Sunday, June 26th, 2011
I recently wrote about the return of jobs to downtown in large tier one cities like Chicago. There are a number of factors driving this: the rise of the “global city”, the locational advantage of downtown for commuters, the significant rise in central city residency for professionals, etc. This has enabled the central cores of cities like New York to remain extremely strong even if in some sense they are losing job share to the suburbs or even outright losing jobs (as in Chicago).
Smaller cities, which I define as anyone below those tier one global type cities, face a much rougher challenge in my opinion. They operate under a different set of dynamics where many of the boosters to downtown employment are absent and indeed there are structural reasons for jobs to migrate to the suburbs. Some of these are:
1. Lack of downtown based industry clusters, notably finance. Cities with vital commercial cores are almost always major global centers for an industries that have historically been based in the core, and which benefit from clustering economics and face to face interaction. Notably, almost all of them are financial centers, often with financial exchanges. This extends far beyond the basic commercial banking sector found in most cities. Other core industries centered in Manhattan, for example, include publishing, media, and fashion. Smaller cities less often have has an equivalent to these industries. Generally the favored target industry clusters of today – life sciences, high tech, advanced manufacturing, etc. – are highly dispersed throughout the region.
2. Limited “global city” effects. As documented by Saskia Sassen in her book The Global City, globalization, while it enabled much routinized production to be done all over the world (the “flat world” of Tom Friedman), also created a need for new specialized financial and producer services. These are increasingly clustered in a limited number of global cities (the “spiky world” of Richard Florida). Smaller cities are often not a major producer of these services. While they may have law firms, accountancies, ad agencies, etc, most of them exist to serve a purely local market. Whereas those firms in global cities not only service the local market, they produce services for export to other markets. This benefits those global cities by creating outsized employment in sectors that are the “natural constituency” for their downtowns.
3. Favored quarter development pattern. Cities typically follow a so-called “favored quarter” development pattern. That is, development is not balanced throughout the region, but is biased to one quadrant, which is also home to a disproportionate number of the college degreed, white collar workers, and higher income groups. In the US, this is often the north side for historical reasons. Because the white collar labor force of the city is disproportionately located in the favored quarter, the approximate center of this labor shed is somewhere in the middle of that favored quarter. Thus a suburban location in the favored quarter may actually be closer to most workers than a downtown one.
4. Traffic and transit. Location in the favored quarter suburbs is further enabled by the small size and comparative lack of traffic congestion in smaller cities. This makes it feasible for workers from anywhere to commute to the favored quarter in a reasonable amount of time, even if they don’t live there. By contrast, the tier one cities are very large and have significant congestion. This limits the commuter shed of suburban locations. On the other hand, their downtowns have 360 degree transit access the enable commuting from anywhere, making it in many regards the most accessible location. (I believe the difficulty of cross-town commuting is one reason Pittsburgh’s downtown has remained relatively strong, for example).
5. Size. Additionally, the smaller size of these cities means for many businesses the entire metro area can be effectively served by a single location. In places like New York or the Bay Area, the regions are so large and spread out that frequently even if there is a suburban location, a second downtown location is also required. This isn’t always the case elsewhere.
6. Positive reinforcement from urban core residential development. Tier one cities have also experienced a significant resurgence in near downtown living by professionals. These people often display a strong preference for a downtown location, where they can avoid commuting in traffic congestion or even not own a car. While the greater downtown of smaller cities have started showing residential growth, it is not yet at a level to generate this type of demand, though it is possible it could at a future date.
Considering these different dynamics vs. tier one cities, the playbook and strategies for strengthening the downtown as a truly commercial center have to be different. I’ve yet to see a truly compelling plan for it anywhere. I can’t claim I’ve got a great one sitting on a shelf here at Atelier Urbanophile either. It’s a hard problem.
I speculate that today most smaller city CBDs have employment that is increasingly concentrated in two sectors: public and quasi-public sector, and the visitor and hospitality related sector. To the extent that there are still truly commercial headquarters and such, many of them are legacy. Every report I’ve seen where someone has done the research has shown consistent declines in private sector employment in downtowns. It will be interesting to see if there are market forces or strategies that can be brought to bear on these smaller city downtowns to enable some of the same results we’ve seen in the tier one cities.