Can Urban Farming Pull the Commercial Real Estate Market Back from the Brink?

It can certainly play a part.

The commercial real estate (CRE) market in the United States has been facing a crisis, with many office buildings becoming vacant due to the shift to remote work and other economic factors.

This situation has left landlords, investors, and local governments searching for innovative solutions to revitalize these spaces and prevent a potential financial crisis. One solution is urban agriculture, which has the potential to transform vacant office buildings into productive, sustainable, and community-focused spaces.

The Commercial Real Estate Crisis

The rise of remote work and the need for social distancing during the COVID-19 pandemic significantly decreased demand for office space. America’s economy has slid downward since, with unemployment, GDP, PMI, and other measures continuing to be revised significantly downwards as inflation ran rampant before mostly plateauing.

Fewer employees, higher vacancy rates, and decreasing property values have made it difficult for businesses to justify the cost of maintaining large office spaces. American banks hold ~$4.7 trillion of commercial real estate debt; over $1 trillion of that debt is maturing this year.

Office building valuations have already plummeted as much as 50%.

The looming CRE crisis could have a ripple effect on the broader economy.

Fret not, there's hope!

Urban agriculture can help revitalize the commercial real estate market by providing new opportunities for landlords and investors. By repurposing vacant office buildings into urban agriculture facilities, the CRE crisis can be addressed in a sustainable and innovative way.

Economic Benefits

These spaces can be leased or sold to urban farmers, who can then use them to grow food for local communities. Many urban farms operate as 501c3 non-profits.

From what I understand, - and please speak to YOUR tax attorney before pursuing this strategy, I am not a financial professional -?if an office building gives exclusive use of space to a 501c3 for a period of at least 3 years, they can write off the full fair market value of the lease on their taxes.

Through potential tax benefits and revenue generated by the farms, building owners can open up capital for their needs.

Environmental Benefits

While the structural facade glass that clads skyscrapers is not as ideal as greenhouse glass, skyscrapers are essentially giant controlled environment facilities. All that’s missing is the agriculture!

By growing food close to where it is consumed, the need for long-distance transportation is reduced, lowering greenhouse gas emissions by orders of magnitude. The controlled environment of a skyscraper floor allows for year-round crop production, and technologies like anerobic digestors can be used to reduce utility costs.

At scale, urban ag can improve air quality, reduce urban heat island effects, and promote biodiversity by providing a non-toxic environment for pollinators like bees and butterflies.

Social Benefits

Urban ag can also have a positive impact on local communities. By providing fresh, locally-grown produce, urban agriculture can help to improve access for food insecure neighborhoods. It can also create new jobs and educational opportunities in the community, and foster a sense of community and connection through shared farming experiences.

Here’s how you can support the movement:

Sow the Seeds is a campaign to raise a $5m endowment for the City Farmers.

By safely investing these funds and operating from their yield, together we can place our team in a position of strength to source project-based grants and deploy them with maximum capital efficiency.

We’re open to contributions of any size, from a few thousand dollars to even more than our ask.

Contact us today at [email protected] or by our website at https://thecityfarmers.org/