PRESENTED BY JUNIPER SQUARE

Propmodo Daily

By Nick Pipitone · Apr. 4, 2024

Greetings!

Today’s email is presented by Juniper Square, an investment management platform for commercial real estate. Check out their new podcast: The Distribution, where some of the biggest names in commercial real estate have open and honest conversations about what’s happening in real estate and private markets.

Cities like D.C. are pouring millions into downtown revitalization efforts, hoping to attract businesses and residents. But rising crime concerns and sensationalized headlines create a persistent fear factor that undermines real estate appeal. In today’s email, we look at whether or not these cities can create a sense of safety that matches their vision for a vibrant downtown.

Also, the pandemic raised employee expectations for workplace comfort and inclusivity. To attract workers back, companies like Cushman & Wakefield are prioritizing employee-centric design. Their new Boston office, shaped by employee feedback, offers diverse workspaces, natural light, and a focus on inclusivity. Check out our article about how this shift reflects the evolving needs of the post-pandemic workforce.

Plus, this week Propmodo Technology delves into the realm of capital project management. We're exploring how advancements in technology are transforming the management of commercial construction expenses, the role of green loans in funding energy-efficient improvements in buildings, and the growing acceptance of C-PACE financing.

Now, let's dig in!

How the Perception of Crime Is Impacting Downtown Renewal Plans

Washington, D.C., is unveiling plans to revitalize its downtown, which has yet to recover from the pandemic. Over the next five years, D.C. will spend $400 million on its downtown district to encourage new housing construction and improve streetscapes, parks, and open spaces. Another facet of D.C.’s Downtown Action Plan will focus on public safety, a growing concern in many cities.

D.C.’s plan proposes a safe commercial corridor grant program, legislation targeting organized retail theft, and the establishment of ‘neighborhood safety centers’ where first responders will be stationed. The D.C. Council also recently voted to advance a massive crime bill that would change policing and punishment, including introducing new felonies, among other things.

Other cities are also getting tough on crime. In Chicago’s recent mayoral primary, Paul Vallas beat incumbent Lori Lightfoot after running a campaign heavily focused on fighting crime. Public safety concerns in New York City’s subway system recently led Democratic Governor Kathy Hochul to deploy 750 National Guard members to assist the NYPD at entrances of busy train stations.

Since the pandemic, a new urban public safety focus has emerged. The perception of urban disorder is amplified by relentless media coverage focusing on shocking, high-profile incidents. This impacts the real estate industry directly and indirectly. Employers seeking to get workers back to the office in downtown areas need them to feel safe. Perceptions of crime also impact where people live and where they spend their money.

More than 1.2 million residents fled the nation’s largest urban counties between July 2020 and July 2021. Not all of these residents have returned. The migration outflows from cities were mostly due to rising housing prices and COVID-19, but increased crime may have also been a factor. Crime also affects property values. Research from the Center for American Progress shows that a 10 percent reduction in homicides leads to a statistically significant 0.83 percent increase in a city’s housing values the following year.

Are major U.S. cities really as lawless as sensationalized headlines suggest? Crime data shows a more nuanced picture. The Brookings Institute researched crime trends in four cities (Seattle, New York, Philadelphia, Chicago) and reached some interesting conclusions. The national murder rate was 34 percent higher in 2022 than it was in 2019, but it was at about half of its historic peak in 1991. The rise in homicides between 2019 and 2022 was also primarily concentrated in disadvantaged neighborhoods that already had high rates of gun violence.

While many fear increased crime in downtown districts, these areas account for a minuscule share of citywide crime. Between 2019 and 2022, downtown Chicago accounted for less than one percent of the citywide increase in violent crime. Center City Philadelphia accounted for less than one percent of the city’s violent and property crime spike in that period.

Brooking’s research notes that even small increases in crime in downtown areas impact people’s perceptions. The problem is that the narrative of urban disorder can starkly impact public policy and affect voter behavior. Local leaders feel pressured to pursue public safety solutions that are sometimes not supported by evidence and inadvertently damage communities.

NYC and Philadelphia officials are considering a return to controversial ‘stop-and-frisk’ policies, which have questionable outcomes and can violate civil liberties. More aggressive crime-fighting approaches rarely address the social and economic roots of crime, but they at least work in the short term to satisfy the demands of voters who want to see something being done.

People deserve to feel safe, and the impact of the pandemic has led to disruptions that have made some cities feel more dangerous. However, the perception of crime doesn’t always match the reality, especially in downtown areas that are statistically the safest areas of most cities. Unfortunately, the perception may matter more than the facts. Cities like Washington, D.C., will target crime downtown regardless of what the data says. For better or worse, the tough-on-crime approach probably isn’t going anywhere soon.

PRESENTED BY JUNIPER SQUARE
The Distribution: A Podcast by Juniper Square

The Distribution by Juniper Square, hosted by Chief Real Estate Officer, Brandon Sedloff, sits you down with some of the biggest names in commercial real estate for open and honest conversations about what’s happening in real estate and private markets.

Past guests include:

• Sonny Kalsi, Co-Chief Executive Officer of BentallGreeonOak

• Mark Gabbay, Global CEO of LaSalle Investment Management

• Sabina Reeves, Chief Economist & Head of Insights & Intelligence at CBRE

• Michael Phillips, Principal & President of Jamestown

• Bob Hart, President & CEO of Tru America

And more!

Listen to The Distribution by Juniper Square on Spotify, Apple Podcasts, YouTube, or wherever you get your podcasts.

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