Why cities have an "interesting and bright future" despite coronavirus fallout fears: Professor

More people are fleeing from their hometowns in fear of contracting the coronavirus. Richard Florida, University of Toronto Professor & Author of ‘Rise of the Creative Class’ joins Yahoo Finance’s On The Move panel to break down the vast amount of residents leaving their home cities.

Video Transcript

ADAM SHAPIRO: We invite into the program now professor Richard Florida, a University of Toronto professor. He's joining us from Miami, Florida, right now. And what do you think? Will people choose to leave cities like New York, Chicago, Los Angeles because of COVID-19? What is the actual story?

RICHARD FLORIDA: So I think-- you know, and I have now looked at the history of pandemics and plagues going back centuries. Not once has any serious-- the bubonic plague, the Black Plague, the Spanish flu. We can go on-- dented the course of urbanization. New York, London, Paris, Rome-- we can go on-- have all remained great cities. And, in fact, as a person who's been doing urbanism for more than three decades, I never even paid attention, and in fact, most of my colleagues never even paid attention to the roles of pandemics and plagues.

Now, what do I think will happen? I think that some people, the older and the vulnerable, and especially families with kids-- and I think this is what people don't understand. Families with kids who were already moving to the suburbs, about ready to move to the suburbs-- the kids were getting close to school age. They wanted a yard and a swing set. Those talks are going to leave places like New York City or Chicago or the inner city.

But I think cities actually have a very interesting bright future. What we find is that in history of crises, in history of pandemics, the young people, ambitious people, people from rural areas who want better jobs flock to cities. And because real-estate prices will decline-- we're going to have fewer offices. There's going to be more of a retail apocalypse. Those big high-priced condominiums that were pied a terres are not going to sell. Our cities might become affordable enough for artists and creatives and middle-class people to move back.

So net-net, I think cities will lose some people. They'll gain some people, but they will come back strong in the next couple of years.

JULIE HYMAN: Richard, it's Julie here. And we don't yet really have data on this necessarily. All we have are anecdotes, right? So for example, I have a friend who lives in Monmouth County, New Jersey, who said there has been a boom in real estate there for houses between $2 to $4 million-- so people coming down from the city or its environs to move down there. So does that also imply though that there will be sort of a hollowing out of urban centers in the next couple of years as we go through this process that you're describing? What's that going to do to tax revenue? What's that going to do to city services, for example?

RICHARD FLORIDA: Well, there's no doubt that people with kids-- and I think the issue here is if you use the city for the public amenities it provided-- the parks, the playgrounds, the restaurants, all of those things-- the art museums. And those are all closed. And you've got a kid or two and another kid on the way. You go, oh my God. I'm going to go to Monmouth County. I'm going to go to the Hamptons. I'm going to go to Hudson, or I might leave.

I have a friend who's leaving Chelsea to move to Charlotte, North Carolina, who works in the financial markets. He's got a two year-- a three-year-old. He and his wife have a three-year-old and another one on the way. They've outgrown their apartment. Those people were going to move anywhere. And I think, yeah, that's going to happen.

The other thing that's going to happen, though, is younger people, ambitious people-- you know, it's funny. I saw those pictures of Washington Square Park with the kids sitting on the lawn. I said if I was 22 or 23, I'd flock to New York City in a minute. If I'm an artist looking for an affordable studio, I might be able to get one. In the short run, Manhattan will be hit hard.

Look, and I think it's not a flight of people. Offices are not going to come back online. We already hear from companies. They're not coming back to even think about the office until the fall or me until 2021. So there's not going to be that revenue of workers coming in, those retail shops.

But, you know, my colleague Derek Thompson wrote a great piece in "The Atlantic" and he said about the retail and commercial apocalypse, it's like a forest fire. It clears out the stuff that was there, and in the process of clearing, new stuff grows up.

Look, we've been through pandemics and plague through all of human history. Have cities failed? No. They come back even stronger. So I think we've got to stop and think not just about the next 6 or 12 or 18 months. What will our cities look like in the long run? And there I'm incredibly positive, even though the short run is going to be very tough.

DAN ROBERTS: Richard, Dan Roberts here. You mentioned that you think cities will be OK through this, but let's zoom in specifically on New York. And, as you said, you know, a 22-, 23-year-old still wants to move to New York after this. I agree with you. I don't think that young people living in New York are going to flee from this, but I do think it's something you might see, specifically because New York has been hit so hard by this time, is that the sort of vertical living that we do in New York City suddenly becomes a lot less appealing. I think a lot of people, after being in their small apartments for two months straight, realize that maybe it's not such a great lifestyle, even though New York itself outside your apartment is so great.

I'm thinking that a lot of people who maybe would have eventually moved out of New York City to the suburbs around it will now do that a lot sooner. Maybe people who are in their late 20s or early 30s leave in the next year, whereas maybe without coronavirus they would have stayed three or four more years.

RICHARD FLORIDA: I agree 100% that those family-formation moves-- I've always said there are three great moves. When you graduate college and university and you start in the labor market, that's a move to states. When you have-- not when you get married. When you form the family, when you have kids, that's typically a move except for the super affluent who can afford all sorts of private schools and big apartments. That's a move out of cities. And then the empty-nester move, what happens when the kids are gone, and what we found is a lot of those empty nesters move where the kids go-- so some of that's back to cities.

In the short run, we're going to see an acceleration of those family-formation, young-family moves out of cities into the suburbs. So what might have happened, as you said, over two or four years is going to happen in a month.

But-- and I think the other folks that are going to move out, which is good-- I think this is good-- are those darn pied a terre buyers, you know, the people who were coming in and stashing money in a big condominium or townhouse, using it, you know, one or two months a year. They're gone. They're going to retreat to their big houses wherever the hell they live in Switzerland or in the Hamptons or in Greenwich.

But that's going to free up-- what have people complained about? I wrote a whole book about this, "The New Urban Crisis," the crisis of success, that the working class, the middle class, the artists being priced out of cities. Now we have a chance to arrest that and turn our cities into places creative people, artistic people, the middle class can move.

And by the way, we've had these chances twice before. We blew it after 9/11, and we really blew it after 2008. Everyone said after both those crises New York would become more affordable. People would leave. The city would be reset. It would be gloom and doom. Both times it came back roaring.

Let's use this darn crisis as an opportunity to build a better city, a better New York, a better Toronto, a better Chicago, a city that is more inclusive where the middle class can afford to live and eventually that comes back better and stronger. So we have an opportunity here, not just a challenge.

ADAM SHAPIRO: OK, so you talk about an opportunity, but when people leave, the tax base gets it, and how do you get those services that attract people to a New York or a Chicago if you don't have the revenue to do it? You keep talking long term. What's the long term if they don't have the revenue?

RICHARD FLORIDA: Well, this is the issue that every city is going to have to confront and not just big cities. What happens in a college town like Ann Arbor or Madison when no students come back in the fall? And those students turn the entire retail and service markets of those college towns. What happens to those lovely commuter suburbs where people live near transit because they paid a premium to live in Montclair or other suburbs that are connected to New York City when people can't use transit and trains?

It's not just big cities that are going to get hit with this revenue shortfall. This is going to be a bloodbath to all kinds of cities, so we got to figure this out.

I'll tell you one thing. The places that will make it are the places-- and you just talked to Comptroller Stringer, who's been terrific on this. We've been talking to his office. The places that are intentional and strategic and say we're going to make a plan to grow better-- we're not just going to throw up our hands and say, you know, we're going to go with the flow here. And you see that.

You not only see that in New York. You see that in small cities across the country saying we're going to develop a recovery plan. This is like planning after a disaster, after a Katrina, after a 9/11. But for communities around the country, the places that do that well will succeed, and the places that blow it-- you know, if a city gets caught up in all of these political machinations and can't figure it out, yeah, they're going to be hard hit.

ADAM SHAPIRO: All right, Richard Florida is a professor at the University of Toronto. We appreciate your being here.