Innovation Geography: The Beginning of the End for Silicon Valley

At Pacific Standard magazine, innovation is increasingly flat (not spiky).

Theme: Economic convergence.

Subject Article: "L.A. tech economy is underrated, venture capitalist Peter Thiel says."

Other Links: 1. "Bay Area growth crisis: 114,000 new jobs created and 7,000 new housing units."
2. "Big tech start-ups bypass Silicon Valley."

Postscript: Whatever you want to call the economic era after manufacturing (if you think there is a successor to manufacturing), I see evidence of convergence. Economic convergence is decline. In less normative terms, convergent economic activity diffuses geographically. Economic activity that used to concentrate in Silicon Valley now happens elsewhere. The world goes from, in Richard Florida parlance, spiky to flat. However, the world still looks spiky, but less so. I'm not interested in the false dichotomy (spiky vs. flat). I'm interested in the trend (spikier vs. flatter or divergent vs. convergent).

The Other Side of the Growing Disconnect Between Where You Live and Work

Importing cheap labor into high wage regions at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Workers paid $1.21 an hour to install Fremont tech company's computers."

Other Links: 1. "The Geography of Foreign Investment in Real Estate."
2. "Consumer City."

Postscript: Rents don't have to rise for gentrification to occur. "The Housing Crisis We Don’t Talk About":

Chester is what is known, in real estate industry jargon, as a “weak market city.” The phrase means what it sounds like. The city is poor and its economy stagnant. The median home sale price in Chester in 2012 was $20,000, compared to $69,350 in nearby Wilmington and $98,000 in Philadelphia. Fewer than half of Chester’s working-age adults are employed, and a third of the population is living at or below the poverty line. In a city where median rent is $790, 51.5 percent of households pay 35 percent or more of their income to their landlords.

I think economic dislocation should be defined as "gentrification". The focus on the one side of the housing affordability equation (i.e. rent) has informed some really bad policy recommendations.

Congratulations, Your City Is Dying!

Shrinking cities have stronger economies at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Low birth rates can actually pay off in the U.S. and other countries."

Postscript: Most people are well aware of the legacy costs stemming from an aging population. Less discussed are the costs of a young and growing population. That a growing population is better than demographic decline is just assumed. Once again, folk wisdom drives policy instead of analysis.

Cheating Demographic Doom: Pittsburgh Exceptionalism and Japan’s Surprising Economic Resilience

Doing the demographic decline at Pacific Standard magazine.

Theme: Ironic demography

Subject Article: "Where Young College Graduates Are Choosing to Live."

Other Links: 1. "The U.S. Cities Attracting The Most Families."
2. "How Many People Left Pittsburgh During the 1980s?"
3. "The Young and Restless and the Nation’s Cities."
4. "Growth Without Growth: An Alternative Economic Development Goal For Metropolitan Areas."
5. "The Metro Story: Growth Without Growth."
6. "Gender Wage Disparity in the Pittsburgh Region: Analyzing Causes and Differences in the Gender Wage Gap."

Postscript: Manhattan is dying, "The emptying of New York City: Nearly 1 million fewer people live in Manhattan now than a century ago. One reason: It got richer." Manhattan has lost more people than Pittsburgh ever housed at its population peak. As you all know, population decline is a strong indicator of a city in substantial economic decline.

Seattle, the Incredible Shrinking City

The gentrification of your single family home at Pacific Standard magazine.

Theme: Gentrification and migration.

Subject Article: "Scrunched in Seattle: Is this hipster hovel the future of the American city?"

Other Links: 1. "Tech Company Wagons Ho! Geography of the Urban Land Rush."
2. "Overflowing Fairfax Homes Split Neighbors."

Postscript: Read the following this morning, thinking about the connection between concerns about gentrification and NIMBYism:

Your question posits whether there is a need for more housing in East Dallas, which I find somewhat off the mark. I suspect, rather, that developers are speculating on a potentially profitable market for people who want to live here. That said, I’m OK, in general, with some new apartment and condo development in East Dallas. My support depends entirely on what is being torn down and where, plus the size and appearance of what is to be built. If the wrecking ball and huge North Texas-style developments are headed for our older, traditional, single-family homes and neighborhoods, I object. A number of Dallas developers have been steadily decimating East Dallas since the 1950s. Once upon a time, Live Oak and Ross were known as Painted Lady Rows, a beautiful gateway to downtown … leveled for parking lots, gas stations and cheap, soon blighted, commercial buildings and apartments. We almost lost the incredible Swiss Avenue in the 1970s. Then the 1990s McMansion craze began its broken-tooth effect on previously charming streetscapes. If this is another wave of destruction headed for what’s left of historic East Dallas, please, let’s exercise caution before there’s little left. Guess what’ll happen once the developers have milked their short-term profits and the market for people willing to pay to live here disappears along with the old neighborhoods and the charm?

Passive residential displacement (is that gentrification?) can take two forms. The first, being priced out of a neighborhood, is the common understanding of the term "gentrification". Less common is the kind described above in the quoted passage. The quality of the neighborhood changes and no longer feels like home. The two forms of passive residential displacement weave together, but the common thread is a sense of place (how we define home).

Turning the concept on its head, consider preemptive gentrification. I want to move my family to a neighborhood where the schools are better and the streets safer. I can't because the rent is too damn high there. But I have no standing, no claim to that place because it isn't my home. I can't afford it. Tough luck.

Being priced out of a place is quite common. It would be more common if residents didn't go through extreme measures to stay put or move into the best school district. The main rub, outside of academic considerations, concerns quality of place and sense of home. But such changes could render a neighborhood more affordable. We balk because it no longer feels like home.

Comparing Apples to the Big Apple: Yes, Washington, D.C., Is More Expensive Than New York City

Contrary to what the Wall Street Journal claims, the metropolitan geographic unit of analysis for New York City is the same as the metropolitan geographic unit of analysis for Washington, D.C. 

Theme: Geographic stereotypes.

Subject Article: "No, Washington, D.C., Is Not More Expensive than New York City."

Other Links: 1. "BLS report on cost of living."
2. "It’s more expensive to live in D.C. than New York, study says."
3. "D.C. is more expensive than New York? Twitter reacts."
4. "Behind a Blue-Collar Cliché: 'The Office' and returning natives help Scranton, Pa., stage a comeback."
5. "Fortresses of Globalization and Wilmington, Delaware."
6. "D.C. more expensive than New York? It’s complicated."

Postscript: Jed Kolko, Chief Economist and VP of Analytics at Trulia, chimes in on the confusion:

The real problem with DC-more-$ claim is that data on average spending was misinterpreted as a cost-of-living metric.

There you have it. All the hyperventilating about comparing apples-to-oranges was for naught.

Tech Company Wagons Ho! Geography of the Urban Land Rush

Tech companies build suburban campuses in the urban core at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Space Shift: As Wealthiest Flock to Supertall Condos, Offices Go Horizontal."

Other Links: 1. "Are Millennials Willing to Spend Most of Their Income on Housing?"
2. "Why Technology Firms Are Moving Downtown."

Postscript: Millennial housing choices subsidize tech labor costs when firms locate downtown (while retaining a suburban-like footprint):

Seattle boasts the highest number of micro-dwellings in the country—3,000 at last count. It also permits the most audaciously minimal units, some as small as 90 square feet. That’s about the size of two prison cells put together.

It’s not for the claustrophobic, but it does come with perks—including the chance for millennials and those with modest incomes to settle in vibrant urban neighborhoods. Their presence, in turn, injects new energy to the heart of the city while tamping down suburban sprawl. Micro-housing reflects a growing zeitgeist—to stop accruing, go minimalist and reduce one’s footprint. Indeed, the name of Seattle’s leading micro-housing development company is called Footprint.

Tech companies, looking to employ well-educated millennials, are expanding their urban footprint. Millennials, looking for city-living and proximity to work, are actively shrinking their urban footprint to lower the cost of rent (or homeownership) forced up by in-migrating tech companies.

Solving the Hispanic Mortality Paradox

Place-based metrics make people seem poorer than they are at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Why Hispanic-Americans live longer: The mystery that has puzzled researchers for decades."

Postscript: I've told this tale before. How does one figure out if global cities undermine state sovereignty when the data are national and not urban? Geographer Peter Taylor grappled with this question. Geographic units of analysis are social constructs. The bias is built into the metrics. What we measure tells us more than the measurements. Scholars studying domestic poverty have fallen into this place-trap.

A Global City of Eds and Meds

Putting "Flyover Country" on the global mental map at Pacific Standard magazine.

Theme: Globalization and urban redevelopment.

Subject Article: "Rochester downtown building sells for $10 million."

Other Links: 1. "The Geography of Foreign Investment in Real Estate."
2. "Are Millennials Willing to Spend Most of Their Income on Housing?"
3. "Urban Decline in Rust-Belt Cities."
4. "Increasing spatial and economic polarization in America’s older industrial cities."

Postscript: The problem with eds and meds global neighborhoods in Buffalo:

Henry L. Taylor Jr. has focused much of his work on reviving East Side neighborhoods, from the area around Futures Academy – in the shadow of the Medical Campus, but hardly benefiting from it – to the Commodore Perry neighborhood now being eyed for transformation.

Globalization will continue to pop up in the damnedest places. But the benefits won't trickle down to the poor located in isolate neighborhoods. Tremendous wealth will reside cheek by jowl with tremendous poverty. Looking at Rust Belt cities in aggregate washes out the few places where wages and rents look quite similar to those of thriving global cities, which is why gentrification in shrinking cities strikes many as ironic (or simply unbelievable).

The Urban Geography of Globalization: Global Neighborhoods

The rise of nano core neighborhoods at Pacific Standard magazine.

Theme: Globalization and urban geography.

Subject Article: "Growing clout of global cities offers property opportunities: Top urban centres will seek to attract talent with non-traditional business districts, and investors should be looking at these new zones."

Other Links: 1. "Housing in New York, London is attractive as an investment for outsiders because it's scarce!"
2. "What draws Chinese investment? It's simple, says foreign capital expert: Direct flights to China and a Top 25 university. @LuskCenter talk."
3. "The Politics of Anti-NIMBYism and Addressing Housing Affordability."
4. "Affordable Housing: Geography of Supply and Demand."
5. "Downtown Mountain View's 303 Bryant St. sells for record price."

Postscript: I'm attempting to pivot away from critiquing the supply-side model of housing affordability. I am mainly interested in how the migration of global labor (people toiling in diverging, tradable jobs) transform regional economies. Nano core neighborhoods are popping up in cities that no one confuses as global. Tradable eds and meds are driving real estate appreciation in Rust Belt cities such as Pittsburgh and Buffalo. Tracking the migration of this labor force cohort should be a leading indicator of globalization and the associated real estate dynamics detailed in my latest post.

Are Millennials Willing to Spend Most of Their Income on Housing?

At Pacific Standard magazine, Millennials prove to be the source of urban gentrification.

Theme: Globalization and gentrification.

Subject Article: "Panel: Lack of affordable housing hurts economic development."

Other Links: 1. "Arcade Fire, Spike Jonze Steal Youth In ‘The Suburbs’ Video: Canadian indie rockers' clip is a somber comment on adulthood."
2. "Transit struggles with North America's move downtown: Millennials' desire to live near their workplaces strains cities from Toronto to Los Angeles."
3. "Urban Development: Faster Greener Commutes Key to Sustained City Growth."

Postscript: From Portland, Oregon to Brooklyn, NYC, a common theme emerges. Some people are willing to endure an irrational migration to a place where the return (i.e. wages) on living in the city doesn't justify the cost (i.e. rent). Ed Glaeser, Jed Kolko, and Albert Saiz looked at this "Consumer City" conundrum. In their model, certain amenities fill the deficit between wages and housing costs. In effect, a streetcar could subsidize lower wages in a cool city. Employers are happy. Real estate developers are happy. Apparently, Millennials are happy with the arrangement. Clearly unhappy are tenured residents who cannot afford the amenity dividend, as the research of Rebecca Diamond demonstrates.

The Geography of Foreign Investment in Real Estate

Real estate investment doesn't bet on continued housing supply restrictions at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Here’s one idea for taxing the rich and making housing more affordable."

Other Links: 1. "Illusion of Local: Why Zoning for Greater Density Will Fail to Make Housing More Affordable."
2. "Strategist makes case for industry clusters."
3. "Odd @badler argument here that flexible supply wouldn't address problem of foreign buyers."
4. "Housing in New York, London is attractive as an investment for outsiders because it's scarce!."
5. "Indians Join the Wave of Investors in Condos and Homes in the U.S."
6. "U.S. Private High Schools Accommodate Influx of Chinese Students."
7. "The Thomas Jefferson High School for Science and Technology Admissions Office."

Postscript: Northern Front Range of Colorado defines housing affordability problem:

Nick Hansen, managing partner and broker at The Group Inc. in Fort Collins, said Millennials, those in their 20s and early 30s, are exacerbating the problem in urban areas.

“Millennials are willing to pay 50 percent of their income on housing so they can live in urban settings. That drives up rents and pushes out others who can’t afford that,” Hansen said.

Millennial demand, not supply restrictions, are pricing out tenured urban residents.

The Political Geography of Economic Development

Alabama's right-to-work boondoggle at Pacific Standard magazine.

Theme: Economic development geography.

Subject Article: "Right-to-work laws build booming Alabama-Japanese connection, employing 12k Alabamians."

Other Links: 1. "Where Indiana Goes, So Goes the Nation: The state's history with organized labor encompasses the country's pro- and anti-union forces."
2. "Sen. Shelby: How Sweet Is the Auto Business in Alabama? Not Very."
3. "Honda Worldwide: Company Overview."
4. "Know Your Rights: Michigan's Right to Work Law."

Postscript: The only way state politicians can hail the economic development benefits of right-to-work legislation is to make them up, outright lie.

The Creative Class Boondoggle in Downtown Las Vegas

The lust for greater density is pornographic at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Downtown Las Vegas Is the Great American Techtopia."

Other Links: 1. "Why Density Matters."
2. "Looking Beyond the Maps of Richard Florida’s 'The Divided City.'"
3. "The Urban Tech Revolution."
4. "STATEMENT From Tony Hsieh, 9/30/14 Downtown Project Q&A: there are a lot of misleading headlines flying around out there…"
5. "Is Jane Jacobs The Justin Bieber Of Urbanism?"
6. "Tony Hsieh: Helping Revitalize a City."

Postscript: Follow the Re/code series (6 parts of, I believe, 10 are already published) about Tony Hsieh's Downtown Las Vegas project.