Are Cities Or The Suburbs Better For The Economy? | CNBC Marathon
The way the suburbs were built was a big mistake. Housing affordability is the primary challenge in the marketplace right now, and frankly, it's going to get worse. We can't afford to live in this city if you're a working class New Yorker.
Make houses more attainable for people. For too many years, the United States has not produced enough housing to meet the demands of a growing nation. People are moving out of the city. They're buying bigger
houses. Life is better spent live. Just think about how much better it was when you were around other people. That's what cities are delivering. America's real estate industry is racing to build more homes, but builders are losing confidence in the market. Housing affordability is the primary challenge in the marketplace right now, and frankly, it's going to get worse as interest rates increase.
The cost of housing far exceeds what some of the essential employees workers need in order to have housing. Architects say that these and other concerns could ease over time with better planning. Suburban retrofitting has the potential to transform people's lives. What started as a fantasy concept for vacationers is now hitting Main Street USA. Developers call them mixed use districts or master planned communities. The Howard Hughes Corporation just announced its purchase of 7000 acres 30 miles outside the city for a master planned community.
These new neighborhoods bring people closer to stores. The change could chip away at the country's larger issues. The central thing that everyone building suburbs fails to grasp is that this is a great one life cycle product. It's really not a multiple life cycle, regenerative kind of thing. Can master planning solve the nationwide housing supply shortage, and what would it mean for the future of America's suburbs? The first thing to know is that nearly half of the renters in the country are struggling to pay their bills. We know that the laws of supply and demand drive housing prices.
For too many years, the United States has not produced enough housing to meet the demands of a growing nation. The second thing to know is that more people are moving away from major cities to places like Fairfax, Virginia. I'd like for us to make houses more attainable for our people. Evelyn Spain is a planning commissioner for Fairfax County, Virginia.
It's a popular suburb outside of Washington, D.C.. Fairfax County has over a million people. So you can imagine there's a lot to learn and a lot to apply to make life equitable and inclusive. Fairfax County is in many ways typical. It's still the, you know, single family home community, but it's changing a little bit.
The American city has been amazingly dynamic, despite powerful built-in limitations on land use. Thinking about that old model of a dense core where everybody works, that's a 20th century, if not a 19th century model. June Williamson has studied these new developments for over two decades. She calls them suburban retrofits.
Part of what's driving retrofit is the understanding that this kind of growth machine paradigm that was pursued somewhat aggressively in the 20th century has kind of stalled out. And the rush to outlying areas has often been so great that the congestion of the highway has become as bothersome as the congestion of the city. These preexisting properties that aren't generating the tax income that they had in the past but they've already been heavily invested in can be very carefully rethought and have new things layered into them. Among several of the highlights in her book is the Mosaic District. It feels less like a parking lot and more like a college campus.
The developers there thought about making a better mix of uses and really making a destination that had a much higher percentage of public open amenity space. And part of this was in recognition that people can now shop at home and click on their computers just to have things delivered to them. But what's really missing is the opportunity to have social engagement with other people. If you walk through these new neighborhoods, it'll feel nice. Maybe too nice.
You know, gentrification is often a word that's used by people who are saying, okay, we're looking at this construction activity and we're thinking about cost concerns or traffic concerns and the like, but to young households, construction is the way that you add those homes of the future. And so a complaint that's often made is, well, you know, it's typically higher end housing that tends to be built. Well, the challenge is it's impossible to build 20-year-old apartment buildings. The only way to get 20-year-old apartment buildings is to build t oday.
In places like Fairfax, long term residents risk being pushed out to make room for new development. We also need to make housing more affordable for our aging community so they can age in place. Some of the most popular trends in city planning started in retirement communities.
Developers call them master plans. I think the defining characteristic of a master planned community is a sense of neighborhood. Even Walt Disney had an idea for a new neighborhood that better mixed technology and daily life. But Walt never saw his idea realized.
However, in the 1990s, the Walt Disney Company assembled a team of city planners, which in turn created Celebration, Florida. This neighborhood has 26 miles of walking trails and an open air shopping center. There are about 10,000 residents in the community.
Disney recently announced a major expansion in this space. The idea has been so popular that copycat retirement communities sprang up all around Florida. Today, the fastest selling master plan community is nearby. It's The Villages. That's also the fastest growing metro area in the entire country. Companies like Blackstone have poured
billions of dollars into real estate too. Blackstone's privately held real estate investment trust is spending big to repair old apartment buildings. And it launched a $1 billion affordable housing fund. Other investors like UMH Properties sell manufactured homes. The CEO says that taking production offsite saves a lot of money. Everything is based on location, age of community, all those things.
But we're capable of providing the brand new houses. Low as $900, $950 per month. Investors are pouring money into these neighborhoods because they have hidden benefits. Take a look at this chart to see why.
It's comparing the maintenance costs for a typical commercial lot versus something more like the Mosaic District. From the government's perspective, it's a no brainer. The smart growth is more cost effective. Still, these new designs are just a small share of the overall housing market. If you're thinking about the traditional master plan community, the big suburban development with thousands of units, that's only about three and a half percent of total single family start.
So it's a small share. Teardown construction, 6%. Two thirds of the home construction in this country is undertaken by small, privately held companies. And they don't get a lot of attention. They're the ones out there building townhouses, building duplexes, doing teardown construction and remodeling our aging housing stock. Smaller developers like James Rouse brought master planning to the middle class with suburban cities.
The developer created Columbia, Maryland, a city full of master planned communities. The ten villages that comprise the city surround a big mall. People spend more time in a mall than they do anywhere else except home. More than they do in church, more than they do in school.
Is that good or bad? Well. The problem that the New Urbanists were trying to solve was really how to stop making bad suburbs. How do we create a better version of this thing that we're out building? The central thing that everyone building suburbs fails to grasp is that this is a great one life cycle product. It's really not a multiple life cycle, regenerative kind of thing. The financial community believes that adding housing to older shopping centers could have a meaningful impact, both for their bottom line and for the public good. Dead malls and sleepy retail districts have
become a common issue in America. I think we often neglect to recognize that we actually have created a development pattern that is a throwaway development pattern. It is a one generation of success and prosperity. And then essentially we walk away from it and allow it to go through a cycle of decline.
Maybe if it's located well enough, we'll do some heroic thing to rescue it. But we're basically just allowing it to fall apart. That comes with all kinds of costs, related costs, social costs, political costs, cultural costs, economic costs. Charles Marone has compared U.S.
land development to a Ponzi scheme. He made this chart to summarize the problem. After one or two life cycles, infrastructure maintenance costs add up, sinking public budgets. That can put local governments in a tough position. They have to either add debt or raise
taxes. Planners believe that there's a better way. So it's really about diversifying these places and adding other choices for which we believe unmet demand does exist. Whether it's a medium density townhouse community that's more of an urban village or a suburban exurban master planned community that has a large amount of housing, these are all ways of capturing economies of scale from the development and the construction perspective.
If you have a business that has a bad business model, will growth help it? Yeah, growth will help it next quarter, next year, like growth is going to help. But unless you fix that, business model it's really just going to bankrupt a lot more people. Marone believes that towns across the country have been covered by bailouts from higher levels of government. For example, federal spending covers the cost of capital for road building if you bring a highway to your neighborhood. As a result, Northern Virginia looks like this. And those highways impact more than the budget.
Commercial developers have long tried to build neighborhoods that encourage walking over driving. There are many reasons for that. Sedentary lifestyles associated with suburban form produce heightened risks of obesity and diabetes, dying in car crashes, developing addictions and modest amounts of physical activity, which can be encouraged and supported by how we build places and plan them are a really low cost cure. Still, one development can't change the status quo. The Mosaic District is still in an excerpt. The legacy of road building in Northern Virginia has made it unsafe for pedestrians in some cases. The local planning commissions want to make walking safer.
What if a person has trouble walking? Or what if a person has trouble hearing? How do they gain access to these new opportunities, to the new housing that's coming in place in our communities? Things like that, we need to be more aware of. While these new suburbs have rolled out across the country in recent years, homebuilders are looking at a tough market ahead. They say that sourcing quality labor and building materials has never been more difficult. Housing affordability is the primary challenge in the marketplace right now, and frankly, it's going to get worse as interest rates increase this year.
The ability to build with density, to build with scale, are ways that you can bend the cost curve in the right direction and add more housing to the market. The reality is, is we're going to have fewer road miles two decades from now than we have today. We're going to have fewer streets, fewer pipes, fewer things that we have to maintain because they're going to fall apart and we're not going to fix them because we don't have the money.
Still, many are searching for solutions. I think it really is important to have that longer time horizon in mind so that we're not arguing about our past values and desires, but but about the future. Of course, design matters. A skilled architect, a skilled urban designer can introduce these different housing types and have them blend in and appear very compatible with detached standalone houses.
But to be inclusive, we need to think about everybody and how everyone is going to be affected by the new development here. Between remote work and the pandemic, more people in businesses are moving to the suburbs. The de-urbanization trend, that's a real thing. People are moving out of the city. They're buying bigger houses.
We have seen that the housing market was incredible in 2021. The pandemic itself, it has changed housing preferences and location preferences. America leads the world in suburbanization. I think the U.S. is distinctive in that
suburbanization has been particularly large in magnitude here in the United States. It's creeping up again, of course. But there's an opportunity here to rethink some of those patterns and reset the norm.
I think the way the suburbs were built was a big mistake. The cities needed to get bigger, but they should have been built very differently. To combat the economic challenges of sprawl, some suburbs are building up rather than out. Where we build housing, where we don't build housing, and what kinds of housing we build have big implications for the economy, for climate, and for patterns of racial and economic segregation. The roads in the sprawling suburbs contribute to the nation's $1.2 trillion maintenance funding gap.
How else does suburban sprawl shape the U.S. economy? Over centuries, developers built mini homes in a pattern that experts call suburban sprawl. The farther out you go from the center of the city, we tend to build lower buildings, shorter buildings, more spread out and more space.
It gives a little bit more of the illusion that you live off in the country, far away from other people. This style of housing is the foundation of the American suburb and the American dream. The one thing it does enable people is to kind of escape the city. So there is a benefit to the cost and
individuals are deciding based on their private benefits and costs and making a decision they think is optimal. Sometimes that can have negative externalities for the rest of society. The New Deal of the 1930s sped up suburban sprawl in the States. The bill created a Federal Housing Administration which standardized neighborhood design. It made mortgages more affordable. And Fairless Hills is typical of the growing new community.
The FHA guidelines made country style living a middle class reality. They also created problems. They prescribed rules to get an FHA loan.
No sidewalks, curvy streets, dead end streets and made it hard to walk. They also enforce a minimum lot size, which spreads people out and inflates the scale of the suburbs. If that's an expensive community with expensive land, it means that the price of buying into the community is going to be very high.
That means automatically the only people who can afford to move in there now are people who are pretty wealthy. A large minimum lot size doesn't say no Black people or no Latinos can move into the neighborhood. But it turns out that income and wealth are really strongly correlated with race, in part because of longstanding discrimination. Many suburban towns also separate land by use. As a result, homes are generally far away from industrial and commercial areas.
Local governments adopt this so that they have some control over what gets built where. But it also can make it difficult to build the housing that people want to live in, in places they want to live. These guidelines were formalized with zoning laws. These are sets of regulations. There are subdivision codes, as well as just regular zoning codes that exist in most municipalities across North America that provide a framework for what you can and can't build. And these are used as planning tools. Restrictive zoning codes have long limited the supply of land for housing in cities like Minneapolis and San Francisco.
Many workers in these cities haven't been able to buy or even rent homes near their jobs, which slows economic development. These old trends are still shaping development today. It was in the 1940s when the United States population crossed that threshold from being predominantly rural to predominantly urban.
And all of the growth since then has really been a shift from rural to suburban. And since the 1960s, people have been trying to modify the zoning to let people mix uses and have stores, apartments, offices, all mixed together, which is what lets you have these sort of lively neighborhoods. In recent years, neighborhoods outside of cities with large job markets have boomed while the population in America's heartland declines. As a result, the maintenance costs associated with suburbia are adding up.
When a suburb grows, the tax base within the nearby city is expected to decline. Which reduces its ability to fund local public goods, including schools, including policing and so on. And so those individual decisions, even though they can be good at the individual level, can have externalities for the city as a whole.
So the spread out development that's typical of the suburbs, it entails higher per capita government costs relative to the denser urban areas. If you're building roads and sewers and all of the houses are located half a mile or a mile away from one another, you need more asphalt and more concrete and more pipes. Suburban towns often struggle to finance their long term infrastructure costs. And population growth nationwide has slowed to 0.1%, a record low. That means that the financial pressure on suburban towns is mounting. All of the declining cities in the Midwest face this problem that they just don't have the income from their current tax base to pay to maintain something that they built 50 years ago when they were three times the size.
So new, so powerful, so revolutionary is this force that we have hardly been able to appraise its influence. Federal spending can hide the true cost of suburbia. Local governments use property taxes in particular to pay for a lot of these costs. So if you've ever wondered why do you have potholes on your neighborhood street and not potholes on the interstate it's because they're paid for by different levels of government. America has a $1.2 trillion funding gap for upkeep of
roads, bridges and tunnels. The American Society of Civil Engineers says new spending in 2021's infrastructure bill helps, but it doesn't cover the full costs. If further improvements aren't made, the country's failing infrastructure could cost each family over three thousand dollars a year by 2039. Another problem? People don't realize how much of their income goes to their car.
In the past, the suburbs became more popular as cars fell in cost. To take account of inflation and once you take account of the rise in people's incomes, the real cost of car ownership today is lower than it was. Of course, if you get a frontier car such as a Tesla, which has features which weren't available in the 1950s, you can pay a lot of money and it can be very expensive.
Since the 1990s, households have increasingly relied on credit to finance their cars. AAA says the annual cost of vehicle ownership has risen to nearly $10,000. Making matters worse, the 2008 recession has destabilized many suburban households.
On average, people in the suburbs are now employed at lower rates and have declining incomes. Home prices have also been subdued when compared to central cities. Some call it the suburbanization of poverty. There's typically a greater availability of land in the exurbs and the land and housing that's on it also tend to be more affordable. Experts say remote work and tasteful planning could make the suburbs better. New growth and density could be directed through redevelopment and infill projects.
There are so many of these surplus properties out there. Many of these infill projects place residents closer to commercial areas, which could create opportunities for entrepreneurs. If we focus on millennials, for example, they have things that they really like. They have bars, r estaurants. So some of those preferences they carry with them. And so what that creates, it creates opportunities for someone to open up a business that caters to these needs.
And I think that sort of plays a big role in that shift of employment to the suburbs. Experts say the most affordable suburbs are often also the least sustainable. So, for instance, a metro like Atlanta or Phoenix has managed to keep housing fairly inexpensive over the last 30 years because they just build a lot of housing and they build these huge subdivisions 10,000, 20,000 homes on very inexpensive land that's essentially, you know, farmland that's undisturbed.
On the flip side, of course, we know that there are terrible climate impacts from building. So there really is a tension. You can see that very clearly in California. You see how close those flames are to these houses. Home prices in the large urban metropolitan areas were so expensive that people started moving out, moving into the more wooded areas. And then you see these wildfires and they're not going away. In fact, they're getting much worse.
Meanwhile, suburban drivers on belt ways are shaping the climate of the future. It's really in the kinds of suburban settings that we would characterize as sprawling, separated uses, car dependent, relatively low density, this is where we see a more extreme emissions use. Most U.S. emissions come from personal cars. Commutes lengthened as the country sprawled in recent decades. So going back to 1970, around 81% of residents lived in the county where they worked, and that declined substantially over time by the year 2000. If remote work persists, it could take some drivers off the road. Home appliances are another huge source of
emissions. Definitely, when you see more sprawl in the suburbs, you're seeing much more carbon emissions out there than you would in one large building in a city. The U.S. has committed to eliminating carbon emissions from electricity by 2035.
But in that time period, researchers expect U.S. auto emissions to remain flat. That's mostly due to suburban drivers. But there's an opportunity here to rethink some of those patterns and reset the norm. So what can be done to improve residential development in the states? Many regions are tackling sprawl head on. In Montgomery County, Maryland, outside of Washington, D.C., 85% of the available land has
already been developed. The county revised its master zoning code to increase the supply of homes along a forthcoming light rail path. This is a suburb to suburb rail line. You see them in other countries. Paris has an enormous project underway, but for the United States, it is really one of a kind. Leaders hope the improvements will take 17,000 daily drivers off of suburban roads.
Experts say that expanding public transit can make a community more equitable. Traditionally, lower income communities have benefited disproportionately from public transit options. But funding and executing such projects is a feat. Residents are paying for the $9 billion suburban D.C.
rail project with an increased tax on gasoline. President Biden's economic council wants to encourage more changes like this. They have called for a $5 billion grant program to fund communities that abolish restrictive zoning codes. One thing to remember is that every part of the country has some walkable, mixed use places that feel like sort of a main street. And we don't have to invent this for real. We've already done this. Just recreate what we used
to do. And so that's where we are now that the kinds of beautiful, scenic, small towns mixed use, walkable streets that we remember and we like to visit as tourists preexist zoning codes and in many cases could not be rebuilt again if you wanted to do it from scratch without significantly revising the zoning. Other parts of the world are experimenting with zoning reform, too. There's been some very interesting work in the city of Bogotá documenting how a rapid bus transit network had uneven effects on low and high income workers in that city. Another study found that changes to the code in São Paulo, Brazil improved the quality of life for renters with college degrees.
But those changes also greatly sank home prices, affecting landlords. In America, homebuilder stocks have wavered as the Fed weighs interest rate hikes. A rising rate environment is going to be very difficult for home buyers. It just takes away from potential buyers purchasing powers.
It means they either can't buy a home or they can buy less of a home. And we know that the entry level housing stock is the leanest it has ever been. Suburban sprawl will determine much about the American economy for the foreseeable future. The development choices made today last for generations.
So it seems as though over the medium term, the deck is basically stacked in favor of the suburbs and against dense urban cores. Ultimately, people are making those decisions for a reason, and it reflects a very kind of fundamental economic force that you see in many places around the world, in many different institutional settings. You know, it took really 50 or 75 years to make the problems of the suburbs, and it takes a long time to undo it. A cost of living crisis is unfolding in America's major cities.
We can't afford to live in this city if you're a working class New Yorker. The problems are acute in downtown Manhattan. One bedroom units are renting for nearly $4,000 a month on average. There's a reason people are willing to pay. It drives you and it motivates you. And it keeps you hungry. It keeps you always thinking
because, no matter what, you know there's somebody out there hustling more. There's somebody, inventing something new. You can never become complacent. That's what's so beautiful about this city. People have returned to cities to see their friends and have a good time. That's pushing rents to new highs in places like Los Angeles, Chicago and cities across the Sun Belt.
While renters have returned, many commuters haven't, despite the return to office push from major companies like Goldman Sachs and JPMorgan. More days at home could help workers escape high city prices and long commutes. But there could be a cost to that decision.
I think it's really hard to form high quality new relationships remotely. I think it's easier to maintain existing connections. There's just something about meeting in person that you can't replicate virtually. During the pandemic, we saw some jobs where it could be done remotely. However, new hires dropped dramatically,
about 40% for over a year and a half. This is really compatible with a view that firms had trouble onboarding new workers because it was difficult for them to learn. As prices keep rising across the country, we ask, are American major cities like New York still worth it ? The biggest benefit of cities are the people. Being close to others in your field of work can unleash powerful benefits.
Economists call this the theory of agglomeration. When there's a concentration of an industry in the city that can make those firms and people more productive. You know, New York City is a good example.
You have this variety of restaurants that you just can't have in a population of 50,000 people. There's long been a hypothesis of agglomeration economies, which just means that we get more productive when we are enmeshed in a maelstrom of economic activity, both because we can buy and sell, we can find workers to hire, we can find employers to hire us, and we can learn from one another. Within large cities, the benefit that you have is the diversity. It's the diversity of people, the diversity of culture. It's the diversity of ways of life.
And I think that is not what is always present in smaller cities, but I think that is an individual choice on the person to decide if they want to stay in a larger city or not. Evin Robinson runs America On Tech, a nonprofit that teaches young professionals how to code. They have offices in Los Angeles, Miami and New York City. We're looking at it from a data perspective about where are most underestimated communities located. And that happens to be within or in proximity of the largest cities.
Opportunities like this are one of the big benefits of cities, and it's what makes many consider them to be worth it despite the costs. But in the age of remote work, Sun Belt cities are poaching talent from the old titans in Silicon Valley and New York. People are fleeing g overnments and places that they're not wanted or they feel that they're not wanted, or where they're being taxed to death. A lot of these tech companies, they're saying, Oh, yeah, you can work remotely. But, you know, in
many cases they're also saying like, we're not going to pay you quite the same amount. Making it in any major city has never been easy. I always wanted to come into Manhattan, be a businessman in Manhattan. You can say anything negative you want to say. There's a lot of negative things to say about this place. It's a financial epicenter of the
world, and it drives you and it motivates you and it keeps you hungry. It keeps you always thinking. That's the exciting part, right? And I'll be honest, actually, that's what the city has lost the most with COVID, is that it's lacking that energy. You walk around, you don't feel that energy. You don't feel that buzz. Before the pandemic, Manhattan could more than double in population during working hours. You're looking at a visualization of data that was collected by NYU's Wagner School in 2012.
Although this hasn't been updated since the pandemic, we can clearly see Manhattan's heartbeat has changed since then. Foot traffic plummeted during the darkest days of the pandemic. At one point, consumer spending fell more than 50% across Midtown. The business community hopes that eventually those vacant storefronts get new tenants. Where I am most fearful is the retail space in the business districts in the Grand Central area. You have about a 30% vacancy of all retail spaces. At best, we'll have two thirds of pre-pandemic
level foot traffic in Midtown moving forward. Spending from high skilled workers has kept major cities afloat through the years. Tech workers in particular have clustered into about eight major U.S. cities, raising issues of affordability in each. Prospects for the software engineers and data scientists in this cohort remain strong. For example, the median worker at Google made over $270,000 a year in 2020, according to SEC filings.
Other workers fare pretty well too. The purchasing power of these specialists can shoot prices upward for housing and other goods. Silicon Valley is kind of maybe the most famous example where, you know, it's really costly to live and there's a ton of regulation and yet software companies seem to continue to locate there. And a lot of that is because of agglomeration economies. If these workers leave the usual major cities, it could fundamentally change the economy. The ability to serve a latte with a smile was a path towards a steady paycheck.
Now, when people stop going to work downtown, those jobs disappear. If we have a shift to hybrid work, maybe that will mean fewer people in the offices. But you'll also see commercial rents going down, and you'll see younger, scrappier firms replace older and more staid firms that have sent their office workers home. Hopefully, those younger, scrappier firms will continue to demand things from the urban service workers and provide opportunity for Americans who start with less. I am more worried about cities like Cleveland and Detroit that started on the edge of of survival, where a decline in demand for offices can really mean just increased vacancies, which then spill through the urban service economy. The surge of people into major rental markets masks the sluggish return to normal in downtowns.
Demand is still strong for city life because, well, it's fun. In 2018, the most recent year with data available, New York City had nearly 20,000 restaurants and over 2000 bars. I mentioned kind of the diversity of restaurants, but there's also the mating market, right? Like young people want to be in a market where they have other young people to meet and friends, right? Like we're kind of inherently social creatures and a density of social connections, which cities provide, is going to continue doing that going forward. But those connections will cost you. Quite honestly, the cost of living here has only gone up. It has not gone down.
Quality of life has gone down in many ways. Rent hikes are hitting some previously affordable neighborhoods. Grocery prices are rising, too, squeezing even the most frugal people.
Economists believe that returns for living in a big city have flattened for less skilled workers since the 1970s. Cities should become fairer places. While cities are relatively good places for adults, even for adults who don't have fancy degrees because there are these urban service sectors, they're really not great places for poor kids. As the likelihood of recession increases, leaders are trying to manage rising inequality. What we are announcing today is the largest i nvestment in the city's history in support of vulnerable New Yorkers experiencing homelessness on our streets and subway. I think that that is the most important thing to getting people back here.
You know, there's a significant decline in ridership on the subway. And a large part of that is if people can avoid taking it, they will. Transit ridership in New York remains well below pre-pandemic levels. If this trend continues, it could impact the quality of service down the line.
It is absolutely true that public transit becomes safer when there are more people who are taking it. This was Jane Jacobs's fundamental insight that in fact, having more people around makes places safe. The available data suggests New York is still much, much safer than it was during the 1970s.
It may become slightly less safe, but they're still the best means to get around New York most of the time. Urban living today looks like a long commute to the office that may feel unnecessary. Or working remotely from a cramped and expensive apartment. This makes a return to the city seem like a raw deal for many people, especially if they can do their jobs from home. What is permanent about the pandemic? And what we thought was probably permanent was this change in the productivity of remote work.
There is always a sort of curve for the adoption of new technologies. We would have gotten all these technologies fully adopted eventually, but the pandemic accelerated it. The theory of agglomeration shined in the late 20th century when fax machines and paper dominated offices. It'll be tested in an era of hybrid work. Our staff is coming into the office 1 to 2 days a week. What we have seen is that this creates more flexibility, this creates more morale within our team and more work life balance.
I really think going forward, hybrid work is here to stay, but so is very much face-to-face contact. It was exactly in the industries that were most capable of enabling remote work prior to the pandemic, like information technology, like Google. They bought a million and a half square feet in downtown Manhattan, even though if they really wanted to enable remote work, they could have enabled remote work. So are cities still worth it? If you're 23, 24, 21, especially, this is the time to invest in your career and you can always come back to where you want to live. You're just going to have more options about where you want to live if you invest in your career now and make yourself a more productive employee. Cities, especially a city like Manhattan, is 100% still worth it.
You see a lot of people come here and they go by every penny they have just to enjoy the experience of living here for a couple of years. And the major banks are going to pound their chests. They say, get back to work, be here five days a week. You will lose talent if you force people to come in five days a week. While you've seen kind of this migration of a lot of individuals leaving major c ities into smaller cities, majority of the population doesn't have the opportunity to move.
And I think during a time of uncertainty it's important that we're making not only strategic investments but meaningful investments into communities that need it most. Just remember that life is better spent live. Just think about how much better it was when you were around other people.
That's what cities are delivering. Where people are moving up and down all over the place, you have the opportunity to learn from them, from their mistakes and from their successes. Good luck to you.