David Malcolm, San Diego Real Estate Expert, Discusses How Our Downtowns Are Under Siege

By  //  May 10, 2023

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Downtowns have long been the hearts of America’s cities and metropolitan areas. But, over the last few years, downtowns have been under siege, according to David Malcolm, San Diego real estate expert.

This trend has been gaining steam recently and is only getting worse.

“The ‘urban exodus’ that’s occurring has serious consequences,” David Malcolm explains. “It has wide-reaching effects far beyond just the downtowns themselves.”

Malcolm dives further into this problem below.

People Are Fleeing Urban Areas

It used to be that downtown areas of major cities were the most desirable places to live in America. They provided fantastic convenience- close to work and everyday essentials- and a great sense of community.

That started to change, slowly but surely, in certain areas by the middle of the last century. For example, according to the Hoover Institution, Detroit saw its population drop from 1.85 million in 1950 down to 630,000 today. Several factors fueled that staggering 66 percent decline.

The most notable was that as major American automakers started to fail, Detroit went with it as it was the hub for the “big three” automakers, Ford, Chrysler, and General Motors. For that reason, it would be easy to think that Detroit’s situation is isolated.

But the fact is that this trend is happening in other major cities, too. 

Between 2019 and 2021, for instance, San Francisco lost 6.3 percent of its total population. That drop outpaced any other major city’s two-year decline, notably including Detroit.

The Pandemic Accelerates De-Urbanization

One of the most significant immediate yet long-lasting effects of the COVID-19 pandemic was that de-urbanization accelerated nationwide. As people were forced to stay in their homes, they realized they wanted more space, which is hard to find in downtown areas.

Additionally, as remote work went from a temporary necessity to a long-term solution, the market for downtown office buildings was decimated. A recent Morgan Stanley report notes that vacancy rates are at a nearly 20-year high. According to David Malcolm, an expert with the highest commercial real estate designation (CCIM) in the United States who has handled sales, acquisitions, and loan negotiations of more than $4 billion, this is a major issue.

“The pandemic may have been the coup de grace for downtown commercial real estate,” Malcolm says. “This is a megatrend and has to be acknowledged as such.”

The Ripple Effect

Residents leaving downtown urban areas and the increase in empty office buildings have had a ripple effect on society in general. For example, there’s been a significant increase in the number of homeless people in these areas and attendant increases in crime.

This, in turn, sets up a vicious cycle that’s hard to break out of.

For 32 years, David Malcolm served on the board of St. Vincent de Paul Management, an arm of Father Joe’s Villages in San Diego. This experience gave him insight into this crisis.

When people leave downtown urban areas, homelessness, and crime flourish. That drives even more people and businesses out, leaving a vacuum often filled by even more homelessness.

This isn’t just a theory. For example, Whole Foods shut down one of its “flagship stores” in downtown San Francisco in April to “ensure the safety” of all employees as crime has exploded, a spokesperson for the company said.

The de-urbanization has had consequences on other industries, as well. For example, there’s been declining demand at downtown convention centers due to adjacent problems. This has a ripple effect on multiple local industries that were used to serving the people at these events.

Similarly, the value of downtown hotels has plummeted as the demand for and interest in staying there has declined.

The siege of downtown areas and their subsequent decline is a significant issue that needs to be solved immediately.

“It’s cancer on the American landscape,” David Malcolm stressed. “Finding a cure, fast, is absolutely critical.” 

About David Malcolm

David Malcolm of San Diego is an influential real estate professional, entrepreneur, and community leader with over five decades of work experience. Mr. Malcolm is an esteemed Harvard Business School’s Presidents Program graduate, a licensed real estate agent, and broker, and a Certified Commercial Investment Member (CCIM). He has run and advised multiple public and private companies and held several municipal and statewide public offices.