What Is the ‘Donut Effect’ and What Is It Doing to Cities?

By: Anneken Tappe · December 18, 2023 · Reading Time: 2 minutes

Cities Lose Their Core

The pandemic has changed our world in more ways than one. Cities are no exceptions.

The rise of remote work did a number on urban populations. But 2023 was expected to be a year of post-pandemic recovery for cities. With the year drawing to a close, this hasn’t really materialized.

Economists call it the “donut effect”, a hollowing out of cities as people, retailers, and jobs are flocking from urban areas to the suburbs.

What’s Behind It?

Since the end of the pandemic, cities have been working on luring back residents, commuters, and tourists, along with their spending and tax dollars. But it’s easier said than done.

Many former urban dwellers are driven to the suburbs by cheaper property and more space, but perceived safety relative to city centers also plays a role. More flexibility to work remotely, or only come into the office on certain days of the week, also has lessened the importance of commutes.

Pulling Out All the Stops

More cities are looking at the “15 minute” rule, which says that residents will be able to have all needs of their lifestyle met within a 15-minute walk. Together with urban planning and climate change initiatives, big changes could be coming to a metro area near you.

•   New York City has a new initiative aimed at keeping traffic out of its busiest sections by introducing “congestion pricing,” or time- and location-based tolls.

•   Chicago, Boston, Washington D.C., and Pittsburgh are offering tax incentives to convert office space into residential buildings.

•   Charlotte and Indianapolis are building safe and lively downtown attractions for residents and tourists alike, an approach known as “placemaking.”

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