America’s superstar cities have avoided the post-pandemic death spiral so far. Will that last?
The pandemic was supposed to be the death of the great American city. The rise of remote work unleashed an exodus to the Sun Belt and suburbs, leaving behind empty subway cars, abandoned offices, and desolate downtowns. Violent crime spiked. Suddenly, so-called superstar cities—such as New York, Boston, and Los Angeles, which boomed throughout the 2010s—were facing what experts called an “urban doom loop.” The more people moved away, the worse things would get; the worse things got, the more people would move away; and so on, in an endless spiral that would do to superstar cities what the decline of the auto industry did to Detroit.
But that hasn’t happened. Twenty-five of America’s 26 largest downtowns have more residents today than they did on the eve of the pandemic. Meanwhile, both violent and property crime plummeted in cities across the country in 2022 and 2023 (Washington, D.C., was a notable exception), and some other threats to public order, such as shoplifting, appear to have been overstated. In fact, the biggest problem that superstar cities face today is the same one that afflicted them before the pandemic: Too many people want to live in them. Housing prices have skyrocketed over the past four years. In New York, Boston, and Los Angeles, vacancy rates are at or near their lowest levels in decades. Even San Francisco, the paragon of post-pandemic urban decline, is doing remarkably well. Last year, its population grew more from net migration than any other city in California, and its crime rate fell. Car break-ins, the symbol of Bay Area decay, declined dramatically in late 2023, according to a San Francisco Chronicle analysis. Homelessness and open-air drug use remain big problems, but they haven’t prompted mass urban flight. Even if things aren’t fully back to normal, the arrow appears to be pointing up.
That’s one interpretation, anyway. The father of the doom-loop hypothesis sees things a little differently. In his view, cities haven’t actually beaten the pandemic death spiral. They simply haven’t experienced it yet.
When Stijn Van Nieuwerburgh, a finance and real-estate professor at Columbia, proposed the doom-loop theory in 2022, he had a very specific sequence in mind.
Step one: The shift to remote and hybrid work causes companies to downsize their offices or eliminate them altogether, leaving the owners of office buildings with a lot of empty space and far fewer potential tenants. This process has already begun; earlier this year, the percentage of vacant office buildings hit an all-time record.
Step two: Office-building owners, now bleeding cash, must either refinance their mortgages—hard to do in a time of high interest rates—or sell. But because of the decreased office-space demand, they will be selling at a discount. This process, too, has begun; prices on even the highest-quality office properties have fallen 35 percent since early 2022 and will likely fall even further in the coming years as pre-pandemic leases continue to expire.
Step three: Because lower property values eventually translate into lower property taxes, local governments will find themselves with huge budget deficits and be forced to cut back on key public services such as policing, transportation, and education. Crime and homelessness will rise, schools will worsen, and public transport will decay. Residents will leave cities in droves, which will further erode the city’s tax base and public services in a vicious cycle. This part hasn’t happened—yet. “We’re only in the first inning right now,” Van Nieuwerburgh told me. “Things are going to get much, much worse.”
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Van Nieuwerburgh’s theory, and thus the fate of America’s cities, depends on two core assumptions. The first is political. City governments could theoretically make up for lost commercial-property revenue by raising taxes instead of cutting key services. But Van Nieuwerburgh argues that, in practice, the fear of political backlash will prevent city leaders from doing so. Even if they did, such a move could encourage residents and businesses to leave the city, generating its own doom-loop dynamic.
Other experts disagree. The urban economist Edward Glaeser told me that many cities raised taxes considerably to strengthen their police forces in response to the crime wave of the 1980s and ’90s without hemorrhaging residents. Both views are plausible, and the outcome will likely vary by city; New York, for example, receives just about 10 percent of its revenue from commercial properties, whereas Boston receives about 36 percent. But it is telling that local leaders in places such as New York and San Francisco are dealing with current deficits by shrinking their budget, not proposing tax hikes.
The second assumption is sociological: If cities are indeed forced to cut back on services, will residents respond by leaving en masse? The answer depends on why you think people want to live in cities in the first place. One view is that cities are fundamentally a kind of economic transaction. Residents pay a premium to live in dense urban environments in exchange for certain benefits, such as proximity to the office, access to amenities, and the provision of public services. As soon as the total costs outweigh the benefits, however—because of, say, higher taxes or budget cuts—then people will leave.
But there’s another view of cities, one influenced less by utilitarian rationality than by a certain romantic intuition. To this way of thinking, the experience of being in proximity to a diverse array of people to meet, places to go, and things to do has a certain magnetism that has nothing to do with work and can’t be easily plugged into a cost-benefit calculation.
“Cities are really about the joys of human interaction,” Glaeser told me. “Go out to dinner. Meet a stranger. We are a social species, and cities are the peak of our sociality.” Indeed, even though many offices remain empty—office attendance is still 37 percent below 2019 levels nationally—urban streets are teeming with life. In the majority of America’s biggest cities, tourism has rebounded to more than 80 percent of its pre-pandemic levels and continues to rise. Downtowns are just as lively on weekends as they were prior to COVID, and mixed-use residential neighborhoods are booming. Many orchestras and museums are selling more tickets than they were before the pandemic.
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Given these dynamics, argues Bruce Schaller, a transportation consultant and former New York City traffic and planning official, the fall in commercial-real-estate values may, paradoxically, breathe new life into America’s superstar cities. As office and storefront space becomes more affordable, more family-owned restaurants, creative businesses, and upstart companies might move in, making the city an even more diverse and vibrant place for its inhabitants. That will, in turn, attract more people and businesses. Local budgets may be squeezed in the interim, Schaller acknowledges, but that’s a manageable problem for a growing city. “Cities aren’t about tax revenue or real estate,” he told me. “They are about the magic that happens when a bunch of talented, highly motivated people come together in the same place. And that isn’t going away.”
At least in some places. Office space in superstar cities is in such high demand that those markets can withstand, and even benefit from, a drop in property values. But in smaller cities, such as Cleveland and Memphis, where property values don’t have as far to fall, a similar decline is more likely to trigger a doom loop of abandoned buildings, shrinking budgets, and declining populations.
Fortunately, a consensus is emerging over how to avoid that fate: Cities must become the kinds of places where people want to spend time no matter where they work. Downtowns should be filled with more apartments, restaurants, and entertainment venues. Large office buildings should be converted into new kinds of spaces optimized for co-living and co-working, or torn down to build more housing. Legislatures should jettison single-use zoning so that separate neighborhoods for home, work, and fun can be replaced by mixed-use neighborhoods that combine all three. “I think older cities have a lot to learn from places like Nashville, Miami, Dubai, Las Vegas,” the urban scholar Richard Florida told me.
Americans have a long history of predicting the death of our major cities, and those cities have a long history of proving us wrong. In 1777, the English writer Samuel Johnson said: “When a man is tired of London, he is tired of life; for there is in London all that life can afford.” If the same holds true for the likes of Seattle, L.A., and Austin, then the great American city might just be all right.
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