Source: JLL Research, 2023
Note: Based on CBD assets 30 years or older, with 10% of RGB/GLA converted to residential with an average unit size of 750 square feet. Notional residential totals are meant to demonstrate a hypothetical carrying capacity for residential conversion. The actual amount of units realized will depend on engineering and financial viability, local planning regulations and market demand

Collectively, these changes will help CBDs adjust to hybrid working patterns, an increasing focus on real estate decarbonization, competition from emerging neighborhoods and fluctuating real estate demand. 

“After three years of dramatic shifts to how we live and work within CBDs, significant opportunity exists to reimagine how we use and interact with city centers,” said Phil Ryan, Director of Global Research, City Futures at JLL. “JLL is looking ahead to the 2030s and beyond to help identify solutions for real estate investors, developers, occupiers and city governments to keep these important economic, cultural, educational and innovation hubs energized and competitive in the post-pandemic world.”

An ecosystem of partnerships will form between the private sector, governments and academic institutions and will be essential to maximizing growth opportunities and accelerating the transformation of CBDs:

• Investors can employ a strategic, long-term mindset toward repositioning and diversifying acquisition mix to best cater to shifting preferences and reduce exposure to external shocks.
• Developers should proactively consider locations based on potential for future growth and proximity to demand pools, the quality and age of buildings, and ability to meet regulatory requirements regarding energy efficiency and sustainability. They should embed ESG considerations to future-proof assets and focus on creating destinations that are resilient to the changes in how people live and work. 
• Governments must anticipate demand changes and provide greater flexibility to developers and investors, including through expanding tax credits to offset the cost of conversion and streamlining the planning process to reduce the lead time for delivery of new product.

Also, critical to making CBDs attractive for living and leisure is improving the public realm and environment for pedestrians, complemented by broadening the options for a variety of retail and community businesses. Additions to green space and tree cover improve the street-level amenity while also helping to mitigate adverse effects of climate change, such as excess stormwater and heat stress. Expansions of on-street dining, closure of streets to cars and other measures to reduce traffic and improve public transit reliability will become more common moving forward.