the Great Recession and Downtown Development

DebSF -- March 25th, 2009

Came across an interesting piece this morning from Harvard econ prof Edward Glasser.  He takes a look at urban/ metropolitan areas and  links sprawl and the skill level of the workforce  to the unemployment rate.  He finds, not surprisingly, that…

the share of adults with a college degree can, all on its own, explain about 1/2 the variation in unemployment rates in urban areas.  EMU and JMU clearly help Harrisonburg in this regard.

Manufacturing is also an important;  the share of the workforce employed  in manufacturing is a good predictor of unemployment.  Old industries (think car manufacturing) are also more likely to lay off masses of workers during a downturn so more manufacturing means more unemployment in a business cycle downturn.  Less important in Harrisonburg as time goes on.

But increasingly relevant for the city is the third factor discussed:  the level of centralization of the metropolitan area.  Glasser finds that the more centralized the metropolitan area – even when controlling for skill level and manufacturing share- the lower level of unemployment.

During the recessions, thousands fled the Dust Bowl. In the 1970s and 1980s, there was a massive exodus from the Rust Belt. Today’s recession will also prompt mobility, probably toward more skilled, more centralized cities with less historical commitment to manufacturing.

Emphasize education, workforce development and centralize/concentrate development. Looks as though HDR has been moving in the right direction all along.

19 Responses to “the Great Recession and Downtown Development”

  1. Deb SF says:

    Sort of on-topic, here’s an interesting piece about a DC effort to retrofit a suburban sprawly kind of area to a more densely developed community:

    http://greatergreaterwashington.org/post.cgi?id=1833

  2. Deb,

    I have not read Glaeser’s paper, but there looks like a bit of a possible contradiction in the argument that would show up in and have to be dealt with by some hairy, technical, econometric methods that are not appropriate to be hashed over in detail in this venue. However, the skinny for most readers is the following.

    On the one hand manufacturing is a negative for employment On the other, the great cities that have historically had lots of manufacturing and are losing jobs have been more distinctly centralized than the less heavily manufacturing ones, with centralization supposedly a positive for employment. Maybe it all falls out neatly in the data, but I suspect that it is kind of messy, far from neat.

    In any case, for Harrisonburg I think there is a strong argument for encouraging downtown development on employment grounds. The poster child here is the positive feedback relationship between expanding employment at Rosetta Stone (reminder of issue of them getting that building from the city that some were fussing about here) and the successful development of Urban Exchange at a time of national recession and possible overbuilding of residences in Harrisonburg. In that regard I have heard from a reliable source that something around 30% of the units at UE will be housing people working at RS. Good.

  3. David Miller says:

    As the personal trainer said to the economic developer: Strengthen your core son!

  4. Scott Rogers says:

    Very interesting article from Glasser — thanks for posting it DebSF. From Glasser’s article…

    Today’s recession will also prompt mobility, probably toward more skilled, more centralized cities with less historical commitment to manufacturing.

    Makes sense — and as Barkley pointed out, that is happening right here in downtown Harrisonburg as Rosetta Stone continues to grow.

  5. Andy Perrine says:

    Glassner’s rationale is exactly the strategy that has guided Harrisonburg Downtown Renaissance since its founding just over five years ago.

    It’s fun when something works.

  6. Bill says:

    The progress on the city’s downtown development has been amazing and very well received by the many people who are rediscovering its significance. My only regret of its history is that we let the Virginia Theater get away from us. What a tragedy. But as in any tragedy, often some good will rise from its ashes- in this case, enough was enough. Eddie and his group are real local heroes-keep up the good work. I enjoy coming from the county and spending my money and time in downtown Harrisonburg.

  7. Jamie Smith says:

    Aside from a bunch of new eateries, Rosetta Stone and Urban Exchange (which is far from finished or rented) Downtown Renaissance has little to boast about. Turning parking over to people who have managed to glut the decks with free parking and reducing the number of available spaces on the municipal lot has now resurrected the old “no parking” problem. Parking is like sex and religion, everyone thinks they have the answer. I agree about the Virginia and many more buildings that were hit with the wrecking ball. Downtown Harrisonburg has a long way to go before it will be an “Urban Center.”

  8. I know this is picky, but the Harvard econ prof’s last name is “Glaeser,” neither “Glasser” nor “Glassner.”

  9. John says:

    I couldn’t disagree more with Jamie’s comment regarding HDR having little to boast about.

    I moved here 8 years ago. Downtown was an absolute dump at that time. There was no guiding force that had the abililty to influence the ‘powers that be’ to make it better. Downtown may still be kind of dumpy, but it is definitely on the upswing, and without a doubt — HDR has added incredible positive energy to Downtown’s direction. It is like a night-and-day difference between then and now. And the City is actually HELPING to make it better. Sometimes I am shocked at how flexible and helpful they are as an entity.

    It’s easy to sit on the sidelines and critique. Many ‘Monday morning quarterbacks’ have absolutely NO CLUE as to what it has taken to make the progress that we have. I am proud to say that I am absolutely hands on in terms of improving our downtown. I’m personally doing things that make it better. So is HDR. So are A LOT of other building owners, entrepreneurs and volunteers.

    It’d be nice if someone could snap their fingers and all of the work would be done instantaneously. That isn’t gonna happen. It takes time. I’ll take the progress we’ve made over sitting on your hands and bitching on an online forum any day.

    News Flash: Downtown districts almost always have parking issues. So what if we have to walk an additional 100 yards to go drink a bucket of PBR’s. I would be ecstatic if parking were the biggest issue downtown. Trust me – there are bigger fish to fry than that.

  10. Scott says:

    Jamie, you said:

    Urban Exchange (which is far from finished or rented)

    To clarify — the planning for Urban Exchange started 3.5 years ago. We’re now only 96 days away from people moving into the East Wing. I wouldn’t consider that “far from finished”…

    As far as “far from rented”, that first wing is already 65% leased. But yes, we still have plenty of room for more tenants. Click here for the current availability.

  11. I would also like to put my two cents in to support the efforts of HDR. Yes, these things take time, and Harrisonburg’s downtown was pretty far down with a lot needing to be done. But changes have been happening, and they are moving in the right direction, even if there is still much more that can or could be done.

  12. Jeff says:

    I know this is a simplistic take, but downtown doesn’t have enough “destinations” for most people. (I’m using “destinations” to mean places a person will go regardless of where they’re located.)

    I’m probably not typical, but take me as an example. I go to the library, and the Shenandoah Bicycle Company (love those guys). I’d go to either place regardless of where it was located. They happen to be downtown so that’s where I go. Otherwise, nothing downtown pulls me. I go to a downtown restaurant maybe once every two months. The shops, offices, services… don’t need them or don’t, for a variety of reasons, use them. And that’s not because I’m against a downtown area; we had another home in Westfield, NJ for a couple years, and it was a lot of fun to go downtown in the evening carrying our bottle of wine (couldn’t buy at the restaurants, had to BYO), picking a sidewalk restaurant we wanted to try… very cool. Westfield had a thriving downtown with lots to do and see and as a result a lot of destinations. (And we didn’t mind parking and walking, either. If you want to go somewhere, you don’t care about parking; to me parking is only an issue if you’re on the fence.)

    I know – there’s a chicken and egg thing here. Without an improved infrastructure, which HDR is trying to provide, more destination businesses won’t choose to locate downtown. And I think what HDR has done, especially with what I assume are limited resources, is commendable.

    At the same time I do wonder whether adding housing like UE will make a dramatic enough impact. A guy like Barkley with his incredible CV is much better placed to speak to this, but say 1,000 more people live and even work downtown in the next year; is that enough to increase revenues at current downtown businesses to the extent other businesses will want to move in? Do restaurants, shops, etc get that much of a bump in business? I have no idea.

    Again, in my simplistic view, I think something else besides housing has to change to stimulate long-term growth. I don’t think a thriving downtown can be supported solely by the people living and working there; it needs to draw significant numbers from the surrounding area. Which leads me back to destinations. The more people feel they NEED to come downtown, the more current businesses thrive; then marginal businesses that can’t afford rising lease rates are replaced by new ones, some of those thrive, and over time enough destinations exist that more people come downtown… then that critical mass makes it possible for niche businesses to also thrive… and the commercial community becomes diverse, attractive to a broad base of people, and even a little eclectic (in a good way).

    Wow, I just solved the world’s problems. How you get there is of course the question. If I was starting a business dependent on foot traffic, I don’t think I’d locate it in our current downtown. If I knew enough people were coming downtown that I’d benefit from significant spillover, then I might. Downtown will only thrive when business owners think it’s the BEST place for them – not just because rent is cheap or small concessions are made… or because it’s the right thing to do so we save our downtown. (An admirable motivation to be sure, but not one that drives many business owners… and not one you should expect to drive business owners.) If I can profit – I’m there. If I can’t – I’m somewhere else.

    How HDR overcomes that I don’t know. I’m not sure the issues can be solved or overcome by a government agency, although they do seem committed to the cause.

  13. Jeff,

    There is a sort of “technical” point here that I think is important and that you are getting at. It is that in urban development there are often “tipping point” phenomena, the underpinnings of which are nonlinear dynamical processes. The intuition here is that there are mutual reinforcing feedbacks between all these things you mention, and then when they get going sufficiently, pushing each other, one can cross a some critical threshold where one moves into a completely different qualitative condition. There really are distinct boundaries, even if they are hard to predict or identify, between a “thriving” and “desirable” neighborhood (or downtown) and a “declining” or “stagnant” or “bad” neighborhood (or downtown). In the Harrisonburg downtown, we may not have yet crossed that ctitical threshold or tipping point, but we are moving in the right direction.

  14. Jeff says:

    Barkley – with ya. I avoided “tipping point” because I didn’t want to seem like a Gladwell-acolyte. :-) But I think you’re right – some thing or collection of things creates a critical mass and momentum takes over… and that is slowly taking place. And I do agree we’re moving in the right direction; slowly building a foundation will pay off long-term. After all, look at some of the cities that built new sports arenas (using public funds) hoping to revitalize a downtown area. It worked in a few cities, but otherwise —-

  15. Jeff,

    Oh, I had forgotten about that popular tract by Gladwell. I prefer Thomas Schelling and his reasonably accessible, but much deeper, Micromotives and Macrobehavior, 1978, in which he applies the idea to phenomena in urban economics and sociology. There is a large literature on this sort of thing, but much of it is pretty mathematical, involving multiple equilibria and other sorts of hairy monstrosities.

  16. rich says:

    Concerning the dowtown area- I’d like it to feel like a garden outside. The turkey plant smells bad, it’s gotta go. This town is surrounded by suffering animals. Ever take a minute to look at the cattle? They are miserable around here, and their dung is found every other step they make, including in the creeks, which then pollutes the river.
    Dowtown has improved much though and I thank all those working hard to accomplish this. We could look at the style we are offering. Developers who don’t live here will try and sell us what makes them the most money. Corporate design is souless. I think the dowtown area could be helped by a group of designers. People want to go “where it feels good”. Designers understand how to create this. Garden designers, interior designers, landscape artists… these people could make dowtown more appealing. Show me Babylon. Where can we take a bottle of wine and enjoy ourselves? Also, in these formative times where people look for good ideas, where is the outdoor venue downtown for speakers? Now I sit at home watching Link and Free Speech T.V.

  17. Emmy says:

    I’ll agree with you on almost all of that. But, I’ve lived here forever and have never been under the impression that local cattle were miserable. We don’t have factory farms around here and most of the farms we do have seem to have adequate space for their cows. Perhaps that’s just coming from my limited world view of cows though.

  18. Jeff says:

    Barkley,

    Snagged the Schelling book; really good read. (I’m glad he left out a lot of the math.) And you’re right, better than the Gladwell book.

  19. The great economist Paul Samuelson is reported to have declared that Thomas Schelling is the most knowledgeable and brilliant person he ever met. Some say he is responsible for saving the world from nuclear destruction, as JFK had his book, Strategies of Conflict on his bedside during the Cuban missile crisis. He is certainly the father of the nuclear hotline and was an adviser to Stanley Kubrick when he filmed “Dr. Strangelove.” He was also one of the major overseers of the Marshall Plan in the late 1940s. He is still alive and gave a talk here at JMU a few years ago, just shortly before he very deservingly won the Nobel Prize in economics. Amazingly, for all his brilliance and enormous influence, he is a very humble man.

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