Can New York and San Francisco Escape the Urban Doom Loop?

When it comes to the collapse in office real estate, there's a lot of focus on who owns the debt, and what kind of pain must eventually be realized by someone. But there may be an even deeper challenge for big cities like New York or San Francisco. Office buildings, and the various restaurants and shops that cater to daily workers, are big contributors to the tax base of many cities. What happens if that goes into decline? In theory, you can get a doom loop of population loss leading to lower activity, leading to lower taxes, leading to lower spending, leading to worse public service, leading to more population loss and on and on it goes. So is that still a risk in 2024? On this episode we speak with Arpit Gupta, associate professor of finance at New York University's Stern School of Business, who has been tracking this risk for awhile. He gives an update on where things stand and why some of the pain may still be possible in the future.

Key insights from the pod:
The current gap between urban and suburban real estate — 5:10
How property taxes drive the “financial urban doom loop” -- 7:04
Will remote work last? -- 9:25
Why there are big lags in the doom loop data — 13:45
How is New York City CRE faring? — 18:04
Why doom loops are really just another economic cycle -- 23:27
The unique challenges facing San Francisco’s recovery — 30:40
Why people love their neighborhoods more than their cities -- 32:46