Wednesday, March 16, 2016

The New Urban Geography

The following is a pithy primer on the evolution of urban geography as an academic discourse. Circa 1994, I learned urban geography from a professor who had a long and distinguished career behind him. I consider myself lucky. Specialized labor worth travelling for defined a region and its urban hierarchy. The biggest city sported goods and services found nowhere else in the region. Such models predated the deregulation of banks in the 1980s. The CBD was on F.I.RE (finance, insurance, and real estate). The rents for the urban core were set regionally.

Along comes Saskia Sassen (around the same time I'm wrapping my head around traditional urban geography). Regional urban hierarchies get recast as global hierarchies. The learned leap over the national scale. Cities are sexy again. Young geographers rush to the alter of Jane Jacobs. Even economists, such as Paul Krugman, get on the bandwagon. Why should a firm locate in the CBD? Agglomeration economies. Productivity gains justify the steep rents. Perhaps they did at one point. That's no longer true:

“The C-suite types want to be in a big downtown urban location, but they don’t want to bring the entire corporate headquarters location because the real estate there is way more expensive,” said David Collis, a Harvard Business School professor. “It’s OK for Jeff Immelt, but he doesn’t want IT people sitting there.”

To be in the CBD of a global city doesn't provide a productivity or innovation  advantage. It provides a marketing advantage. The address helps to attract executive talent. The address doesn't make the company run better. The company cuts the best deal it can and amasses subsidies to justify the economics of the move. Being in downtown Boston helps General Electric attract talent globally to places not Boston.

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