For more than a decade, the American desire for city life has been insatiable. Bountiful restaurants and shops, art and Instagram-worthy public spaces, people-watching and energizing density have pushed up housing prices and helped fill city coffers with tax revenue. Now with the impact of the Covid-19 pandemic on human health and the economy, major cities are witnessing a rapid and stunning reversal that is generating genuine concern about whether urban centers can recover. Cities have weathered downturns before, notably from the 1950s to the 1980s, when white flight and ill-conceived urban-renewal projects caused populations to drop. But the coronavirus, which has heightened the fear of density and led many city dwellers to work remotely, is posing a question once unthinkable: do we need cities? The answer used to be obvious: cities are the center of regional economies. But after the country’s GDP contracted by 32.9 percent annualized in the second quarter of 2020 (the steepest drop since record keeping began in 1947), it seems unclear if or when urban centers will regain their share of the country’s economic activity. Conventional retail was failing before the pandemic; now shopping online is bigger than ever, and brick-and-mortar stores are struggling to stay open while keeping employees and shoppers safe. In New York, the city with the deadliest Covid-19 outbreak, commercial rents have dropped an average of 11.3 percent across 16 major retail corridors in Manhattan, and as much as 37.5 percent in fashionable SoHo, compared with last year. At least 5 percent of the population (420,000 people) left New York between March and May. While many of those New Yorkers may have been temporarily holed up in vacation homes, a permanent loss of even half of them would wipe out a decade’s worth of population growth in a matter of months.
It’s not just New York—all major metropolitan areas are seeing negative indicators like rising unemployment, small-business closures, and commercial vacancies. In a National League of Cities’ survey of 485 cities, sales tax decreased on average by 11 percent and income tax by 3.4 percent compared to last year. Officials in 90 percent of cities said they will be less able to meet residents’ needs next year. A big fear is a “K-shaped” recovery, where the white-collar, work-from-home crowd sees an economic rebound (e.g., the S&P 500 reached a record high in August), while the rest of the country is mired in a new Great Depression.