Talking Headways Podcast: Downtown or Not Downtown

This week we’re back at the 2023 Mpact conference in Phoenix for the closing plenary, lead by Assistant Secretary of Transportation for Transportation Policy at USDOT Christopher Coes, about what’s happening in center cities and how to make them thrive again. This panel features:

• Karen Chapple, Ph.D., Director, School of Cities, University of  Toronto, Toronto, ON
• Nichol Bordeaux, Chief Planning and Engagement Officer, Utah Transit Authority, Salt Lake City, UT
• Dee Brewer, Executive Director, Downtown Alliance, Salt Lake City, UT
• Emeke Moneme, President, Capitol Riverfront, Washington, DC
• Ryan Johnson, Co-Founder and Chief Executive Officer, Culdesac, Tempe, AZ

Click here for an unedited transcript of our full conversation. An edited excerpt can be found under the audio player below. Christopher Coes: Let me follow up with that because, again, I’m hearing entertainment, quality of life being the driver, being a livable community, right? What I didn’t hear is more office space. Emeke Moneme: Yeah, so we’ve got 58 percent of the land use in the neighborhood is residential. Only about 28 percent is office. And I think there’s been an intentionality to kind of get that balance right. I’m sure many of my development property owners want more office in the neighborhood, they always want more office. But I think we’re now rethinking what that right mix is. I think Downtown DC, 90% of the land use is office and it’s the one that’s still trying to figure out how it moves forward through this position. I think we’ve kind of got the balance right at 60, maybe a little bit more office — but it’s a different type of office. We were just talking earlier about with WeWork filing for bankruptcy. I think the entire markets kind of thinking about, ‘Well what’s the right format, location and quantity of office you need to kind of make that 15 minute neighborhood piece work?’ You have to have some presence there, but getting the balance right is what we’ve been focused on. Christopher Coes: Ryan, do you wanna touch on that? What are you seeing in terms of the market? Like what are the challenges of the fact that we have so much office space now in Downtown, that need’s to get converted. What do you see the opportunity or the barrier for addressing that? Ryan Johnson: So what we’re seeing is there’s a lot of remote workers, that creates geographic flexibility. We also have co-working on site that helps people that are working remote, and also smaller scale entrepreneurship. And we’re also seeing a flight to quality. I think the challenges are bigger in B and C office space and that’s one of the reasons why Tempe is doing disproportionately well. It has the highest price office space along Tempe Town Lake and so you know those will always be filled eventually. I think it’s the things that are farther out in the burbs where people don’t really want to be there as much as they do in a walkable, thriving area. Christopher Coes: So let’s take a step back, Karen, you talked about some policy ideas — I love policy. From your perspective, what is the main policy issue that the federal government should be focusing on today? Karen Chapple: Well, I do like that the federal government is looking at office conversion and has an RFP out on for research on that. You know, I think we kind of have to look carefully at the tax structures and right now, you know, a lot of our cities are all set up to give big tax abatements to commercial office development. And so we need to probably rethink our tax structure. I mean, I always go back to 1986 and Reagan and the multifamily apartments and how we lost that type. I mean, that’s the sort of structural reform we kind of need in order to get land uses kind of mixed up Downtown. Also, cities have been really slow to act and this has been striking and depressing for me that cities have been waiting kind of for the commercial landlords to figure out what’s going on and what they wanna do. And the thing is that those landlords are sitting on space ’cause it’s easier for them to keep it empty and wait it out. Right? And that’s a disaster from a public good and a public space and civic infrastructure perspective. We can’t have that, we can’t afford that. And so we need to force those commercial landlords to take some action. I don’t know what exactly what that is, but maybe you can ask some of your buddies. Christopher Coes: Okay. I imagine that if you had a policy magic wand, you may have an approach, what would it be? Emeke Moneme: Well, let me, let me — I want to double down on the, the tax structure piece. An interesting piece of data for us. So, 2019 before the pandemic, property taxes were the main driver for value in our communities. Property tax, sales tax and income tax. What we saw over the five to six years transition through COVID is that income tax was the chief generator of tax benefit out of our neighborhood. Neighborhoods adjacent to us and the other business improvement district, NOMA North of Massachusetts Avenue, they’re growing. It’s the people moving in high earners spending money sales tax remaining to number two, property tax dropped to number three. So I think this, this data is telling us that structurally our economies, successful growing economies, are more dependent upon again that quality of life that drives people to choose to live there, maybe even work in the neighborhood at some coworking space, spend their money go out to eat in that neighborhood. That’s what’s generating that flywheel for the economy for Downtown. As it relates to policy. Where do we begin? I’ll share a vignette. So 23 years ago when I first moved to DC as a bright, eager less gray-haired young man, I came to do real estate development. I thought that that’s, that’s why I’m in DC. I wanna go build things. I worked for mayor, then Mayor [Anthony] Williams, in DC, and ended up doing an internship where they put me in the Transportation Department. I spent a month complaining why would you send me the Transportation Department? I came here to do real estate development. And then within six months I completely understood that I was doing real estate and economic development by working in transportation. So I think anything that we can do to further tie that link between land use decision making, transportation investment decision making closer and closer together, including EV investment, right? Because that’s a piece of the action. Those are the big levers. That’s the piece that’s gonna move private capital to take action once it sees the federal government move.