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.

Moving to Yesterday

Is New York City dying? Is it already dead? Yes and yes. No and no. Kings and queens come and go. The crown rules for centuries. Long live New York:

I think that New York is built a great deal on the nostalgia of the period that [one] just narrowly missed, and I think that's what attracts people to coming there—the mythic notion of what New York has been. I hesitate to say, "Oh, it used to be great, and now it's not good anymore," but I think that there's no question that it has become a city defined in part by how expensive it is, and expensive cities become less diverse and less interesting, because the interesting stuff tends to be the stuff around the margins.

Writer Susan Orlean makes the cliché migration from too expensive NYC to the greater creative spaces of LA. However, her restraint from shoveling dirt on the more legendary destination is well met. Her New York may be dead. But your New York, young writer, is busy being born right now. But you aren't moving there for what will be. You are moving there for yesterday, like Woody Allen's paean to the golden eras of Paris.

In this sense, migration is a lagging indicator. You go where you know. You go where the buzz is (was). The social human is risk averse.  No one rolls the dice on a place that might, or might not, become.

For Rust Belt cities, this disposition is a burden. Yesterday's Pittsburgh lacks appeal. Furthermore, social media celebrates a Census release like a harbinger of things yet to be, but sure to happen. Yesterday's numbers portend tomorrow's boom town.

"[T]he interesting stuff tends to be the stuff around the margins." - Susan Orlean

Orlean's assertion is as true for geographers as it is for writers. Buried beneath the headlines of booms and busts, at the edges of the data dump, lurks hidden trends yet to entice the young and geographically fickle. The Rust Belt is dead. Long live Pittsburgh.

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.

Pittsburgh Is Dying...Again

That's right. You heard it here second. Pittsburgh is dying. Again. Richard Florida (who else?) with the dirty details:

At the other end of the scale, the metro with the lowest retention rate is Phoenix with 36.3 percent, followed closely by Providence. Hartford is third, and Austin—a leading tech hub—is fourth. Rochester, Virginia Beach, Salt Lake City, Buffalo, New Orleans, and Pittsburgh round out the ten metros with the lowest grad retention rates. ...

... On the flip side, the bottom ten metros include Phoenix (with a paltry 18 percent retention rate), Hartford, Virginia Beach, Providence, and New Orleans, with Rochester, Buffalo, Sacramento, Austin, and Oklahoma City completing the top ten. Baltimore (44 percent), Washington, D.C. (44 percent), and Pittsburgh (43 percent) also have modest retention rates. My own research was spurred by the outmigration of my former Carnegie Mellon students from Pittsburgh.

The first hall of shame concerns both two-year and four-year college grads. The second hall of shame focuses on the four-year cohort, which aligns with the usual educational rate cited in the ubiquitous brain drain hysteria. It's a rough proxy for the coveted creative class.

I wouldn't make too much about such pap save for Florida's unambiguous confession about patient zero, Pittsburgh. The malady? Talent was leaving the campus of Carnegie Mellon for, wait for it ... Austin:

I asked the young man with the spiked hair why he was going to a smaller city in the middle of Texas, a place with a small airport and no professional sports teams, without a major symphony, ballet, opera, or art museum comparable to Pittsburgh's. The company is excellent, he told me. There are also terrific people and the work is challenging. But the clincher, he said, is that, "It's in Austin!" There are lots of young people, he went on to explain, and a tremendous amount to do: a thriving music scene, ethnic and cultural diversity, fabulous outdoor recreation, and great nightlife. Though he had several good job offers from Pittsburgh high-tech firms and knew the city well, he said he felt the city lacked the lifestyle options, cultural diversity, and tolerant attitude that would make it attractive to him. As he summed it up: "How would I fit in here?"

Are you giggling yet? You should be. Revisit the bottom 10 lists for both categories. If Pittsburgh is bad, Austin is arguably worse. Has tolerance there gone to shit? Perhaps.

Or, catering to the creative class has nothing to do with talent retention. This June, I will have studied brain drain for ten years. The only thing I know for sure is that Richard Florida doesn't have a clue about how to keep people from leaving a region.

Repackaging the Innovation District Boondoggle

Does innovation need to be in the city? Is innovation better off in the city? Is there a density dividend for innovation? Perhaps. Perhaps not. We don't know.

I'm waiting for a good argument as to why we should build innovation districts. Bruce Katz of Brookings is the #1 booster. His latest attempt to sell real estate development as economic development:

Midtown Atlanta is an example of the growing trend of companies relocating major research facilities to be near urban universities that provide mixed-use amenities, lively places, and a high density of firms. For example, Pfizer recently moved one of its largest research centers to Kendall Square in Cambridge, blocks from MIT, and Google now has its machine learning research hub in Baker Square in Pittsburgh, near Carnegie Mellon University.

Companies are relocating major research facilities to be near universities regardless of whether they are found in urban, suburban, or even rural areas. In fact, Silicon Valley exists because of Stanford University. This is an old trend dependent on the quality of the research university. It had, still has, nothing to do with where the university is located.

Well, that's not entirely true. It used to have something to do with where the university was located. Back in the day (50s and 60s), innovation blossomed near universities that enjoyed a wealth of greenfield development potential. The university could expand with little to no political controversy. Such impediments weighed on the urban campus of Penn.

Today, brownfields are the new greenfields. Universities such as Johns Hopkins have become major players in urban redevelopment. Hence the trend Katz notes. But the history he offers to explain the geographic shift is erroneous.

Sharing Economy Boondoggle

If the powers that be in Austin regulate the sharing economy, innovation will suffer. If the powers that be in Raleigh regulate the sharing economy, millennials won't live there. If the powers that be in Albany regulate the sharing economy, it "is an obstacle to progress in general." Yield to the sharing economy or die.

Such claims strain credibility and belong in the same category as sports stadium boondoggles. Owners prey upon regional doubts about being good enough to run with the big dogs. Every city, it seems, has an inferiority complex. Civic pride makes for bad policy choices.

Fueling the young adult bravado, more and more places buy the idea that jobs follow people. Only quality amenities will allow for talent retention and attraction. Throw cold water on Airbnb or Uber at your own peril. Food trucks are the new symphony orchestras.

Furthermore, if we could retroactively build great urban spaces, then sprawl wouldn't have happened. Once again, quality of place drives migration. I'm dealing with such speculation in Cleveland. The aim is to spark infill. How? A big report will tell you.

There are two problems with these recommendations. Actually, there's a third problem. But I'm too angry to write about it. First up, infill is happening without doing anything that must be done. Macroeconomics explain the ironic flow. Macroeconomics explain the sprawl. There's a bit more to it than that. But macroeconomics merit consideration when discussing migration. Second, examples are lacking of how sound planning have proven to drive infill. What I see, considering actual migration analysis, is a demographic convergence of infill across places regardless of policy. This is a national trend, like sprawl, without a full embrace of the sharing economy.

Policies Promoting Innovation

Two popular approaches to promoting innovation, deregulation and densification, don't work. The latest boondoggle on the deregulation front comes from Austin, Texas:

The City Council is telling the entrepreneurial community that if you would like to innovate and potentially disrupt an existing industry, you should do it elsewhere.

The City Council dares to impose some regulation on Austin's sharing economy. The disruptors claim that doing so will make the sky fall. At stake isn't innovation, but a regulatory environment that favors the startups over established businesses. The capital rich get richer at the expense of labor. Uber is as old as dirt.

Regulating the sharing economy might be a bad idea. But the supposed crisis of innovation is a red herring. More likely, HomeAway and others are squawking about innovation because they cannot marshal a good argument against the proposed laws. Weak tea.

As for densification, I've spent years mocking the supposed benefits of urban planned knowledge orgies. At best, the density dividend for innovation is a positive correlation without a proven causality mechanism. Google wondering about collaboration and productivity:

The company’s top executives long believed that building the best teams meant combining the best people. They embraced other bits of conventional wisdom as well, like ‘‘It’s better to put introverts together,’’ said Abeer Dubey, a manager in Google’s People Analytics division, or ‘‘Teams are more effective when everyone is friends away from work.’’ But, Dubey went on, ‘‘it turned out no one had really studied which of those were true.’’

The short version of a long article, cramming a bunch of smart and talented people into a room doesn't predictably lend itself to innovation. Turns out, the quality (not the quantity) of the interactions is the magic sauce. Urban or suburban, with or without innovation districts, innovation depends on the social dynamics of the team. Density doesn't matter.

Capital Rich, Labor Poor

Let's share. Do my taxes and stay at my seaside mansion. I don't have to do my taxes. You don't have to pay for a vacation place you can't afford. Deal.

The deal is this. My capital steals your work. I pay you spare capacity. La la la la la La.

All you have is labor. I own all the capital. My capital returns more than your labor. If I have enough capital, I don't need your labor.

Well, truth be told, I need your labor. You can't have my capital. Fuck you.

Sharing economy.

Globalization and African-American Neighborhoods

An effective way to map globalization is to track foreign-direct investment flows. Inside the United States, an effective way to map globalization is to track real estate developer investment flows. Where investment fears to tread marks a devastating dearth of global jobs. Employment is sporadic and wages are low.

Within a city or metro region, Richey Piiparinen identifies two types of neighborhoods: core and gap. He's employing a geopolitical model developed by Thomas Barnett. Core countries are well globalized. Those in the gap suffer from a lack of globalization. Usually, globalization is framed as benefiting some at the expense of others. This zero-sum Marxist view misunderstands the geography.

Disconnected people reside in disconnected countries and neighborhoods. Only the people who stay put suffer from the lack of globalization. Richey explores such places in Baltimore and Cleveland. Even in shrinking Rust Belt cities, globalization is unleashed. In much of Cleveland, such a claim is obviously ridiculous. However, in Pittsburgh, community development practitioners recognize that vacancy and blight live cheek by jowl with gentrification. Every city has some core neighborhoods and a lot of gap.

How can we address this divide? People living in the gap can be connected to global jobs (transit) and investment (e.g. better schools). While such changes are necessary, they are insufficient. Globalization is a product of migration. Macroeconomic forces follow people. The Fullbright program has a diversity problem:

The Fulbright program, run by the U.S. Department of State’s Bureau of Educational and Cultural Affairs, is widely seen as a prime opportunity to add international experience to one’s résumé. Despite the bureau’s increased efforts to diversify the pool of grantees in recent years, though, the program also has a reputation of being overwhelmingly white.

International experience helps make a person into an agent of globalization, a harbinger of investment. The State Department could be a major playing in addressing Cleveland's core-gap disparity. The Fullbright program should seek only minority applicants living in gap neighborhoods as way to connect isolated communities with global prosperity.