtown to file a legal document may also shop, dine, or visit the library, etc. Without their multifunctionality downtowns would lack the essential infrastructure needed for making such multipurpose trips possible.

The value of such trips and the multifunctionality upon which they rest is strongly demonstrated by the significant reconfigurations many of our strong retail malls have undergone in recent years as they have struggled for survival. They have decided to become even more like a downtown – indeed, some even call themselves “town centers.”  Facing a large disruptive dose of creative destruction in the retail industry, these shopping malls have sought to vastly improve their ability to generate multi-purpose trips by becoming much more multifunctional, adding such things as residential units, hotels, sports facilities, pamper niche operations, entertainment venues, etc. In doing so they potentially became  even more competitive with our downtowns, but their emulation provides strong validation of the importance of multi-purpose trips and their underlying multifunctional array of destinations that supports them.

Multi-Purpose Trips and Walk Sheds. These multi-purpose trips occur mostly on foot. While the newly multifunctional shopping malls provide a physically bounded walk shed for their visitors, the situations in our downtowns are less clear. The length of pedestrian trips in Manhattan’s midtown business district is about two times longer than in other downtowns, yet the median length of Manhattan shopping trips is only about 1,200 feet and 75 percent of all pedestrian trips are under 2,000 feet. [3] This suggests that the diameter of what, for want of a better term we will call here a Downtown Multifunctional Node (DMN), should usually be well under one-half mile in diameter or well within a 5-minute walk shed. In turn, that means that our downtowns can contain a number of such walk sheds, with the small ones being covered by one of them, but our larger ones, such as Midtown Manhattan might have about 11 or more DMNs.

The walkability of a downtown and the accessibility and service levels of local transit can influence how many destinations will be reached both within a DMN and across DMNs. However, the time available to the pedestrian will also be a factor. Downtown office workers these days, for example, may only have 30 to 45 minutes for their lunchtime trips, that translates into walking to destinations within about 1,000 feet. They are unlikely to walk out of the DMN their office is located in at lunchtime, unless it is close to the periphery , though they may do so for business related appointments throughout the day. Visiting tourists, on the other hand, are unlikely to have similar time constraints and consequently are more likely to visit several DMNs. This points to the fact that different downtown users are potentially impacted by a downtown’s multifunctionality in different ways, some at the geographic level of the mixed use building, others at that of the DMN, and others across several DMNs.

Dense, compact downtown development also generates higher rates of multi-purpose trips.

Multifunctionalism + Density = Agglomeration. If agglomeration is the key to the economic success of our large cities, it is likely to be strongest in their downtowns, and that is another very important competitive advantage for them. Multifunctionalism assures that businesses can have many of their clients, suppliers and supporting businesses nearby. The downtown is likely the most densely developed part of the city and that assures that lots of other related private and public organizations will be nearby. The downtown central social function venues such as restaurants, bars, coffeeshops, social clubs (e.g., Harvard, Yale, Cornell, Union, Metropolitan, Century clubs in Manhattan), and gyms facilitate high levels of related social interaction and exchanges of ideas and information.

Dominant and Supportive Functions

While large downtown office clusters recently have been hammered for being insufficiently multifunctional, they have been wrongly accused of being purely monofunctional. Every downtown office cluster I’ve visited has had supportive business services nearby, as well as the eateries, coffeeshops, drugstores, and banks to meet at least some of their workers’ needs. These firms may be present in varying numbers and attractiveness, but they are almost always there to some extent. In these large office clusters the office operations are the dominant function, and the venues of other functions are there to support them. This is important: the venues of the supporting functions are unlikely to be popular destinations drawing people and firms located outside of the area. Their viability in the area is dependent on their relationship to the dominant function.

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[1] Thanks to Mark Waterhouse, Paul Levy, and Richard Florida for their very helpful comments on earlier versions of this article. And again I must express my appreciation of the great editing Mark also did on it.

[2] N. David Milder. “How Many Residents Does it Take to Create New Functionally Diverse Downtowns – How to Think About Allocating Scarce Resources to Get There? The American Downtown Revitalization Review – The ADRR. February 2023. https://theadrr.com/wp-content/uploads/2023/02/MW-Edits-NDM-housing-and-office-multifucntionality.pdf

[3] See: Boris Pushkarev and Jeffrey Zupan, Urban Space for Pedestrians: A Report of the Regional Plan Association. MIT Press, Cambridge, MA. 1975. Retrieved from: https://s3.us-east-1.amazonaws.com/rpa-org/pdfs/RPA-Urban-Space-for-Pedestrians.pdf

Michael J. Berne blogs as the Retail Contrarian and N. David Milder blogs as the Downtown Curmudgeon. Both are unafraid of questioning conventional wisdom about downtown revitalization, taking fresh looks at downtown challenges and opportunities, and engaging in friendly debates about these subjects. This column reflects the email give and take they have been engaging in for several years now.

MJB So David, last time we went back and forth on the prospects for retail recovery in the more intensely-developed Downtowns of our larger metros.  How about, this time, we focus more on suburbs and small municipalities?  First, I’d like to give a shout-out to the recently retired Bill Ryan at the University of Wisconsin Extension Center for Community and Economic Development — he and his shop have done such great work over the years on these sorts of Downtowns.  Indeed, I’m eager to see what Bill has to say in response to our conversation.  O.K., so let’s get to it.  Earlier in the pandemic, there was this presumption that many of them would benefit from the rise of hybrid work and the flight from the cities to both suburban as well as second-home communities.  Certainly, there have been some high-profile brands — like Starbucks, Chipotle, Sweetgreen, Parachute Home and Faherty — stating explicitly that they would be skewing more towards such opportunities than they had in the past, but speaking more broadly, have you been seeing much evidence of this benefit on the ground?

 NDM: Mike, I strongly join your shout out to Bill Ryan at UWEX!!  The State should declare him a WI Treasure!

And, of course, I also strongly agree on the small rural and suburban municipalities as our focus in this conversation. As for what I am seeing on the ground, it’s not been much since we have not traveled much outside of NYC since the beginning of the pandemic because of health reasons. That said, I have been looking via the internet into some of these towns I know around the nation and some of their managers and stakeholders, and at the store location functions of the websites of the internet born retailers like Warby Parker and Bonobos, etc. What I am seeing from those sources are that Central Social Functions venues such as food, beverage, entertainment and pamper niche operations – e.g., hair and nail salons, dance and yoga classes –are opening at a faster and larger clip than retail, and that the admittedly small sample of eight or so internet born chains I looked at still are looking at very primo suburban locations, and still not in smaller independent rural cities, in the 25,000 to 75,000 range.

Let me then jump to noting that when we start off by talking about retail chains, we immediately narrow our focus to a much smaller group of downtowns and Main Streets that have any real chance of attracting them. That in turn raises the point that knowing and accepting if your downtown can or cannot attract comparison shopping type retail chains is one of the most important things the leaders in these downtown can do. I know that for me, and I suspect for you, working with these downtown organizations when they have not accepted this reality can be very frustrating. And then even if they can attract chains it will be likely for some kinds and not others.

What I am looking for these days, more than info on the chains, are: 1) if small merchants are really learning how to utilize omnichannel marketing strategies and tools that can enable them to better connect with customers in their traditional trade areas, and to attract e-shoppers from much larger market areas, and 2) the demographic shifts in population, and creatives, to smaller towns and cities, and even some rural areas. While the media and academic focus has been on how the pandemic generates remote workers who may or may not have fled to sparser regions, I think that for retail the far more important trend is that the pandemic really accelerated the adoption and use of omnichannel strategies and tools, and filtered out a great number of operators who were deficient in these skills.

MJB: When I’m presenting on the subject, I always make sure to point out that these expansion-minded DTC’s, along with the still-healthy legacy brands, are only willing to consider a tiny subset of Class A locations.  This includes a few suburban Downtowns, though they’re almost always ones that have long been shopping destinations, and in many cases, anchored by an institutionally-owned lifestyle center, like Bethesda, MD (with Bethesda Row) or Walnut Creek, CA (with Broadway Plaza).  It is a trend with little to no relevance to 99% of the suburbs and small towns out there.

It is, as you say, all about analyzing and understanding what is and is not realistic for your retail mix.  I do think that the Downtowns in these suburban and small municipal settings — which I’ll abbreviate as SSM’s for the purposes of brevity — will be very hard-pressed to support commodity-based businesses which consumers generally patronize on the basis of convenience.  Larger cities, with their much higher population densities within walking distance and their much higher tolerance for hassle, have a greater chance of sustaining storefront grocery and drug stores, but in SSM’s, most such tenants — with the exception of Dollar General or a legacy ACE Hardware — will need their on-site parking along high-traffic arterials. In some cases, they might be able to find such opportunities on the Downtown periphery, but more likely, they’ll look to the strip corridor further out, nearer to the freeway interchanges.

A specialty positioning is even more essential in these SSM’s, then.  I’m less bearish on the potential for boutiques than most — such shops can and do exist even in the absence of fashion co-tenancy, but only when the merchant is well above-average in sophistication, savvy and resourcefulness.  This is also where your comment about omnichannel comes in — it is certainly not a silver bullet but at this point, it is table stakes.

What has struck me — though not entirely surprised me, given how these things generally work — is how so many main streets of smaller towns these days have been adopting the retail forms that originated in and are still primarily associated with the urban core.  Driving through Kansas and Wyoming last summer, I saw a lot of them with say, a third-place coffeehouse, a craft brewpub, a denim boutique,  a co-working space, maybe a parklet or two.  If the community is large enough, there might even be a small-scale food hall.  I’d be curious to know how such concepts are received in these places, as I’m not one to believe that what starts in cities necessarily reflects the preferences and sensibilities of every consumer.  Then again, there is a Central Social District (CSD) component here that seems universal…

NDM: Following up on your mention of Chipotle and Starbucks I did a quick look at their locations in NJ, Westchester and Long Island. Starbucks is often in SSM downtown locations, but Chipotle is not, save in a few instances when there is a downtown shopping center such as Palisade Court in Englewood, NJ. I have not heard about many recent openings or closings of Starbucks through my grapevine in these downtowns. But there is a real question about them being a real third place anymore in many locations, as their seating has been significantly reduced.

There are a number suburban towns across the nation that had done quite well recruiting coveted retail chains in the past, but a whole lot of them were deeply hurt even prior to Covid by the process of creative destruction the whole retail industry was going through. How do you think they will come out of the Covid crisis? On a strong recovery trajectory? or still struggling? I know you have been working in some of these downtowns. My observations suggest a variety of ways. Some, whose trade area populations were not that homogeneously affluent have faced real headwinds, and are trying to tack by attracting newer and smaller chains and/or shifting away from retail to other uses such as more food and beverage, and pamper niche operations. Among those with more solidly affluent TAs, some reputable chains are returning, but their numbers still lag those of “the good old days.” Some problems they seem to face is that landlords still want relatively high rents and trophy-like retail tenants. They and their downtowns would be doing a lot better if rents closer to what the market is now supporting were asked, and quality tenants capable of attracting lots of customers were signed up. One more observation: housing in the downtowns that only added less than about 300 new units did not seem to have as much bang as it did in districts with more than 300 units. I don’t know if that 300 number is solid, but I think that a downtown needs a fair number of new residential units for them to have a meaningful impact. Even a 100 or so won’t do it.

Let me turn to the real meat and potatoes of this discussion:  the downtowns and Main Streets that don’t attract clusters of very desirable retail chains that feature comparison shopping type merchandise. They still can attract F&B chains like Dairy Queen and McD, though they often locate in the town closer to a main highway, than in the downtown. And they also can attract some franchised chain stores. But the heart and soul of the commercial operations in these districts are the independent small businesses. And as Bill Ryan’s research on towns and cities in WI with populations between 1,000 and 50,000 showed, most of them were not in pure retail, but central social function operations like eateries, bars, personal services, and entertainments (e.g., miniature golf, bowling alleys).

Those data and more importantly my personal experiences since around 1958 in small towns in OH, MI, NC, VA,  NY, NJ,  VT, NH, OR, NE, CO, NM, WY have shown me the huge social importance of downtown coffee shops, diners, bars and even fast food franchises in these smaller communities. Yes, the specific expresso coffee shop concept may be new to these towns, but the social functions they host have long been around, and I think they are performed more robustly in these smaller and more rural places than in our big cities. Good F&B venues, I think, are the basic building blocks for a strong downtown in these SSMs. You don’t even need a lot of them, even just one can be a district cornerstone, but they have to serve quality products. They can play both an important local 3rd place role, and be a tourist attraction. The Golden Lamb in Lebanon, OH is one example of this and  Rancho de Chimayó, about a 40 minute drive from Santa Fe NM is another.

So, while most of the storefronts in these towns may not be retail, what kind of retail can they be? Those selling necessities are probably the most needed and wanted. However, as you argue quite correctly,  market forces make it difficult for many of the really  rural ones — aside from the $ stores — to attract groceries, drugstores, etc., and if they do, they will probably lean toward select sites closer to a main highway. However, smaller towns with relatively small populations can attract a supermarket if they are located in the rural part of a fairly large regional metro area. For example, a 20,000 SF supermarket is in Sherwood, WI, pop around 3,000, a suburb of Appleton. Gering, NE, pop around 8,500, also has one. Once a SSM gets above around 15,000 or so in population, the town is much more likely to have a supermarket if it also is the commercial core of its region. For example, Rutland, VT, pop 16k, has several, and a Price Chopper is in its downtown.  Many suburban downtowns have supermarkets such as Englewood, Westfield, Maplewood and Morristown in NJ, Garden City in NY.

The grocery problem appears mostly in the very small towns in economically depressed and low populated regions. Capturing community value strategies are sometimes viable in them when consumer demand is close enough to supporting  a grocery at near a break-even point that a nonprofit can live with, but a for profit would obviously reject. Profound structural changes are needed to alter the hand dealt to these disadvantaged SSTs.

There are a number of trends that might be altering the hands dealt to all SSMs. Recently, an article in a trade publication argued that 2023 would be a gusher year for  retail openings. The Chase Institute says that retail is following the population flight to smaller cities and towns. Decent research has shown that today’s SMBs are far more adept at using the marketing tools associated with the use of omnichannel marketing strategies. There appears to have been a real move to smaller store formats by many retail chains. What say we about them?

As you know, I think omnichannel is the key to stronger indie downtown biz operators. For most, it will enable them to relationship build when the customer is not in their shops, and can facilitate BOPUS transactions. It also can facilitate both electronic and traditional backdoor marketing to businesses in the area. For others, with a really savvy operator, it also provides an opportunity to electronically tap larger consumer markets. Dodd’s Shoes in Laramie comes to mind as an example of this, but another was a women in Teaneck, NJ back in the mid 1990s who really boosted her sales by putting her antiques on the eBay website. I have come across a number of candy-makers, 2nd hand shops, women’s apparel,  and arts and crafts galleries that have similarly benefited from omnichannel.

I found your mention of savvy boutique operators provoking me to ask if finding and cultivating such biz operators isn’t the real name of the game for the vast majority of our SSMs? I then thought along these lines: while we tend to venerate small independent businesses in this country, the law of averages, and assuming a generous bell curve distribution, says half of them must be below average in talent. Maybe the top 20% are the savvy ones we need. How do we find them? How do we nurture them?

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The Challenge[1]

The recent strong impact of remote work in our large downtowns on how many office workers show up in their workplaces has sparked calls for the central business districts within them to be made far more multifunctional. Housing, in particular, has been highlighted as the function most in need of buttressing. On one hand the housing is seen as a possible replacement for unwanted office spaces, and a way to save outdated buildings while recapturing  lost real estate capital values and rental and tax revenues. However, the main focus in this essay will be on another reason to increase downtown housing offered by advocates of greater downtown multifunctionality: the ability of more housing to improve and strengthen how our downtowns function. The inherent aim is to make our downtowns more magnetic places for people to live, relax, play, and connect. It is an objective consistent with strongly improving the balance between a downtown’s Central Social Functions and its Central Business Functions.[2] When both are strong we have our strongest and most magnetic downtowns.

The owners of downtown office buildings are doing what is economically rational for them to do, to try to regain market share and recapture value. That’s fine, especially since academics are foreseeing a destruction of $413 billion in office values nationally in the near future.[3] Downtown managers and city governments have different objectives. Most importantly, they have responsibilities for the well-being of  our entire downtown. They are the ones whose job it is to think strategically and propose needed interventions and incentives that may vary across the geographies of the downtown. Since resources for adding housing are bound to be limited, it is imperative that they have a well-grounded strategy to guide housing growth. Their attention needs to focus on downtown housing in a manner that goes well beyond just the conversion of outmoded office buildings, and to push the interests and concerns of the whole downtown community to the forefront, not just those of troubled property owners. The discussion below covers a number of analytical points and research findings that should help them formulate the needed well-targeted strategies.

An interesting question that currently is getting too little attention is how these two reasons for more downtown housing are related: will the conversion of outmoded downtown office buildings to residential uses necessarily make their surrounding areas better places to live and play? How many new units are needed to significantly lift downtown foot traffic and shopper spending, while reducing visitor fear of crime? Does it make a difference where the new housing is located within a downtown?

Those critical strategic questions about housing are further complicated by the fact that estimates by real estate experts do not indicate that vast amounts of office space will be converted to residential uses. For Manhattan these estimates  range from 8% to about 14% if new regulatory improvements and appropriate financial incentives are added.  Furthermore, nationally, most of the buildings recently  converted to residential uses were not offices, but had a variety of other uses such as factories, hotels, and even schools and religious – see Table 1. Also, many large downtowns are seeing new housing built in them or on their periphery, and it is often occurring in mixed use multi-building developments, such as Manhattan’s Hudson Yards, and increasingly in new structures that have housing mixed with various combinations of hotel, office, retail, entertainment and personal services spaces, such as the Waterline in downtown Austin. When we think about new housing for our downtowns we need to also think of development paths other than the conversion of outmoded office buildings.

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[1] I want to thank Mark Waterhouse for his great editing of this article, and to Paul Levy, Richard Florida, and Andy Manshel for their very helpful comments on an earlier draft.

[2] For more about downtown Central Social Functions and Central Business Functions see: https://www.ndavidmilder.com/2021/12/a-search-for-a-clearer-and-more-useful-vocabulary-for-talking-about-and-analyzing-downtowns

[3] Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, Work From Home and the Office Real Estate Apocalypse (November 26, 2022). Available at SSRN: https://ssrn.com/abstract=4124698 or http://dx.doi.org/10.2139/ssrn.4124698