RIP Cities. We told you 6 feet apart would do it

[SoCal Deek]

1 minute ago, Roundybout said:

No, I’m sorry if I misstated earlier. My wife and I intend to move to the burbs when the time comes to have kids for the schools. Inner ring suburb most likely. 
 

I do think vibrant communities full of energy and life, where you don’t have to drive 20 minutes to a soulless shopping center for milk, will be very attractive to people, yes. 

Yes, it’s most certainly a far better experience to walk to through a crime, graffiti, and drug infested urban neighborhood to get your carton of milk. 😉

[Precision]

The population of NH is steadily growing in large part due to residents of Metro-Boston leaving MA for NH.  I can't help but think migration from cities is going to be a long-term trend when places like Boston can't hold population.  In March the governor of MA (Healey) proposed reductions in taxes to stem the tide of people leaving MA.  

 

[Big Blitz]

CRE Storm: Over $800 Billion In Office Space In Nine Cities Could Become Obsolete By 2030 
 

 

In a recent Bloomberg interview, Barry Sternlicht’s Starwood Capital Group warned that the CRE space is in a “Category 5 hurricane.” He said, “It’s sort of a blackout hovering over the entire industry until we get some relief or some understanding of what the Fed’s going to do over the longer term.”

 

The current downturn in CRE could persist for years, if not through the end of this decade. Jan Mischke, a partner at the McKinsey Global Institute, along with Olivia White, a senior partner at McKinsey, and Aditya Sanghvi, a senior partner and leader of McKinsey’s real estate special initiative, published a note in Fortune, warning “$800 billion of office space in just nine cities could become obsolete by 2030.” 

 

The authors of the report blame the CRE downturn on the “shift to remote and hybrid work prompted two further shifts in people’s behavior”: 
 

First, many residents, untethered from their offices and therefore less fearful of long commutes, moved away from urban cores. New York City’s urban core (that is, the dozen densest counties in the metropolitan area) lost 5% of its population from mid-2020 to mid-2022. San Francisco’s urban core (San Francisco County, Alameda County, and San Mateo County) lost 6%.

 

Second, consumers began shopping less at brick-and-mortar stores–and far less at stores in urban cores, where people were now less likely either to work or to live. Foot traffic near stores in metropolitan areas remains 10 to 20% below pre-pandemic levels, but the differences between urban and suburban traffic recovery are substantial. For example, in late 2022, foot traffic near New York’s suburban stores was 16% lower than it had been in January 2020, while foot traffic near stores in the urban core was 36% lower.
 

“The reduced demand will have major impacts on urban stakeholders. For example, in just nine cities that we studied especially closely, $800 billion of office space could become obsolete by 2030. And macroeconomic complications could make matters even worse,” the authors continued. Without office workers in downtown areas, economic recoveries in major cities will be a “U” shape or, in some cases, an “L.” 

 

The unraveling of downtowns is already underway. We shared a video this week of scenes of San Francisco’s downtown transformed into a ‘ghost town.’ Building owners in the crime-ridden metro area are already giving up and defaulting as vacancies rise, crime surges, and refinancing is near impossible in today’s climate as the Federal Reserve keeps interest rates sky-high to tame the worst inflation in a generation. 
 

https://confoundedinterest.net/2023/07/22/cre-storm-over-800-billion-in-office-space-in-nine-cities-could-become-obsolete-by-2030-office-vacancy-rates-soar-as-fed-went-crazy-with-stimulus/

 

 

 

This is going to reshape the electoral map and how they tax you.  Without their big city tax base to fund state and local governments, you’ll start to see new tax proposals or plans that will do nothing but anger everyone that already can’t afford anything ….

 

BUT what I’ve been saying is much more likely is you State workers that think you’re safe, the Ds will turn on you so fast if left with no choice due to the electoral shifts and no longer a need to prioritize programs (education) that over half the public is fed up with.