WSJ: Wall Street Sours on America’s Downtowns
Downtowns have been a mother lode for American cities over the years, providing billions of dollars in tax revenue along with their distinctive skylines. In turn, investors who bet on downtown office towers, or on the trains and buses delivering workers to them, could generally trust they held a winning hand.
Now, with white-collar workers spending more time in their home offices, a phenomenon that shows few signs of ending, investments linked to downtowns are trading at falling prices in volatile markets.
“You could see this as a slow-motion change or as the beginning of a slow-moving train wreck,” said Richard Ciccarone, president emeritus of Merritt Research Services, a municipal credit-analysis firm. “I hope it’s not a train wreck, but it could be.”
This is all related to the pandemic’s shutdown orders–and it was something I predicted would happen elsewhere.
After all, do the same thing for a month and it becomes a habit. And we’ve been working at home for three years now. After years, it’s not a habit; it’s a lifestyle.
Of course it doesn’t help that we’ve constantly demonized proximity to strangers as a vector for a deadly disease; who wants to sit on a bus or in a subway or work in an office cubical next to a bunch of people, where COVID-19 can sweep through like wildfire?
You can’t catch COVID-19 through Zoom.
It’s also quite likely a lot of those workers will never return to the office because they no longer live in that city. Telecommuting means you can move out to the suburbs, or even to a different state, or even to a different country–and no-one has to be the wiser. And to me, the biggest tell during the pandemic was an interview with someone who was arguing that people should go back to work after the pandemic was over–who admitted that he moved out of New York City and out to the countryside several states away.
Dude; if the experts arguing we should return back to the office no longer live in the same state as their own offices, then why should we expect everyone else to just fall in line?
So here we are; lines of credit running out, buildings being let go and returned back to the banks–banks who themselves are having liquidity problems as bond holdings plummet in value, as the Fed fights inflation that we were assured was just “temporary” by all the experts.
Meanwhile we still see supply chain shortages as in-demand industries fail to find workers.
Frankly, I’m going with “train wreck.”
And to be honest, when the pandemic began in 2020, I didn’t think things would get so bad, because I believed, quite honestly, the property owners of these massive buildings would push back at some of the more egregious pandemic restrictions in order to protect the value of their holdings. (For example, I expected a lot of property owners to seek greater use of their outdoor venues, to keep foot traffic high. After all, contact tracing evidence from Asia demonstrated outdoor venues were safe, even at the height of the pandemic.)
But they didn’t push back; they succumbed to the worse impulses of the ‘panic and lockdown’ crowds, they didn’t even push to reopen after vaccinations were widely available–again, despite solid evidence vaccination actually helped.
And so now property values have collapsed.
And to be honest, I strongly believe they should not be bailed out. Nor should the cities whose tax revenues are causing them to suffer.
Instead, they should be allowed to go bankrupt.