**Urban Core Office Portfolios: Unlocking Value Means More Than Talk**
*By Connect CRE Staff*
*Photo: ConnectCRE*
Cushman & Wakefield’s debut report, *Reimagining Cities: Disrupting the Urban Doom Loop*, proposed that walkable urban places—known as WalkUPs—could counteract the decline in downtown vibrancy through strategic redevelopment. The concept revolved around converting vacant office spaces into residential units and prioritizing mixed-use developments.
But a follow-up study titled *Reimagining Urban Real Estate Portfolios* offers a deeper dive into today’s urban real estate challenges, backed by sobering data. The report examined downtown areas across 15 cities and found that, on average, about 70% of the real estate footprint is dedicated to work-related buildings—some even reaching into the high-80% range.
Clearly, revitalizing today’s office-centric WalkUPs takes more than just repurposing office space.
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*Rebecca Rockey*
**A Multi-Stakeholder Challenge**
Rebecca Rockey, Cushman & Wakefield’s Deputy Chief Economist and Global Head of Forecasting, explained that the latest research was meant to inform a wide range of stakeholders—from commercial real estate professionals to public sector leaders—about the scale and complexity of this issue. “This is a pretty big problem that’s going to take a long time to solve,” she said.
While landlords and developers are grappling with vacancies, municipalities are facing dwindling real estate tax revenues, reduced foot traffic, and the broader socio-economic consequences. These include challenges to public safety, education funding, and infrastructure maintenance. According to Rockey, understanding the entire built environment—not just office real estate—is crucial for devising effective solutions.
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*Photo: ConnectCRE*
**Findings and Data Surprises**
While excess office space is well known, the report sheds light on some lesser-known dynamics shaping downtown areas. Rockey pointed out that nearly 70% of all foot traffic in urban cores comes from visitors. Commuters and residents, meanwhile, account for only 20% and 10%, respectively—a trend that turns city centers into ghost towns after business hours.
Another telling statistic is that while “play” real estate (retail, hotels, restaurants, museums, arenas, theaters) typically occupies just 1.2% of total downtown real estate, it contributes to 25% of total visitor attendance.
Meanwhile, real estate allocation in most downtowns breaks down as follows:
– 13-14% dedicated to play-oriented properties
– 15% to residential or “lived” real estate
– 70% to work-related spaces
Rockey emphasizes a needed rebalancing: “Office should be more around 40% of the urban real estate mix.”
At the same time, city governments face falling tax revenues, prompting tax hikes that further burden struggling property owners. “In some cases, this financial pressure may even lead to tax lien sales and the risk of foreclosure,” the report warned.
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*Photo: ConnectCRE*
**A Long-Term Transformation**
Rockey acknowledged that reversing the dominance of office-centric urban districts is no quick fix. She noted that it took decades for WalkUPs to develop into primarily office-based spaces, and it will take just as much time and cross-sector cooperation to reimagine them.
This includes streamlined permitting processes from municipalities and developer focus on local needs—be it more housing, retail, or community services. Rockey stressed the importance of public and private collaboration, or what she called, “forum building.”
The future of thriving urban centers depends on such cooperation—focusing on flexibility, innovation, and a shared vision for vibrant, livable downtowns.
“It’s about a give-and-take on both sides,” Rockey concluded.
