The Remote Work Challenge: Lessons From 5 Cities

The Wayback Machine - http://web.archive.org/web/20260802031904/https://www.pew.org/en/research-and-analysis/reports/2026/05/the-remote-work-challenge-lessons-from-5-cities Report May 13, 2026 Overview 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. This report provides an overview of the situation nationally and then shares research findings from each of the five cities individually. Key findings show that: Although these cities have been affected meaningfully by remote work, none has truly entered a doom loop—at least not yet. Tax revenues have proved resilient, in part because of strength in tax streams unaffected by remote work. For example, high housing prices have boosted residential property taxes. Despite the modest effects on the budgets of the five cities so far, risk remains. Because reduced office values only gradually affect commercial property tax revenue, cities do not know the full impact yet. Downtowns are struggling with increased office vacancies and reduced foot traffic. According to multiple interviewees, the loss of office workers made downtowns feel less safe and vibrant, making them less attractive for retailers, residents, and visitors. Office-to-residential conversions are a key part of cities’ efforts to transform depressed downtowns into more complete neighborhoods. Leaders are focused on increasing the supply of housing downtown and creating places that will attract visitors, accessing federal programs, creating local incentives, and even buying underutilized buildings to spur conversions. Decisions at the state level directly affect how easily cities can adapt to post-pandemic realities. States provide funding to cities, determine which taxes they can levy and at what rates, and create programs to encourage downtown redevelopment. The national picture The debate over the doom loop To date, the worst fears of urban doom loop theorists have not been realized. Revenue collections have remained surprisingly unremarkable: After the initial fiscal shock of the pandemic, city tax revenue grew in 2022 and 2023, per a National League of Cities survey.7 Although revenue collections have weakened more recently, this weakness is more reflective of the challenges common to state and local governments generally—especially weaker economic growth and the expiration of temporary federal COVID aid—and less an obvious consequence of remote work and office vacancies.8 Other measures of city vitality have bounced back from pandemic lows. Many big cities lost population initially, but almost all were growing again by 2024 (though restrictive immigration policies put further growth in doubt).9 Urban crime rates have fallen after a pandemic-era spike.10 Cities have benefited from the recovery of domestic business and leisure travel (though they face new challenges from a decline in international visitors).11 Taken as a whole, cities face fiscal and economic pressure, but there is little indication of a significant downward spiral. “Nobody’s calling it a doom loop anymore,” Sarah Sullivant, a managing director with S&P Global Ratings who assesses cities’ creditworthiness, told Pew.12 But as Stijn Van Nieuwerburgh, a Columbia Business School professor and one of the authors of the “Office Real Estate Apocalypse” paper, pointed out: Many of the steps in the doom loop process have played out as predicted.13 Office vacancies surged to record levels and continued to reach new highs into 2025, even as some public and private sector employers require a higher number of workers to return to the office more days a week (see Figure 1).14 As a result, sale prices of office buildings across the country have plummeted. The owners of these buildings are often in financial distress, struggling to pay back loans or qualify for new ones that they can afford.15 What is surprising, Nieuwerburgh told Pew, is that the office market’s problems have not had a more obvious impact on city finances.16 There are a few possible explanations for that. One of the most benign is that the taxes directly affected by office values—especially commercial property taxes—simply make up too small a share of overall revenue to fundamentally alter a city’s fiscal direction. Property taxes are the largest source of revenue for most cities, but many major cities also raise a substantial share of their revenue from sales taxes, income taxes, or other levies.17 These other taxes are not generally thought to be as vulnerable to the effects of remote work, although in some instances they might be— Philadelphia, for example, applies its income tax to commuters and has seen a substantial drop in wage tax revenue from nonresidents.18 Just as importantly, commercial property tax revenue is only part of overall property tax revenue and not the biggest part—in most cities, residential property tax revenues raise more.19 Not all commercial properties are office buildings, so taxes on them are a fraction of commercial property tax revenue, which is a fraction of overall property tax revenue, which is a fraction of total revenue. This increasingly smaller fraction may not be big enough to make a large difference for city budgets, especially because residential property tax revenue has surged—a byproduct of the stubbornly high home prices that have created a housing affordability crisis throughout the country. In many cities, weakness in property tax is also at least somewhat self-correcting. If property values go down, city officials have the power to raise tax rates to compensate—and potentially collect the