Downtowns and economic development

In two recent Atlantic articles James Fallows writes about the renaissance in central city downtowns occurring across America and around the world. (You can find the articles here and here.)  He concludes that vibrant downtowns are an essential ingredient in city success: He writes:

“Yes, you can find exceptions. But most of the time, when you’ve got a downtown district with a self-sustaining combination of retail outlets (especially nonchain stores); restaurants and bars and brewpubs and music sites (to draw people downtown at night); art or festivals or live events (to give people a civic sense-of-self); and, crucially, residential spaces (where people who don’t have children or whose children have grown up live in second- and third-story apartments above stores and restaurants, providing street life through the evening and a general sense of bustle in downtown)— when find a place with those things, it’s very likely that all the other economic, cultural, civic, and educational indicators of local well-being will be positive too.”

Exactly! Vibrant central city downtowns are a critical economic development asset for cities and regions. Driven largely by the preference of many college educated Millennials to live and work in dense, walkable, transit-rich, amenity-rich neighborhoods. That most characterize downtown and near downtown neighborhoods.

More evidence of the economic development power of vibrant downtown comes from a terrific new report from Smart Growth America in collaboration with global real estate advisors Cushman & Wakefield. The report is titled Core Values: Why American Companies are Moving Downtown. Worth reading! 

Cushman and Wakefield identified five hundred companies that have recently located in an American downtown. Smart Growth America interviewed them to find out why a central city downtown. Here is what they found:

Companies across the country want to be in walkable, downtown neighborhoods. This report highlights just some of the many companies at the forefront of this emerging trend.

This trend is happening with companies of all sizes—from just a few people to many thousand. They represent a diverse variety of industries, and include everything from startups to some of the most successful companies in the country. They are moving not just to big cities on the coasts, but to mid-size cities in nearly every state in the nation.

Companies’ motivations for these moves are diverse. Many chose downtown to attract and retain talented workers. Some want to reinforce their brand identity or to create a dynamic company culture. Some want the creativity and opportunity for collaboration a downtown location provides. Some want to be closer to customers or partners or to centralize operations. And some want to use their sizable investing power to support a city’s renaissance and other triple-bottom-line business outcomes. The companies included in our survey see competitive advantages in each of these. Other companies considering where to move would do well to consider these points when deciding on a new location.

Though their motives are diverse, common themes emerged about what these companies looked for when choosing a new location. Nearly all opted for vibrant, walkable neighborhoods where people want to both live and work. Some companies emphasized having a range of transportation options, with easy commutes for employees living in the suburbs as well as downtown. Great office space was another important factor, and many companies highlighted unique and inspired architecture that dovetailed with a broader company emphasis on creativity. A warm welcome from the city also factored in to many companies’ decision making process. And finally, companies explained that a clean, safe downtown was a fundamental requirement for their choice of where to move.

Municipal leaders can learn important lessons from all of this. Many towns and cities already have walkable, downtown neighborhoods that are well-positioned to attract the companies discussed here. Those that do not can take proactive measures to create these kinds of places. As this research hopefully makes clear, creating great-quality neighborhoods is an economic development strategy that can attract jobs and new businesses—in fact, it already is.

These are important lessons for Michigan policy makers to learn. State, regional and city leaders all need to pay heed to this trend. By and large Michigan political and business leadership is behind the times in understanding the importance  of placemaking to economic growth. If we want to retain and attract businesses, particularly high-wage knowledge-based businesses, we need to create the kind of neighborhood attributes Fallows writes about at far greater scale in our cities––particularly Detroit and Grand Rapids.

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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 3 Comments

  1. I think having a vibrant, active downtown also can help lower skilled, lower income families. There is the issue of gentrification which hurts some lower income families. But having a lot of highly skilled upper middle income singles, couples and families also may create jobs for many lower skilled people and help them start up the economic ladder. In previous generation when I was young most high skilled upper income people lived in the suburbs, commuted to the downtown area and then commuted back home to the suburbs. Only the poor lived in the inner city. Because upper middle class people lived in the suburbs the retail, service and restaurant jobs that were necessary to meet their desires were also in the suburbs. Many times, the lower skilled folks in the inner city were unable or could not afford to commute to those jobs in the suburbs. With the revival of down towns and with many upper middle class moving there, the working poor and upper middle class live in closer proximity and the jobs are available to many of them.

  2. Yes, downtowns are important. However, I think often we are mistaken in believing that investment in the core of a city will benefit those on the periphery, some of whom may need it most of all. Historically, urban renewal has served corporate and political interests while continuing to neglect the poor. Especially in a city as large as Detroit, there is no reason to believe that concentrated investment in one small business sector would improve conditions on the other side of town. The focus needs to be on the periphery and not the core, as the city has been the central focus of American urban development for at least the past 50 years. Look where that has gotten us. Continuing focus on downtown may succeed at turning Detroit into Chicago, but Chicago is still pretty messed up.

    1. We need to do both. Invest in and develop city downtowns and the neighborhoods. Its not either or. Downtowns matter for the region probably more than the city. Because for lots of young professionals they are the neighborhood of choice. Think bed room suburbs for the boomers. So without those residential neighborhoods talent goes to regions with them. And where they go economic growth in the region goes with them. And with economic growth you get more local services jobs in the region, both city and suburbs, that increase the opportunity for city neighborhood residents to find a job. Think of the local service jobs created by high paid factory workers in the past. Professionals and managers are the high paid workers now that drive economies. But you need lots of college grads to have those jobs in a region at scale. That is Michigan’s main economic challenge. Believe me you would rather be both the city and metro Chicago than the city and metro Detroit. Young talent doesn’t solve all problems, but it is an asset worth having.

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