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The conservative Supreme Court justices found that President Joe Biden’s plan would hurt Missouri’s bottom line, and that the president didn’t have the power to cancel so much debt.
Liberal Justice Elena Kagan disagreed: “The majority overrides the combined judgement of the legislative and executive branches, with the consequence of eliminating loan forgiveness for 43 million Americans.”

Supreme Court justices listen to arguments.
Artist: Bill Hennessey

1. Conservative justices found states had standing

The biggest obstacle for those who wanted to legally challenge President Joe Biden’s student loan forgiveness was showing they’d be harmed by the relief policy, which is typically a requirement to gain the right to sue.
That need to prove so-called legal standing is designed to prevent people from using the judicial system to work out policy differences that are considered more appropriate for elections.
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The six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — that were successful in getting Biden’s plan nixed by the justices had argued that the policy would lead to a loss of profits for the companies in their states that service federal student loans.

Chief Justice John Roberts, in the majority opinion for Biden v. Nebraska, wrote that MOHELA, or the Missouri Higher Education Loan Authority, would lose around $44 million a year in fees it earns from servicing federal student loans after Biden’s forgiveness. As a result, Roberts found that at least Missouri had successfully proven legal standing. He said the court didn’t need to consider standing for the other states.

U.S. Supreme Court Chief Justice John G. Roberts poses during a group portrait at the Supreme Court in Washington, U.S., October 7, 2022. 
Evelyn Hockstein | Reuters

Legal experts and consumer advocates were skeptical that Biden’s plan would reduce MOHELA’s bottom line. They pointed out that the lender’s revenue was actually expected to rise because of some student loan servicers recently leaving the space and it picking up extra accounts. 
“I was surprised the court found Missouri had standing,” said higher education expert Mark Kantrowitz. “The debts of MOHELA are not the debts of the state. And MOEHLA is able to sue on its own, so why didn’t it bring its own lawsuit?”
Luke Herrine, an assistant professor of law at the University of Alabama, said he was confused by the fact that Roberts didn’t pay much attention to the issue of standing at all. The requirement has long been defended by conservative justices, especially former Justice Antonin Scalia.
“I don’t think they actually took the standing issues all that seriously,” Herrine said. “And I have no idea if that will be a precedent, or if it’s just a one-off so they could get to the merits, because they didn’t like this case.”

They are classic ideological plaintiffs.

Elena Kagan
liberal justice

Liberal justice Elena Kagan strongly disagreed that Missouri had standing, pointing out that the lender was financially independent from Missouri, “as corporations typically are.”
“The revenue loss allegedly grounding this case is MOHELA’s alone,” Kagan wrote in her dissent. “The state’s treasury will not be out one penny because of the secretary’s plan.”
“We do not allow plaintiffs to bring suit just because they oppose a policy,” Kagan said.

2. Heroes Act doesn’t allow for broad debt cancelation

When the president rolled out his plan in August 2022 to forgive as much as $20,000 in education debt for tens of millions of Americans, he pointed to the Heroes Act of 2003 as his legal justification. That law was passed in the aftermath of the 9/11 terrorist attacks, and grants the president broad power to revise student loan programs during national emergencies.
The Covid pandemic was such an emergency, the administration said. The U.S. Department of Education warned that the crisis had left millions of borrowers in a worse off financial situation and that there could be a historic rise in delinquencies and defaults without its loan cancellation.

But Roberts took the sides of the states, saying the Heroes act didn’t permit the kind of sweeping student loan forgiveness the president was trying to deliver.
″’Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” Roberts wrote. “We can’t believe the answer would be yes.”
Kagan once again disagreed.
“The statute, read as written, gives the secretary broad authority to relieve a national emergency’s effect on borrowers’ ability to repay their student loans,” she said.
In the end, it was the Supreme Court that exceeded its authority, Kagan said.
“The majority overrides the combined judgement of the legislative and executive branches, with the consequence of eliminating loan forgiveness for 43 million Americans,” she wrote. More

A logo of Meta Platforms Inc. is seen at its booth, at the Viva Technology conference dedicated to innovation and startups, at Porte de Versailles exhibition center in Paris, France June 17, 2022.
Benoit Tessier | Reuters

The second half has kicked off in earnest, and earnings are revving up.
Investors tracking the action may garner useful insights from Wall Street experts’ top stock picks, and this can help them make informed decisions as they seek solid returns over the long term.

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Here are five stocks for investors to consider, according to Wall Street’s top professionals on TipRanks, a platform that ranks analysts based on their past performance. 

Cava Group 

First on this week’s list is the Mediterranean restaurant chain Cava (CAVA), which made a blockbuster public debut last month. The rally in CAVA shares since its initial public offering reflects investors’ optimism about the fast-casual restaurant chain’s growth prospects. Cava has expanded to 263 locations since it opened its first restaurant in 2011.  
Stifel analyst Chris O’Cull initiated a buy rating on Cava with a price target of $48. The analyst sees robust growth potential, given the company’s plan to expand to at least 1,000 restaurant locations in the U.S. by 2032. Cava’s expansion plans include a foray into new markets in the Midwest region next year.  
O’Cull expects the company’s growth plans to be backed by a healthy balance sheet. He noted that following the IPO, Cava had about $340 million in cash on hand and no funded debt. The analyst estimates annual revenue growth of 20% during the next four years, driven by at least 15% growth in Cava’s footprint. He projects adjusted earnings before interest, taxes, depreciation and amortization to almost double to $112 million in 2026 from $58 million this year and the company to generate positive free cash flow starting in 2026.  
“In our view, the stock’s premium valuation can be justified by its AUV [average unit volume] and unit count growth opportunity and the potential for solid operating momentum to cause upward revisions to near-term estimates and long-term earnings potential,” said O’Cull.  

O’Cull is ranked 349th among more than 8,400 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each rating delivering an average return of 12.3%. (See CAVA Technical Analysis on TipRanks)        

Apple  

Tech behemoth Apple (AAPL) is known for its innovative products, including the iPhone and iPad. That said, the company’s higher-margin Services segment has rapidly grown over recent years and has enhanced the firm’s revenue and profitability.  
Evercore ISI analyst Amit Daryanani, who ranks 258th out of more than 8,400 analysts tracked on TipRanks, recently revealed the results of the annual Apple Services survey conducted by his firm. The survey indicated that Apple Services continues to experience increased adoption across the board. In particular, Apple Pay, Music and TV+ saw the most notable rises in adoption compared to last year’s survey. 
The survey revealed that Services’ average revenue per user (ARPU) in the U.S. is $110, which is much higher than Daryanani’s global estimate of $81. The analyst contends that ARPU growth is the major catalyst for the Services business, given that smartphone penetration has likely reached peak levels.  
“We continue to see Apple Services as well positioned to maintain double digit growth through FY27 and beyond driven by increasing ARPU coupled with new product launches,” said Daryanani.  
Daryanani reiterated a buy rating on AAPL with a price target of $210. He has a success rate of 60%, and each of his ratings have returned 11.5%, on average. (See AAPL Insider Trading Activity on TipRanks)  

Meta Platforms 

Next on our list is social media giant Meta (META), which recently launched Threads, a social media app challenging Twitter.
Tigress Financial Partners analyst Ivan Feinseth thinks that the Thread launch was well-timed to take advantage of Twitter’s sliding popularity. He said that the introduction of Threads has created an additional growth catalyst that could further drive Instagram’s engagement.  
Feinseth also expects Meta’s ongoing artificial intelligence investments and integration to continue to enhance engagement and advertising revenue across all its apps. The analyst highlighted that Meta’s solid balance sheet and cash flows help support its growth initiatives, including investing in the Metaverse, strategic acquisitions, and share repurchases.  
Feinseth reiterated a buy rating on Meta and raised the price target to $380 from $285. The analyst said, “Increasing AI integration, better cost management, and increased operating efficiency will drive a reacceleration in Business Performance trends.” 
Feinseth holds the 205th position among more than 8,400 analysts on TipRanks. Sixty percent of his ratings have been profitable, with an average return of 12.8%. (See Meta Blogger Opinions & Sentiment on TipRanks) 

Nvidia  

Semiconductor giant Nvidia (NVDA) is seen as one of the major beneficiaries of the growing interest in generative AI, which is fueling tremendous demand for its GPU chips.  
Goldman Sachs analyst Toshiya Hari noted that Nvidia has already gained from the traditional AI boom for a decade, as reflected in the spike in its Data Center segment revenue from $129 million in fiscal 2013 to $15 billion in fiscal 2023. The analyst increased his revenue and earnings estimates for Nvidia, as he thinks that the company has entered a new phase of generative AI-driven growth. 
Hari projects demand for Nvidia’s products in training generative AI models to represent a cumulative revenue opportunity of about $85 billion (base-case scenario) in calendar years 2023 to 2025. (See Nvidia Financial Statements on TipRanks)     
Meanwhile, he estimated inferencing (comprises key applications that could leverage generative AI like search, productivity tools in enterprise, ecommerce, email, and social media) could be a nearly $7.7 billion revenue opportunity from 2023 to 2025, including $4.5 billion in 2025.     
Hari increased his price target for Nvidia stock to $495 from $440 and reiterated a buy rating. He continues to see “significant runway ahead for the company based on its robust competitive position in what is a rapidly growing (yet nascent) AI semiconductor market.” 
Hari holds the 171st position among more than 8,400 analysts on TipRanks. Additionally, 63% of his ratings have been profitable, with an average return of 19.1%. 

US Foods

US Foods (USFD) distributes fresh, frozen and dry food, as well as non-food products, to food service customers.  
Recently, BTIG analyst Peter Saleh reiterated a buy rating on USFD with a price target of $48, saying, “US Foods is one of the best self-help stories in our coverage, with the majority of the EBITDA growth contingent on operational improvements management has been diligently implementing for the past year.” 
Following a stellar gross profit margin in the first quarter, Saleh raised his second-quarter gross margin estimate by 20 basis points to reflect increased penetration of private brands, stock-keeping unit (SKU) rationalization, reduced waste and improved labor retention. 
The analyst also raised his Q2 EBITDA estimate and expressed confidence in US Foods’ ability to beat expectations, citing the company’s strategic initiatives, stable industry sales and its track record of handily surpassing Wall Street’s EBITDA projections in recent quarters.   
Saleh is ranked 325th among more than 8,400 analysts tracked on TipRanks. His ratings have been profitable 64% of the time, with each one delivering an average return of 12.7%. (See US Foods Stock Chart on TipRanks)  More

While the thought of funding your retirement adequately might be daunting, if you start planning now, you’ll certainly be thankful later. It’s never too early to start thinking about retirement and it might not be as difficult as you think.
Retirement usually entails replacing your annual salary from a workplace with other income sources to maintain your current lifestyle. While Social Security may cover part of your budget, there are understandably reasons to be concerned about how much you could receive from Social Security by the time you retire. The rest of your money will most likely need to come from your savings and investments.

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6 days ago

CNBC crunched the numbers, and we can tell you how much you need to save now to get $80,000, $90,000 and $100,000 every year in retirement, without taking a bite out of your principal.

More from The New Road to Retirement:

Here’s a look at more retirement news.

First, there are some ground rules. The numbers assume you will retire at age 65 and that you currently have no money in savings.
Financial advisors typically recommend the mix of investments in your portfolio shift gradually to become more conservative as you approach retirement. But even in retirement, you’ll likely still have a mix of stocks and bonds, as well as cash. For investing, we assume a conservative annual 6% return when you are working and an even more conservative 3% rate during your “interest-only” retirement.
We also do not factor in inflation, taxes or any additional income you may get from Social Security or your 401(k) investment plan.
We have a full breakdown of how much you need to save now if your goal is to get to $80,000, $90,000 or $100,000 every year in retirement.
Watch the video above to learn more. More

Ignatiev | E+ | Getty Images

Company: Mercury Systems (MRCY)

Business: Mercury Systems is a manufacturer of essential components, products, modules and subsystems. The company sells them to defense prime contractors, the U.S. government and OEM commercial aerospace companies. Essentially, Mercury Systems makes the electronics that go into defense applications. Because it pays for its own research and development, it’s not subject to the Truth in Negotiations Act that requires cost disclosure. This allows the company to have better than single-digit margins.
Stock Market Value: $2B ($34.38 per share)

Activist: Jana Partners

Percentage Ownership: 8.00%
Average Cost: $36.30
Activist Commentary: Jana is a very experienced activist investor, which was founded in 2001 by Barry Rosenstein. The firm made its name taking deeply researched activist positions with well-conceived plans for long-term value. Rosenstein called his activist strategy “V cubed.” The three Vs were (i) value: buying at the right price; (ii) votes: knowing whether you have the votes before commencing a proxy fight; and (iii) variety of ways to win: having more than one strategy to enhance value and exit an investment. Since 2008, the firm has gradually shifted that strategy to one which we characterize as “the three Ss” (i) stock price – buying at the right price; (ii) strategic activism – sale of company or spinoff of a business; and (iii) star advisors/nominees – aligning with top industry executives to advise them and take board seats if necessary.

What’s happening?

On July 6, Jana entered into a voting agreement with the company, pursuant to which Mercury Systems agreed to appoint Scott Ostfeld, a managing partner of Jana, to the company’s board as a director. Additionally, Jana agreed to vote its shares in favor of the company’s nomination slate at the 2023 annual meeting, comprised of Gerard J. DeMuro, Roger A. Krone and Ostfeld. Both parties agreed to additional voting commitments. On July 6, Bill Ballhaus, Mercury Systems’ interim president and CEO, was also named chairman.

Behind the scenes

Mercury Systems has been a successful manufacturer of small electronic components with many favorable attributes. For starters, the company’s product is a critical part of larger defense products with the U.S. and other governments as the ultimate purchaser. Further, unlike many peers, it pays for its own R&D, making Mercury Systems more nimble and allowing it to have higher operating margins. This is a business that was growing at an average annual rate of 14% between 2017 and 2020 with earnings before interest, taxes, depreciation and amortization margins as high as 23.2% in 2018. However, management tried to move up the value chain with development programs for more elaborate sub assembly systems, which the company did not have the capabilities to properly execute. At the same time, Covid happened, which brought supply chain issues. This led to inefficiencies in production and delivery delays that led to decreased profits, lower margins and stagnant growth. Now the company is guiding to 16.5% EBITDA margins and -1% growth. 

Jana was not the only activist investor to see this. Jana originally filed a 13D on Dec. 23, 2021 wherein the firm broadly called for a strategic, operational and corporate governance evaluation. Jana’s filing was shortly followed by Starboard’s 13D on the company. In June 2022, Jana and Starboard each won a seat on the company’s board: Bill Ballhaus (Jana) and Howard L. Lance (Starboard). Shortly thereafter, the company ran a strategic review that resulted in 20 interested parties who signed confidentiality agreements and two proposals that the board ultimately determined would undervalue the company. The board terminated the strategic review and decided that there was more value in operating as a standalone entity. Jana exited its 13D in February 2023, and Starboard exited its 13D in June 2023. However, since Jana exited its 13D and before the firm sold down its entire position, the company named Jana’s director nominee Ballhaus as interim president and CEO. That led to Jana rebuilding its position, engaging with the company and getting a board seat for Jana partner Scott Ostfeld. With the addition of Ostfeld and contemporaneous resignations from the board, since 2021, a majority of the board has been reconstituted and the company has replaced the CEO. Moreover, three of the five new directors were identified by Jana or Starboard, and Ballhaus is someone Jana knows very well.
Jana’s relationship with Ballhaus goes back to 2015 when the firm was an activist at Computer Sciences. Jana orchestrated the spinoff and sale of Computer Sciences’ government services unit to SRA, whose CEO at the time was Bill Ballhaus. With all due deference to Ozzy Osbourne and Steven Tyler, Ballhaus is a rock star when it comes to aerospace, defense and technology industries and has extensive experience working as a turnaround CEO for other companies. Jana has already done the heavy lifting of getting Ballhaus into the boardroom. Now that he has also made his way into the C-suite, the path ahead is clear: Clean up the operations of the 12 development programs that have been adversely affecting the company’s performance, build back the company’s lost profitability, cash flow and marketwise predictability, and invest wisely to restore growth.
However, it is important to note that Mercury Systems is still a strategic asset. Despite its operational issues, it had interest from 20 potential acquirers — two of whom made an offer. These suitors have not gone away and will likely continue to watch the company as management turns it around. So, a future strategic or financial acquisition is not entirely off the table.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

BlackRock’s move into crypto fits into the asset management giant’s broader mission of creating products that are easy to use and cheap for investors, CEO Larry Fink said Friday.
“We believe we have a responsibility to democratize investing. We’ve done a great job, and the role of ETFs in the world is transforming investing. And we’re only at the beginning of that,” Fink said on “Squawk on the Street.”

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BlackRock applied for a spot bitcoin ETF on June 15, which appeared to spur a rally in cryptocurrencies and a flurry of similar filings from other asset managers. The initial filing for the iShares Bitcoin Trust did not include a management fee.
The Securities and Exchange Commission has previously rejected dozens of applications for similar funds, but BlackRock’s involvement and the proposed surveillance sharing agreement in the filing is seen by many in the crypto industry as a sign that momentum is shifting.
“We are working with our regulators because, as in any new market, if BlackRock’s name is going to be on it, we’re going to make sure that it’s safe and sound and protected,” Fink said.

Fink had previously been critical of crypto, saying in 2017 that the popularity of digital currencies was do in large part to money laundering.
However, interest from clients and the high cost of transactions motivated BlackRock to take a closer look at entering the space, Fink said. He also added that crypto can serve a diversification role in investor portfolios.

“It has a differentiating value versus other asset classes, but more importantly, because it’s so international it’s going to transcend any one currency,” Fink said.
The CEO declined to discuss the spot bitcoin ETF directly, saying he is prohibited from doing so while the filing is with the SEC.
BlackRock reported its second-quarter results on Friday, earning $9.28 in adjusted earnings per share on $4.46 billion in revenue. The company said it now has more than $9 trillion in assets under management. More

This week, the Senate Budget Committee met on Capitol Hill to consider the dilemma facing the program.
The latest projections from the Social Security trustees show the program’s combined funds may run out in 2034.
Proposals to increase levies on high earners have sparked a debate among lawmakers and experts as to whether those changes would be fair.

zimmytws | iStock | Getty Images

When it comes to Social Security benefits, a key deadline is looming: Benefits may be reduced in the next decade if no action is taken sooner.
This week, the Senate Budget Committee met on Capitol Hill to consider the dilemma facing the program with a focus on a key question: Should payroll taxes be adjusted to make it so the wealthy pay more into the program?

The latest projections from the Social Security trustees show the program’s combined funds may run out in 2034, at which point 80% of benefits will be payable. The fund used to pay retirement benefits may run out even sooner — in 10 years in 2033 — at which point 77% of those benefits would be payable.
Social Security is a “pay as you go” program, Social Security Administration Chief Actuary Stephen Goss said at Wednesday’s Senate hearing.
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In 2023, up to $160,200 in earnings are subject to Social Security payroll taxes.
In 1983, when major legislation was enacted to shore up Social Security’s trust funds, 90% of covered earnings fell below the taxable maximum, according to Goss.

As of 2000, that dropped to 82.5%.
Since then, it has remained at about that same level. “We expect it to remain there in the future,” Goss said.

Senate Budget Committee Chairman Sen. Sheldon Whitehouse, D-R.I., touted his bill, the Medicare and Social Security Fair Share Act, that would require wages above $400,000 to be taxed for Social Security.
“Right now, the cap on Social Security contributions means a tech exec making $1 million effectively stops paying into the program at the end of February, while a schoolteacher making far less contributes their share through every single paycheck all year,” Whitehouse said.
The bill also aims to correct other unfair features of the system, Whitehouse said, particularly the ability to live off wealth income while making no Social Security contributions. Under the bill, those with more than $400,000 in investment income would contribute to Social Security in the same way as those who earn wages.
The bill does not propose any benefit cuts.

Chairman Sen. Sheldon Whitehouse, D-R.I., right, and ranking member Sen. Chuck Grassley, R-Iowa, conduct a Senate Budget Committee hearing, May 4, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

Other Democrats also support the idea of making higher earners pay a larger share into the program.
Rep. Brendan Doyle, D-Pa., has introduced companion legislation to Whitehouse’s proposal in the House.
Rep. John Larson, D-Conn., and Sen. Richard Blumenthal, D-Conn., on Wednesday reintroduced the Social Security 2100 Act. The bill, with more than 200 Democratic House co-sponsors, also calls for applying Social Security payroll taxes to earnings of more than $400,000. It would also apply an additional net investment income tax on people making more than $400,000.
Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., have introduced a separate bill that would instead apply Social Security payroll taxes to incomes over $250,000, while also having the wealthy pay taxes on their investment and business income.

A tech exec making $1 million effectively stops paying into the program at the end of February, while a schoolteacher making far less contributes their share through every single paycheck all year.

Sen. Sheldon Whitehouse
Democratic Senator from Rhode Island

Polls have shown raising the Social Security payroll tax cap — sometimes attached to a slogan, “Scrap the Cap” — is also popular with the public.
Yet, at Wednesday’s Senate hearing, some leaders and experts questioned whether that is the right approach.
“The truth is that taxes on the rich alone won’t save Social Security for our children and grandchildren,” said Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Budget Committee.
Democrats’ proposals would push the marginal tax rate to over 50% and many would break President Joe Biden’s promise not to raise taxes on anyone making less than $400,000, Grassley argued.

“These are tax-heavy messaging bills and not real solutions,” Grassley said.
Experts who testified at the Senate hearing were also divided on whether higher taxes are the right strategy to pursue to fix the program.
“Any resolution of this funding gap must be perceived to be fair, yet fairness is in the eye of the beholder,” said Andrew Biggs, senior fellow at the American Enterprise Institute. More

The Biden administration announced it would automatically cancel education debt for 804,000 borrowers, for a total of $39 billion in relief.
The debt cancellation is a result of the administration’s fixes to repayment plans, which included updated counts of borrowers’ payments.

President Joe Biden announces new actions on June 30, 2023 to protect borrowers after the Supreme Court struck down his student loan forgiveness plan.
Chip Somodevilla | Getty Images

The Biden administration announced Friday it would automatically forgive $39 billion in student debt for 804,000 borrowers.
The relief is a result of fixes to the student loan system’s income-driven repayment plans. Under those repayment plans, borrowers get any remaining debt canceled by the government after they have made payments for 20 years or 25 years, depending on when they borrowed, and their loan and plan type.

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In the past, payments that should have moved a borrower closer to being debt-free were not accounted for, according to the Biden administration.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement.
To bring people over the line for forgiveness, the Biden administration counted payments for borrowers who’d paused their payments in certain deferments and forbearances and those who’d made partial or late payments.
The announcement comes weeks after the Supreme Court struck down President Joe Biden’s sweeping student loan forgiveness plan, which would have delivered relief to about 37 million people.
The Education Department will notify eligible borrowers in the coming days. More

Office attendance has stabilized at 30% below where it was before the Covid-19 pandemic, according to a new report.
Demand for office space is expected to drop to far below where it was in 2019.
Changes in office culture are influencing where people live and shop.

Virojt Changyencham | Moment | Getty Images

Office demand declines

That flexibility is helping drive down demand for office space. By 2030, McKinsey predicts, demand for office space will be as much as 20% lower than it was in 2019, depending on the city. While remote and hybrid work is the big reason, the trend toward more desks in less space and shifts to automation were also factored into its analysis. 
Lower office space demand has companies rethinking how to make their real estate jibe with new work habits. Working in teams and increasing productivity are the top reasons office workers with flexibility give for being on-site. 

Many office environments are not meeting employees’ needs. Having spaces for employees that are free from noise and distraction so they can work independently is “critical to job performance,” says Jordan Goldstein, a managing principal at architecture firm Gensler.
Creating what’s called “meeting equity” is also important, so people who are physically in the office and people who are working remotely can conduct business. “The days of a four- to six-person room with a 42-inch flat screen on the wall are over,” said Goldstein. Instead, he suggests employers should create an environment where the virtual and physical offices are brought together. 

The ripple effect: People moving out

The evolution in office culture has also changed where people are choosing to live. Of the people surveyed who moved after March 2020, 20% said that their move was possible only because they could now work from home more frequently, according to McKinsey.
Researchers looked at neighborhoods in San Francisco, Houston and the borough of Manhattan in New York, and found people moved out of expensive, office-dense ZIP codes and into cheaper ones with more mixed use of real estate.

McKinsey’s comparison of the pandemic’s effect on New York’s Financial District and Lower East Side neighborhood showed that mixed-use neighborhoods, with a diverse offering of office, residential and retail space fared the best.
The Financial District, which consists of 80% office real estate, a large concentration of workers and an average home price of about $1.5 million saw people leave at more than two times the rate than the Lower East Side, where the average home price is about $500,000 lower and just 7% of real estate is dedicated to office space. 

Retail demand is changing

Shopping patterns were also changed by the pandemic, with remote and hybrid workers less likely to spend near the office.
“Retailers need to rethink their model,” said Jan Mischke, a partner at the McKinsey Global Institute, as foot traffic and and spending continues to be lower — especially in office-dense neighborhoods — and online shopping continues to take market share from stores. “The demand for retail floorspace in 2030 will be lower than it than it [was] in 2019,” he said.
“We feel we have a sufficient clarity now that it’s relatively clear what needs to happen,” said Mischke. At the city level, that means creating more mixed-use environments, which proved more resilient during the pandemic. More