Friday, August 19, 2011

Core Strength Pittsburgh

The obsession with residential density is misplaced. What matters is job density. In such terms, Pittsburgh's urban core has been very healthy for decades. The city flies under the radar because the population is in decline (even if the workforce is growing) and the job growth is anemic. Concerning the latter observation, change is in the air:

In a national tech industry providing some positive job growth in an overall economy that still suffers from high unemployment, those three companies follow other recent dramatic office upsizings that include Google, which announced in January it was expanding its presence at Bakery Square to 113,980 square feet, and ZOLL Lifecor, among others.

Illustrating the region’s tech sector growth, the number of online technology job postings for August increased 36 percent this year over last year, according to data gathered by Dice, a career site for technology and engineering professionals.

These growth companies are having trouble finding space big enough to accommodate the new hires. But this is the Rust Belt, Pittsburgh. It can't possibly be true. The real estate market numbers, both commercial and residential, suggest otherwise.

Turning back to job density, Pittsburgh is among the most centralized for large employment centers (see Brookings report). Other Rust Belt cities (i.e. Chicago, St. Louis, and Detroit) are among the most decentralized. The pattern:

On the whole, the 33 older industrial metro areas in this study tend to exhibit higher-than-average levels of employment decentralization.

Pittsburgh is the exception, not the rule. The reason is partly physical geography. Legacy institutions such as Carnegie Mellon University are also important. The clincher is the current financial crisis and the apparent linkages with demographic change. The macroeconomic shift favors Pittsburgh, a region well versed in dealing with acute demographic challenges as well as limping along under fiscal duress.

The sustained density of jobs in the urban core is suited for a robust knowledge economy. Where the workers reside is irrelevant. That's not to say more people moving into the City of Pittsburgh doesn't matter. In fact, the job density could attract more people to live there. In my survey and interview of expatriates who moved back to Cleveland, many expressed frustration about living in or near downtown. The problem? Employment opportunities were out in the suburbs. The journey to work was difficult and time-consuming, particularly for those trying to do without an automobile.

Unlike Pittsburgh, Cleveland's urban core is struggling to find tenants for office space. I see this as a major liability for encouraging the brain drain to boomerang back home. Increasingly, it will be an issue for attracting any talent to the region. The resistance to relocating employment downtown is considerable. Executives live out in the suburbs and enjoy close proximity to work. Life is good. Why rock the boat?

I'd guess that things will get a lot worse before improving. Rust Belt cities should put more emphasis on job density in the urban core. That's priority #1. The proof is in Pittsburgh.

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