Central cities surging

In our 2006 A New Agenda for a New Michigan report we wrote: “The most successful regions across the country are those where both the suburbs and central cities are prospering.” That is even more true today.

The widespread belief among far too many Michiganders that central cities are part of the past and are now liabilities where “they” live is part of the reason Michigan has fallen from one of the most prosperous states in the country to one of the poorest.

We have explored in these posts frequently the new reality that vibrant central city neighborhoods are increasingly where young professionals are concentrating. (See this Wall Street Journal article entitled “Young Drive an Urban Rebound” for an overview of the trend.)

A new report by Joe Cortright of City Observatory provides compelling evidence that central cities are now where businesses––particularly those in knowledge-based sectors––are increasingly locating. Cortright writes:

For over half a century, American cities were decentralizing, with suburban areas surpassing city centers in both population and job growth. It appears that these economic and demographic tides are now changing. Over the past few years, urban populations in America’s cities have grown faster than outlying areas, and our research shows that jobs are coming with them. Our analysis of census data shows that downtown employment centers of the nation’s largest metropolitan areas are recording faster job growth than areas located further from the city center. 

Cortright found that the average annual job growth from 2002-2007 was 1.2 percent in the periphery in the 41 largest metropolitan areas compared to 0.1 percent in the city center (defined as the area within 3 miles of the center of each region’s central business district). From 2007-2011 that has completely reversed; with job declines of 0.1 percent annually in the periphery compared to job gains of 0.5 percent in the center city.

The City Observatory report is worth reading. For those who want a summary the New York Times wrote an analysis of the report that is also worth checking out.

The Times article tries to answer the question “why is this happening?” They write:

The recession accelerated the recent decline in urban sprawl. Industries based outside cities, like construction and manufacturing, were hit much harder than urban ones like business services. Jobs disappeared everywhere, but more rapidly outside cities.

But the data indicate that more lasting forces are at work. People increasingly desire to live, work, shop and play in the same place, and to commute shorter distances — particularly the young and educated, who are the most coveted employees. So in many cities, both policy makers and employers have been trying to make living and working there more attractive.

In a knowledge-based economy employers increasingly are following talent rather than talent moving to where the jobs are. Talent is the asset that matters most and is in the shortest supply. Young talent particularly are concentrating in vibrant central cities. Knowledge-based businesses need talent most so they are increasingly locating in central cities to access that talent.

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