As vaccination rates rise and businesses reopen, cities across the country are cautiously moving ahead with economic recovery plans to encourage workers back into offices and revitalize pandemic-hit real estate markets.
Some medium-sized cities – like Austin, Texas; Boise, Idaho; and Portland, Ore. – may recover faster than others because they have established close relationships with their local economic development groups. These partnerships have set out comeback plans that incorporate a number of common goals, such as access to affordable credit, small business facilities, and a focus on the inner city.
The partnerships also encourage investments in infrastructure to encourage new business activity. Last Wednesday, President Biden announced a $ 2 trillion infrastructure plan to modernize the country's bridges, roads, public transportation, railways, ports and airports.
"Recovery plans create an agenda for rebuilding the metropolitan area," said Richard Florida, a professor at the University of Toronto who helped develop a plan for northwest Arkansas.
In Tucson, the revitalization plan, which goes into effect this month, calls for an assessment of the impact of the pandemic on key business areas such as biotechnology and logistics. Other regulations advocate the recruitment of talented workers and the preparation of so-called shovel-ready construction sites of 50 acres or more.
The demand for industrial sites in Tucson is high. According to Sun Corridor, the regional business development agency that sponsored the redevelopment plan, more than 80 percent of inquiries for real estate in the city are directed to industrial plants. And 65 percent of the inquiries deal with space for new factories.
City officials are building on a five-year industrial and logistical development growth plan in the Tucson area of $ 23 billion that resulted in 16,000 new jobs prior to the pandemic, according to Sun Corridor. Caterpillar and Amazon moved to the area, while Raytheon, Bombardier and GEICO were among the many well-known companies expanding their operations there.
"In terms of hockey, we don't play where the puck is. We try to go where we expect," said Joe Snell, President and Chief Executive of Sun Corridor. "We make sure we have inventory of the construction sites so that we can carry out the job when they knock. "
Other cities are struggling to recover after pandemic restrictions emptied their central business districts. The question is how much will these inner cities recover when the pandemic ends?
"The pandemic has caused major changes in the way we work and the geographic location of the way we work," Florida said. "The office as we know it, a space to work, is dead."
Experts disagree on what's next. Several economic trends, such as hiring growth and remote working adoption, collide, said Richard Barkham, global chief economist at CBRE, the commercial real estate company.
After a 3.5 percent decline in economic activity in 2020, the U.S. economy is projected to grow 6.5 percent in 2021, which is a good sign for construction. However, CBRE also predicts office workers will work 36 percent of their time remotely, up from 16 percent prior to the pandemic.
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April 6, 2021, 1:43 p.m. ET
"We're seeing a temporary drop in demand for new offices," said Barkham. "We also see this carved out over two, three, or four years until the centers come back."
The travel and entertainment sectors closed during the pandemic, but companies involved in innovation, technology and information were booming, said Tracy Hadden Loh, a staff member at the Brookings Institution. Austin has seen particularly strong growth in the development of office space for technical professions. Charlotte, NC .; Phoenix; and San Francisco, she said, adding that office construction would revive for the knowledge economy after the pandemic.
But she's tempered her prediction on another trend: "The number of square feet per worker has gone down really dramatically since 1990," she said. Along with recent announcements from companies like Google, Microsoft, Target and Twitter about remote work and some cities, there could be less office construction activity.
These challenges are not limited to medium-sized cities. Larger metropolitan areas like Los Angeles and New York are certainly in dire straits, but they have shown in the past that they are able to recover from calamity. In San Francisco, local authorities said there was no way of predicting post-pandemic construction but that expectations were high.
"This isn't the first recession here," said Ted Egan, chief economist for San Francisco. "We expect people to come back to the office."
However, cities that have strong alliance with business development agencies are expected to recover faster.
For example, the Downtown Austin Alliance, a business development group, convenes focus groups and workshops, and conducts interviews and surveys to generate new interest in their downtown office market. Before the pandemic, 11 buildings with an area of around 3.5 million square meters were under construction, almost half of all office space in the city center.
Boise established a 16-person economic recovery task force made up of city officials, academics, and leaders from professional associations. Recommendations were issued in September to “improve economic resilience and agility”.
The Greater Portland Economic Development District partnered with the Metro regional government to devise a plan to recover from the economic shock of the pandemic, which cut 140,000 jobs and closed 30 percent of the area's small businesses. One of their recommendations is to Direct funding and technical assistance to small businesses through local financial institutions for community development, part of an affordable finance program.
Some cities are already seeing success. A year ago, Boston abruptly stopped construction for nine weeks to stop the spread of the coronavirus. During the moratorium, the Boston Planning and Development Agency drew up a redevelopment plan that focused on remotely reviewing large-scale project approval decisions. With 250 employees working from home, with new software and digital equipment in some cases, the planning agency has held 220 virtual public meetings and digitally reviewed architectural plans and land use proposals.
"We have identified a method for conducting our reviews and resuming public participation," said Brian P. Golden, director of the agency. "To be honest, it worked better than we could reasonably have expected."
The city approved 55 major development projects last year covering 15.8 million square feet and valued at $ 8.5 billion, the highest value in Boston history. The largest was $ 5 billion worth of Suffolk Downs, a 10 million square foot mixed-use development with 10,000 residential units rising on top of an enclosed racecourse.
Tucson also intends to resume construction. In addition to identifying locations for industrial development, the restoration plan for the solar corridor provides for the revitalization of the inner city.
The pandemic closed 85 downtown restaurants, eliminated 10,000 travel and tourism jobs, and reduced sales in that sector by $ 1 billion. The antidote is to convince city and county officials to provide loans and grants to small businesses associated with the tourism industry, which is at the heart of commercial space in central Tucson.
Mayor Regina Romero said the city is investing $ 5 million – $ 2 million more than last year – in the city's tourism marketing group. Tucson also distributed $ 9 million from the Federal Aid Act passed in March 2020 in grants of between $ 10,000 and $ 20,000 to small businesses, many of which are in the tourism industry.
"We work together as a region," said Ms. Romero. "This is one of the most important steps we can take for recovery."
