Definition

The Donut Effect

A geographic pattern identified by Stanford professor Nick Bloom (a Kadence investor) in which remote work causes economic activity to migrate from urban cores toward suburban rings - leaving downtowns hollowed out while outer neighborhoods thrive. Cities like San Jose show an extreme version: nearly all-commercial with minimal residential density, so when office workers stop commuting, there is no mixed-use economy to sustain restaurants, retailers, or cultural venues. The donut shape describes how vitality concentrates in the ring (residential suburbs where remote workers now spend their days) rather than the core (downtown offices that sit half-empty). The effect has implications for municipal tax bases, pension funds exposed to commercial real estate, and urban planning strategies.