What to do with downtown? Officials from Washington, D.C. and San Francisco share their experiences

downtown - san francisco
Downtown San Francisco is facing many of the same issues as Ottawa's downtown core.

As local officials look for ways to breathe new life into Ottawa’s downtown core, experts in major U.S. cities have been coming up with their own ways to address many of the same issues. 

On Thursday, the Canadian Urban Institute (CUI) hosted an online panel to discuss the challenges facing Ottawa and other downtowns across North America and the opportunities for revitalization. The event followed the release of the Downtown Ottawa Action Agenda — a strategy devised by the CUI, Ottawa Board of Trade, and other local organizations — on Wednesday. 

Local officials — including OBOT president and CEO Sueling Ching, National Capital Commission CEO Tobi Nussbaum, and ByWard Market District Authority executive director Zachary Dayler — were joined by two U.S. experts, whose cities are both experiencing hardship post-pandemic. 

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Nina Albert is deputy mayor for planning and economic development in Washington, D.C. She said the U.S. capital’s downtown offices took a similar hit to those in Ottawa when employees from public- and private-sector organizations went online during lockdowns. 

“Downtown D.C. is 87 per cent commercial offices, which is a huge concentration,” said Albert. “We see that in other parts of the city that are much more mixed use — where there’s a mix of residential, office, retail and entertainment — those markets have rebounded. They’re more resilient. It’s the huge concentration of offices that is really deadening the downtown.”

Much like Ottawa, she said D.C.’s downtown also has been reliant on federal workers in the past and government return-to-office mandates have influenced policies in the private sector. 

San Francisco is in a similar position, though its primary tenant is the tech industry, said Sujata Srivastava, chief policy officer of the San Francisco Bay Area Planning and Urban Research Association. 

“Less than half of office workers are back in the office,” she said. “Our vacancy rate is about 30 million square feet, so 36 per cent of the office space. That’s a lot of inventory to try to fill up.”

Just like Ottawa, the reduction of workers has led to a significant decrease in foot traffic, which has had ripple effects for businesses and municipalities. 

“We’ve seen less foot traffic to support small businesses, so we’ve had a lot of closures,” said Srivastava. “(There are) a lot of budget implications for the local municipalities. And because of all those dynamics, transit ridership is very low. Those revenues are gone and there’s this existential crisis for a lot of our transit agencies of, ‘How do they survive?’”

Business closures have led to a “circular issue” at street level, where storefronts are empty for extended periods, making it difficult to attract new tenants. 

“There is a little bit of a perception issue when you have vacancies on the ground floor,” she said. “It depresses the market and you don’t see that type of activity happening.”

Panel moderator Mary Rowe, president and CEO of CUI, said empty storefronts can create a financial issue for cities. 

“If those storefronts stay vacant, then it starts to devalue the real estate value, which means that it diminishes the amount of property tax that can be collected by the municipal government, which actually has to provide the services that make it appealing for businesses to open,” said Rowe. 

“Lots of concerns about community safety, that if you don’t have businesses operating and there’s no vibrancy or lots of people living there, it starts to feel unsafe to people.”

Srivastava added that the pandemic didn’t start many of the Bay Area’s issues, only heightened them. Housing affordability and lack of supply have been a major challenge for years, she said, particularly near downtown and other employment centres. Cracks in the transit system became more obvious as workers lived farther from work. 

“Downtown had become so mono-centric and dependent on not just federal workers, but on the tech sector,” she said. “So (we’re) really trying to think about how we diversify the economic engines for downtown and create more affordable spaces for smaller businesses and other types of uses.”

Cities prioritizing mixed use, incentives

In D.C., Albert said the city is expecting to see a significant decline in office values in the next five years, with the city’s bottom line expected to take a hit. But not all is bleak, with economic indicators such as GDP, new business starts, employment growth and population growth all trending upwards. 

To revitalize its downtown, Albert said the city needs to match demand. With office spaces no longer drawing in tenants, the hunt is on for ways to reposition office assets to accommodate more mixed use. That means finding ways to get developers and investors on board.

“We already have a housing conversion incentive program that we published and are taking applications on, but we’re getting more aggressive than that,” said Albert. “We are now trying to incentivize office to what I call ‘anything that is productive.’ Office to trophy office, office to hotel, or something else that you might come up with. We will entertain all of that and entertain that conversion.”

A “trophy office” typically represents a level of prestige and quality that surpasses Class A spaces.

She added that capital cities such as D.C. and Ottawa often have unique assets as well as an international brand and presence that can be leveraged to draw in both tourists and new residents. 

“How do we leverage and play off of that?” she said. “Is there a community where there’s existing demand for these spaces? The artist community, is it looking for space now? And how do we also go after local businesses who couldn’t have afforded a retail space for that opportunity?”

To help incubate small businesses, Albert said the city has started offering grants to help them invest in those spaces. 

“We’ve got a … $5-million program for next year,” she said. “These grants don’t always have to be big. They can be quite modest.”

Similar efforts are underway in San Francisco, according to Srivastava. To achieve the transformation the city wants, she said removing barriers to getting projects underway has been high on the priority list. 

“There have been a lot of changes that have helped to create some momentum, making it easier to convert some of those obsolete spaces into residential units,” she said. 

But work remains. 

“On the financial incentive side, we still don’t really have a conversation here in the Bay Area about what we’ll do to help the market recover,” she said. 

While low real estate values create challenges, she said there could be an opportunity to take advantage of lower costs to start addressing affordability issues. 

“We have a lot of opportunities to think about how we experiment with some lower cost commercial space,” she said. “Can we do something creative, like artist housing or more small business spaces? We’re thinking a lot about sea level rise, particularly for the waterfront. How can we leverage some of the infrastructure in the downtown area and eastern waterfront to create new spaces that make the downtown more attractive to people?”

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