Thursday, February 17th, 2011
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.