Why Ann Arbor Won’t Be an Economic Engine

The recent Kalamazoo Gazette editorial on our new report included a reference to former Governor Engler, when he was out of office, expressing regret that he just hadn’t written off Detroit and focused on Ann Arbor instead as the economic engine for the Michigan economy. Bad idea! Michigan needs a vibrant Detroit  for it to be prosperous again.

But the notion that Ann Arbor is best positioned to drive Michigan’s transition to a knowledge-based economy is widely held across the state. Unfortunately Ann Arbor’s politics make it unlikely to happen. Yes, Ann Arbor is home to the University of Michigan – a world class research university – which is a terrific asset. But to leverage the asset there has to be a large pool of talent that both will attract knowledge-based enterprises and commercialize the ideas coming out of the university. That talent pool won’t concentrate in Ann Arbor as long as it’s politics are anti-growth, particularly anti-density.

The City Council just turned down another development designed primarily for young professionals. It’s a regular occurrence. Is it easier  in Ann Arbor to do higher density development today than five years ago? Yes, but it still is real hard.

The result: Ann Arbor has about one third the young professional households as Madison (see our Young Talent in the Great Lakes report). A chief reason, Madison offers the kind of high density, mixed use, walkable neighborhoods that Millennials are looking for, Ann Arbor doesn’t. Ann Arbor may be an interesting place for Boomers to visit with its downtown restaurants, shopping and entertainment, but it’s not a very appealing place for Millennials to live.  So Madison is an engine for the Wisconsin economy, Ann Arbor isn’t for Michigan.  Unless Ann Arbor becomes much more development friendly and much more responsive to the changing demands for housing and density don’t count on Ann Arbor being an engine for the Michigan economy.

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has 14 Comments

  1. Actually, Ann Arbor has higher population density than Madison. The estimated 2008 densities were 4,221.1/sq mi for Ann Arbor, compared to 3,029.8/sq mi for Madison.

    One key difference is that Madison can grow by annexation of surrounding areas, while Ann Arbor is blocked in on all (?) sides by charter townships, something that no other state has. So even though Ann Arbor itself has higher density, the city’s growth is constrained, and geographically it’s only 1/3 as big as Madison. That’s part of why Madison has a population of more than 200,000, and the Madison Metropolitan Statistical Area is over 550,000, while Ann Arbor has 114,000 and the entirety of Washtenaw County only 323,000.

    1. It’s not the density of the city that matters. It’s the existence of high density, mixed use neighborhoods that are attractive to those looking for walkable, 24/7 neighborhoods that Ann Arbor is missing. Not all of the neighborhoods in talent magnets like Chicago, Seattle, Portland are high density. But they, unlike Ann Arbor, have encouraged the kind of neighborhoods (largely in and around their downtowns) that have the density that many young professionals are looking for (particularly before they have children.) Take a look at the maps in our Young Talent in the Great Lakes report (they are included in my presentation as well) and you will see that it is just a few neighborhoods in Chicago, Minneapolis and Madison where young professionals are concentrated. It’s those kind of neighborhoods that are, by and large, missing in Michigan, including Ann Arbor.

  2. Seeing is believing – sounds like a road trip to Madison is in order for Ann Arbor leaders.

  3. Lou – that may be, but neighborhood density and city density are closely related. Consider a comparison of Phoenix and Philadelphia, the 5th and 6th largest cities in the US, respectively. The populations are reasonably close, at 1.6 million and 1.55 million people; however, Phoenix has a density of 2,937.8/sq mi, while Philadelphia has a density of 11,410/sq mi. I’d be willing to bet that almost any neighborhood in Philadelphia is denser than almost any neighborhood in Phoenix.

    The other thing to keep in mind is that density generally results from scarcity. That can be scarcity of land (e.g., Japan), scarcity of culture (e.g., concerts, theater, museums), scarcity of transportation, etc. In other words, my argument is that people don’t necessarily LIKE density; they like the things that tend to go along with density. But to the extent that people can have those things (jobs, culture, etc.) without the density, or to the extent that people don’t value those things (e.g., retirees don’t need jobs, people with cars may not put much value on public transit, etc.) they will choose that.

    1. I don’t know why it is so hard to accept that some people like high density neighborhoods. An increasing number of young professionals do. They can live anywhere, but choose to live in high density neighborhoods in talent magnets like Chicago and Manhattan. It’s not forced on them. Obviously there are developers who think there is demand for those kind of neighborhoods in Ann Arbor. They are willing to take the risk and invest in them. Ann Arbor won’t let them. And because they won’t, it is likely that fewer young professionals choose to live and work in Ann Arbor, going to where they can get the quality of place they are looking for in places like Chicago. If you can’t find what you want here, they will look for it elsewhere.

  4. This fact of politics has to be lived with. But it is a hope that the emerging concept of “economic gardening,”which the Small Business Assn. of Michigan is enunciating in concert with the Edward Lowe Foundation, will get some traction. Candidates for Governor all are considering it as their “how do we help the Michigan economy” packages come forth.

    We need whatever state leadership that emerges to embrace helping those of us who remain driving business in the state. We no longer need the “tax incentives for jobs” concept that the state has been trumpeting for many years.

  5. Do you really think people want to live in high-density neighborhoods for the sake of high-density, or is it all the other things that usually go along with high-density: public transportation, nightlife, museums, concerts, theater, and jobs? I don’t think people necessarily want to live at 15,000 people / sq mi, but they want to live in Manhattan and they put up with the density to get that, because there is no way to live in Manhattan without the density.

    What is the intrinsic value you perceive in high-density living that you believe makes it inherently desirable to some people?

    1. Neither of us knows since we are not folks who highly value living in high density neighborhoods. But my guess is it is a bit of both. Some people desire being around lots of other people and others want the amenities that can only come from high density neighborhoods. Just because you don’t want to live in close proximity to lots of others, doesn’t mean some don’t value it. But from a policy perspective it doesn’t matter, you can’t get the amenities you agree are attractive without high density. So preventing high density residential development means Ann Arbor doesn’t have neighborhoods with the amenities that many young professionals are looking for which means that many of them leave which limits economic growth. The point of my post.

  6. Lou and cmadler, whoever the heck you are, agree that young people want to live in high-density neighborhoods/cities for the amenities and energy they offer. That’s the “intrinsic value” that makes high-density areas “inherently desirable” for young knowledge workers, as cmadler puts it.

    But no one has addressed here why Ann Arbor opposes this. Any thoughts? I wrote the cover story for Dome magazine this month on the University of Michigan’s ambitious plans for the Pfizer complex. Will U-M be able to attract the knowledge workers and entrepreneurs it’s looking for without offering the density attributes Lou describes?

    1. Good questions. My guess on the first is current residents of the city don’t want what come with higher density. They like their neighborhoods the way it is. And clearly their preferences politicaly trump the interests of potential new residents/voters. What is harder to understand is why city leaders – both public and private – don’t more forcefully make the case that these policies lead to slower economic growth.

      The second is real interesting. My guess is that the U is such a desirable employer and the jobs so specialized that they will fill all the positions at the Pfizer complex. But it will be harder than it should be. More important, to be an economic engine for the region/state, as many hope, Ann Arbor needs to grow beyond the U. That is where the size of the talent pool is too small. I wrote an upcoming post comparing Portland to Ann Arbor. What they have figured out is that if you get the employees demanded by a growing economy and you restrict city density you get more commuters from farther away. Which is not good for the environment. Portland has figured out how to get both growth and be friendly to the environment. Why can’t Ann Arbor have both?

  7. “I don’t know why it is so hard to accept that some people like high density neighborhoods.”

    That part isn’t hard to accept, Lou. The hard part is accepting our elected officials’ wanting to bet EVERYTHING on that being the future based on the word of people without money in the game, when the portion of the population who wants to live that way runs around 5%-10%. Not everybody who lives in densely populated areas does it by choice; some quite the opposite. Meanwhile, what we already have–the way the vast majority wants to live–goes down the tubes from lack of maintenance.

    Not everyplace can be Portland–nor should it. Care to compare the affordability of Ann Arbor to Portland?

    My major objection to committing everything to density is that the chronic socializers who want to live that way don’t want to pay the high prices demanded for goods and services offered by businesses in high-rent, high-tax districts that density entails. They want those of us who don’t care one way or the other whether downtowns are vibrant to sacrifice the government services we pay taxes for so the revenue can be funneled to the rent-seekers they want to patronize. How many of the risk-taking developers aren’t asking for financial incentives from Ann Arbor government?

    A major problem with the young professionals is that they’re young. They haven’t experienced their government being “long and wrong” on a single strategy, and thus haven’t developed the aversion that some of us have to doing it again.

    1. No one is arguing that all neighborhoods in Ann Arbor should be high density. But that some should be. What is happening is that government regulation is preventing the market from working. There is demand for high density central city living. Developers want to serve that market, government won’t let them. A growing number of consumers (agree that it is no where near a majority) want those neighborhoods and can’t get them here so they go elsewhere. But the elsewhere for many of them are places like Chicago (not suburban or exurban Ann Arbor). And because talent concentrations are central to economic growth in a knowledge-based economy, when they leave they reduce the capacity of Ann Arbor and the region to grow. So all of us pay a high price for not allowing the market to meet consumer demand for high density neighborhoods.

      I reject the notion that those who want to develop or live in high density neighborhoods will only do so with high subsidies. Those who move to places like Chicago and New York (as many of Michigan’s young college grads do) pay both high prices and high taxes. If anything the subsidies work the other way. Nearly all of our policies give preference to low density, sprawl development. If the country went to a no subsidy residential policy those in low density neighborhoods would see far higher price increases that those in high density neighborhoods.

  8. I agree with Lou. I am a young professional – I will be graduating in the spring with my Master’s in Public Administration from Grand Valley in Grand Rapids. Yes, I will be looking for a decent job and yes I will probably take what I can get (because of the economy in general), however, I will be moving out of the state of Michigan as soon as possible. It is because I want to live somewhere that values high density living. Yes, those of you who say people like me want high density because of the amenities are correct, but those amenities and high density are completely intertwined. I wouldn’t want amazing downtown restaurants, bars, theatres or entertainment venues if they were in low density areas. That doesn’t make sense. I want high density and I want the amenities, so the argument of high density vs. the amenities that come with it is a moot point. They go hand in hand; I want both.
    Also, for those who think that low density, suburban or ex-urban living is NOT subsidized… please reconsider – the most subsidized programs in the last 6 decades have been the highway systems that allow for this suburban sprawl. If all subsidies were cut, guess what? It would be CONSIDERABLY more to live in in the suburbs than in the central city. Please do a little research before defending your point.

    1. Wow! This is exactly right. Low density development is what has been subsidized heavily for decades. But even with those subsidies more and more consumers don’t want that kind of living. Successful regions will be those that adjust to changing customer demand and provide the kind of mixed use, high density, walkable neighborhoods that more and more consumers want. Particularly young professionals.

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