It’s Not The Ones Leaving Who Matter – It’s Whether Others Will Take Their Place

Published On: December 1, 2020By Categories: Short Read

There is a lot of hand-wringing right now in high-cost “superstar cities” like SF and NYC about urban flight and remote work. The discussion, though, assumes that the tenants there now – employers, residents, retailers – are the only ones that matter, and that if they leave (or have left), there will be no one to take their place(s). However, top-tier markets – for trophy office space, coveted residential addresses, Class A retail locations – enjoy what I call “layers of demand”, such that there are always going to be many others who will want to open businesses there, rent apartments there, etc., especially if the asking price has been reduced! Those who obsess about the ones who have voluntarily fled the high costs remind me of that old Yogi Berra saying: “no one goes there anymore, it’s too crowded.” After all, these places are expensive at least in part because, even with all of the downsides, people still really want to be there! Yes, right now it hurts. Property values will drop, and tax bases, shrink. But long-term vitality should remain intact.

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