**Urban Core Office Portfolios: Unlocking Value Requires More Than Just Talk**
Cushman & Wakefield’s recent research into the future of American downtowns reveals a concerning yet potentially reversible trend in urban development. In its initial report, *Reimagining Cities: Disrupting the Urban Doom Loop*, the firm proposed a seemingly straightforward solution to revitalizing downtown areas: convert underutilized office buildings into residential units and emphasize mixed-use redevelopment. This concept focuses on transforming Walkable Urban Places (WalkUPs) into vibrant, multi-functional communities.
However, the firm’s follow-up study, *Reimagining Urban Real Estate Portfolios*, dives deeper, offering data-driven insights that underscore the scale and complexity of the challenge. The report, which covers real estate dynamics across 15 major U.S. cities, found that, on average, 70% of downtown real estate is dedicated to office or work-related use. In some cities, this figure climbs to the high 80% range. These office-heavy landscapes, predominantly WalkUPs, reveal why simple conversion plans may fall short.
“This is a pretty big problem that’s going to take a long time to solve,” said Rebecca Rockey, Cushman & Wakefield’s Deputy Chief Economist and Global Head of Forecasting. She explained that the goal of the report was to share insights not only with commercial real estate stakeholders but also with civic leaders and public-sector decision-makers.
While empty office buildings primarily impact commercial landlords through lost rent, cities also suffer from a downturn in property tax revenue and decreased foot traffic. These fiscal consequences trickle down to influence broader social infrastructure, including public safety and education. Rockey emphasized the need to understand the “whole built environment” when crafting meaningful solutions to these issues.
**Surprising Foot Traffic Data**
One of the more surprising findings from the study relates to who actually spends time in downtown areas. Contrary to common assumptions, the majority of foot traffic—nearly 70%—originates from visitors such as tourists and suburbanites looking for entertainment. Only 20% comes from workers, and just 10% from residents. This imbalance contributes to the “ghost town” phenomenon observed in many downtowns after dark.
Though what Cushman & Wakefield calls “play real estate”—retail outlets, restaurants, theaters, museums, hotels, etc.—makes up only about 1.2% of real estate in most urban cores, it accounts for 25% of visitor activity.
Current downtown real estate use is heavily skewed:
– 70% consists of work-related uses
– 15% is residential or “lived” space
– 13% to 14% is play real estate
“In our view, office should make up closer to 40% of the urban core real estate,” Rockey noted.
**Financial Pressures and Public Sector Impact**
Municipal budgets are feeling the pressure, with reduced commercial occupancy leading to fading tax streams. To recoup these losses, some cities are increasing taxes, further straining property owners. In extreme cases, this spirals into tax lien sales and potential foreclosures, increasing risk for public and private sectors alike.
**The Path Forward Requires Collaboration**
Revamping these downtown districts isn’t a short-term task. According to Rockey, cities spent decades evolving into office-centric WalkUPs. Rebuilding them into more balanced, livable communities will equally require years of careful planning, coordination, and investment.
She advocates for deeper collaboration between the private and public sectors—what she refers to as “forum building.” On one side, local governments should streamline permitting and development processes, while on the other, private developers need to focus more intently on meeting the actual needs of the local population.
For example, a downtown saturated with office space might benefit more from a mixed-use project featuring affordable housing and community-oriented retail. Similarly, cities looking to attract young families might invest in schools and parks as part of their rejuvenation strategy.
“It’s about a give-and-take on both sides,” said Rockey.
Unlocking true value in urban office portfolios, as the report suggests, is less about theory and more about execution—turning conversation into coordinated, long-term action.
