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Austin, Tucson and Portland on fast track to recovery

As vaccination rates rise and businesses begin to reopen, cities across the country are moving forward cautiously with economic recovery plans to get workers back into offices and revive real estate markets hit by the pandemic.

Some mid-sized cities – like Austin, Texas; Boise, Idaho; and Portland, Oregon – might be on the verge of a bounce back faster than others because they’ve developed strong relationships with their local economic development groups. These partnerships have established return plans that incorporate a number of common goals, such as access to affordable loans, relief for small businesses, and a focus on city centers.

Partnerships also encourage investments in infrastructure to attract new business activities. Last Wednesday, President Biden announced a $ 2 trillion infrastructure plan to modernize the country’s bridges, roads, transit, railways, ports and airports.

“The recovery plans create an agenda for the reconstruction of the metropolitan area,” said Richard Florida, a professor at the University of Toronto, who helped prepare a plan for northwest Arkansas.

In Tucson, the revitalization plan, which goes into effect this month, calls for assessing the effect of the pandemic on important industries, including biotechnology and logistics. Other provisions recommend recruiting talented workers and preparing so-called ready-to-use sites of 50 acres or more.

Demand is strong for industrial sites in Tucson. More than 80% of inquiries for real estate in the city are directed to industrial facilities, according to Sun Corridor, the regional economic development agency that sponsored the stimulus plan. And 65% of requests relate to space for new factories.

City leaders are building on a five-year, $ 23 billion growth plan in industrial and logistics development in the Tucson area, which resulted in 16,000 new jobs being created before the pandemic, according to Sun Corridor. Caterpillar and Amazon have established themselves in the region, while Raytheon, Bombardier and GEICO were among the many leading companies that have expanded their operations there.

“In hockey terms, we don’t play where the puck is; we try to skate where we expect it to happen, ”said Joe Snell, President and CEO of Sun Corridor. “We make sure that we have the inventory of construction sites so that when they come knocking on the door, we can fill the order.”

Other cities are struggling to recover after pandemic restrictions emptied their central business districts. The question is to what extent these city centers will bounce back when the pandemic ends.

“The pandemic has caused great changes in the way we work and in the geography where we work,” said Mr. Florida. “The office as we know it, a workspace, is dead.”

Experts disagree on what will follow. Several economic trends, like the growth in hiring and acceptance of remote work, are colliding, said Richard Barkham, chief global economist at CBRE, the commercial real estate company.

After a 3.5% drop in economic activity in 2020, the U.S. economy is expected to grow 6.5% in 2021, he said, which bodes well for construction. But CBRE also predicts that office workers will spend 36% of their time working remotely, up from 16% before the pandemic.

“We are seeing a temporary slowdown in demand for new office space,” said Barkham. “We’re also seeing that it’s been reduced in two, three, or four years until the centers come back.”

The travel and entertainment industries were shut down during the pandemic, but companies that engaged in innovation, technology and information have exploded, said Tracy Hadden Loh, a member of the Brookings Institution. Growth in office development for tech jobs has been particularly strong in Austin; Charlotte, North Carolina; Phoenix; and San Francisco, she said, adding that building of offices for the knowledge economy would resume after the pandemic.

But she tempered her prediction because of another trend: “The square footage per worker has declined dramatically since 1990,” she said. Add to that recent announcements from companies like Google, Microsoft, Target, and Twitter about remote working, and some cities might see less office building activity.

These challenges are not limited to mid-sized cities. Large metropolitan areas like Los Angeles and New York are certainly in distress, but they have shown the ability in the past to bounce back from calamity. In San Francisco, city officials said there was no way to predict post-pandemic construction activity, but expectations were high.

“This isn’t the first recession here,” said Ted Egan, chief economist for San Francisco. “We expect people to come back to the office.”

But cities that have a strong alliance with business development agencies should recover faster.

For example, the Downtown Austin Alliance, a business development group, holds focus groups and workshops, and conducts interviews and surveys to spark new interest in its downtown office market. Before the pandemic, 11 buildings covering about 3.5 million square feet were under construction, nearly half of all downtown offices.

Boise established a 16-member Economic Recovery Task Force, made up of city officials, academics and leaders of professional organizations. In September, he issued recommendations aimed at “strengthening economic resilience and agility”.

And the Greater Portland Economic and Development District has partnered with the Metropolitan Regional Government to prepare a plan to recover from the economic shock of the pandemic, which has destroyed 140,000 jobs and closed 30% of the region’s small businesses. Among their recommendations is to direct funds and technical assistance to small businesses through local community development financial institutions, under an affordable lending program of the Department of the Treasury.

Some cities are already enjoying success. A year ago, Boston abruptly suspended construction for nine weeks in an attempt to stop the spread of the coronavirus. During the moratorium, the Boston Planning and Development Agency prepared a turnaround plan focused on remote review of permit decisions for large projects. With its 250 employees working from home and, in some cases, equipped with new software and digital equipment, the planning agency held 220 virtual public meetings and digitally reviewed architectural plans and land use proposals.

“We have identified a methodology to conduct our reviews and resume public participation,” said Brian P. Golden, director of the agency. “Honestly, it worked better than we could have reasonably expected.”

Last year, the city approved 55 major development projects covering 15.8 million square feet and valued at $ 8.5 billion, the largest in Boston’s history. The largest was the $ 5 billion Suffolk Downs, a 10 million square foot mixed-use development with 10,000 housing units towering over a closed horse racing track.

Tucson also intends to resume construction. Along with the identification of industrial development sites, the Sun Corridor revival plan calls for the revitalization of the city’s downtown area.

The pandemic closed 85 downtown restaurants, cut 10,000 travel and tourism jobs, and cut industry revenues by $ 1 billion. The antidote is to persuade city and county leaders to provide loans and grants to small businesses related to the tourism industry at the center of commercial space in downtown Tucson.

Mayor Regina Romero said the city is investing $ 5 million – $ 2 million more than last year – in the city’s tourism marketing group. Tucson also distributed $ 9 million of federal relief legislation passed in March 2020 in grants ranging from $ 10,000 to $ 20,000 to small businesses, many in tourism.

“We work together as a region,” Ms. Romero said. “This is one of the most important steps we can take for the recovery.”

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