Reimagining Cities-Disrupting the Urban Doom Loop

residents. 32 Although WalkUP critical mass has not been quantitively defined, a possible definition is that it is achieved when no public sector subsidy is needed to finance the next project in the WalkUP. Once critical mass is reached, the WalkUP will continue to grow independently through private investment and financing. Employment alone is not enough to sustain virtuous spirals; residential and retail spaces are even more important. Sufficient residential development—either multifamily rental or for-sale housing—is crucial since it represents the largest asset class in the built environment—and as we stated earlier, the built environment is the largest asset class in the U.S. economy. Residential makes up 60% of all real estate square footage in our cities, so it must be prominent in our WalkUPs. In addition, residential areas drive demand for local-serving retail, one of the largest (by square footage) and lowest risk retail categories. For example, walkable urban grocery stores, ranging from 5,000 to 80,000 sf and open 12-24 hours a day, activate the streets around them. However, these stores require a base of 5,000 to 10,000 housing units per store before they consider opening. As a “follower” land use, local-serving retail must have existing demand in place within walking distance before opening its doors. While multifamily rentals and for-sale housing make up 60% of all square footage in our 15-city sample, they account for only 28.5% of the current WalkUP inventory. This discrepancy highlights the need for WalkUPs to add more residential inventory, as it is important economically and socially, and will ultimately drive additional local-serving retail. Another crucial element in creating and sustaining virtuous spirals is effective and creative placemaking through place management (e.g., business improvement districts, Main Streets, private sector place management). Place management enhances the level of service necessary for WalkUPs to succeed, but beyond the base service

level a city provides. These services could include weekly power washing of sidewalks, homeless outreach, and safety ambassadors connected to the police, among others. A place management organization, such as a business improvement district (BID), is funded by property owners through a 5% to 10% increase in their property taxes, approved via a ballot initiative through state government legislation. Effective place management allows a WalkUP to capitalize on unique assets that make it a desirable place to live, work and play, providing fixed and operating capital to ensure safety and vitality. 33 Two Manifestations of Doom Loops: Structural and Episodic The first type of doom loop is structural, where prolonged social or economic decline of a city occurs because the market demands a fundamentally different live/ work/play development form, or a major industry that supports the economy moves away or collapses. In the late 20th century, this structural shift led to disinvestment in walkable urban cities in the U.S., with 58.5% of all assets invested in real estate and infrastructure moving to Drivable Sub urban areas on the edges of central cities and into sprawling suburbs. 34 This structural doom loop left some cities effectively—and actually—bankrupt. The second type of doom loop is episodic, triggered by events such as economic recessions, public health crises, natural disasters, or political or civil unrest. These events threaten the perceived or actual safety of walkable urban places for residents and employees, causing a sudden economic downturn. CASE STUDIES Overcoming a Structural Doom Loop: New York City In 1961, New York City started running annual budget deficits because the city’s revenues could not fund expenditures or debt payments. By 1974, the annual deficit

32 Zouaoui, Amira Manel, Hichem Zitoune, and Meriem Chabou. “The Critical Mass: A Trigger Parameter for Cultural and Creative Cluster Strategies in Metropolises.” 3rd International Conference of Contemporary Affairs in Architecture and Urbanism. May 2020. 33 The Virtuous Cycle of Placemaking. PennState Extension. August 2022. 34 Cevik, Serhan and Sadhan Naik. “Bubble Detective: City-Level Analysis of House Price Cycles.” International Monetary Fund working paper. February 2023. (6)

22 Cushman & Wakefield