TODAY’S NEWS. TOMORROW’S INSIGHTS.A daily newsletter from McKinsey & Company
Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities
Cubicle farm. You might not expect to see fresh produce growing inside an office tower. But in cities around the world, companies are converting empty office space into vertical farms. In one US building, greens and root vegetables are nestled in conveyor belts that move up and down automatically. The crops travel through varying levels of light and darkness that imitate a plant’s 24-hour cycle. Since office towers are climate-controlled, they are ready-made places for growing food, an urban farming leader says. [Smithsonian]
Cities’ vacant offices. Schools are full of kids, and cruise lines are packed with travelers, but commercial real estate is still wrestling with high vacancies and lackluster demand. In 2026, when a third of US office leases expire, we can expect rents to fall and vacancies to climb higher still. That threatens cities that depend on commercial property taxes for a significant share of revenue. Rather than increase taxes, which might antagonize affluent residents, cities might highlight what they do best: green transit, walkable pathways, and cultural amenities. [Atlantic]
Empty spaces. Vacant office and retail space have grown sharply as hybrid work proliferates. Real estate faces tough challenges in the world's superstar cities—places such as Beijing, Houston, and Paris—which claim a disproportionate share of urban GDP and GDP growth. How long could the pain last? To find out, McKinsey modeled several scenarios. In a moderate scenario, demand for office space may fall 13% in 2030, compared with 2019. In a severe scenario, demand could plunge by as much as 38%, explain Sven Smit, McKinsey’s chair of insights and ecosystems and chair of the McKinsey Global Institute, and coauthors.
Hybrid places. As residents move out of the densest city areas, they’re taking their shopping elsewhere. In metropolitan areas, foot traffic near stores remains 10 to 20% below prepandemic levels. Foot traffic is also recovering faster in the suburbs than in more heavily populated areas. Challenges like these may imperil the fiscal health of cities. Yet they might also prompt a historic transformation of urban spaces. Consider what actions cities, developers, and other stakeholders could take to turn empty spaces into hybrid places.
— Edited by Belinda Yu, editor, Atlanta
Was this forwarded to you? Sign up here.
Or send us feedback—we’d love to hear from you.
Follow our thinking
