The “Urban Doom Loop”: Breaking the Cycle with City Revitalization

The term “urban doom loop” was coined in 2022 by Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia Business School. It describes the self-reinforcing cycle where declining office occupancy leads to reduced economic activity and tax revenues, further accelerating urban decline.  

The concept gained traction as megacities like Los Angeles and New York experienced rising vacancy rates after the pandemic, with mixed recovery outcomes.    As of the third quarter of 2024, Downtown Los Angeles experienced a vacancy rate of 32.8%, highlighting ongoing challenges in the office market. In contrast, New York City’s office market has shown signs of improvement. By December 2024, office conditions were reported to be tighter than pre-2019 levels, marking a shift to a landlord’s market in premium spaces, where high demand has left tenants unable to move or expand. According to Cushman & Wakefield broker Mark Weiss, this recovery trend occured by sector–beginning with “elite” financial firms, commercial banks, law firms, and then technology companies. 

The 3 Phases of the Urban Doom Loop

 The “urban doom loop” describes a self-reinforcing cycle of urban decline, unfolding in 3 phases:  

1. Office Vacancies Increase: Hybrid and remote work reduces demand for traditional downtown office spaces, leading to higher vacancy rates and underutilized buildings. 

2. Economic Ripple Effects: With fewer office workers in downtown areas, local businesses experience declining foot traffic, resulting in reduced economic activity.  

3. Shrinking Tax Base: As economic activity slows, cities lose critical tax revenue needed to fund public services, infrastructure investment, and revitalization efforts further accelerating decline. 
   

Where Does the Pacific Northwest Stand?  

Cities across North America are recovering at different rates, with population trends highlighting a significant divergence between Portland and Seattle. 

Portland: Population Decline, Surrounding City Growth 

Between April 2020 and July 2023, Portland experienced a decline of approximately 22,000 residents, representing a 3.5% decrease.  

Although Portland’s population has declined, the surrounding areas have seen growth. Cities like Milwaukie, Happy Valley, Woodburn, and Vancouver, Washington, have experienced population increases, indicating that residents are relocating nearby rather than leaving the region entirely. 

Seattle: Population Growth 

In contrast, Seattle ranks as the 13th fastest-growing big city in the U.S., adding approximately 5,900 residents between July 2022 and July 2023. This represents a growth rate of 0.8%, bringing the city’s total population to 755,078. 

Ending the Doom Loop 

Urban revitalization is happening now, with focus on creating modern, appealing environments that meet tenant demands. This includes: 

1. Investing in Amenities: Today’s tenants expect hybrid-friendly, amenity-rich spaces that go beyond traditional office environments. Features like wellness-focused designs, fitness centers, rooftop lounges, and sustainability-driven upgrades create spaces that attract businesses and encourage workers to return to the office. These investments signal a commitment to both tenant satisfaction and environmental responsibility. 

2.  Creating Experiences: Downtown areas must evolve into travel-worthy destinations. By integrating mixed-use developments, hosting cultural events, and showcasing public art, cities can transform stagnant spaces into vibrant hubs of activity. These efforts not only attract visitors but also foster a sense of community and safety. 

3. Supporting Local Businesses: A thriving downtown relies on a strong ecosystem of local shops, restaurants, and services. Collaboration between property owners, city planners, and businesses can create programs and incentives to sustain these establishments. By boosting foot traffic and fostering a sense of connection, cities can ensure their downtown cores remain active and economically viable. 
   

Changing the Narrative: Bridging the Suburbs & Cities 

At its core, cities are beginning to recognize the interconnected relationship between urban cores and surrounding neighborhoods. Instead of viewing downtowns and suburbs as separate or competing entities, urban planners are shifting the narrative toward collaboration—where downtowns serve as walkable hubs that support the growth, livability, and economic vitality of their neighboring areas. 

By bridging the gap between suburbs and downtowns, cities can create dynamic ecosystems that drive innovation, attract businesses, and improve quality of life for all residents. This approach fosters a sense of shared purpose, ensuring that urban centers and their surrounding communities thrive together.