Downtown Job Growth

An excellent article from City Lab about it with some resonance for Sacramento.

An excerpt.

For downtowns in major American cities, these are boom times. The urban centers of New York and Chicago boast record high employment. In San Francisco and Seattle, there’s an explosion of residential construction, dining, and entertainment options, as well as a commercial rebirth in high-end, white-collar employment.

But in many smaller cities, the downtown renaissance doesn’t rest on such solid ground. Look to downtown Cincinnati or St. Louis and you’ll see large growth in residential and entertainment offerings, and major investment in civic spaces and buildings. What you won’t see is the same level of success in becoming growing centers of commerce.

For decades, jobs have been leaving downtowns and heading to the suburbs. In 2015, a City Observatory report suggested this might be turning around based on 2007-2011 data, but many downtowns were still losing jobs in that time, including Kansas City, Minneapolis, and San Antonio. A 2015 analysis by Wendell Cox found that just six cities were responsible for about three-fourths of all major-city downtown employment growth from 2010 to 2013: New York, Chicago, Boston, San Francisco, Seattle, and Houston. This shows the disparity between the major business and tech hubs and all the rest.

Traditional downtown employers like banks, utilities, and department stores have shrunk or closed. Many central business districts have become more dependent on public sector and quasi-public sector employers like eds and meds for growth. Providence, Rhode Island, for example, is powered by its high-quality hospitals and educational institutions like Brown University and the Rhode Island School of Design. City Observatory’s report found that eds and meds accounted for more than 100 percent of downtown job growth in the U.S. between 2007 and 2011. That is, without it downtowns would have lost jobs during that period.

Civic centers, government hubs, tourism and entertainment districts, and educational and medical clusters are all great things; they’re an important part of what makes downtowns tick. But commerce—true private sector commerce—is the beating heart of a downtown.

Because economies are dynamic, cities can’t simply rely on legacy employers to fill this role. They must always be creating new industries and new firms. After making great progress rebuilding the architectural, cultural, touristic, entertainment, and residential life of these downtowns, this is the next challenge for these smaller cities.

Indianapolis is an interesting case study here. Indy achieved early recognition for its downtown revitalization based on its claim to be the “amateur sports capital of the world.” This was a tourism- and entertainment-led strategy similar to other cities, one that continues today. There have been 119 new restaurants in downtown Indy since 2012. Downtown is now home to 18 microbreweries, certainly more than enough for almost anyone.

This helped fuel demand for downtown living, along with more bustling streets, improvements to bike and pedestrian infrastructure, and new transportation options like Uber and an all-electric car-share system. As in similar cities, new buildings with thousands of apartments and new residents have physically transformed downtown. The growth rates in downtown housing and population are comparable to higher-growth suburbs: The city expects as many as 30,000 people to call downtown home by 2020, up over 10 percent from today.

But Downtown Indy’s employment levels haven’t seen the same boom. The Brookings Institution found a loss of 29,207 jobs in a three-mile radius of downtown between 2000 and 2010, a 17 percent decline. This did rebound somewhat after the recession. In the ZIP code at the heart of downtown, there have been about 4,000 jobs added since 2010, growth of just under 10 percent, but still below 2005 levels. Downtown has added very little office space in the last 20 years, and office vacancy rates were at 16 percent last year. Employment is heavily concentrated in the public and quasi-public sectors. According to Downtown Indy Inc., half of all jobs downtown are either in government or eds and meds. In short, downtown Indianapolis hasn’t made as much progress on the private sector job front as on the other parts of its downtown story.

About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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