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The art of the city: how creators may save urban business districts

Artists could be welcomed back into cities’ empty commercial space after being driven away by high rents.

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Everything that we knew about cities — and about commercial real estate — prior to March 2020 is being cast into doubt. All of our assumptions about commuting, public transit, urban density, retail and restaurants are now out the window. We don’t know what the new normal will eventually be, but it is almost a certainty that things will not go back to the way they were at the beginning of last year. What started out as a temporary health crisis has morphed into a fundamental shift in how we all live and work. And even when vaccines and cures for Covid-19 are widely available, it is unlikely that we will simply reset the clock. This is a new world for everyone, including owners and operators of commercial properties in urban areas.


No matter how you slice it, the numbers are pretty dismal. Record numbers of retail stores and restaurants are closing. Residential vacancy rates in major American cities have never been higher. Work-from-home policies that have turned downtowns into ghost towns are expected to continue even when the pandemic ends. Office towers that are currently under construction might not have a full complement of tenants when they open their doors. In this world of bad news followed by more bad news, many people are wondering if cities even have a future.

Work-from-home policies that have turned downtowns into ghost towns

I tend to be a bit of an optimist, and while a lot of commercial real estate is being abandoned by tenants who can’t afford the rent or no longer need the space, I don’t believe that downtown areas are going away. Far from it. But I do think that they will be much different five years from now they were even a year ago. Of course, there’s no way to predict exactly how cities will evolve over the next few years, much less over the next several decades. After all, what are property owners supposed to do with a 15,000 square-foot law office with no lawyers in it?

 

The answer may lie with artists. Creators have always been the proverbial canary in the coal mine when it comes to the urban future. Painters, musicians, sculptures, and other artists have always been on the hunt for low-cost spaces where they can do their work. It’s hard not to think of bohemians in their loft studios in lower Manhattan back in the 60s and 70s when we think of artists. But thanks to the New York real estate boom of the 1980s, many of those artists were pushed out as neighborhoods became more desirable for commercial and high-end residential tenants. Today, a former “crash pad” in Chelsea now rents for $40 a square foot. And instead of being occupied by a metal worker, it is most likely home to a software company. Or at least it was until the pandemic hit. As 2020 ends, there’s a high likelihood that the space is sitting there vacant.

Creators have always been the proverbial canary in the coal mine when it comes to the urban future.

Back in the 1990s, San Francisco was home to hundreds of music rehearsal spaces, studios, and light industrial workshops where people could create art. But as the dotcom boom hit the Bay Area, artists were priced out of the city. Many of them moved across the Bay, and for 15 years, Oakland was the location of choice for makers who needed affordable spaces. As the East Bay became more desirable, however, the artists who were forced out of San Francisco once again found themselves being pushed out. In the last seven years, there has been an exodus to places like Vallejo, Richmond and Stockton – areas that are close by but still affordable for musicians, painters, and sculptors.

 

So what happens now? This may be the time for artists to come back into the heart of American cities. With so much empty commercial and rental space, property owners need to find ways to fill their units, even if it’s not at the rate that they are accustomed to. A basic economic level, full units are better than empty ones because they generate revenue. In addition, having artists in commercial spaces reduces the risk of crime because properties don’t look abandoned. Of course, this is what needs to be modified to allow quick exits if higher paying commercial tenants return. But for the next couple of years, inviting artists into commercial spaces may be the best of all possible worlds.

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