> "As office building vacancies jeopardize urban fiscal health and downtown vitality, here’s how cities and states are adapting."
The distress over remote work comes not from employers, but from owners of commercial real estate.
Here's a view of that from a lending broker in the commercial real estate sector. [1] The high vacancy rate is all too real, and papering it over with "extend and pretend" lending tricks is mostly over. A lot of loans renew in 2026-2027, and they won't have the near zero interest rates from last time. Vacancy rates are higher than generally reported, because many landlords are making concessions.[2] San Francisco has about a 30% office vacancy rate, by the way.
All this means foreclosures, distressed property, markdowns, and bankruptcies. "A January 2026 Morningstar DBRS analysis, reported by The Wall Street Journal and The Real Deal, found that more than half of the roughly $100 billion of securitized commercial mortgages coming due in 2026 are unlikely to pay off at maturity."
The loud "return to office" pronouncements did not result in an increase in office space in use.
Despite all the noise, remote work has not really decreased much in recent years. "Less than 1/3 of companies requiring fully in-person work in 2026."[3]
>Despite all the noise, remote work has not really decreased much in recent years. "Less than 1/3 of companies requiring fully in-person work in 2026."[3]
Remote work is generally being displaced by hybrid. That still requires employees to live in expensive metros and employers to maintain offices with space for everyone. The offices can be a little more austere and the commutes a little worse given that they're only for 2-3 days a week, but everybody's still got to pay for basically the same stuff. Downtown retail, though, is screwed with only 2-3 days of foot traffic to pay the bills.
It is likely we need to see it crash first. I am not in this industry but it does make sense to me that it gets easier after the current owner gets wiped out, banks take possession, value gets marked down, and then money gets spent on the conversion.
With the loan under water or the fear of it going that way it is probably hard to fund additional debt for a multi-year construction effort when no one is sure which way the market will go. Also may mean that they miss out on a govt bailout that could make them whole.
Just a theory on why we haven’t seen much of this.
the best approach & sustainable cities has always been mixed zoning.
city buildings at human scale i.e 4-5 stories like in most European cities. shops / retail etc at retail level. then offices / apartments occupy the other levels.
make places walkable & dense. then have public Parks etc. then shit like niteclubs etc - should be relegated to basement level. same as parking.
That is not how Europe is actually built though. You'll see those four to five stories with shops retail on the ground floor and then the others above on the main street. However, if you get off the track and go behind those streets, you discover that there's a lot of places that are just pure apartments with no retail and some offices but very few in between. If you're expecting to find a place where there's ground floor retail and residents and offices above, you need to be looking at places where there's 15 or more stories on every building. And by every building, I mean every building, not just downtown.
I don’t know why people use “Europe” as a broad term. The city layouts in Warsaw, Paris, Athens, and Amsterdam are quite different.
Even then, I’d say that most larger/capital cities have 5-8 story buildings, with retail or other shops on the ground floor in the majority of central areas.
However even we don't have 15+ stories on every last building. (My home in Singapore only has 3 stories and legally no one can change that, because it's under conservation.)
Agree. And you also then should ask, why is it so? It’s usually not because they were after some pedestrian nirvana. It’s because land is so expensive they have to utilize it to a high degree for it to make sense. It does help that once you have the density, public transportation is worth investing in. But most of America is how it is because land has been relatively cheap and available and the development was during the rise of the automobile. I think it’s very narrow minded to assume that most Americans would like living in the European style city (the dense version). We have space, yards, large homes, automobiles are affordable, greater privacy than apartments provide, etc. Sure homes here are have grown unaffordable for young people in many areas, it’s certainly a problem. We’ve also built a ton of new apartments and people still complain about affordability. There’s not really any true affordable housing without subsidies, and that’s just shifting the burden somewhere else. Materials and labor is what it is and they add up to big numbers, meaning many people are perpetually priced out. If this is your problem, I’d suggest looking at the tiny house movement as a solution before expecting any US city to redesign itself for your wants/needs. Maybe prices will come down in a decade or so when all the boomers are selling to go into assisted care facilities.
I think remote work will create new cities and new urban centers if we allow it to continue. We shouldn’t be forced to be crammed into the same places.
People want to live with their services and things to do. There's a reason why developers are building suburbs around all the existing cities, but they're not going to middle and nowhere places to build suburbs. Even the land would be a lot cheaper. Nobody wants to live in the middle of nowhere. They want to live close to things they can do. Even if you can work from home, you still want to be able to go to a doctor's office. You won't be able to meet your mates for a softball game, or whatever sport you have to like playing. Maybe you want to go out for a drink or to a restaurant. Cities provide a huge number of valuable things because of the concentration of people that you just can't get in a new small town or new development. Sure, if you can ever get that urban development going, it eventually will develop all those things. But, those things are really hard to get first because they depend on customers. It becomes a chicken and egg. You can't have a new development because there's not things to do, but you can't have things to do until there's people who live there. Build around an existing city and you have all those existing cities. It's worth the things to do.
They basically said that NYC and SF "threw the curve," and should be excluded from the analysis. Probably, the same goes for Chicago and LA.
What I find amusing, is mean commute times. I know a number of folks that live in the Atlanta and Boston areas, and they would love a 30-minute commute. I think that NYC claims a 27-minute mean commute, but everyone that I know that commutes (and I know a lot of folks that commute; both by car, and by rail), take 90 minutes to two hours.
I think they must include [very expensive] suburbs right on the city limits, to get those means; when the affordable housing is out in the bedroom communities; usually 20-50 miles away.
Also, if the commute is supposed to end at the city limits, or some fixed point, downtown, it's leaving out a significant amount of time. It can take two hours to drive from the Queens/Nassau border, to the Hudson (on a bad day -usually, it's an hour). Subway rides take a certain time, too. These are affected by proximity to stations, and how many stops a train makes.
I don't think it's a useful comparison for any sub-60 minute commute when it's a passive mode of transportation vs active.
When I lived in Manhattan, I had a ~35 minute commute by subway. I read a book every week or two, and it was far more productive than anything that happens in a 20 minute drive by car. My commute now is roughly 20 minutes, driving... and it's very stressful.
Beyond 1 hour, the time lost has greater impact on your life (socializing, household chores, family time, etc). Even still, I'd rather 90 minutes in a train than 60 behind the wheel.
> When I lived in Manhattan, I had a ~35 minute commute by subway. I read a book every week or two, and it was far more productive than anything that happens in a 20 minute drive by car. My commute now is roughly 20 minutes, driving... and it's very stressful
Really just shows how different people's experiences are based on location and density
When I was commuting downtown in Calgary, it was either paying for parking downtown and a 20-30 minute drive, or a 60-90 minute transit ride depending on which bus I caught
A 20-30 minute driving commute is basically the norm here. Unless you live quite outside the city.
> Even still, I'd rather 90 minutes in a train than 60 behind the wheel
The tradeoff between transit and driving has never been within 30 minutes for anywhere I've lived, personally. It's always 40+ minutes difference, and that's assuming your bus even shows up on time
Cities being dependent on workers being present at commercial office buildings appears to be a uniquely American problem.
Most of my American friends I know turn to the suburbs as a default for "family" style living once they have kids. Imagine their bemusement when they go to a place like Amsterdam or Tokyo and see plenty of families with small children walking around. Heck, you don't even have to go far to see how a city can be a great place for a family, just look at Boston.
Cities, when done correctly, are a better place to raise a family than the suburbs. And yet, when done incorrectly, are terrible.
"Cities, when done correctly, are a better place to raise a family"
The birth rates say otherwise. Cities universally have very very low rates of childbirth. So low that they usually have to depend on a constant inflow from rural areas just to maintain their population. Its a pattern observed across the entire world. And its remarkably clear from the numbers.
You could argue there are a couple of exceptions. If the child is going to be a musician then perhaps a city is better. But I suspect you are confusing being born with millions in a trust fund with living in a city. Those aren't the same thing.
You're conflating the opportunity cost of having a child with the actual logistics of raising a child.
Cities are by definition economical logistical hubs. It's where the jobs and opportunities are. Most people aren't saying "gee I better pack up and move to suburbia before having a child" it's more like "having a child could cost me my high-paying job so I better not". And that issue is exacerbated in the U.S. with the worst parental-leave policy among developed nations. Regardless though, the trend will still exist in countries with generous parental-leave policies because having a child is an opportunity cost in an urban environment. That doesn't mean the environment itself isn't conductive to raising the child. Completely different stories.
As someone who pushed to raise our family in the city only to eventually end up in the suburbs, the suburbs are better for kids - which is why we move there.
Amsterdam and Tokyo are lovely cities but they both suffer from extremely low fertility, so it doesn't seem like people chose them to have a family. Walkable is great but having a little more room with a nice backyard and a car to take the kids places is great.
I think a better split would be between city mice and country mice.
I live close to the Boston light pollution bubble. I've worked within Boston, have had friends in suburban Boston, and it's a place to raise a family if you are a city mouse and can live with the noise and crowds and have plenty of cash, because everywhere you go, somebody has their hand out for money.
I'm a country mouse, and if I have to deal with more than 5 or 10 people a week, it's getting close to too many people. When I spent a few days in Vermont under really dark skies and with not many people, I felt the best I had in months.
I think instead of trying to proclaim which is the better space for raising families or living, make it possible for someone to live in a place that's best for them, be it a country mouse or a city mouse. One size does not fit all. Heck, it doesn't even fit many.
That's the big monomer: "walking" around. Many American cities (especially on the western end) aren't made to have families walking around. They aren't unwalkable, but they aren't welcoming you to walk. Among several other factors in US urban environments.
And to add the final nail to the coffin: even if you tried to make it walkable, real estate prices drive you back out. The biggest draw to suburbs is simply one of cost. $2200 median rent in downtown LA (1 room) vs. $1450 for a suburb 20 miles north?
The real cost of suburbia has been aggressively hidden for decades and is only now becoming realized as even gen-Z buyers with college degrees are getting priced out of starter suburban homes.
The solution is to aggressively tear down draconian zoning laws that force businesses to build obscenely large parking lots and forbid mixed-used developments. More American-style suburban homes with 2 yards, a 2 car garage, and 3 bedrooms is not going to help with prices at all, in fact, it's likely to make the housing crisis in every country worse. The rent itself is not the only cost but the utilities as well. When you build another 100 spread out homes in suburbia, even if the city subsidizes the cost of all that piping, wiring, drainage, and asphalt, it comes back to you in the form of tax or cuts to amenities like parks, museums, and other public goods. Suburbia isn't "cheaper" than the city, it just shifts the cost from rent/mortgage elsewhere.
This isn't just abstract wish-listing by the way. It's real policy proposal that has been tested, and demonstrated to work.
I would suggest weighing up other aspects: reinforced concrete was widely used under the assumption that it was eternal, or simply without considering how it would behave over time, and today a massive amount of infrastructure and buildings has simply reached the end of its lifespan. Whether the dense city appeals to those most terrified of change or to the few who need it to extract wealth from the many, it is incompatible with the New Deal. This is based on small, semi-autonomous buildings, resilient for that very reason, with sufficient local photovoltaics, energy and heat storage, and heat pumps which have the highest COPs over short distances. It involves designs with large south-facing glazed surfaces, featuring overhangs and blinds, so that the low winter sun penetrates effectively to provide free heating, while the high summer sun doesn't even touch the facade, all elements that are impossible to implement at scale in dense cities. Not to mention that we are very good at making simple things replicated in huge quantities, and much less so at large-scale, bespoke projects.
Whether you like it or not, the "ecological" city that is both dense and walkable DOES NOT EXIST, and there is no future in general for the current city, with its vast waterproofed surfaces where the soil has already turned to sand, eroded here and there by groundwater, causing the weight of large buildings to lead to slow and irreversible subsidence. Cities built in places where it made sense to be in the past, but makes no sense today.
Right now most people, even the bright ones, being victims of habit and propaganda, cannot bring themselves to admit it or understand it, but when they do, the collapse of urban real estate will have a far greater impact than the teleworking that is currently being denied at a high cost to everyone.
The distress over remote work comes not from employers, but from owners of commercial real estate.
Here's a view of that from a lending broker in the commercial real estate sector. [1] The high vacancy rate is all too real, and papering it over with "extend and pretend" lending tricks is mostly over. A lot of loans renew in 2026-2027, and they won't have the near zero interest rates from last time. Vacancy rates are higher than generally reported, because many landlords are making concessions.[2] San Francisco has about a 30% office vacancy rate, by the way. All this means foreclosures, distressed property, markdowns, and bankruptcies. "A January 2026 Morningstar DBRS analysis, reported by The Wall Street Journal and The Real Deal, found that more than half of the roughly $100 billion of securitized commercial mortgages coming due in 2026 are unlikely to pay off at maturity."
The loud "return to office" pronouncements did not result in an increase in office space in use. Despite all the noise, remote work has not really decreased much in recent years. "Less than 1/3 of companies requiring fully in-person work in 2026."[3]
[1] https://fidentcapital.com/the-2026-maturity-wall-what-the-en...
[2] https://www.cbcworldwide.com/blog/buyers-sellers-are-making-...
[3] https://founderreports.com/return-to-office-statistics/
Remote work is generally being displaced by hybrid. That still requires employees to live in expensive metros and employers to maintain offices with space for everyone. The offices can be a little more austere and the commutes a little worse given that they're only for 2-3 days a week, but everybody's still got to pay for basically the same stuff. Downtown retail, though, is screwed with only 2-3 days of foot traffic to pay the bills.
Hmm, a city in desperate need of housing has an oversupply of office space. I know it's not a simple conversion, but it feels like a natural fit.
With the loan under water or the fear of it going that way it is probably hard to fund additional debt for a multi-year construction effort when no one is sure which way the market will go. Also may mean that they miss out on a govt bailout that could make them whole.
Just a theory on why we haven’t seen much of this.
city buildings at human scale i.e 4-5 stories like in most European cities. shops / retail etc at retail level. then offices / apartments occupy the other levels.
make places walkable & dense. then have public Parks etc. then shit like niteclubs etc - should be relegated to basement level. same as parking.
Even then, I’d say that most larger/capital cities have 5-8 story buildings, with retail or other shops on the ground floor in the majority of central areas.
However even we don't have 15+ stories on every last building. (My home in Singapore only has 3 stories and legally no one can change that, because it's under conservation.)
Really? You don’t even have hedges around your yards.
In 2024, I went to SF downtown during the work day and it was absolutely dead compared to pre-Covid.
How is it in 2026?
What I find amusing, is mean commute times. I know a number of folks that live in the Atlanta and Boston areas, and they would love a 30-minute commute. I think that NYC claims a 27-minute mean commute, but everyone that I know that commutes (and I know a lot of folks that commute; both by car, and by rail), take 90 minutes to two hours.
I think they must include [very expensive] suburbs right on the city limits, to get those means; when the affordable housing is out in the bedroom communities; usually 20-50 miles away.
Also, if the commute is supposed to end at the city limits, or some fixed point, downtown, it's leaving out a significant amount of time. It can take two hours to drive from the Queens/Nassau border, to the Hudson (on a bad day -usually, it's an hour). Subway rides take a certain time, too. These are affected by proximity to stations, and how many stops a train makes.
When I lived in Manhattan, I had a ~35 minute commute by subway. I read a book every week or two, and it was far more productive than anything that happens in a 20 minute drive by car. My commute now is roughly 20 minutes, driving... and it's very stressful.
Beyond 1 hour, the time lost has greater impact on your life (socializing, household chores, family time, etc). Even still, I'd rather 90 minutes in a train than 60 behind the wheel.
Really just shows how different people's experiences are based on location and density
When I was commuting downtown in Calgary, it was either paying for parking downtown and a 20-30 minute drive, or a 60-90 minute transit ride depending on which bus I caught
A 20-30 minute driving commute is basically the norm here. Unless you live quite outside the city.
> Even still, I'd rather 90 minutes in a train than 60 behind the wheel
The tradeoff between transit and driving has never been within 30 minutes for anywhere I've lived, personally. It's always 40+ minutes difference, and that's assuming your bus even shows up on time
Most of my American friends I know turn to the suburbs as a default for "family" style living once they have kids. Imagine their bemusement when they go to a place like Amsterdam or Tokyo and see plenty of families with small children walking around. Heck, you don't even have to go far to see how a city can be a great place for a family, just look at Boston.
Cities, when done correctly, are a better place to raise a family than the suburbs. And yet, when done incorrectly, are terrible.
The birth rates say otherwise. Cities universally have very very low rates of childbirth. So low that they usually have to depend on a constant inflow from rural areas just to maintain their population. Its a pattern observed across the entire world. And its remarkably clear from the numbers.
You could argue there are a couple of exceptions. If the child is going to be a musician then perhaps a city is better. But I suspect you are confusing being born with millions in a trust fund with living in a city. Those aren't the same thing.
Cities are by definition economical logistical hubs. It's where the jobs and opportunities are. Most people aren't saying "gee I better pack up and move to suburbia before having a child" it's more like "having a child could cost me my high-paying job so I better not". And that issue is exacerbated in the U.S. with the worst parental-leave policy among developed nations. Regardless though, the trend will still exist in countries with generous parental-leave policies because having a child is an opportunity cost in an urban environment. That doesn't mean the environment itself isn't conductive to raising the child. Completely different stories.
Amsterdam and Tokyo are lovely cities but they both suffer from extremely low fertility, so it doesn't seem like people chose them to have a family. Walkable is great but having a little more room with a nice backyard and a car to take the kids places is great.
I live close to the Boston light pollution bubble. I've worked within Boston, have had friends in suburban Boston, and it's a place to raise a family if you are a city mouse and can live with the noise and crowds and have plenty of cash, because everywhere you go, somebody has their hand out for money.
I'm a country mouse, and if I have to deal with more than 5 or 10 people a week, it's getting close to too many people. When I spent a few days in Vermont under really dark skies and with not many people, I felt the best I had in months.
I think instead of trying to proclaim which is the better space for raising families or living, make it possible for someone to live in a place that's best for them, be it a country mouse or a city mouse. One size does not fit all. Heck, it doesn't even fit many.
And to add the final nail to the coffin: even if you tried to make it walkable, real estate prices drive you back out. The biggest draw to suburbs is simply one of cost. $2200 median rent in downtown LA (1 room) vs. $1450 for a suburb 20 miles north?
The solution is to aggressively tear down draconian zoning laws that force businesses to build obscenely large parking lots and forbid mixed-used developments. More American-style suburban homes with 2 yards, a 2 car garage, and 3 bedrooms is not going to help with prices at all, in fact, it's likely to make the housing crisis in every country worse. The rent itself is not the only cost but the utilities as well. When you build another 100 spread out homes in suburbia, even if the city subsidizes the cost of all that piping, wiring, drainage, and asphalt, it comes back to you in the form of tax or cuts to amenities like parks, museums, and other public goods. Suburbia isn't "cheaper" than the city, it just shifts the cost from rent/mortgage elsewhere.
This isn't just abstract wish-listing by the way. It's real policy proposal that has been tested, and demonstrated to work.
https://www.planning.org/planning/2022/spring/a-business-cas...
Whether you like it or not, the "ecological" city that is both dense and walkable DOES NOT EXIST, and there is no future in general for the current city, with its vast waterproofed surfaces where the soil has already turned to sand, eroded here and there by groundwater, causing the weight of large buildings to lead to slow and irreversible subsidence. Cities built in places where it made sense to be in the past, but makes no sense today.
Right now most people, even the bright ones, being victims of habit and propaganda, cannot bring themselves to admit it or understand it, but when they do, the collapse of urban real estate will have a far greater impact than the teleworking that is currently being denied at a high cost to everyone.