The Future of Cities

[dgies9156]

I have been bemused by much of the discussion on downtowns and returns to work. I'm the first to admit I find the diversity of opinion interesting  but I think you are all missing it.

The reality is that if work from home takes off, the dynamic of American life will change so much that my (so far unborn) grandchildren would not recognize life as it exists today. We live around cities because they were places where commerce, industry and government came together in one place. A farmer could ship his/her goods to say, Chicago, for transshipment to the west or east coast. The bankers, traders and lawyers were there to facilitate commerce. Industry came because it was along the major transportation lines and it had access to bankers and lawyers.

If we don't need interpersonal contact, we don't need cities. A place like Dubuque, Iowa, long a tribal outpost for German and Irish Catholics, becomes an attractive option for folks who like river living in a hilly, natural setting. Carbondale IL offers the same options as does everyplace from Dickson, TN to Pagosa Springs Colo.

Without a concentration of attractive cities, where does the culture come from? Can sports teams as we know them survive? Does a geographically diverse America change the complexion of our interpersonal relationships? Do we now become a nation of hermits with arranged marriages? Asking for a friend.

[The Sultan]

People don't just congregate to cities due to commerce. And I doubt WFH will make your grandchild "not recognize" life today. That's hyperbolic nonsense.

[Hards Alumni]

I have been bemused by much of the discussion on downtowns and returns to work. I'm the first to admit I find the diversity of opinion interesting  but I think you are all missing it.

The reality is that if work from home takes off, the dynamic of American life will change so much that my (so far unborn) grandchildren would not recognize life as it exists today. We live around cities because they were places where commerce, industry and government came together in one place. A farmer could ship his/her goods to say, Chicago, for transshipment to the west or east coast. The bankers, traders and lawyers were there to facilitate commerce. Industry came because it was along the major transportation lines and it had access to bankers and lawyers.

If we don't need interpersonal contact, we don't need cities. A place like Dubuque, Iowa, long a tribal outpost for German and Irish Catholics, becomes an attractive option for folks who like river living in a hilly, natural setting. Carbondale IL offers the same options as does everyplace from Dickson, TN to Pagosa Springs Colo.

Without a concentration of attractive cities, where does the culture come from? Can sports teams as we know them survive? Does a geographically diverse America change the complexion of our interpersonal relationships? Do we now become a nation of hermits with arranged marriages? Asking for a friend.

Nope.  Cities will continue to grow.  People move to cities for work.  All kinds of work.  There aren't jobs in the sticks and we are no longer an agrarian society.  Something like 2% of Americans are involved in Ag.   There aren't new factories popping up in rural America.  Could SOME WFH people move around?  Sure, but my guess is that companies will figure out a way to pay their WFH people less, or figure out a new pay scale for the WFH folks.

No doubt the world is changing, but we are certainly not going to be moving away from urban settings in the future.

[Heisenberg]

No doubt the world is changing, but we are certainly not going to be moving away from urban settings in the future.

JP Morgan Asset Management just published a 70-page report on the implications of the shutdown/restart of the economy around COVID in 2020.

In short, this event will probably be the biggest economic event the economy will have faced in our lifetime.

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/portfolio-insights/siag-post-covid-world-final.pdf#page=6

Chapter 6 - The urban commuter economy

COVID reshaped the daily lives of millions of workers overnight and in the process shattered a commuter ecosystem that had served major urban cores for decades. While the pieces are being put back together, the system remains fragile. Costly, capital-intensive mass transit systems have been starved of the fare revenue needed to maintain service, potentially rolling those costs up a level to the municipal or state fiscal authorities.

State and municipal entities, although able to weather the storm of COVID fairly well, can ill afford to shoulder the burden of money-losing mass transit systems. The lagged effect of property tax declines may add
pressure to cut costs and services, raising the specter of a downward spiral in economic activity, further population loss and declining property values. We can take some hope from the fact that previous downturns
have proven the resiliency of the urban model, but caution is warranted. The need for cities to serve as a hub of large office populations is being questioned as never before.

Chapter 7 - Work and home life after the Pandemic

In the coming years, employers and employees will renegotiate how we live and work across the physical and virtual worlds. The need to commute to an office, for generations accepted as a given, is now subject to the question, How much do we really need commutes, or offices? It will be impossible to "unring the bell" and return to pre-COVID work patterns as if nothing has changed.

For the costly and capital-intensive sectors of the economy that served the pre-COVID workforce, the prospects are challenging – particularly mass transit systems and marginal urban offices. Supply exceeds demand and may for quite a while as prices slowly adjust and assets are repurposed to the extent possible.

On the flip side, there is too little logistics infrastructure to serve the evolving e-commerce marketplace and too little residential real estate to serve the population of young families. In these sectors, favorable supply and demand characteristics will deliver strong returns on capital over the long term.

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So if we refrain from the MUscoop tactic of way over ANALysing the precise wording of every post, causing everyone to get lost in the trees constantly, and instead look at what the message being conveyed is, dgies is correct.

10, 20, or 30 years from now, there will be a place with many people called "Milwaukee" or "Chicago." The real question is, why do people choose to live there? If the answer is no longer to be close to an office, this means a tectonic change for the city and the lifestyle of living in a city. And if this is the case, what becomes of the large buildings in the city center? See my post above; the stock market already wiped out the last 27 years of office real estate gains as it fears the true value of those buildings.

Restated, cities have to remake themselves. And they will. But first, we have to "blank slate" everything we know about a city and re-think its purpose and goals. In other words, this entire debate is about whether this is still true. At the very least, it can no longer just be said, as done here, as if it is stating a fact. We don't know if it is a fact anymore.

People move to cities for work.  All kinds of work.  There aren't jobs in the sticks and we are no longer an agrarian society.

The JP Morgan report has made it clear we will not beat people with a stick to return to a pre-covid world. So, I'm afraid that's not right either.

Sure, but my guess is that companies will figure out a way to pay their WFH people less, or figure out a new pay scale for the WFH folks.

Finally, we have to stop with the obvious incorrect statement that leads to wildly incorrect worldviews.

Nope.  Cities will continue to grow.

Milwaukee's population peaked with the 1960 census at 741,324. The Census Bureau puts Milwaukee's 2022 population at 563,305, a decline of 26%
https://www.census.gov/quickfacts/milwaukeecitywisconsin

Chicago's population peaked with the 1950 census at 3,620,962. The Census Bureau puts Chicago's 2022 population at 2,665,039, a decline of 28%
https://www.census.gov/quickfacts/chicagocityillinois

I assume Hards is not over 70, so this statement that cities continue to grow stopped being the case before he was born, and repeating this falsehood over and over and over will not make it true.

As noted in previous posts, if he means the metropolitan areas, they also stopped growing in the last five years, largely driven by the tectonic changes caused by COVID. JP Morgan's report clearly states we are not returning to all those big buildings in the city centers like we did pre-pandemic. So, if you don't have to go to that building anymore, do you really want to live on the commuter lines in the metropolitan area?

Do not underestimate what shutting down and restarting the global economy did in 2020. It changed the trajectory of everyone's lives.

[Uncle Rico]

JP Morgan Asset Management just published a 70-page report on the implications of the shutdown/restart of the economy around COVID in 2020.

In short, this event will probably be the biggest economic event the economy will have faced in our lifetime.

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/portfolio-insights/siag-post-covid-world-final.pdf#page=6

Chapter 6 - The urban commuter economy

COVID reshaped the daily lives of millions of workers overnight and in the process shattered a commuter ecosystem that had served major urban cores for decades. While the pieces are being put back together, the system remains fragile. Costly, capital-intensive mass transit systems have been starved of the fare revenue needed to maintain service, potentially rolling those costs up a level to the municipal or state fiscal authorities.

State and municipal entities, although able to weather the storm of COVID fairly well, can ill afford to shoulder the burden of money-losing mass transit systems. The lagged effect of property tax declines may add
pressure to cut costs and services, raising the specter of a downward spiral in economic activity, further population loss and declining property values. We can take some hope from the fact that previous downturns
have proven the resiliency of the urban model, but caution is warranted. The need for cities to serve as a hub of large office populations is being questioned as never before.

Chapter 7 - Work and home life after the Pandemic

In the coming years, employers and employees will renegotiate how we live and work across the physical and virtual worlds. The need to commute to an office, for generations accepted as a given, is now subject to the question, How much do we really need commutes, or offices? It will be impossible to "unring the bell" and return to pre-COVID work patterns as if nothing has changed.

For the costly and capital-intensive sectors of the economy that served the pre-COVID workforce, the prospects are challenging – particularly mass transit systems and marginal urban offices. Supply exceeds demand and may for quite a while as prices slowly adjust and assets are repurposed to the extent possible.

On the flip side, there is too little logistics infrastructure to serve the evolving e-commerce marketplace and too little residential real estate to serve the population of young families. In these sectors, favorable supply and demand characteristics will deliver strong returns on capital over the long term.

-------------------------------------------------------------------------

So if we refrain from the MUscoop tactic of way over ANALysing the precise wording of every post, causing everyone to constantly get lost in the trees and instead ook at what the message being conveyed is, dgies is correct.

10, 20, or 30 years from now, there will be a place with many people called "Milwaukee" or "Chicago." The real question is why do people choose to live there? If the answer is no longer to be close to an office, this means a tectonic change for the city and the lifestyle of living in a city. And if this is the case, what becomes of the large buildings in the city center? See my post above; the stock market already wiped out the last 27 years of office real estate gains as it fears the true value of those buildings.

Restated, cities have to remake themselves. And they will. But first, we have to "blank slate" everything we know about a city and re-think its purpose and goals. In other words, this entire debate is about whether this is still true. At the very least it can no longer just be said, as done here, as if it is stating a fact. We don't know if it is a fact anymore.

The JP Morgan report has made it clear we will not beat people with a stick to return to a pre-covid world. So, I'm afraid that's not right either.

Finally, we have to stop with the obvious incorrect statement that leads to wildly incorrect worldviews.

Milwaukee's population peaked with the 1960 census at 741,324. The Census Bureau puts Milwaukee's 2022 population at 563,305, a decline of 26%
https://www.census.gov/quickfacts/milwaukeecitywisconsin

Chicago's population peaked with the 1950 census at 3,620,962. The Census Bureau puts Chicago's 2022 population at 2,665,039, a decline of 28%
https://www.census.gov/quickfacts/chicagocityillinois

I assume Hards is not over 70, so this statement that cities continue to grow stopped being the case before he was born, and repeating this falsehood over and over and over will not make it true.

Now if he means the metropolitan areas, as noted in previous posts, they also stopped growing in the last five years, largely driven by the tectonic changes caused by COVID. JP Morgan's report clearly states we are not going back to all those big buildings in the city centers like we did pre-pandemic. So, if you don't have to go to that building anymore, do you really want to live don't the commuter lines in the metropolitan area?

Do not underestimate what shutting down and restarting the global economy did in 2020. It changed the trajectory of everyone's lives.

I'm not reading that. 

But I'm very happy for your success or very sad for your misfortune

[Heisenberg]

People don't just congregate to cities due to commerce. And I doubt WFH will make your grandchild "not recognize" life today. That's hyperbolic nonsense.

Yes, they congregate in cities for more than commerce. But commerce drives the tax base, and living close to the city center is the largest driving force for why people pay to live in a city in the first place.

What happens when a significant number of the city's residents are no longer required to live near the office?

[Heisenberg]

I'm not reading that. 

But I'm very happy for your success or very sad for your misfortune

Your ignorance of many things you comment about has has long been established. It is not necessary to tell us you prefer to stay this way.

May God have mercy on your soul.

[Uncle Rico]

Your ignorance of many things you comment about gas has long been established. It is not necessary to tell us you prefer to stay this way.

May God have mercy on your soul.

God isn't real

[Heisenberg]

God isn't real

And this statement, combined with the falling populations in Milwaukee and Chicago, is why this is happening to the Jesuit University in Milwaukee.

https://eu.jsonline.com/story/news/education/2020/12/01/marquette-layoffs-enrollment-declines-raise-questions-diversity/6180047002/

Marquette — which as Wisconsin's largest private college enrolls 11,550 students — this fall saw its smallest freshman class in more than two decades, according to university data. The class has 1,647 students, 350 students fewer than the university had expected. The decline is in line with a 16% decline among first-year students nationwide.

"To think that there is an easy way to get out of this, other than structurally changing, I believe is not realistic," Lovell said. "We are going to do everything we can to preserve who we are and what we do, but we also have to deal with the realities of what's happening in our industry."

[Uncle Rico]

And this statement, combined with the falling populations in Milwaukee and Chicago, is why this is happening to the Jesuit University in Milwaukee.

https://eu.jsonline.com/story/news/education/2020/12/01/marquette-layoffs-enrollment-declines-raise-questions-diversity/6180047002/

Marquette — which as Wisconsin's largest private college enrolls 11,550 students — this fall saw its smallest freshman class in more than two decades, according to university data. The class has 1,647 students, 350 students fewer than the university had expected. The decline is in line with a 16% decline among first-year students nationwide.

"To think that there is an easy way to get out of this, other than structurally changing, I believe is not realistic," Lovell said. "We are going to do everything we can to preserve who we are and what we do, but we also have to deal with the realities of what's happening in our industry."

Cool.  Sounds like they understand the problem and are working on coming up with a plan to attack it. 

Good for them.  That's smart.

Hopefully, they don't become the next NFL

[The Sultan]

Yes, they congregate in cities for more than commerce. But commerce drives the tax base, and living close to the city center is the largest driving force for why people pay to live in a city in the first place.

What happens when a significant number of the city's residents are no longer required to live near the office?

They will still live in cities because cities are cool.

[The Sultan]

Cool.  Sounds like they understand the problem and are working on coming up with a plan to attack it. 

Good for them.  That's smart.

Hopefully, they don't become the next NFL

LOL...exactly.  Being smaller isn't worse. It's a strategic decision.

[Uncle Rico]

LOL...exactly.  Being smaller isn't worse. It's a strategic decision.

Will Marquette have to move because local cities are smaller?

No, they'll readjust how they do things and acclimate to a changing climate.

21 pages of Heisey raging against the decline of cities because lord knows why

[The Sultan]

Will Marquette have to move because local cities are smaller?

No, they'll readjust how they do things and acclimate to a changing climate.

21 pages of Heisey raging against the decline of cities because lord knows why

He's an intellectual.

[warriorchick]

Marquette — which as Wisconsin's largest private college enrolls 11,550 students — this fall saw its smallest freshman class in more than two decades, according to university data. The class has 1,647 students, 350 students fewer than the university had expected. The decline is in line with a 16% decline among first-year students nationwide.

This is old information.

There are 1923 students enrolling in the class of 2027.

[TSmith34, Inc.]

This is old information.

There are 1923 students enrolling in the class of 2027.

Yes, the brilliant futurist picked out a 3-year-old article showing that enrollment was down in the midst of COVID.

[tower912]

Nm

[Heisenberg]

LOL...exactly.  Being smaller isn't worse. It's a strategic decision.

The Mayor of Milwaukee thinks the exact opposite of this decision.

---

Here's how Milwaukee can reach Mayor Cavalier Johnson's ambitious goal to grow to 1 million people

https://www.jsonline.com/story/news/solutions/2023/03/08/whats-path-for-milwaukee-to-reverse-population-decline-grow-again/69959649007/

Today, some cities in the south and southwest are seeing their populations soar. But more than a few proud American cities are shrinking, shedding thousands of residents. Milwaukee is one of them.

Mayor Cavalier Johnson hopes to reverse that trend. More than 100 years after Daniel Burnham's exhortation, Johnson is making big plans of his own.

He wants Milwaukee to grow. A lot.

During his campaign for mayor, Johnson raised a few eyebrows when he talked about the city increasing its population to one million people, nearly twice its current size.

It is not just that Johnson wants Milwaukee to grow. He needs population and business growth to help relieve enormous pressure on the city's long-term finances.

But you sense that Johnson's moonshot for Milwaukee is about more than aspiring to grow; it is about inspiring a city to reimagine itself, to think differently about its future.

[The Sultan]

Milwaukee is t growing to 1 million. That's just nonsense. Regardless I was talking about Marquette's enrollment.

[dgies9156]

JP Morgan Asset Management just published a 70-page report on the implications of the shutdown/restart of the economy around COVID in 2020.

In short, this event will probably be the biggest economic event the economy will have faced in our lifetime.

Brother Heise:

It is a question of who is more authoritative:

JPMorgan Asset Management and its army of accountants, developers and financial analysts who know real estate, infrastructure and urban investment?

Or...

MU Scoop commentators?

Let's put it this way: I'm not making investment decisions based on the banter of MU Scoop Commentators.

[Uncle Rico]

Brother Heise:

It is a question of who is more authoritative:

JPMorgan Asset Management and its army of accountants, developers and financial analysts who know real estate, infrastructure and urban investment?

Or...

MU Scoop commentators?

Let's put it this way: I'm not making investment decisions based on the banter of MU Scoop Commentators.

Is it surprising Covid is the biggest impact economically in our lifetimes?  Don't think I needed JP Morgan to tell me that

[Herman Cain]

A successful conversion of an office tower was done in the mid 90s of the former Gulf & Western building in Columbus Circle. The building had severe structural issues and when Gulf & Western moved out the building went into bankruptcy .

GE was the lender and decided to address the structural issues and convert the building to a hotel and residential. GE brought in Trump who promoted the building heavily, using Barbara Corcoran of Shark Tank fame, among others as brokers . They ending up  selling all  the condo units and it was successful conversion.

I am confident all these years later, there are enough talented and motivated people to process many of these vacant office buildings .

[ZiggysFryBoy]

Brother Heise:

It is a question of who is more authoritative:

JPMorgan Asset Management and its army of accountants, developers and financial analysts who know real estate, infrastructure and urban investment?

Or...

MU Scoop commentators?

Let's put it this way: I'm not making investment decisions based on the banter of MU Scoop Commentators.

I'll bite.

Sultan, 🐷🐷, Rico. Pakuni, Hards, et al are all bigger experts on, well, everything.  Especially when compared to industry experts,  analysts, and other smart people.

[tower912]

I know I trust them.

[MU82]

It is a question of who is more authoritative:

JPMorgan Asset Management and its army of accountants, developers and financial analysts who know real estate, infrastructure and urban investment?

Or...

MU Scoop commentators?

Let's put it this way: I'm not making investment decisions based on the banter of MU Scoop Commentators.

I can't speak for any of our fellow Scoopers on either side of this fun back-and-forth ... but personally, I don't claim to know more than JPMorgan's top people do, and I will gladly defer to them:

++ JPMorgan is not leaving cities. Indeed, America's largest bank has actually doubled down on both NYC and DC with expensive new digs. Apparently, the army of accountants, developers and financial analysts who know real estate, infrastructure and urban investment are making huge bets on big cities.

++ JPMorgan management requires workers to show up at the office or face harsh consequences. To the small percentage of employees who have grumbled, management's response has basically been: "OK, there's the door."