Are Cities in a ’Doom Loop’?
Wednesday, August 30th, 2023 Insurance IndustryA question that has been rattling around in my head for a while crystallized for me this morning when I read that a famous Nordstrom had closed in the heart of San Francisco. Then the Washington Post hammered the point home by leading the paper with this headline: "How the ‘urban doom loop’ could pose the next economic threat."
My question has been about the long-term effects of the pandemic on work in offices. If enough people stay home to work, then businesses don’t need as much office space. Restaurants, bars, coffee shops and other retail establishments see less traffic, and many close. As they close, downtowns become less attractive as places to live and work.
Retail traffic declines further, fewer people come downtown, businesses need less office space. And down and down and down we could spiral,... meaning owners of commercial real estate could lose so many tenants that they default on loans.
