A new report by Cushman & Wakefield (NYSE: CWK), Reimagining Urban Real Estate Portfolios, finds that there is significant value to be unlocked in Downtowns if cities, investors and other stakeholders act swiftly to rebalance their real estate portfolios. The current mix of real estate uses in most U.S. Downtowns is misaligned with optimal real estate portfolio theory. This mismatch has left many urban cores exposed to persistent vacancies, reduced foot traffic, declining property values, and growing fiscal pressure. The report outlines how repurposing real estate uses in Downtowns—and possibly, other walkable urban places—could revitalize cities and unlock as much as $340 billion in value.

“Downtowns are currently over-indexed on office space, averaging 70% of total real estate use compared to the ideal ~40%,” said Rebecca Rockey, Deputy Chief Economist at Cushman & Wakefield. “That imbalance has made them less resilient in the wake of the pandemic, remote work and economic disruption, and now, ripe for targeted reinvention.”

Key findings from the report include:

• Downtowns are disproportionately reliant on office real estate, which has contributed to steadily rising vacancy rates now exceeding 26% and sharp valuation declines in many cities.
• Strategic conversions of lower-quality office buildings into residential or entertainment uses, referred to as “Live” or “Play” space, could unlock between $105 billion and $208 billion in value across 15 major U.S. Downtowns.
• Asset quality is critical to successful conversion outcomes. The greatest value is achieved when lower-value office buildings are repositioned into higher-value residential or entertainment assets. The report stresses the need for targeted, quality-focused investment.
• Non-Downtown Walkable Urban Places (WalkUPs) are generally closer to the ideal real estate mix. Broad conversion efforts in these areas could reduce value, but carefully selected projects still present compelling opportunities.
• There is urgency to act. Declining property tax revenues, reduced foot traffic, and increasing retail vacancies are creating uneven risks to urban economic health. Without focused policy action and investment, cities could face long-term fiscal strain and growing challenges to revitalize their urban cores.
• No two cities have the same real estate or property tax fingerprint. City governments need to engage with all stakeholders to understand what incentives and incentive structures could have the biggest impact.

The report also highlights how unique each U.S. city is—the challenges and opportunities vary. Miami, as an example, has a Downtown with a more balanced real estate mix that more closely mirrors the optimal portfolio. This is one reason it has been more resilient and has actually seen Downtown foot traffic grow since 2019. This points to the fact that cities with a healthier balance of residential, office and entertainment uses can support economic vitality and remain more resilient even during disruptive shifts. Other cities are taking notice, but swift action is needed.

“This is a call to action for real estate owners, civic leaders, and investors,” said David Smith, Head of Americas Insights. “The data shows that smart, targeted redevelopment in our Downtowns can create real financial returns and strengthen the overall vitality of cities.”

The report comes at a time when many municipalities are facing severe budget shortfalls. Cities like New York, San Francisco, Boston, and Chicago project multi-billion-dollar deficits driven largely or in part by falling office values and tax base erosion. Reimagining Urban Real Estate Portfolios offers a roadmap for action, identifying where conversions will be most effective and how they can help rebuild vibrant, resilient urban cores.

The full report by Cushman & Wakefield can be found here.

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 2024, the firm reported revenue of $9.4 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com

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