American Cities Are Starting to Thrive Again. Just Not Near Office Buildings.
Neighbourhoods are benefiting from remote work
3 min
While office towers sit empty and nearby businesses struggle to pay their bills, residential neighbourhoods in America’s biggest cities are bustling again.
The pandemic and remote work have done little to dent the overall appeal of cities such as New York, Chicago and Los Angeles, foot-traffic and rent data show. Instead, the pandemic has shifted the urban centre of gravity, moving away from often sterile office districts to neighbourhoods with apartments, bars and restaurants.
“We’re now back to what cities really are—they’re not containers for working,” said Richard Florida, a specialist in city planning at the University of Toronto. “They’re places for people to live and connect with others.”
At the height of the pandemic, some analysts predicted that big cities would enter a downward spiral as remote workers sought more space and cheaper places to live. That happened to some degree early on, but it didn’t last. While big metropolitan areas lost population during the first year of the pandemic, partly because of a drop in immigration from abroad, the losses have since slowed or reversed, according to a Brookings Institution analysis of census data.
Many residential neighbourhoods benefit from remote work. As people spend more time at home, they frequent local shops, gyms and restaurants, boosting the economy of places such as Brooklyn, N.Y.’s Ditmas Park and Williamsburg, as well as Washington, D.C.’s Georgetown.
Data from Placer.ai, which tracks people’s movements based on cellphone usage, shows a stark divide between office and residential districts. In Downtown Los Angeles, visitor foot traffic is 30.7% below pre pandemic levels, while Downtown Chicago’s visitor foot traffic is 27.2% lower. By contrast, in the residential areas of South Glendale and Highland Park near Los Angeles and in Chicago’s residential Logan Square neighbourhood, visitor foot traffic has been rising and is nearly back to pre pandemic levels.
Food delivery also illustrates the shift. In 2019, almost 95% of New York City corporate lunch orders came from the city’s business district, according to food-order app Grubhub. This year, it is down to around 85%. In Chicago, the central business district accounted for more than 80% of corporate lunch orders in 2019 but just over 60% this year.
Rent data, meanwhile, attests to strong demand for city living. In Manhattan’s Greenwich Village, median housing rent was 30% higher in April 2023 than in April 2019, according to Jonathan Miller, chief executive of real-estate-appraisal firm Miller Samuel. In the Brentwood neighbourhood of Los Angeles, the median rent is up 63%.
Big cities still face serious challenges. Vacant office buildings leave downtown shops and restaurants with too few customers, while falling commercial building values threaten property-tax revenues.
“The increased vibrancy of great urban neighbourhoods will never be enough to offset the decline in property-tax revenues caused by remote work and the falling values of commercial office buildings,” Florida said.
Housing shortages have pushed up rents. In the long run, replacing offices with apartments can help revitalise urban centres, but that will take time. Conversions are also often tricky and expensive. Crime is up in many places. San Francisco in particular has been slower to recover and its retail has come under pressure.
Still, anyone walking through New York’s Jackson Heights or Silver Lake in Los Angeles looking for a deserted hellscape will be disappointed.
In Manhattan, the pandemic ignited a retail renaissance in the Soho neighbourhood, with availability there now at its lowest level since 2014, according to real-estate services firm Cushman & Wakefield.
“Before the pandemic there was a disconnect between landlord expectations and what tenants could pay,” said Steven Soutendijk, executive managing director for the firm’s retail division. “Covid sort of shook that up a little bit, in a good way.”
Andrea Loscalzo, owner of the Italian restaurant Salumeria Rosi in Manhattan’s Upper West Side, said his eatery is as busy as before the pandemic. Many regulars left the neighbourhood and never returned, but young professionals in their 30s and 40s moved in to replace them, he said.
“Even as families decamp, New York’s magnetic pull on the young and the talented is now more than ever,” Florida said.
In Chicago’s central business district, retail vacancy rose to a record high of 28% last year compared with about 15% in 2019, according to Stone Real Estate, a local brokerage. Crime in the city remains a concern, and in April, Walmart said it would close four of its eight locations in Chicago after annual losses nearly doubled in five years.
The city’s residential and tourist neighbourhoods are performing considerably better. In River North, which has a mixture of residential, office and hotels, retail vacancy dropped by more than 2 percentage points, driven largely by the strength of its restaurants, said John Vance, principal at Stone Real Estate.
“The city blocked off some streets to traffic so we could have expanded outdoor dining,” Vance said. “River North feels vibrant.”
Lakeview, a neighbourhood within walking distance of Lake Michigan and Wrigley Field, is bustling with young residents, families and Cubs fans, said resident Naomi Polinsky. Its restaurants and bars were packed on a recent Saturday night.
“We walked next door to the sports bar, and there was not a single place to sit. We walked across the street to the wine bar, completely crowded,” she said.
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From making unpopular decisions to learning when to listen, leaders from five businesses reveal what nobody prepared them for — and how running a company has challenged their expectations.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Elon Musk is exploring a potential merger between Tesla and SpaceX, a deal that could reshape the future of AI, robotics, autonomous vehicles and space technology. With a combined valuation potentially reaching $3.5 trillion, the move could bring Musk’s vision of an interconnected technology ecosystem closer to reality, although a deal remains uncertain.
5 min
Elon Musk has engineered ties between Tesla TSLA 3.41%increase; up pointing triangle and SpaceX SPCX 7.79%increase; up pointing triangle that are hard to break, and now he wants to fuse them together permanently.
Musk has run both Tesla and SpaceX concurrently over the past two decades, using a schedule that dictated which days he spent focused on each business.
The companies have often shared resources and personnel, signaling their close ties. Last year, SpaceX looked into creating a spacesuit for Tesla’s humanoid robot Optimus, a person familiar with the matter said. Tesla last week showed off its new Roadster, a vehicle featuring SpaceX rocket thrusters that it hopes to soon bring to market.
And in recent months, Musk has repositioned both companies by expanding beyond their core operations toward a shared mission centered on artificial intelligence.
The world’s richest man on Tuesday signaled his interest in tying up SpaceX and Tesla, marking what would be the biggest corporate merger of all time. Because he serves as chief executive of SpaceX and Tesla, Musk said committees of independent directors at both companies are evaluating a possible deal, adding that a transaction might not come to fruition.
The committees will likely evaluate, with lawyers and bankers, how each company would fare in a potential deal and how a deal might best be structured. They then present their conclusions to their respective boards, who typically vote on whether to proceed.
“It’s an odd Kabuki dance where two groups of people are talking and I can’t be in the conversation,” Musk told SpaceX investors on Tuesday in response to an analyst’s question about a potential deal.
For Musk, the merger supports his vision of a world full of autonomous cars, humanoid robots and weekly rocket launches, as well as the data centers and satellites required to keep the whole thing running.
Some investors and analysts said they expect a transaction would be structured as an all-stock deal, with SpaceX potentially paying a modest premium for Tesla shares.
SpaceX, which has a market value of about $2 trillion, said it is seeing sharp growth in revenue across its businesses, which include operating data centers, launching rockets and operating satellite networks such as the internet service Starlink. Tesla is valued at about $1.5 trillion and is expanding its operations beyond its automotive and energy business. Shares in both companies traded higher following the news Tuesday.
Musk’s substantial ownership stakes in both companies, along with voting control at SpaceX, has enabled him to set the deal in motion. Analysts and investors said the deal will probably face regulatory scrutiny internationally, though some see Musk’s close relationship with the Trump administration as an asset to getting approval.
Blurred lines
The companies haven’t said which directors are on the special committees evaluating a potential deal. Several SpaceX and Tesla board members have either personal or business ties to Musk. And like Musk, venture capitalist Ira Ehrenpreis sits on both boards.
In a filing this week, Tesla outlined millions of dollars in business agreements with SpaceX and its subsidiaries last year, including $143 million in car sales to SpaceX, $3.3 million in advertising that it bought on the social-media platform X and $430 million in revenue from the sale of Megapack batteries for SpaceX’s data centers.
The companies also split the cost of resources including the use of Musk’s SpaceX jet and the bill for his personal security, which he runs through a private company.
Employees at both companies routinely move between companies to work on special projects, and some executives have dual roles, including Charles Kuehmann, vice president of materials engineering at both SpaceX and Tesla, and Ashok Elluswamy, the vice president of AI software at Tesla who runs a joint venture with SpaceX called Digital Optimus.
Over the years, Musk has launched new startups within his empire, including brain-implant company Neuralink, underground-tunnel developer the Boring Company and xAI, the AI startup that merged with SpaceX in February.
It is that AI business that Musk thinks can serve a market worth tens of trillions of dollars, justifying the need for a merger.
The business case goes like this: Tesla is developing robotaxis and robots, which it calls “physical AI.” SpaceX is working on the back end of physical AI: the data-center capacity and internet connection required for those robotaxis and robots to operate continuously.
“I don’t see what the value of Tesla is if it’s not merged with SpaceX,” said investment adviser Ross Gerber, a former Tesla bull turned critic invested in both companies. “If they don’t merge, the brains of everything that runs Tesla is owned by another company.”
On top of it all, both companies face constraints on the supply chains they need to make this world a reality, particularly when it comes to chips. To address this, Musk earlier this year announced a joint venture between Tesla, SpaceX and Intel to design and manufacture chips in Texas. “The most epic chip-building exercise by far,” he has said.
Musk at the wheel
For Musk, a merger would also solve two problems: demands on his attention and his lack of control at Tesla.
Tesla for years was Musk’s only public company, a status that came with greater scrutiny. There, Musk reports to a public board, as well as individual investors who make up around 30% of Tesla’s voting power, according to FactSet.
The question of Musk’s attention became a particular focus for investors and the board in recent years after he acquired Twitter in 2022 and launched xAI in 2023, and again in 2025 as he spent time in Washington, D.C., running the Department of Government Efficiency in the early months of President Trump’s second term.
As Tesla’s car business suffered in 2025, Musk threatened to take his AI ambitions outside the company if he wasn’t granted 25% voting control. Last November, Tesla shareholders approved a new pay package for Musk, which created a path for him to vastly expand his stake.
As of Sept. 30, Musk owned a roughly 20% stake in Tesla, according to the company’s proxy filing.
The SpaceX IPO gave Musk a different path. When SpaceX went public in June, the deal’s structure enabled him to have more than 80% voting power at the company—so much that he can’t be fired and decisions can’t be made without his support.
If SpaceX acquires Tesla, he will likely stay in control.
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