Will cities, and the retailers in them, bounce back?

Discussion
Photo: RetailWire
Sep 04, 2020
Tom Ryan

Fleeing residents, empty offices and tourists made scarce by the pandemic are causing wide ranging debates on how steep a recovery cities are facing.

Among the challenges:

  • Tourists: International tourism’s recovery is expected to be held back by travel restrictions as well as lingering fears of flying, even when a treatment or vaccine becomes available. Domestic tourism as well could be restrained by economic recession and possible continued virus spikes.
  • Workers: Concerns over using mass transit, in particular, are seen inhibiting returns to offices, and some may never return due to increased comfort with telecommuting.
  • Residents: Home sales in many suburbs are soaring as city dwellers, now with the ability to work remotely, escape the health risks of living in densely packed urban neighborhoods, as well as the always-inherent space limitations.

Even if workers return, the recovery from a pandemic is expected to take time. Smaller shops, restaurants and other businesses may not be able to ride out the pandemic’s restrictions and lean traffic in the months ahead. Wrote Ryan Kailath for NPR, “When people do finally return to the office one day, they might find the city around it to be completely different.”

In an op-ed on the World Economic Forum’s website, however, Christian Ulbrich, CEO of JLL, the commercial real estate firm, wrote that global cities will be “reimagined” but eventually “flourish in a post-COVID future.” Workplaces were already being rethought to add flexibility and the future office will place “more focus on supporting learning and development, creativity and collaboration — the real reasons people and businesses want to work together.”

The “allure and variety of metropolitan social and cultural scenes” as well as career development opportunities will continue to attract youth and drive urbanization. Unless a vaccine fails to emerge, Mr. Ulbrich also feels “people’s innate desire to socialize, enjoy culture and share experiences will eventually drive renewed growth.”

In an op-ed for The New York Times defending New York City’s comeback chances, comedian Jerry Seinfeld expressed skepticism about the allure of “remote everything” versus the vibrancy of experiencing New York City. He wrote, “Energy, attitude and personality cannot be ‘remoted.’”

DISCUSSION QUESTIONS: How serious a threat is COVID-19 to the viability of cities and the retailers doing business in them? Do cities need to be reinvented and, if so, how?

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Braintrust
"As I look at the world through rose-colored glasses, I like to believe that time will heal all wounds. "
"There will be many lingering and overall changes coming out of this, but cities will not be going away, just reformulated."
"This is not doomsday. There have been pandemics before and the world has worked its way through them."

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21 Comments on "Will cities, and the retailers in them, bounce back?"


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Neil Saunders
BrainTrust

During the pandemic, we’ve heard a lot of talk about the disruption from online. However I actually think the changes in where we work, play and shop from a physical perspective are probably more of an issue for retail. I do not think cities will remain in the doldrums forever, but I believe that even when this is all over more people will work from home and commuter inflow to cities will be reduced. The migration from big urban areas over the past six months will not simply bounce back in a matter of weeks; it could take years for population levels to rebuild. All of this will impact urban retail which relies on high footfall to work, and the economics of some of those massive flagship stores may simply unravel. Conversely, retail demand will grow in suburban and more rural areas. Ultimately these shifts require retailers to rethink location and growth strategies.

David Naumann
BrainTrust
David Naumann
CEO and President, Cogent Creative Consulting
2 months 20 days ago

Until COVID-19 has passed by, urban businesses will be stressed financially and we will continue to see more closures. With fewer tourists and less traffic from office workers and social distancing limiting the number of customer in stores because of pandemic fears or local capacity restrictions, it may not return to normal for some time or ever. Cities that rely on international travel are further impacted by international travel restrictions. Cities will need to find new ways to attract visitors and shoppers with creative attractions or events that are socially safe and retailers need to reassure shoppers that their stores are safe.

Richard Hernandez
BrainTrust

I believe it will be a number of years before some semblance of what was will become a reality again. NYC is losing people by the hundreds as a majority of the city remains closed and remote working has become normal at least until early 2021. U.S. citizens cannot travel overseas, so those countries depending on tourist will have to re-tune their message to focus on local or in-country tourism but, above all else, people have to feel safe again and I don’t think we are quite there yet.

Ralph Jacobson
BrainTrust

Over the past several decades, migration has been into cities, both in the U.S. and around the globe. Will a devastating one-year (at this point) hit at the heart of cities due to COVID-19, social unrest, skyrocketing costs of living and rising crime rates turn this long-term trend around? In the short term, there is a mass exodus from a few major metro areas, and premium property prices have fallen recently.

However the convenience of living in a city hasn’t changed and as I look at the world through rose-colored glasses, I like to believe that time will heal all wounds. There may be a migration toward the suburbs for now, however five years from now the cities will thrive once again, and retail will not have endured a slowdown with the exception of the current violence hitting too many places. That has got to stop.

Scott Norris
Guest

The recent infection data suggests the suburbs and exurbs are even worse than the core cities. When there’s the one grocery store, the one Walmart, etc., the entire community gets exposed; whereas in an urban setting there are often more options that spread out the risk.

In agriculture it’s understood that monoculture crops are much more susceptible to disease, parasitism, and food-safety concerns — suburban settings have a lot of social parallels. (Plus increased logistics and service-delivery costs, higher energy consumption, etc.)

I’m not surprised that demand for mid-range residential property here in Minneapolis & St. Paul continues to be very strong even after all our troubles….

Lee Peterson
BrainTrust

COVID-19 is temporary, cities are permanent. To add to that, over the course of the last 40 years in the U.S., cities have become hubs for a sustained creative class which, as manufacturing has decelerated here, has become a key element of the global economy and will only increase in its importance. Additionally, a key factor in creative work is collaboration, which also bodes well for the future of cities as the gathering points of like-minded forces. Creativity and innovation works best with teams, and cities are the very definition of people coming together to work, live, play — and innovate.

A bigger question may be; what’s going to happen to the giant office towers when everyone can work from anywhere? It’s possible that smaller cities will boom, like Columbus, Ohio, Charlotte, North Carolina, Boise, Idaho or Austin, Texas. Cities will remain viable, that’s for sure, their significance may just flatten out — in more ways than one.

Brandon Rael
BrainTrust

The COVID-19 pandemic has accelerated consumer behaviors that were already in motion. Rationalizing the retail store footprints and the purpose of the physical stores was a critical imperative before the mass quarantining and social distancing rules were established.

Retail and the service industries are extremely resilient and always will be. We should expect that out of the pandemic, there will be some pain and challenges, yet also companies driving new operating models to meet the relentless pace of change. A hybrid physical and digital commerce model is here to stay, and will require companies to be far more flexible, agile and ahead of the innovation curve.

Retail is a critical part of our economy and will remain so through the pandemic and afterwards.

Gene Detroyer
BrainTrust
Throughout the history of mankind, though there has been an ebb and flow of successes and disasters, more and more people have gravitated to cities. There is no long-term reason for that to stop. The cities of tomorrow will be more vibrant and livable than today. COVID-19 may actually propel the development of new types of city life: more ease, more vitality, more to offer. With regard to specific cities, I can only speak to NYC. It has a 400 year history and has been written off multiple times over those 400 years. Each time it has come back as a better place. Even as people are moving out, I feel life coming back. Despite the fact that the local leadership has been the worst in my lifetime, we seem to be enduring on the whole. I am not suggesting, in any way, that tomorrow will be OK. It will take time. But as was quoted in George’s commentary: “The ‘allure and variety of metropolitan social and cultural scenes’ as well as career development opportunities… Read more »
Georganne Bender
BrainTrust

Will cities and retailers bounce back? Dear God, I hope so. The key word is eventually; the big question is how long will eventually take? Reading about places that are closing due to the pandemic is overwhelming. And working closely with independent retailers it’s an everyday experience, especially in places that rely heavily on tourism.

St. Charles, Illinois, home of KIZER & BENDER for 30 years, relies on tourists for the many events held throughout the year. The St. Charles Business Alliance immediately and completely refocused on retailers and restaurateurs, marketing our retailers to the community and beyond, closing streets and parks to accommodate outdoor dining, and changing festivals to strolls through town so that attendees can socially distance while walk among our businesses. It is going to take continuous tweaking until we feel safe enough to get back to our regularly scheduled lives.

Jeff Sward
BrainTrust

The surge in suburban real estate is no small thing. A surge in suburban home purchases is completely different than a surge in Airbnb bookings. That may be only a slice of the city demographic, but that kind of shift doesn’t sound like it will bounce back any time soon. So city retail square footage becomes less productive and suburban retail square footage becomes more productive. And if this helps suburban retail and malls in general, it only means the lack of productivity and under-utilizatiion shifts to city office buildings and retail. The whole process of evolution and reinvention just got a lot more complicated.

Dick Seesel
BrainTrust

I’m optimistic that an effective vaccine will be widely available (and administered, I hope) within the next 12 months. I’m less optimistic about the “return to normal” and what that new normal will look like. In an economy driven by the consumer and service sectors, how long will it take for people to return to offices, to stores, to restaurants and to theatres?

There has already been tremendous collateral damage from the pandemic, even if the economic data doesn’t always show it. Every one of us can tell stories about empty workplaces, shuttered arts organizations and vacant hotels in our own cities. The ripple effects are going to take a long time to subside, even if we are all rooting for a rapid turnaround.

Andrew Blatherwick
BrainTrust
The world is certainly changing and cities will probably experience a very big change as well, but cities are not going to die. They will just develop into different entities. If the number of offices declines, the number of people wanting to live in the cities will be increased as more living space becomes available. People are social animals and cities are exciting vibrant and social places where people want to be. It was the massive increase in office space that drove prices of land up and people had to move out to the suburbs because they could not afford to stay in the cities. If that is reversed then people will come back into the cities. I say if because it is by no means clear that vast numbers of offices will close, there will be more people working from home and that is likely to remain higher than it was but not to the extent of long term empty offices. From a retail point of view, the more people in the cities, either… Read more »
Steve Montgomery
BrainTrust

Cities will recover but the real questions are to what extent and how long will it take. One of the major impacts the pandemic has had is people are moving out of the cities. This group consists of those that can afford to do so. This has a negative impact on the economic wellbeing of the cities ranging from taxes that the cities collect to the disposable income that supports the businesses in the city.

Similarly many business have found that they can have their people work remotely which also negatively impacts the city’s businesses. Current reports indicate employees are not overly interested in commuting to their former offices, and businesses are now realizing that they don’t need all the space and that their workforce may be willing to take a reduction in pay to continue to work from home. Both are attractive because it reduces their costs.

Ed Rosenbaum
BrainTrust

We often hear things will be good when we get back to normal. We just do not know what that normal will look like. There will be changes. Cities and the retailers doing business there are going to have a difficult time finding ways to bring people back after we learned we can do almost everything we need to online. Offices will reopen. But many workers will choose to continue to work from home. This will take a toll on lunch business. That space will not see the recovery necessary to survive. Downtown retail shops will continue to experience losses because the foot traffic they need is going to be slow to return. The pandemic and ensuing shutdowns will continue to have a negative effect on downtown business for some time to come.

Paula Rosenblum
BrainTrust

Depends on the city, doesn’t it? I mean, I’d go to Paris in a heartbeat. Some other cities (one does not want to offend), not so much. Especially the ones that all look the same.

So my answer is “It depends on the city.”

Gene Detroyer
BrainTrust

Here is a choice for you Paula, pre-Covid.

Craig Sundstrom
Guest

Absolutely. In fact, I would go further and suggest the question seems 60-70 years out of date, hearkening back to when downtowns were the center of retail life. But save for a few tourist meccas — NYC, Chicago, SF — that era is lost to the past, and for the most part “urban retail” equates to either service retail (drug or phone stores) or restaurants and bars that serve office and residential populations.

Kathleen Fischer
BrainTrust

Cities will bounce back, as will retailers, but bouncing back does not mean a return to where we were. COVID-19 has accelerated changes that were already occurring, such as working remotely and shopping online, which requires businesses to reimagine their office space and retailers to rethink their sales and delivery methods. There will be many lingering and overall changes coming out of this, but cities will not be going away, just reformulated.

RandyDandy
Guest
2 months 20 days ago
There’s a great paradox brewing here. In that, yes, depending on the city, future fortunes rest greatly on whether your core infrastructure systems functioned well, or did not, going into the pandemic. That included how reliable was your mass transit; inescapable/endemic were your attractions; deeply imbedded was your office presence; unique was your retail; and so on. Where I used to live, Midtown Manhattan: its retail, office, and entertainment aspects felt solid AND necessary. And though its mass transit had its issues-it was reliable enough; and there was always walking the grid, easily. Transpose that to where I live now, hilly San Francisco. Of the same modes, it has always felt they existed here because it was expected-but NOT because it was absolute. Imagine if “working remotely” was something a decade ago; would tech companies have built or leased so large here in the CBD? The grandness of Union Square shopping is long gone. And who lately came to “the city by the bay” for its entertainment value? Add in an underground transportation system that… Read more »
John Karolefski
BrainTrust

Cities will have the “potential” to be viable again once there is a vaccine for COVID and some time passes. But only if a bigger threat to the viability of cities is addressed: namely, less law and order. Sadly, it is possible to have increasing crime that cannot be contained by a leaner police force due to defunding, early retirements and the fact that fewer people will want to be police men and women. Such a scenario will have to be addressed or clear-thinking people won’t want to live in such cities, even after COVID is history.

Craig Sundstrom
Guest

“Close” is the key word here, and the second question then is “will ‘close’ be enough?” It’s not clear; some things simply scale. If you have 80-90% of pre-existing traffic, then you might have either 80-90% of restaurant, drugstores, etc remaining or the same number remaining but just less profitable (probably it would be some combination of these two extremes).

But some things just don’t scale: mass transit — which is probably essential for cities like NYC, Chicago and SF to function — has been on a lifeline for years, with (often) declining ridership and soaring retirement/health costs already bringing it close to insolvency before COVID-19 happened. Even a small loss of ridership/revenue could tip some systems past the point of no-return.

And then of course we have WFH, that which keeps major lessors awake at night, and threatens to laugh in our faces: “Close? You foolish people can only wish…”

wpDiscuz
Braintrust
"As I look at the world through rose-colored glasses, I like to believe that time will heal all wounds. "
"There will be many lingering and overall changes coming out of this, but cities will not be going away, just reformulated."
"This is not doomsday. There have been pandemics before and the world has worked its way through them."

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