The days when cities controlling the financial and economic engine of a region are ending

BY STEVEN KASZAB

Thank you, Pandemic. Only a human event like the pandemic could force urban, city and financial planners of some of the largest cities in the land to re-think what a city should be, and what it can become. Large cities have financial towers spotting their landscape, and these towers once held thousands of employees working for some of the largest corporations in the land.

Problem: Many are near empty, or half staffed according to previous employee levels, as return-to-office mandates simply go unheard. Working from home, or remotely has become the desired form of employment for many employees. Coming into the office two to three days a week has also become extremely popular. Corporations have taken the bull by the horns and threatened to release employees who do not cooperate with their corporate mandates to return to these towers of finance, resulting in some: firings, layoffs, and resignations. The problem is there simply are not enough trained employees to go around, so losing a valued employee is a non-starter.

What will companies do with their unused paid office space? There are towers where several offices on each floor are empty. Corporations cannot incur such costs and losses for long. In September 2024, the national average of occupancy in America was 50.25% according to Kisi Access Control. In Canada, the average is even lower at 46.9%. What can be causing this situation?

• Continual fear of COVID-19 variants.
• Preferred personal savings of travel time and expenses not paid for by employers.
• The cost each employee incurs to be employed. The cost of living makes this an important issue.
• Employees have great satisfaction working at their own time/schedule and pace.
• Cost of living/inflation/corporate control/employee dissatisfaction are all applied.

For the employer there is a huge cost per foot applied to their monthly ledger flowing from $32.89 per foot up to and beyond a hundred dollars a foot. It is the corporation’s fault for signing lease agreements where such costs exist, but no one knew what a pandemic could do to the business world. Oh yes, they did! Businesses do not plan well for the future, whether that be planning expansions, or for the possibility of a natural or human disaster like Covid.

Peter Kolaczynski, Director of CommerialEdge notes that office occupancy remains extremely low, offering high levels of unused space. One can tell the corporate world is taking this into consideration as the level of construction going on. In Austin Texas, a future economic marvel, between 2019-2022 3.5 million sq ft was developed. In 2023 only 1.3 million were started, but not finished. There simply is no rush to develop towers that will not be filled with employees and their businesses. Seattle went from 2.6 million sq ft in 2019-2022 to 696,000 sq ft in 2023. Toronto’s levels as compared to Vancouver’s lag behind these levels. Development starts will be finished, but the city of Toronto has announced lower levels of regulatory permission given to such businesses preferring to push ahead residential building starts instead.

What can be done with these high towers, what repurposing can be done for billions of dollars of business-oriented buildings?

• Refurbishing for residential. Very costly but doable. Perhaps swallowing the cost now for future financial benefit.
• Declare downtown city centers tower free zones. Would unclog traffic and make the city more livable.
• Cities can seize properties that have not fully paid their taxes. Yes folks, corporations and businesses often do not pay their fair share of taxes.
• The transportation hub of a city is the most costly, so redevelopment and modernization is key and should be directed towards the surrounding suburbs and beyond where future development will happen.
• Redesigning urban centers to make them more livable and safer for the public in the future.

The modular/cell model of employment is a good model, placing employees in their preferred locations, be that at their home, or wherever. It Is less stress upon the urban centers greenhouse environment and livability. The future is transforming how business should work, moving from a place of control and management to one of accepting servitudes, online and digitally as well. Communication systems need to be modernized, with online capabilities –  a human right.

The only way that entire regions can develop is by ending urban centers’ monopoly of development. Investment will flow towards any place where money can be made. The days when cities controlling the financial and economic engine of a region are ending.