“Wall Street is betting against America’s downtowns,” a lengthy Wall Street Journal analysis claimed, in part, because of the remote work increase starting in the COVID era led to empty office buildings and lost real-estate value.
“I hope it’s not a train wreck, but it could be” said the former head of a municipal credit-analysis firm.
In the dismal economic picture that the article paints, “Investors are paying less for bonds linked to New York subways and buses. Downtown-focused real-estate investment trusts trade at less than half their prepandemic levels. Bondholders are demanding extra interest to hold office-building debt.”
Downtowns were once the symbiotic “mother lode” for city coffers, the news organization asserted, insofar as tax revenue is concerned, which could usher in austerity measures and reduced services unless Washington provides bailouts.
“[I]nvestors who bet on downtown office towers, or on the trains and buses delivering workers to them, could generally trust they held a winning hand,” the WSJ recalled.
“Now, with white-collar workers spending more time in their home offices, a phenomenon that shows few signs of ending, investments linked to downtowns are trading at falling prices in volatile markets.”
The related erosion of the tax base is bad news for municipal budgets, too. “It puts under strain some of city governments’ traditional ways of extracting wealth: collecting property taxes on office buildings, taxes on wages earned within city limits, and fares from office workers’ commutes.”
This detailed WSJ focus on financials only hints at the key factor in the demise of these once-prosperous enclaves: public safety.
“From New York to Chicago to San Francisco, residents and visitors complain about empty downtown streets and transit stops that have become way stations for the mentally ill and homeless.”
Mores specifically, Soros-funded soft-on-crime prosecutors, defunded or demoralized cops, catch-and-release policies even for violent repeat offenders, and wrongdoing like shoplifting reduced to “traffic-ticket” misdemeanors have all contributed to the creation of a left-wing dystopia.
Brazen thievery has also prompted many retailers to shut down their stores permanently in high-crime, downtown areas that were once active shopping, dining and cultural districts.
“Congratulations, Democrats. You have demolished America’s cities and with that demolition, you crippled a civilized nation,” longtime newsman Don Thurber asserted.
“What is happening to American cities is what happened to American manufacturing in the Midwest,” he added, insisting that both parties share blame for the latter.
Specifically referencing New York City’s disastrous de Blasio administration, Thurber ominously claimed that “The plan is to dump the middle class into the suburbs in the hope of flipping them blue—and eventually destroy them as well.”
The WSJ suggested that those very suburbs are the likely beneficiary of the purported bad center-city investments.
“The suburbs are going to be one of the big winners in this, and the potential losers could be the large cities that have depended on people coming back and forth to work,” the chair of a municipal-bond investment firm opined.
Another school of thought is that the globalists and big financial corporations will nonetheless buy up vacant or semi-vacant downtown properties at fire-sale cost in a similar manner to which they are currently acquiring single-family homes or farmland.
This, in the end, could perhaps constitute a neofeudalistic scenario benefitting an elite class of state-sanctioned property owners, while turning most global citizens into a permanent class of renters who, in the words of the World Economic Forum, “will own nothing and be happy.”
In the meantime, “The pessimism from investors who bet on office buildings and mass transit can be seen in market signals that are flashing red,” the Journal summarized.