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Thursday, February 17th, 2011

The Big City CBD Advantage

It’s interesting to look at the divergent fortunes of cities. One thing I’ve noticed is that while virtually every small city Central Business District (CBD) has had significant private sector employment declines to the point where they are now very dependent on the public and quasi-public sectors plus perhaps a few legacy headquarters, some of the biggest city CBDs have actually managed to sustain themselves as major commercial engines. This includes New York, Chicago, and Boston, though you could also add DC as a specialized sort of government company town. I suspect San Francisco would be in this group, except that it almost deliberately abandoned its CBD and even the pretense of being a commercial city out of abhorrence at the specter of “Manhattanization” there. LA of course never had much of a traditional CBD.

There are a lot of traditional explanations for this such as density and such. But I think in those really big areas, one advantage is simply the size of the commute shed there. They are able to effectively concentrate people from over a very wide area in a way that other places simply can’t match.

New York and Chicago are the best examples. They have massive commuter rail systems that radiate in all directions from their central cores. This make it possible to commute to Chicago’s Loop from as wide a range as from South Bend, Indiana to Kenosha, Wisconsin. You could even go as far as Milwaukee, as there are plenty of commuters on Amtrak’s Hiawatha service.

By contrast, if you are located in an office park on Lake-Cook Rd in north suburban Northbrook, you have a much more limited area from which to draw. In fact I spent some time working in one of those, and noticed how heavily skewed to the north the residences of the people who worked there with me were. There were plenty of people who lived in Wisconsin and drove in. But very few from the south half of the metro area. It’s just not feasible for most people to commute some of those routes via car given the horrific traffic.

This restricted commuting shed almost by definition limits the number of people who can work at an employer located there. Whereas someone located in downtown Chicago can draw from the entire metro area with ease. This gives a business a much wider potential talent pool from which to draw. This might not make a difference for more general business skills, but for specialized skills (and especially the need to aggregate different types of specialized skills together) the ability to pool and concentrate the resources that the entire metro area can bring to bear might indeed make a difference.

I suspect the ability of businesses located in these central cores to draw from the entire region in the way that suburban business locations can’t is one of their key draws.

By contrast, places like Indianapolis or Nashville are much smaller and much less congested. You can commute from anywhere to anywhere by car with ease. In fact, favored quarter development patterns in these cities actually mean that to be in the center of gravity of the white collar labor force, a business should locate away from downtown. It’s no big surprise why they’ve retained much less of a hold on private sector commerce. I’ll have much more to say on that topic in a future post.

48 Comments
Topics: Economic Development

48 Responses to “The Big City CBD Advantage”

  1. John says:

    Exactly. My office in the Loop has a person commuting from South Bend on the South Shore Line and an intern from Milwaukee on Amtrak, both on a daily basis. If you want to have access to all of the region’s employee base, the CBD is the only place in Chicago to do it.

    This of course explains why the south half of the Metro area is less wealthy and the housing is cheaper too. They don’t have easy access to the region’s suburban jobs. Why are the region’s suburban jobs mostly north, northwest, and west? My guess would be proximity to O’Hare. A new airport in Peotone would be a game-changer for the south suburbs.

  2. Alex B. says:

    DC definitely fits the mold. There is indeed a large amount of Government office space in the CBD (broadly defined), but there’s much more private sector space than most might realize. Regardless of who owns it, the location and commute patterns are quite similar.

    The key word from CBD in this case, of course, is ‘central.’ The robust transit networks in these cities helps things quite a bit, but the fact that they are central locations is of primary importance.

    Even places that do not have robust transit networks but still do have substantial job concentrations in their CBDs display this kind of phenomena – Minneapolis is one that comes to mind. Minneapolis also benefits from having St Paul to the east, as the area has grown and sprawled in the direction of the favored quarter, the presence of St Paul has ensured that the geographic population center of the entire region is still squarely on top of downtown Minneapolis.

  3. NYC resident says:

    Disagree that CBDs in big cities always have an advantage–looking at NYC for example, many of the best businesses and highest salaries are found at corporate techipole locations such as Northern NJ and Fairfield County, CT.

    The CBD is great, but also extremely congested and the top execs have just as much access to talent in White Plains and Stamford, if not more– enabled, of course, by NYC’s awesome commuter rail network as well as by the fact these are favored areas to live. This has changed dramatically in just a few years in the sense that many hundreds of thousands of the best employees actually live in NYC and reverse commute on NJTransit or MNRR.

    Of course NYC may be the exception since it is so big- Chicago definitely seems to still have a huge CBD advantage.

  4. ds says:

    I agree with the above analysis – it is extraordinarily difficult for a southsider to get to the major surban job centers near ohare, schaumburg and the i-88 corridor. Given this it seems that in the extremely remote chance an airport in peotone would be successful, its primary effect would be to draw jobs away from the Loop and spread the metro area out even further.

  5. George Mattei says:

    I think this concept extends to many of the facets of larger cities, not just downtowns. For example, lots of cities wanting to make it to “big league” status try to build big transit networks and support multiple sports teams and arts institutions.

    Let’s face it, there is no way Indianapolis or Nashville can ever compete with a New York or Chicago in the short term in these arenas. The population base of the larger cities support much more robust arts institutions than smaller cities can have. Same goes for transit and sports teams. Sure, these cities may have SOME of these features, but to collect ALL of them in one place is virtually impossible.

  6. George Mattei says:

    The other thing to note is land prices and parking. In Columbus, where I live, where there is not a robust transit system. Additionally, land downtown costs much more than in the suburbs. Basically businesses locating downtown have a few options:

    -acquire land or parking garage rights (or build a parking garage) for a substantial additional expense
    -Pay for workers to park in local public lots and garages
    -Put the onus on workers to find and pay for their own parking, increasing their costs, effectively reducing their salary

    The question is what advantages offset this additional cost? Sometimes there is a mitigating advantage, but often there is not.

  7. Patrick M says:

    The five cities you named are basically the top mode share cities for transit in the USA:

    http://www.bikesatwork.com/carfree/census-lookup.php?state_select=ALL_STATES&lower_pop=250000&upper_pop=999999999&sort_num=3&show_rows=25&first_row=0

    Philly is close behind.

    I guess the question to ask is are there CBDs in other big American cities that have just as many jobs as the 5 top transit metropolises, but have lower GDP per employee?

  8. John Morris says:

    Very true, and also self evident that mass transit would have this effect.

    I guess, the reverse commute trend we see in San Francisco and the NY area is very interesting. I see that in Pittsburgh a bit too, although I have no real data

  9. John Morris says:

    George, actually NYC does not stand out as a big player in the sports arena game, which New Jersey bet so much on.

    In general the city, and Manhattan in particular stands out for how few it has. The proposed West Side stadium met bitter opposition.

  10. Joseph E says:

    Re: “I suspect San Francisco would be in this group, except that it almost deliberately abandoned its CBD and even the pretense of being a commercial city out of abhorrence at the specter of “Manhattanization” there. LA of course never had much of a traditional CBD”

    Huh. Do you know much about California?

    LA used to have a very strong CBD, from about 1890 to 1930, sustained by a radial system of streetcar lines and interurban trains. But after freeways were built in the 1930′s thru 60′s, the CBD slowed it’s growth and many employers moved to edge cities and new centers, like Century City, Westwood, Warner Center, Santa Monica, Burbank, Glendale, Pasadena, El Segundo. However, Downtown Los Angeles still has over 200,000 jobs in about 2 square miles and is by far the largest job concentration in the region (though not a very large percentage of new jobs, to be sure)

    San Francisco has also been hurt by decentralization, as you say, but I believe the decision to build freeways and convert the bridges to cars-only (the Bay Bridge used to have the bottom deck for streetcars) lead to jobs being spread out in new suburbs, rather than any limits on density within San Francisco. The geography of the Bay Area also makes it hard to get to San Francisco from accross the bay, due to limited access.

    BART is basically running at full capacity at rush hour and freeway buses are very busy; it would have required massive investment in multiple high-capacity transit lines to allow more jobs to be concentrated in San Francisco. Of course, in Chicago and New York there is just that sort of huge, diverse transit system to get people to work all in one place, even from distant suburbs.

  11. John Morris says:

    Also George, New York built the vast bulk of it’s mass transit and commuter rail, when it was a much poorer city. The last major line was completed in the 1940′s I think.

    These investments have paid off pretty well, and likely would have done better had the city not engaged locked in strict zoning codes preventing mixed use density from developing sooner in former manufacturing areas and along the rail lines, as well as rent control and a Robert Moses style “urban renewal” and highway construction.

    Why building transit or any other major project costs so much is a subject in itself.

  12. Thad says:

    I wouldn’t say this is an advantage, but a consequence of a spoke and hub network where there are many ways to get to the center, but you have more difficulty travelling radially. All of the cities you mentioned too are much older cities that came of age in a different time where this pattern of development was much more logical due to the compact nature of cities. Chicago is the perfect example where everything, highways, Metra, the “L”, travel downtown and were design with the idea that everyone is commuting downtown (Just look at the layout of infrastructure). This has become problematic and the reason why projects like the Circle line and the Chicago Metropolis 2020 plan to foster better connections to suburban economic centers are becoming more popular, because more jobs are going to suburban areas and not everyone is or has to commute to the Loop.

    This also serves as a disadvantage to the unemployed because there could be a better paying job in Naperville or Aurora than in the city, but if they don’t own a car and don’t have convenient access to Metra, then they miss that opportunity. So it may benefit employers in some ways, but it can also serve as an inhibitor to those seeking employment.

    Also there are many younger cities, especially in the Sun Belt that don’t have one dominant CBD that aren’t falling by the wayside like L.A., Houston, Dallas, even Miami with it’s large downtown. They developed more of a grid or web like pattern that has more radial connections.In fact these places with multiple employment centers mean that even though some do have a limited drawing pool of talent, people have more opportunities to live closer to where they work. Also, the transit systems tend to develop to support this pattern.

  13. Ed says:

    In “Sprawl and Urban Growth” (pg 4 below) Ed Glaeser pointed out that average commute times in New York City at 39 minutes were the longest in the country. He also pointed out that in edge cities, the average commute is only 21 minutes. Nationwide census data repeatedly shows that people who commute by transit have longer commutes than people who drive even to the same address. If you spend time with Google maps, for most addresses in most regions of a given metro area driving is just about always faster than commuting by transit. Buses and trains make many stops along there routes to pick up passengers, cars are point to point. If you have to transfer between buses or modes commute times increase even more. As Donald Shoup observed in the “High Cost of Free Parking”, most commuters don’t take transit for the time savings in their commutes but rather to avoid paying for parking.

    Its the times savings of driving vs commuting by transit that drives job sprawl. In 2006, in the Chicago MSA 68.6 of all jobs in the region were located further than 10 miles away from the CBD. That was actually higher than Los Angeles where in 2006 only 65.6% of all jobs in the region were more than time miles from the CBD. (See Brookings below).

    Second I question the argument that CBDs have an advantage at retaining skilled employment. First look at NYC. The financial services industry has been leaking out of Wall Street for other locals in the region like Connecticut. The yuppie baby boom in lower Manhattan occurred as persistently vacant office space on Wall Street was absorbed by converting it into high end housing. Employers left Manhattan to Connecticut to reduce commutes for their employees and to reduce office rents for themselves.

    Second look at San Francisco. The SF Financial District used to be the financial headquarters of the West Coast. It used to be the center of Fortune 500 companies on the west coast. BofA departed to North Carolina. Chevron moved to San Ramon. Today the preferred address of the Venture Capital firms in Sand Hill Road in Palo Alto, the largest law firms and accounting firms by billing are now located in the Pennisula, no longer in the SF financial district. Most of the firms listed in the Chronicle 200, (the list of the largest companies in the Bay Area are located Santa Clara, not San Francisco. (Intel, Apple, Google, HP, etc).

    The economic function of cities is changing. What drives urban success isn’t the presence or absence of a large Fortune 500 company or even large concentrations of high end employers. But rather consumption. What is driving the success of SF, Manhattan and even the Northside of Chicago is the excitement of urban life. Its the nightclubs, the bars, the restaurants, the cafes, the theater – the diversions of urban life. Google now runs a shuttle to SF for its employees who choose to live in the City. Its employees in SF aren’t living in SF because of the close proximity to work or to minimize there commutes. Google’s employees would shorten there commute if they moved from SF to Mountain View. Its the excitement of urban life that is the draw to living in SF.

    http://people.missouristate.edu/davidmitchell/Urban/Sprawl%20and%20Urban%20Growth.pdf

    http://www.brookings.edu/reports/2009/0406_job_sprawl_kneebone.aspx

  14. John Morris says:

    “The financial services industry has been leaking out of Wall Street for other locals in the region like Connecticut.”

    A pretty deceptive statement. Wall street to a great degree moved up towards midtown, 42nd street and the West Side where thete was some space for larger building footprints and actually better access by commuter rail. Also, major high rise office development was built on the Jersey waterfront.

    The market, for lower Manhattan luxury housing very much reflects this abundant base of jobs.

  15. John Morris says:

    Ed, your point about the growing popularity of dense urban living is very true. However, the excitement aspect is just one part of the overall greater convenience-to potentially everything. Work commute times are just one part of the picture. I think the overall need for a car, trip for all other errands, meetings and aspects of life is an understated problem.

    Also, the point you make about commute times also seems deceptive and misleading. Manhattan, for example has 1.5 million residents alone, a great number of whom must have pretty short commutes. Long avg mass transit commute times reflects a very large number of riders–including many who are low income and live far out on poorly running lines

  16. George Mattei says:

    @ John Morris-

    John, my point about sports teams was not that they exist in downtowns, but that in general, larger cities can support more diversity of experiences than smaller cities can. While Manhattan itself might not have many teams beyond the Nicks and Rangers, the metro area supports many pro sports teams, including those in Jersey.

    The same is true with downtowns. Let’s say hypothetically 2% of your population in the average American metro area wants to live downtown. Well, in Columbus, 2% of 1.7 million is 34,000 people. So that might be your upper limit. In New York 2% of 20 million is 400,000. That’s a lot more people. They support many more apartments, businesses, etc. Then on top of that you have the “New York Effect”, where a small percentage of the entire national population wants to live there because it’s New York. Voila, Manhattan.

    Same with the arts and sports and transit. Bigger population base, more demand, cost per person is much lower for many things. New York was still a much larger city in the 1940’s than many cities in the U.S. are today.

  17. Thanks for the comments.

    Thad, I want to clarify that I wasn’t trying to say your whole region would fail if you weren’t a big city. Obviously Houston is doing quite well. But the CBD for those places is a small part of the story and certainly no longer the commercial heart of their regions.

  18. John Morris says:

    George, Manhattan itself has 1.5 million people (almost all of whom live in apartments) with what looks like great demand for more. That ends up at well above your 2% number. Add to that, the perhaps 4-5 million other New Yorkers who seem to be OK with living in dense neighborhoods. (Construction of this type is also common in on the Jersey Waterfront)

    Remember also, that NY has rent control which has played a big role in limiting the supply of anything other than luxury apartment rental construction since the 1940′s.

    This places likely demand closer to 20% or more. remember also, that NYC was very slow in converting it’s Brooklyn and Queens waterfronts over from industrial uses–and actually changed the zoning only after non legal users, like artists demonstrated huge demand.

    In general, NYC has a large percent of people willing to live at density levels at which transit works well.

  19. John Morris says:

    Actual population of Manhattan, over 1.6 million.

  20. John Morris says:

    I bring up the zoning laws, because you can’t say demand for something doesn’t exist–if you make it illegal. NY did not allow large scale office or apartment construction along a big area near it’s Brooklyn and Queens waterfront until very recently.

  21. John Morris says:

    Just to put the wasteful stadium fetish in perspective, Pittsburgh, wit 2 million in metro area has pro Baseball, Football and Hockey stadiums and a big college basketball arena.

    If NY did that per capita, it would have 10 baseball, and ten Football stadiums.

  22. John Morris says:

    The NYC metro area has one Football Stadium, shared by two teams.

  23. Ed says:

    John Morris-

    As to commute times, I am not being deceptive or misleading. I am being factual. The 39 minute average commute times in NYC and 21 minute average commute times for edge cities, comes from pg 4 of this Ed Glaeser/Mathew Kahn paper. This is a peer reviewed, fact checked academic paper.

    http://people.missouristate.edu/davidmitchell/Urban/Sprawl%20and%20Urban%20Growth.pdf

    Between 1998 and 2006, the share of employment located with 3 miles of the CBD in the New York/ Northern New Jersey/Long Island Metro area declined from 35.5% of employment to 34.8% of employment while the share of employment further than 10 miles from the CBD increased from 45.6% to 46.2% see (pg 18) Brooking paper here.

    http://www.brookings.edu/reports/2009/0406_job_sprawl_kneebone.aspx

    While you are free to dispute my characterization of employment in the financial sector leaking out of lower Manhattan, I think its fairly factual to point out that the share of employment in the CBD’s of New York/Northern New Jersey/ Long Island Metro area are decreasing while the share of employment further away from the CBD’s are increasing. Further the baby boom in Lower Manhattan is a consequence of projects that converted former office space that used to be used by the financial services industry into housing for the wealthy. During this same the same time frame there was a substantial relocation of firms and employment out to places like Greenwich Connecticut, to New Jersey etc.

    But I also think you are missing my argument. The point I am making is just like Google employees are now living in San Francisco but working in Mountain View, we are now seeing the rise of people living in Manhattan but working in New Jersey or Connecticut or living in Lincoln Park and working out in Oak Brook. This class of people isn’t moving to housing near the CBD merely to reduce commute times, but instead often moving to the CBD despite the fact that such moves often increase their own commute times. This is something that is important.

    35 years ago if someone was to claim that most of the Fortune 500 companies headquartered in San Francisco would depart the city as a result of mergers and relocations most people would have assumed that SF was going to turn into some sort of post apocalyptic Bladerunner like urban dystopia. But while a lot of the big employers departed (Chevron, BofA, Crocker Bank, Pacific Telephone, Southern Pacific), in many senses of the word, the City of San Francisco is arguably nicer today than when it was still the financial center of the west coast in the mid 1970′s.

    Similarly, lower Manhattan is probably stronger today, despite the fact that a lot of Wall Street firms left the area in the past 10 years.

    The fortune of Central Business Districts is no longer so tightly interwoven with whether or not they attract, retain or even lose a major employer or several major employers. Instead the health of the Central Business District depends more upon the health of the restaurant corridor in the area, the bars, the night clubs, and the general the density of diversions in the area. That is now the agglomeration that matters.

    Look at the Bart Map. Oakland, not SF is the center of the Bart System and probably the most central location in the Bay Area commute shed. While employers have departed from SF, they didn’t really decamp in mass to Oakland. In many respects Oakland has a nicer climate, the fog burns off quicker, yet the climate is still quite mild. Yet SF has the much stronger economy. Again its that there are more urban diversions in SF.

    http://www.visitingdc.com/airports/san-francisco-bart-map.asp

  24. John Morris says:

    Some of your points are either ill informed or plainly deceptive.

    To talk about the declining percent of Wall St jobs in Lower Manhattan and not even mention the massive number of these jobs, now in Midtown is deceptive! Midtown, Manhattan is most certainly in the CBD. In fact, the move came partly because it has even better transit links–Metro North from Grand Central, LIRR, PATH, New Jersey Transit @Penn Station.

    Also, to imply that most of the jobs leaving the Manhattan CBD are now in Westchester, Connecticut or suburban New Jersey is also very inaccurate. A very large amount of office construction has happened directly across the Hudson and to a lesser extent in Downtown Brooklyn and Long Island City.

    A lot of this comes down to lies and statistics. The areas near Manhattan may not be called the CBD but they are not in any way suburbs.

    It’s highly unlikely more than 0.5% of people living in lower Manhattan commute every day to Connecticut.

  25. John Morris says:

    Are you really serious about the numbers you quote being significant?

    “35.5% of employment to 34.8% of employment while the share of employment further than 10 miles from the CBD increased from 45.6% to 46.2%”

    Less than a percentage point change is a rounding error and hardly significant.

    In fact it proves that the jobs moved out of some lower Manhattan buildings just moved elsewhere in the CBD or closeby.

    This is the change to build a thesis on? I would agree that in San Fransisco a significant change has happened.

  26. Mike says:

    Employers decentralize. One of the things that has weakened the central business districts in both the Bay Area and Los Angeles is decentralization. There was a time when my law firm only had an office in San Francisco that served all of Northern California. Today in addition to the office in San Francisco, it has an office in Palo Alto, Oakland, Walnut Creek, and Sacramento. Most of the accounting and consulting firms I work with have done the same thing.

    Similarly when I worked in LA most of the firms had offices in downtown LA, usually a second office in West LA, Century City or Beverly Hills, usually another office in the San Fernando Valley, usually Warner City, Burbank or Sherman Oaks, another office in the South Bay usually Torrance, Seal Beach or Hawthorne, and usually one or two offices in Orange County, usually Costa Mesa, Irvine or Huntington Beach. This was true for most professional services. Because employers were located throughout the region so were services targeting them. Moreover instead of paying for one large expensive office in a single central business district, you had multiple office spread out the region in areas with cheaper rents. It also reduces everyones commutes.

    The composition of the work might vary somewhat office to office. There was more patent law stuff done in the South Bay office because of the defense contractors like TRW and more entertainment in West LA. But the reason you had less hyper commuting is that people generally lived close to the office they worked out of. If you worked in West LA, you probably lived fairly close to West LA.

    Ed-

    Solid argument, well supported. Some people just won’t accept facts as facts. There isn’t much you can do with them.

    More to your point look at downtown LA. In the past 10 years it has had quite the revival despite loosing major employers like the headquarters of ARCO, First Interstate Bank, Security Pacific. Yet despite the exodus of employers the area has strengthen as the restaurants and clubs came in, which lured the residential construction. Downtown LA is probably stronger today than it has been in the past 50 years.

    Then look at San Diego. Again the Central Business District has been revived despite an absence of major employers moving to the area. Instead it was the success of Horton Plaza which begot the Gaslamp District and that the drew people interested in living downtown. The skid row that used to cover most of downtown has mostly departed. Downtown San Diego is a marginal employment center the employment growth has been along the freeway corridors.

  27. John Morris says:

    The numbers Ed quotes in regards to NYC, hardly look like solid support for his argument–less than 1% change in employment.

  28. Mike says:

    John look again at the Brookings Institute data on job sprawl. There are several pages. Jobs are departing the central business districts of just about every region in the country.

    When you have a trend that is happening just about every metro in the country it is significant and not merely rounding error.

  29. John Morris says:

    Both Mike and Ed also seem to be unaware that fortune 500 type employers are a small part of the picture. The loss of some of those, hardly supports the idea that all jobs have been lost or that CBD’s are no longer important job centers. They have often just evolved into places more focused on smaller firms and the self employed.

  30. John Morris says:

    Mike, yes the numbers may show that elsewhere, but the change stated for the NYC area is not significant.

  31. Ed says:

    John Morris

    I have cited data from reliable respectable third party non-interested sources.

    Are you disputing the Brookings Institute data, or the Ed Glaeser/Matthew Kahn paper data? Ed Glaeser is professor at Harvard. Mathew Kahn is a professor at UCLA. Which data source have I cited that you feel is either deceptive or misleading and why?

    http://www.economics.harvard.edu/faculty/glaeser
    http://publicaffairs.ucla.edu/matthew-kahn

  32. John Morris says:

    I think I stated exactly what I thought was deceptive.

    You stated/implied a major shift had happened in NYC’s employment when the numbers you quoted showed changes under 1% (well within a rounding error, considering NY is a hotbed of self employment and small firms)

    “Between 1998 and 2006, the share of employment located with 3 miles of the CBD in the New York/ Northern New Jersey/Long Island Metro area declined from 35.5% of employment to 34.8% of employment while the share of employment further than 10 miles from the CBD increased from 45.6% to 46.2% see (pg 18) Brooking paper here.”

    You then went on to talk about the recent changes in lower Manhattan–without mentioning the main area jobs had shifted to which was not out of town but a few short subway stops to the Times Square and midtown area.

    This is very important, in that the real numbers for NYC, do not show the kind of major shift, you imply and are actually proof that cities with decent transit systems and critical mass can retain and grow vitality and hold their job base.

  33. david vartanoff says:

    FWIW approximately a year ago the NY Times reported record reverse commuting on Metro North trains.

  34. Alon Levy says:

    In New York, distance from the CBD is a meaningless statistic. It doesn’t sprawl evenly in all directions – the water gets in the way, and so does the tradition of state lines. 10 miles east of Midtown is just west of Jamaica; 10 miles northwest is the classic suburbia of North Jersey.

    And on another note, Midtown and Lower Manhattan are about 4 miles apart. Whichever of the two you use as a core, a 3-mile circle will exclude the other.

  35. John Morris says:

    LOL, Enough said. Anyone who knows Manhattan today would consider anything below 86th as one business district.

  36. John Morris says:

    Alon is right, google maps says Wall St. is 3.8 miles from 42nd St. The true story is one of a mixing and densification that has made most mid Manhattan down one business district.

    For example, lot’s of Wall Street jobs have gone uptown (still plenty there) while start ups and publishing jobs have taken root downtown.

    “The Alliance for Downtown New York counted 60 media companies now in or moving to the area below Chambers Street. Condé Nast, The Daily News, U.S. News & World Report, Newsweek, The Daily Beast and The National Enquirer have announced plans to move their offices from Midtown to the financial district and the World Trade Center neighborhood, where they will be joining The Forward, Inc., Fast Company and Men’s Fitness, the music-rights organization BMI, and others. The Downtown Alliance estimates that there will soon be 5,375 media employees working downtown, not including Condé Nast.”

    http://www.nytimes.com/2011/01/29/nyregion/29metjournal.html?_r=1&pagewanted=1

  37. Michael says:

    I can’t tell you about downtown vs midtown. But by fiddling with the application I linked below I found out that over the last 5 years about 86% of employed Manhattanites stay within NYC, while .4% head up to White Plains and .2% head to Stamford.

    Also found out that over the last 5 years the percentage of Manhattanites that leave Manhattan to go to work jumped from about 25% to 27%.

    http://lehdmap.did.census.gov/

    If you want to work with the program for a while you can probably find out the downtown vs midtown commuting patterns. Either way its a fun program.

    Mike

  38. John Morris says:

    “86% of employed Manhattanites stay within NYC, while .4% head up to White Plains and .2% head to Stamford.

    Also found out that over the last 5 years the percentage of Manhattanites that leave Manhattan to go to work jumped from about 25% to 27%.”

    OK, this is somewhat interesting and a clear trend twoards reverse commuting is starting to happen. However, by far the most likely commutes are from Manhattan to New Jersey waterfront and Manhattan to Brooklyn/Queens waterfront and downtown Brooklyn.

  39. Alon Levy says:

    If I’m not mistaken, the reverse commuters are more likely to live in the Bronx than in Manhattan. Fordham is the busiest Metro-North origin station for reverse commuters.

    Doesn’t matter, though – for all the hubbub about White Plains and Stamford, the employment at both combined is still less than one tenth the employment in Manhattan, and about one half the employment in the edge city cluster of Edison, New Brunswick, and Woodbridge.

  40. AF says:

    “Between 1998 and 2006, the share of employment located with 3 miles of the CBD in the New York/ Northern New Jersey/Long Island Metro area declined from 35.5% of employment to 34.8% of employment while the share of employment further than 10 miles from the CBD increased from 45.6% to 46.2% see (pg 18) Brooking paper here.”

    I recall a big event between 1998 and 2006 that may have affected employment in Lower Manhattan.

  41. John Morris says:

    Yes, the particular period in question captures the effect of 9/11.

    I do think the reverse commuter trend is important/potentialy very important and worthy of a blog post here. At this point, most of the commuter rail stations are surounded by mostly parking garages, and not very well geared for reverse commuters. But with some tweaking, real mini business distrcts could be brought bach to the old downtowns–Stamford (which has office towers near the station)New Rochelle–and Newark!

    The economics of transit would be vastly improved by more people traveling in both directions.

  42. alki says:

    I think people need to revisit downtown LA. In the last 15 years, the city has developed a number of commuter lines that now converge on Union Station, which has become a transportation hub for the region, as well a number of light rail lines and a subway line that converge on downtown. While that may not have increased employment downtown…in general LA has not had significant employment growth during the past ten years…., it has made the CBD more attractive and helped to grow its residential population……many new apts and condos have been built in the past ten years.

    Meanwhile, Seattle is an example of a medium size city whose downtown core is growing. In the past ten years, the Seattle CBD has seen considerable growth in office and residential development. In fact, the downtown footprint is grown ever wider as developers begin to build on peripheral parking lots. Unfortunately, mass transit is lagging behind. The bus system is fairly good but the city has been slow to develop rail transport. Currently the city has only two commuter lines and one light rail line. More is slated but time and money are dear.

  43. Thor says:

    It wasn’t 9/11 that killed Wall Street as much as the movement of stock trading from humans at the NYSE to faster and cheaper electronic exchanges like Achipelago Trading Services or even Nasdaq. Electronic trading is capturing a lot of the liquidity in the markets. As server farms became comparatively more important for executing exchanges than face to face contact, there wasn’t the same rational for spending money on high wall street rents. While the New York City metro still has a huge human capital advantage in this sector compared to the rest of the world except possibly London, lower Manhattan no longer has a huge advantage compared to the rest of the New York metro region in attracting financial services employment. This is why the financial sector jobs are dispersing into the rest of the New York metro. They are going to New Jersey and Connecticut, Brooklyn, Queens and elsewhere. The process doesn’t happen overnight. A lot of the financial firms have long term leases and not all firms are going to leave Manhattan in the same way that no all manufacturing employment has fled the Midwest for Asia. But the process is on going and its not merely a consequence of 9/11. Manhattan will not die as a result of this. It is in the process of re-inventing itself again, largely by turning into even more of a playground for the very wealthy.

  44. John Morris says:

    Thor, what you are saying s only partly true. A large bulk of “Wall Street” jobs has left lower Manhattan but not the city itself.

    Bottom line is that lower Manhattan has many older buildings with small floor plans that are not ideal class A office space. These have been coverted to residential.
    Uptown, newer class A type buildings with larger floor plans have been built.

    The move is in fact a perfect demonstration of the CDB advantage, Aaron talked about since the Midtown West area is actaully the best served by transit and commuter rail in the city.

  45. Thor says:

    What data are you relying on to argue that the financial sector employment that has left lower Manhattan has been offset by the growth in financial sector in Midtown Manhattan.

    That is news to me. Show me the data.

  46. John Morris says:

    Just general knowledge of NY. When Lehman closed, it was in Midtown as is Morgan Stanley and many others.

    The data given shows a change of under 1% in employment within three miles of the CBD and NY’s employment numbers are still dominated by FIRE-Finance, Insurance and Real Estate.

  47. John Morris says:

    Thor,

    Here’s an old article from 2004 about this. I’ll admit much has changed since-but this was a powerful trend with many long leases signed.

    http://nreionline.com/mag/real_estate_midtown_manhattan_pillar/

    “Adding insult to injury, two large blocks of space came to market in the third quarter. JPMorgan Chase & Co. vacated 588,200 sq. ft. at 1 Chase Manhattan Plaza, an office tower near City Hall, in a move to consolidate its office space in midtown. The banking firm also vacated 298,000 sq. ft. of sublease space at 95 Wall Street. And Larry Silverstein’s 7 World Trade Center — due to open in 2006 — will introduce 1.7 million sq. ft. of office space to the market.”

  48. John Morris says:

    Here’s a more recent article.

    http://www.crainsnewyork.com/article/20090714/FREE/907149988#

    “Average vacancy rates in Manhattan in June rose to 10.5%, nearly double the 5.5% low hit in 2007. Cushman forecast that vacancies could climb to 14.3% over the next twelve months as companies shed an estimated 65,000 jobs and as two big new buildings—11 Times Square and the new Goldman Sachs headquarters—open up.

    “The highest vacancy rate is expected to be in the midtown Class A market where the financial and professional services are dominant,”.

    It describes financial services as a dominant part of the midtown job base. The job losses since the recession are more likely lost rather than just moved around the region.

    The moves toward midtown fit Aaron’s thesis perfectly.

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