At a ULI Fall Meeting 2010 panel on “Regional Economic Drivers,” moderated by Heitman Managing Director Mary K. Ludgin, Richard McLemore of MetLife Real Estate and Craig Thomas of AvalonBay Communities, Inc., attempted to answer the question “where and when will the jobs show up?”
The answers to that question aren't surprising. However, there is a glimpse of a new economic geography:
As for the Midwest, it is becoming a “screaming bargain,” due to the low cost of land and housing, low wage levels, and available human capital.
For all the mindless babbling about brain drain, there is a glut of human capital in the Rust Belt. In Pittsburgh, there is no need to court graduates outside the region. Thus, wages remain relatively low for high skilled positions. If job growth ever took off, then I doubt Pittsburgh could scramble fast enough to attract the talent in demand. Serious worker shortages still loom on the horizon and the competition for workers will be fierce.
The main problem for Midwestern cities is brand. The screaming bargain falls on deaf ears if you are city named Detroit:
Detroit, Oregon is not a crumbling rust-belt city. And it has nothing to do with Mo-town Records. It's a resort community nestled on the shore of a lake in the Cascade foothills. But hotel owner Doug DeGeorge thinks the name is a turn-off to some potential visitors.Doug DeGeorge: "The name Detroit doesn't bring positive thoughts to anybody's mind."So he convinced the City Council to put a measure on the ballot that would change the town's name to Detroit Lake. He believes adding that word shifts the mental image. In fact, the lake that borders the town is called Detroit Lake and some highway signs already use the term. Dean O'Donnell runs Mountain High Grocery in Detroit. He says there's support for the change in the business community.
I predict that more and more companies (as well as talent) will come to have a positive association with Rust Belt cities. Bringing together outsiders with employment opportunities moving into the region will be the key challenge for shrinking cities over the next few years. I reckon the talent shortages will be more acute elsewhere before hitting a place such as Pittsburgh. Firms will chase the human capital and the cheap costs that the Midwest has in spades.