Another Sign of Downtowns' Decline?

Many of the top US cities are experiencing less traffic congestion compared to pre-pandemic levels as fewer people commute to work, according to a new study by INRIX. The good news: US drivers are saving time and money. The bad news: It is more evidence that Downtowns and central business districts continue to languish. 

Throughout the pandemic, San Francisco, Detroit, and Washington, D.C., have continued to see significant reductions in travel demand for downtown, with the trend continuing through Fall 2021, at -49%, -41%, and -38%, respectively.

San Antonio, Tampa and Phoenix led other major downtowns in terms of traffic recovery, with those areas rebounding to -5%, -6% and -7% below pre-COVID level. 

The numbers behind this phenomenon are plain. Downtowns house a significant portion of a region’s jobs. For example, in the New York Metro Area, 20.2% of jobs are located downtown. With fewer people coming into the office, this decline could affect office space demand and rents. The data is also useful, on the plus side, as it helps to formulate a company’s return-to-office policies.

Of course, the importance of downtown in terms of employment varies by metro area. In Washington D.C, 13% of jobs are located downtown. Downtown Dallas, for its part, holds just 2% of the region’s jobs. 

Foot Traffic a Contributing Factor

Eventually these numbers will at least partially rebound. For companies and city planners, the key is knowing exactly when. Complicating matters has been a steady rise in foot traffic across US cities.

“Everyone is looking for the Goldilocks position—companies don’t want to move too early or too late,” Sheila Botting, Avison Young’s President of Professional Services for the Americas, tells GlobeSt.com. 

Earlier this year Avison Young created an index to measure cities’ foot traffic. Called the Vitality Index, it uses data from Orbital Insight, Avison Young’s geospatial intelligence and location analytics partner, which aggregates anonymized cell phone location data geofenced to unique locations.

The insights the index delivers are being used by a range of CRE stakeholders, Botting said, from companies deciding future occupancy strategies to property owners looking at buy/hold/sell decisions to developers planning their next project.

Currently, The Vitality Index is showing a steady increase in foot traffic in major cities but is still trending significantly below 2019 levels. The widespread return in the fall that many hoped for has yet to materialize. In fact, the whole nature of office work has undergone a fundamental shift.

The definition of the office was changing long before COVID happened, Botting said. “COVID essentially represented the largest change management activity across the globe. Suddenly people realized that they could work anywhere, anytime, anyplace.”

This has accelerated what was already taking place in the corporate workplace, as employers and employees grappled with the best way to work, according to Avison Young. “It means both the flexibility to work remotely and a place to gather with coworkers, but not just one or the other,” according to the Index. “This will significantly influence office designs and play a key role in recruitment.”

Botting added, “We need downtowns. We need offices without a doubt, that does not go away. But the scale and purpose of these offices does change. It’s going to scale up or scale down for any organization based on business purpose, culture, how people work and, ultimately, the role of the office.”

Top Three Markets for Congestion

None of this is to say that major cities no longer have a traffic problem. 

The top three markets for congestion, according to INRIX, were New York (102 hours), Chicago (104 hours) and Philadelphia (90 hours) in 2021 despite congestion being -27% to -37% below 2019 levels. 

Fourth-ranked Boston (78 hours), ranked first in 2019 with 101 hours lost, still lags pre-COVID levels by -47%. Washington, D.C. continued to lag other major U.S. metros, as congestion levels were -65% below 2019 levels.

Overall, the average American driver lost 36 hours due to congestion, up 10 hours from 2020 but down 63 hours from 2019. Nationally, drivers spent 3.4 billion hours in traffic congestion last year, a 34% increase from 2020. Despite the increase, drivers experienced 2.6 billion fewer hours in traffic than in 2019.