What: In the US, some city centres are witnessing rejuvenation thanks to the very reasons that led them to experience exodus pre- and during the pandemic.

Why it is important: Although the US is a specific market when it comes to cities, the same phenomenon of green exodus was predicted in Europe with cities supposedly emptying out to the benefit of smaller towns. This has not translated into the numbers, which is great news for department stores often located at the centre of cities.

Due to the remote-work shift brought about by the pandemic, America's great cities could seem in a precarious spot. Fewer people commuting into the office means less revenue for downtown areas, which affects the funding of important programs like schools and public transit. This shift to remote work is also costing cities a lot of money, with a recent analysis finding that the shift cost Manhattan over $12 billion a year. The hollowing out of downtown areas has led to concerns about an "office apocalypse" and the "death of downtown."

However, cities can use the short-term challenges of remote work to reinvent themselves and attract footloose residents. Before 2020, home prices in superstar cities like New York and San Francisco soared as they built very little housing. As a result, these cities ended up catering to elite residents and failing the middle class, depriving them of the quality of services and housing their families needed to thrive. With more people shifting to remote work and moving farther from the expensive urban core, the bill for decades of underinvestment and poor management in America's large cities has come due.

Workers are voting with their feet, and early projections suggest these cities will face major budget problems. The exodus of workers is leading to a dire outlook for a cornerstone of downtowns: their office towers. The total square footage leased across 14 major US real-estate markets fell by 60% between 2019 and early 2022. The empty office towers are setting off alarm bells for leaders in major metro areas, but the remote-work revolution could pave the way for a new urban boom.

But is it not all doom and gloom: young people still want to live and work in vibrant city centers, and cities can offer them greater opportunities to learn, network, and enjoy cultural events. Cities will have to shift some of their priorities, experiment with new ways to reduce crime and provide better education and other services, and make housing more affordable. Cities can also experiment with smaller quality-of-life improvements and make streets safer to attract and retain residents. The move to remote work can help these places become stronger by catering to people who truly want to live there. Superstar cities have several advantages that rusted-out manufacturing centers did not have, including cultural attractions, highly educated populations, and diverse industries.

With adaptation and innovation, America's major cities can usher in a new urban boom.

Forget the death of downtown, City Centres are back in force