The first-of-its-kind study examines 15 U.S. cities to identify their current real estate portfolio and how that compares to the optimal product mix for thriving in the future

Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, today released Reimagining Cities: Disrupting the Urban Doom Loop—an in-depth research report that puts 15 U.S. cities under the microscope to identify the real estate portfolios cities currently have versus what they need, given how much the economy has changed post-pandemic. In doing so, a few key findings emerge.

  1. Cities, particularly economically important, walkable urban places near the core, violated portfolio theory in real estate markets. This is especially true for downtowns, where 70% of real estate square footage is currently office.
  2. There is an optimal product mix for real estate markets to move towards. This optimal mix, for most cities, on average, is 42% Work (office, owner-occupied, GSA), 32% Live (for-sale and multifamily rental housing) and 26% Play (retail, hotel and other sports/entertainment).
  3. Reimagining these walkable urban places will yield dividends for all stakeholders in the city. These small, walkable pockets of cities account for only 3% of the city’s landmass, 25% of the city’s real estate footprint, but 37% of city tax revenues and 57% of city GDP. If these places fail, the entire city suffers.

Developed in partnership with Places Platform, LLC, a real estate solutions technology company co-founded by coauthor Christopher B. Leinberger, who is also the Charles Bendit Distinguished Scholar & Emeritus Professor and Chair, Center for Real Estate & Urban Analysis at George Washington University School of Business, Reimagining Cities looks at the recent past and probable future for 15 key U.S. cities—addressing critical questions about their economic health, how “doom loops” can manifest, and how they can be reversed into “virtuous cycles.”

The report details four key strategies needed to revitalize cities and downtowns to ensure they remain vibrant and engaging, including:

  1. Decreasing the share of real estate dedicated to Work, especially in downtowns;
  2. Increasing the share of space dedicated to Live, particularly in downtowns;
  3. Boosting the ratio of for-sale housing within Live; and
  4. Enhancing the Play component, to drive incremental foot traffic from visitors

“Our study is really a call to action,” said Kevin Thorpe, Cushman & Wakefield’s Global Chief Economist. “Some of our great cities and downtowns are at risk of entering into an urban doom loop, which is a very difficult cycle to break. The bottom line is a portion of the real estate most cities have today made sense for the economy 20 years ago, pre-hybrid work, but do not make sense for the economy today. Our downtowns and central cities are transforming with the knowledge economy, but also with the experience economy. Cities are increasingly about experience and consumption, and not just knowledge sector production. From this study, we now have the data, we know where the problems are, and we know what the solutions are. Doom loops are not inevitable, but the time to take action is now.”

To complete the analysis in the report, Places Platform, LLC leveraged its proprietary tools, including its place-based analysis, and worked with Cushman & Wakefield to aggregate a first-of-its kind real estate database which includes nearly 100% of all real estate data from the parcel level up. This place-based analysis includes data covering all real estate products in 15 sample cities, including multifamily rental, for-sale housing, office, retail, hotel, industrial, cultural (museums, theaters, and more), sports and events facilities, convention centers, government buildings and universities.

“By partnering together, Cushman & Wakefield and Places Platform, LLC have been able to compile a never-before-seen real estate database that includes all property types in these walkable urban places,” said Rebecca Rockey, Cushman & Wakefield’s Deputy Chief Economist and Global Head of Forecasting. “This has led to analysis that can help investors, businesses, local governments, and place management organizations understand the current real estate portfolio mix and how to proceed in ways that help urban neighborhoods grow and thrive.”

Additional key findings from the report include:

  • Any pandemic-induced ‘doom loop’ is episodic and has shown signs of a reversal: Population losses and drops in visitor foot traffic have reversed in these walkable urban places regained residents and attracted more visitors.
  • The optimal urban real estate mix exists: The ideal balance consists, on average, of 31% of space dedicated to Live, 42% to Work, and 26% to Play. This split generates the highest real estate value and GDP per acre. Expanding residential and entertainment offerings will create more vibrant, resilient urban environments.
  • Office remains a key component of urban real estate portfolios: In fact, Work should be the plurality of square footage in urban cores, but an over-reliance on Work—especially in downtowns—has pressured valuations. A more balanced mix of residential (Live) and entertainment (Play) space is necessary to improve real estate values.
  • Downtowns are extremely Work-centric: Currently, 70% of downtown real estate is dedicated to Work. These areas must increase their allocation of space to Live (currently only 16%) and Play (15%) spaces to create a more balanced and sustainable real estate mix.
  • Other economically important, walkable urban places are more balanced, but many still need more Live and Play: With 42% allocated to Live, 44% dedicated to Work, and 14% to Play, Downtown-Adjacent, Urban Commercial and Urban University neighborhoods are more closely aligned with the optimal product mix, which supports higher real estate values and GDP growth.
  • Cities must make the right thing easy to do: For example, expediting the entitlement process, moving toward form-based codes and offering incentives to accelerate adaptive reuse of space dedicated to Work—there are multiple options for how cities can facilitate this rebalancing.

“Cushman & Wakefield is dedicated to helping our clients navigate the evolving landscape of commercial real estate,” said Michelle MacKay, CEO of Cushman & Wakefield. “This report reflects the deep and rigorous approach we take toward understanding the full real estate ecosystem, to help our clients develop solutions that address their most complex issues. Our comprehensive advisory offering addresses the full spectrum of client needs, from strategic planning to execution, helping our customers to make critical decisions with confidence.”

To learn more, read the full report.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.

Michael Boonshoft michael.boonshoft@cushwake.com

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