Isn’t it ironic that the blue blob Covid overlords governing cities are the ones now dealing with the mess they created? Heather Gillers reports in The Wall Street Journal on the rising vacancies and falling confidence in America’s cities. She writes:
Wall Street is betting against America’s downtowns.
Investors are paying less for bonds linked to New York subways and buses. Downtown-focused real-estate investment trusts trade at less than half their prepandemic levels. Bondholders are demanding extra interest to hold office-building debt.
Downtowns have been a mother lode for American cities over the years, providing billions of dollars in tax revenue along with their distinctive skylines. In turn, investors who bet on downtown office towers, or on the trains and buses delivering workers to them, could generally trust they held a winning hand.
Now, with white-collar workers spending more time in their home offices, a phenomenon that shows few signs of ending, investments linked to downtowns are trading at falling prices in volatile markets.
“You could see this as a slow-motion change or as the beginning of a slow-moving train wreck,” said Richard Ciccarone, president emeritus of Merritt Research Services, a municipal credit-analysis firm. “I hope it’s not a train wreck, but it could be.”
Investors’ dimming view of downtowns isn’t good news for cities’ finances, nor for their residents. It puts under strain some of city governments’ traditional ways of extracting wealth: collecting property taxes on office buildings, taxes on wages earned within city limits, and fares from office workers’ commutes.
Residents of some cities are bracing for austerity. Many New York library branches expect to close an additional day each week under cuts proposed as the city faces rising labor costs and budget gaps projected to reach $7 billion in 2027. From New York to Chicago to San Francisco, residents and visitors complain about empty downtown streets and transit stops that have become way stations for the mentally ill and homeless.
Action Line: If you’re living in a big blue blob city where you’re treated more like a piggy bank than a valued constituent by your politicians, it’s time to look for a better America. Start your search with Your Survival Guy’s 2023 Survival States. Then click here to sign up for my free monthly Survive & Thrive letter and make yourself a Survivor.
E.J. Smith - Your Survival Guy
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