A brand new report paints a sobering image of what the shift to distant and hybrid work might do to town’s economic system within the months and years forward, given the discount in foot site visitors and spending seen within the downtown for the reason that pandemic.
“Urban Economies on the Precipice: A Tale of Six Cities,” a report issued Friday by the Massachusetts Taxpayers Foundation, examines the post-pandemic problem Boston and 5 different main cities face in changing worker-driven economies and managing the impacts of vacant workplace buildings.
“Office-worker-driven economies in major cities are taking permanent hits as hybrid/remote work reduces downtown time and money spent,” MTF states in a doc accompanying the report. “As office leases expire, more empty buildings will stress owners, local businesses and city finances.”
Office occupancy charges are half that of 2019, MTF states, pointing to knowledge from Kastle Systems that present a 99% pre-pandemic price. In Boston, downtown occupancy was estimated at 30-35% in October 2022, in keeping with metropolis knowledge.
The new report states that the issue “will get worse,” as generative AI replaces U.S. service jobs, “further weakening office space demand.” MTF estimates 25% or extra of those roles might be changed by synthetic intelligence.
MTF checked out six main cities, Boston, Chicago, New York, Philadelphia, San Francisco and Washington D.C., that “collectively drive regional economies and contribute approximately $4 trillion or 18% of the U.S. Gross State Product.”
These cities function the nation’s largest public transit businesses by ridership, however that quantity is down 20-40% since March 2020. Foot site visitors can also be off 50% from pre-pandemic ranges, and work at home charges run between 25-45%, the report states.
Collectively, the pandemic has resulted in a shift in “economic performance and population” from the Northeast and Midwest to the South, with roughly 1.25 million residents shifting to Southern states, the report states.
“The report underscores the challenges and opportunities cities like Boston face in rejuvenating downtown areas, transitioning from office-worker-driven economies and managing the effects of vacant office spaces,” MTF President Doug Howgate mentioned in an announcement.
“With many forms of economic activity in the Northeast and Midwest regions hovering at approximately 40% below pre-COVID levels, it is evident that the pandemic’s effects are far-reaching.”
The report urges policymakers to take “comprehensive, swift and ambitious action” to navigate the altering financial and technological panorama, and reply to the results of local weather change — with a heavy emphasis on increasing the state’s “status as an international hub of innovation.”
“Massachusetts has all the requisites: higher education and research institutions, talent, ideas, resources and a history of success,” Howgate mentioned. “The next competition has already begun and we must find the tools and platforms to coordinate, cooperate and promote the Bay State as a center of gravity in innovation.”