Thursday, March 31, 2016

Why Would a Company Build an Iconic Skyscraper in Philadelphia?

What's the why of the where? Such a classic geographic question excludes how and when. The "when" of a skyscraper in the urban core is my subject. The why of the when in downtown Philadelphia:

“If you go to Silicon Valley, you continually hear that they’re busing in a ton of people who want to live in San Francisco,” Gattuso says. “That’s where the technologically skilled talent wants to be, in the cities.” Given that, he says, it makes sense to actually put a tech campus in the heart of a vibrant urban core such as Philadelphia’s Center City. “This area is one of the great secrets of American cities. We’ve got a core with a growing population of 150,000, and a lot of arts and culture. When you place this technological focus in the middle of it, it fits into a larger vision to attract and retain this type of talent.”

True or not, that's what the company investing in the real estate project believes. The intent defines the urban geography in a way that wasn't true as early as a decade ago. If yesterday's company sought productivity in expensive real estate, today's company beckons human capital.

I'm going against the flow. The likes of Edward Glaeser insist that productivity dictate high end rents. Save they don't. I wonder how long they haven't. Forever?

If forever is post-WWII, then I'm correct. The defining economic geography of the United States during the Cold War and post-Cold War is talent attraction. Build a work palace where the smartypants want to be.

If a high density urban environment fomented high value innovation, then we wouldn't have a Google Bus. Live urban, work suburban undermines Richard Florida's entire creative class paradigm. The city, for the affluent, is a residential space. The city is no longer a work space.


Jonathan said...

This skyscraper reminds me a lot of Detroit's Renaissance Center, just announced 40 years later and ignoring all of the lessons learned.

D Holmes said...

I’m still not quite clear on your message. I get that the dense urban environment fostering innovation may be hogwash. But in Milwaukee, the City is increasingly becoming a workplace as well as a residential space for the affluent. After a decade without a single new office building being constructed in the downtown, there’s been a flurry of projects the past 3 years, with three projects completed, two under construction, and five more likely to break ground over the next 3 to 4 months (not including a rumored 52-story tower for Johnson Controls). Most cite talent attraction and prestige as factors, but also the desire to occupy state-of-the-art buildings providing more efficient work space. I would say that all are at a higher quality of construction than anything recently constructed in the suburbs. The new buildings are in addition to over 10 million SF of historic industrial buildings that have been converted into office space over the past two decades (a trend that also seems to have accelerated recently). The largest project under construction is a 32-story 1.2 million SF tower for Northwestern Mutual Life (NML), which has a lot of similarities to the Comcast Tower in the flexible workspace, public areas, and sky lobbies. NML is also constructing a 34-story residential tower adjacent to the office tower – both as a real estate investment, and to serve their parking needs.

Whatever the reason (prestige, talent attraction, projects offering modern highly efficient space, etc.), a lot of companies employing a lot of “creative” staff are moving to the downtown area. I’m not sure that this disproves anything you are saying.

Jim Russell said...

a lot of companies employing a lot of “creative” staff are moving to the downtown area.

Quantitatively and anecdotally, the trend is real enough. Different schools of thought exist as to explaining the trend and what it means. We could start by asking if there is a rent premium or even a development premium given certain subsidies (e.g. tax abatements). If there is a premium, why would anyone pay it? Rational choice and all that.

Furthermore, concerning shifting residential patterns, we could quibble. Perhaps, as some demographers have suggested, the 70s were the exception not the rule. Yet such an aberration serves as today's benchmark for trend comparison and contrast.

My aim is to open up this urban morphology discussion, instead of jumping on the innovation district boondoggle bandwagon.

D Holmes said...

Figuring out the why is really difficult. Sometimes I don’t think the companies really understand the reasons for their moves. The CEO for Fiserv made headlines in Milwaukee two years ago talking about the difficulty of attracting tech talent in a market like Milwaukee. He noted that most of the jobs they were adding were at a new facility in suburban Atlanta (Alpharetta). Apparently, the CEO views Atlanta as a hotbed for tech talent, and also that this tech talent would find an unwalkable unbikeable office park over 40 miles from downtown Atlanta to be an attractive work location and asset for attracting tech talent. Could be true – but I would be skeptical of any reason this CEO gave for office location decisions linked to any current urbanist theories.

Jim Russell said...

Sometimes I don’t think the companies really understand the reasons for their moves.

Talent attraction/retention is a black box, which opens the door for many a brain drain boondoggle. Most firms are chasing yesterday's geography or yesterday's stereotype. Does one need to be in the downtown of a major global city? I doubt it.