We are at a promising time in our city’s history.
This is due, in no small part, to the obvious and recently well-publicized reasons: the election of a new mayor; the imminent resolution to a debt crisis caused by the city’s incinerator; and the outline, at least, of a comprehensive foundation laid out by the receiver’s team to address a decades-long structural deficit. Optimism, after several difficult and uncertain years, is finally, welcomingly warranted.
There is, however, an additional and more fundamental reason to be optimistic about our city. For the first time in more than 60 years, certain trends in residential preferences and business location decisions—or economic geography, as it is sometimes called—favor urban centers like Harrisburg.
These trends have been well-documented and analyzed, most notably by the urban economist Richard Florida in his book “The Rise of the Creative Class” and, more recently, by journalist Leigh Gallagher in her book “The End of the Suburbs.” As Florida, Gallagher and many other observers have pointed out, these trends are animated by a few key, interconnecting factors:
1) The shift in the economy to increasingly creative, knowledge-based industries.
2) The emergence of a generation—born between 1979 and 1996, known as Millennials—whose living and work preferences favor walkability, access to mass transit, unique architecture and design, close proximity to restaurants and shops and a diversity, authenticity and overall “coolness factor” generally not found in the suburbs.
3) The labor market alignment of Millennials with the knowledge, technology and innovation industries, which together fashion a new “creative-class” economy and metropolitan geography.
Anyone who has visited New York, San Francisco, Philadelphia, Boston or Washington, D.C., lately will have seen the impact these trends are having on their downtowns and surrounding neighborhoods. After six decades of decline, each of these cities has registered significant gains in new residents in the 2010 census. In fact, according to the Pew Research Center, the 30 largest U.S. cities (not metropolitan areas, which are sometimes conflated with the word city, but actual center cities) have gained population by a median of 5.5 percent from 2000 to 2010. And the Brookings Institution recently released a report showing that, between 2011 and 2012, center cities within the 51 largest U.S. metropolitan regions (averaged together) grew more than their surrounding suburbs for the first time since 1920.
Talk of a national urban revival is no longer just wishful thinking by city boosters. The trends and supporting data are real. We are at an inflection point in metropolitan migration patterns throughout the country, driven in large part by the living and work preferences of young adults ages 20 to 34. Charles Lesser & Co., a real estate consulting firm, recently surveyed the preferences of this age group and found that:
- 31 percent prefer to live in a center city (twice that of previous generations of the same age cohort).
- Two-thirds seek walkable places or town centers.One-third are willing to pay a premium to be within walking distance to shops, restaurants, bars and other amenities.
- Half are willing to give up living space in order to live in a walkable neighborhood.
- Diverse neighborhoods, close proximity to jobs, “authenticity” and places that foster social connectedness are highly valued.
In other words, the places with attributes that Millennials prefer (walkability, social amenities and “cool factor”—i.e. cities) have an inherent competitive advantage to their surrounding region in growing their economy and population. Furthermore, unlike the “old economy” model of labor-market geography, where workers tended to follow the jobs, now the jobs, at least in the creative, knowledge-based industries, are increasingly following the workers. A recent article in the Wall Street Journal entitled “Companies Say Goodbye to the ‘Burbs,” stated that, “…U.S. firms have begun a new era of corporate urbanism… The bottom line: companies are under pressure to establish an urban presence that projects an image of dynamism and innovation [to attract younger workers].”
Despite being a smaller, “third-class” city, Harrisburg is not immune to these trends. In fact, for the first time since 1950, Harrisburg registered a modest, but still meaningful, population gain in the 2010 census. Not surprisingly, the gain was driven by young adults. The 2010 census reveals that Harrisburg increased its share of 20- to 34-year-olds by 8.7 percent, or 979 residents. In fact, this increase in young adults is actually larger than the total population gain of 578 residents, underscoring the trend’s strength in offsetting losses in other age groups. As this census data indicates, Harrisburg, despite popular negative perceptions, actually offers many of the positive qualities that young adults now prefer.
Our real estate development company, WCI Partners, has witnessed this trend firsthand with our Olde Uptown neighborhood redevelopment project. In 2007, we began renovating vacant, historic row homes in a blighted part of Midtown that had suffered from four decades of disinvestment, decline and concentrated poverty due to the aftermath of the Agnes flood. Since that time, we have renovated more than 100 properties and built 16 new ones within a four-block area, in addition to completing numerous neighborhood improvements like new sidewalks, streetlights, street trees and banners.
As a result, we have seen an influx of about 250 new residents to the area over the last six years (which, in turn, has created a vibrant community with a 90 percent drop in crime). The majority of these new residents (but certainly not all) fit the Millennial profile of professionals and creative types ages 24 to 34, who prefer the walkability, diversity, interesting design and architecture and proximity to bars, restaurants, coffee shops and downtown jobs that the neighborhood affords. The trend (if not quite the magnitude) is as real in Harrisburg as it is in Philadelphia or Washington D.C. As we say in the real estate business, there is demand for city living, at least from a certain (not so insignificant) segment of the market.
Consistent with the “creative-class economy” model of geographic preferences described above, there is also demand from knowledge and technology-based businesses to locate in the city. We have seen this trend at WCI Partners, as well. In fact, over the last half-year, we have been renovating an historic Front Street mansion in Midtown for WebpageFX, an Internet marketing company currently located in Carlisle that will be moving about 50 college-educated employees (almost all of them in their mid-20s) to the city this spring.
WebpageFX began its search almost three years ago, considering locations around the central Pennsylvania region. The company ultimately decided to locate in Harrisburg due to one overriding factor: the city—and its attributes that Millennials prefer—provided the strongest competitive advantage in attracting and retaining young, place-conscious talent. As WebpageFX’s owner Bill Craig told me, “The city is where our employees want to be. They want the proximity to restaurants, bars, coffee shops, the riverfront and other amenities that it offers. Everyone is really excited for the move.”
This and broader examples (andCulture, Red Privet, Pavone, WebClients and others) demonstrate the virtuous cycle that these “new economy” trends generate. Vibrant cities attract creative, young people who, in turn, attract creative businesses that together create more vibrant cities.
This virtuous cycle can be seen more widely in recent development projects and the emergence of “creative-class” services and amenities in the city. Projects like COBA and LUX by Brickbox serve to confirm the demand created by the trend in urban living preferences. New student housing projects, like International House, in concert with the emergence of the HACC Midtown Campus and Harrisburg University as educational anchors, reinforce the city as a “new economy” location. Millennial preferences for urban amenities have driven the development of 2nd Street in downtown, as well as the emergence of neighborhood businesses like Little Amps, Midtown Scholar, Midtown Cinema, Stash, TheMakeSpace, St@rtup and others. And continually growing organizations like Harrisburg Young Professionals help to provide the scaffolding of social activity, civic engagement and consumer spending necessary to sustain and bolster this positive cycle of urban growth.
To be sure, most cities, like Harrisburg, still have a variety of serious challenges to overcome, many of which cannot be easily solved and some of which serve as obstacles to the very trends that would alleviate them. And it often seems that the smaller the city, the bigger the challenges, due to less critical mass and a smaller pool of resources to marshal. Nonetheless, it remains encouraging that the prospects of meaningful growth for cities (including Harrisburg) are real and even seem to be strengthening. For so long, cities have struggled, with frequently frustrating results, against the predominant trends of suburbanization. Now that some of these trends are reversing, it will be the job of public officials, business leaders and various other stakeholders to implement the policies, initiatives and strategic partnerships that will effectively harness them.
David Butcher is president of WCI Partners LP.
