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The COVID-19 pandemic called into question the economic vitality of U.S. cities. The rise of remote work meant employees experienced zero-minute commutes and a greater ability to balance their work and home lives. Cities, however, confronted the possibility that fewer people would choose to live and work in urban areas. For cities, this economic risk has also posed a budget risk: Cities’ primary revenue sources—property taxes, sales taxes, and income taxes—are typically influenced by the value of office buildings and the wages and spending of office workers.
In the September 2022 paper “Work From Home and the Office Real Estate Apocalypse,” three business school professors from New York raised the frightening possibility that the economic and fiscal problems of cities could be self-reinforcing, a vicious cycle they dubbed a “doom loop.” They argued that the declining value of office buildings would reduce local tax revenue; less tax revenue would force cities to cut services or raise taxes; and, as a result of these budget-balancing measures, cities would be even less appealing places to live and work, leading to even less economic activity and revenue.1
City officials, municipal analysts, researchers, and journalists have spent the intervening years determining how serious the threat really is—and which places are most vulnerable. During the pandemic, much of the immediate focus centered on a small group of cities. New York and San Francisco were of particular interest because of their obvious vulnerabilities, including large office sectors, some of the most expensive commercial real estate in the country, and rapid population loss early in the pandemic.2
In recent years, however, researchers have recognized the need for a broader perspective of how cities are faring. New York and San Francisco may not be the cities most at risk: New York’s office recovery has been particularly robust, while the artificial intelligence boom has spurred renewed optimism for San Francisco’s tech-focused economy.3 Looking beyond these cities is helpful to understand the full scope of the problem and determine whether the risks from remote work are concentrated in a few atypical cities or endanger the fiscal health of a far greater range of places.
Since 2024, the Urban-Brookings Tax Policy Center, Moody’s Ratings, and the Lincoln Institute of Land Policy have each projected the possible effects of remote work and office vacancies on revenue collections in dozens of cities.4 This report seeks to complement these quantitative analyses with a qualitative look at five cities: Atlanta, Boston, Dallas, Denver, and Milwaukee.
In each city, researchers from The Pew Charitable Trusts interviewed budget and economic development officials, local experts, and civic and business groups about the pandemic’s impact on the local economy, the effects of remote work and office vacancies on the municipal budget, and how leaders are adapting.
Each city was selected because at least some data points suggested it might be vulnerable to economic and fiscal challenges from remote work. For example, Boston and Dallas are unusually dependent on commercial property taxes (which could drop as office values decline), while Atlanta has some of the longest commute times in the country (which could discourage workers from returning to the office).5
Although these five cities are not necessarily representative of the country as a whole, their experiences help to illustrate the breadth of the impact of remote work, showing how its rise has played out in places with varied economies and tax structures, and what it could mean for the future. Researchers also interviewed national experts on office vacancies, city finances, and urban development to provide additional context.
The effects of remote work on cities have been manageable so far, but city leaders should be concerned that they are not happening in isolation: Cities are also struggling with rising costs, reduced state and federal support, and fragile economies, among other challenges.6 Even if remote work on its own is not sufficient to cause cities lasting harm, it could result in harm in combination with these other factors. Encouragingly, city leaders are not complacent—they are trying to adapt to remote work and renew downtown vitality. The outlook for cities will depend in large measure on the success of these efforts and the degree of support they receive from state and federal policymakers.
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