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Getty Images; Alyssa Powell/Insider

DISCOURSE ECONOMY

Middle America's
'doom loop'
Work from home is crushing Midwestern downtowns

Eliza Relman
Jun 22, 2023, 12:58 PM GMT+3

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Y
ou may have heard that America's
cities are in trouble. From the
"death of downtowns" to the "urban
doom loop," the plight of America's
superstar metros — and their central
business districts in particular — have been
a frequent source of concern for economists,
politicians, and commentators.

Most of the concern has been focused on

coastal cities like San Francisco and Seattle,
which have seen the usual stream of
commuters shrink to a trickle due to remote
work's hold on the white-collar workforce.
But Midwestern cities are also facing a crisis
of their own — struggling to attract workers,
residents, and visitors to their downtowns.
And while many coastal metros experienced
a "golden age" in the decade before the
pandemic, cities in America's heartland
have been struggling since well before
COVID came around.

In order to pull out of their tailspin,

economists and urban planners say many
Midwestern cities need to get serious about
improving amenities and boosting quality
of life in their downtowns. Instead of being
places where people are forced to go to
work, leaders need to make their center
cities into a destination that people actually
want to visit.

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"What I really think it comes down to in

these places is that there's nothing special
about any of the downtowns in any of these
cities that would be attractive to new
residents," Michael Hicks, a professor of
economics and business research at Ball
State University in Indiana, told Insider.
"The cities just don't have the fundamental
amenities that would attract people."

Hollowed out

A good way to gauge just how much trouble

Midwestern cities are in is to take a look at
how many people their downtowns are
actually attracting. Standing in the middle
of the city square and counting people can
be a bit tough though, so researchers at the
University of Toronto have been analyzing
anonymized cellphone data for the past few
years to track the number of people
physically present in central business
districts each day. The granular, individual-
level data provides a fuller picture of
downtown vitality — both before and after
the pandemic — than other measures such
as oPce vacancy rates and mass-transit
ridership. The conclusion the study draws
for the heartland is bleak. Five of the bottom
10 cities in the tracker's most recent data,
which measured the period from December
2022 to March 2023, were in the Midwest: St.
Louis, Indianapolis, Minneapolis,
Cleveland, and Kansas City, Missouri. Nine
of the 13 Midwestern cities tracked in the
study were in the bottom half of the
rankings.

Other indicators of central business district

health — from oPce workers to vacant real-
estate space — are similarly stark for many
of these cities. Jacob Frey, the mayor of
Minneapolis, recently said he expects his
city's downtown workforce will max out at
about 75% of its pre-pandemic numbers,
and a recent study showed that 21.2 million
square feet of oPce space in the city is
sitting vacant. In April, Salesforce
announced it would give up one-quarter of
its oPce space in the Indianapolis
Salesforce Tower, Indiana's tallest building.
The Midwest as a whole has also struggled
to attract new residents and hold onto its
existing residents in recent years. Between
April 2020 and July 2022, the region saw a
net decline of more than 400,000 residents.
And things could get even worse for
downtowns if they fall into the so-called
"urban doom loop." Commercial property
taxes make up a large chunk of many city
budgets, so as oPce vacancies rise, the
decreased revenue could force leaders to
curtail municipal services or make cuts to
key programs. Declining services and
quality of life in turn pushes residents out,
leading to a self-reinforcing exodus.
Without serious changes, these midsize
cities in the middle of the country could be
quietly sliding into oblivion.

"The writing on the wall is not great," Karen

Chapple, the director of the School of Cities
at the University of Toronto and the author
of the downtown recovery study, told
Insider.

North American downtowns

with the slowest recoveries
Ratio of winter 2022-2023 downtown visits to 2019
visits
Non-Midwest Midwest

San Francisco, CA 32%

St. Louis, MO 38%

Portland, OR 40%

Indianapolis, IN 41%

Minneapolis, MN 41%

Cleveland, OH 44%

Oakland, CA 47%

Kansas City, MO 47%

Toronto, ON 47%

Philadelphia, PA 47%

Montreal, QC 47%

New Orleans, LA 48%

Seattle, WA 48%

Chart: Andy Kiersz/Insider • Source: University of

Toronto School of Cities

'The collapse of the Midwest'

The original sin that led to the Midwest's

current predicament can be traced back to
boneheaded choices made 70 years ago. In
the early part of the 20th century,
Midwestern cities boomed — attracting
workers and families seeking out
manufacturing jobs and education.
Downtowns were bustling places for
shopping, living, and working.

That all changed in the 1950s. Many

Midwestern cities relied on a single industry
or even a single company to buttress its
economy. Cleveland had the steel industry,
Detroit was built by autos, and Akron was
home to tire manufacturers. So in order to
keep businesses from leaving town, leaders
began to single-mindedly focus on
attracting businesses — even if it meant
making peoples' lives harder.

"For the second half of the 20th century,

most Midwestern cities really focused on
bending over backwards to accommodate
businesses," Hicks said. "They bulldozed
neighborhoods, they did eminent domain
for all kinds of highways to get the products
moved from factory to customer more
quickly. And they neglected the
fundamentals that people have liked about
cities for 3,000 years, which is you can meet
with people, you can walk to a place to eat,
it's safe."

Midwestern downtowns cleared out during the pandemic,

but their problems started decades before COVID came
around. Michael Siluk/Getty Images

This urban transformation turned

Midwestern downtowns into "nothing but
skyscrapers and highways," Amanda
Weinstein, a professor of economics at the
University of Akron, told me. "The thought
was, cities are just for jobs and that's all they
really are."

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After years of being ignored, workers'

community ties began to fray and they
started to look for greener pastures. Many
Rust Belt residents left for the Sun Belt,
Weinstein said, which promised
a`ordability and a higher quality of life.
Even those central-city residents who
weren't lured by warmer locales eventually
migrated out of the city to leaber
surrounding suburbs.

"The collapse of the Midwest is really the

story of, 'As soon as the job went away, I got
the hell out of this shitty town,'" Hicks said.

Given this long history of out-migration and

neglect, it's not surprising that Midwestern
downtowns that were struggling before the
pandemic are having an even harder time
now, Tracy Hadden Loh, a fellow at the
Brookings Institution who studies
downtowns and urban real estate, told me.

"The pandemic is a huge disruption that has

produced some real paradigm shifts, but the
vast majority of what it's done is just
drastically accelerate existing trends," she
said.

'A people problem, not a

business problem'

If Midwestern cities have any hope of

reversing this downward spiral, experts told
me, then leaders will need to prioritize
people over business. If a diverse set of
people live in or frequent downtowns,
they'll attract a variety of employers and
build a foundation that can weather shocks
to the system, such as a pandemic or the
death of an industry.

"What we're seeing increasingly is that jobs

are following people and where people want
to be," Weinstein said. "We have to compete
to get the talent that business needs."

In order to draw in new residents, Hicks told

me, there are two big things that need to be
addressed: adequate housing and services.
Downtowns should create an environment
that attracts people, and that will in turn
draw in employers and boost the economy.
Hicks and Weinstein wrote in a Brookings
Institution report that the Midwest's history
of embracing loose regulations and tax
incentives for businesses have hurt the
provision of services that would attract
people to live in downtowns.

"I don't think there's a commercial bx to this

for cities," Hicks said. "It's a people problem,
not a business problem."

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Quality of life is largely determined by the

services and amenities available in a
community. These include schools, safe
public spaces, libraries, playgrounds,
transportation and relatively short
commute times, and restaurants and retail.
Midwestern cities have largely failed to
invest in these kinds of amenities, leaving
their downtowns devoid of anything but
oPce space and industrial parks. To bring in
new residents and visitors rather than just
workers, they need these attractions.

"If oPce workers are coming downtown

less, but college students are willing to come
downtown more, what about literally
putting a college in your downtown?"
Hadden Loh said. "This is something that
cities are increasingly looking at." She
pointed to Phoenix as an example. Over the
past couple of decades, the city has made
major investments in revitalizing its core,
including a new downtown campus for
Arizona State University.

It's a people problem, not a

business problem

Even in situations where Midwestern cities

have preexisting natural amenities — like
mountains or lakes — that lend themselves
to redevelopment, they've failed to
capitalize on those advantages. Take
downtown Cleveland, where Weinstein said
the city has allowed its natural waterfront
along Lake Erie to be "forgotten." Despite its
potential, the waterfront isn't walkable and
o`ers little by way of restaurants or
attractions. And given the city's long history
of prioritizing industry, residents are
concerned about the lake's water quality.

"The number of restaurants we have that

overlook the lake I can count on one hand,"
she said.

In an e`ort to give the area a face-lift, the

city is currently considering potentially
closing Burke Lakefront Airport, a city-
owned, 450-acre regional airport situated
on prime waterfront real estate. The airport
largely serves private business and medical
gights and has recently seen its traPc
plummet. Closing the airport and
redeveloping the waterfront into an
amenity-rich area with a mix of housing and
commercial space would be a "big game
changer" for Cleveland, Weinstein said.

Housing is also a crucial piece of a thriving

downtown. Cities need to attract residents,
not just tourists and workers. Downtown
areas might need to be rezoned to allow
developers to come in and build housing.
And cities that are struggling to attract
workers back downtown might have an
easier time attracting residents in a hot
housing market. Some Midwestern cities
have already begun incentivizing pricey
conversions of oPce space to residential
property.

O`ering those two elements in tandem —

higher-quality services and a larger stock of
housing — can reverse the "doom loop" and
instead create a positive feedback loop.
"Oftentimes, the best way to improve your
housing stock is to focus on making sure
you have good clean parks, you've got high-
quality public safety and services," Hicks
said.

Midwestern downtowns need to get away

from the nine-to-bve oPce district of the
past and embrace a diverse, multiuse, high-
amenity model.

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"In the long term, I think what we're

learning from the places that have bounced
back is that you just want to make sure that
you have diverse, 24/7 downtowns, and we
kind of give up this idea of the downtown
oPce district as being something that is a
relic of the early 20th century," Chapple
said. "We're in a di`erent world now."

If Midwestern cities like Kansas City want to build for the

future, then leaders will have to focus on attracting
residents — not businesses. Edwin Remsberg/Getty
Images

A vision for the future

It's not all doom and gloom in the Midwest.

As downtowns have struggled, many of the
suburbs surrounding Midwestern cities
have long been thriving. Both Weinstein
and Hicks say this is because they've
focused on livability: creating safe, walkable
neighborhoods with green spaces and
strong school systems.

"The suburbs have it bgured out," Weinstein

said. "I've heard people kind of pejoratively
say, like, 'Oh, the suburbs just do so well
because they cater to families.' And I'm like,
yes. You just found your perfect economic
development strategy: cater to families,
cater to residents."

The pandemic exacerbated this pull to the

suburbs. Hicks said the typical household
that moved out of places like downtown
Indianapolis or Chicago was a 26-year-old
married couple without kids.

"They want to get a dog, they want to start a

family, and so they said, 'Well, you know,
mortgage rates are really low. Let's just get
the hell out of this apartment,'" he said.

If Midwestern cities want their downtowns

to survive, then the center cities may need
to become more like the suburbs that have
bled them dry. One place that has bgured
out this equation is the city of Columbus.
While Ohio is losing residents, Columbus
has grown over the past two decades and
the metro area even gained residents during
the height of the pandemic. And unlike so
many other Midwestern cities, the
University of Toronto study found that
more people are now visiting Columbus'
downtown than in 2019.

The reasons for the city's success come

down to the quality of life it delivers. The
Columbus city government invested heavily
in amenities, ranging from a strong school
system to a walkable downtown with
plentiful restaurants and bars and even an