After Covid, vibrant SJ downtown a long shot?

Investments connected to America's downtowns are nose-diving, explains Heather Gillers in the WSJ, due to post-pandemic remote work influxes keeping people away from offices. Is it time to ditch turgid inclusionary zoning regulations and start converting unused office space to homes?

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....

Office buildings are only about 50% as full as before Covid-19 across 10 major metro areas, according to keycard tracking by Kastle Systems, a building-security company. Federal transit data show public-transportation ridership at less than 70% of pre-Covid levels in major metro areas.

President Biden said more than a year ago it was time for America to get back to work “and fill our great downtowns again.” Yet even in the federal workforce, more than half of employees worked remotely at least one day a week last year, according to one survey.

This article originally appeared in the Wall Street Journal. Read the whole thing here.