New Geography

Category: Urban Issues

  • Urban Core Millennials? A Matter of Perspective

    Yes, millennials are moving to the urban cores but not in significant numbers when view from the context of larger city (metropolitan area) trends. That’s the updated story, based on new small area data that approximates the year 2011 (Note: ACS 5-Year Data).

    Small area trends are important to understanding developments in metropolitan areas, because conventional municipal jurisdiction based analysis obscures the extent of large suburban areas within the boundaries of most core municipalities. In 2010, approximately 58% of the population in core municipalities lived in small areas that were essentially suburban, with much lower population densities than areas that developed before World War II, and where nearly all motorized travel is by car.

    Even worse, "principal cities," have been equated to core municipalities in some analyses, despite their overwhelming suburban, single family nature, such as Staten Island in New York to the broad expanses of Phoenix, Denver, and Portland. Excepting the core municipalities, the principal cities designated since 2000 are polycentric business centers, the metropolitan area criteria adopted by the Office of Management and Budget (OMB). Marking the transition of American cities from being monocentric to polycentric, principal cities are 92% suburban and exurban.

    This analysis uses my City Sector Model, which classifies small areas (ZIP codes, more formally, ZIP Code Tabulation Areas, or ZCTAs) in metropolitan areas in the nation based upon their function as urban cores, suburbs, or exurbs. The criteria used are generally employment and population densities and the extent of transit use versus car use. The purpose of the urban core sectors is to replicate, to the best extent possible, the urban form as it existed before World War II, when urban densities were much higher and a far larger percentage of urban travel was on transit. The suburban and exurban sectors replicate automobile-oriented suburbanization that began in the 1920s and escalated strongly following World War II.

    A recent revision to the model divided the urban core into two classifications, the downtown or central business district ("CBD") and the "inner ring." The CBD is the locus of the most important urban revitalization in the core municipalities, while the inner ring includes the remaining part of the urban core that resembles the outlying parts of the pre-World War II city in its travel patterns and population densities (the City Sector Model criteria are described in the note below).

    The Anecdotal Evidence

    Seemingly endless stories are covered in both the print and electronic media describing how younger adults have been attracted to the urban core. Press organs like The New York Times and the Los Angeles Times can readily send their reporters to nearby cafes, bars, and restaurants. Much rarer are the anecdotes from the suburban strip malls and even a "Starbucks" on Long Island, Sugarland, outside Houston, or in the San Fernando Valley. But data, not anecdotes, are the most reliable indicators of actual trends.  

    From Anecdotes to Data

    The new data reinforces the reality that the story of millennials in the urban core is more nuanced than often suggested. This analysis compares population data for younger adults in the age range of 20 to 29 years old.

    Data: The Urban Core

    The "good news" relates to part of the city, the urban core. Millennials are concentrating to a greater degree than before in the urban core. Millennials have a larger share of the total population in the CBD then in any of the other for city sectors. In 2011, millennials represented 24.4% of the CBD population. By comparison, millennials are a much smaller 14.1% of the overall metropolitan population and the share in the exurbs is only 12.1%, less than one half that in the CBD. The associated inner ring has the second highest millennial component, at 18.1%, well above the shares in the outer sectors. Further, the millennial composition of the CBD increased between 2000 and 2011 from 22.4% to 24.4%. The inner ring millennial composition also increased, from 17.0% to 18.1% (Figure 1).

    So there is no question that the urban core millennial population is increasing beyond the general population increase.

    Data: City-Wide

    The other, often neglected, reality is that the gains in the urban cores are small compared to overall city (urban area or metropolitan area) trends. And millennial urban core gains may well have reached a peak, as has been suggested by Trulia’s Jed Kolko. Over the last year the millennial population in the CBDs has dropped a modest 25,000 (an amount that is probably within the margin of error, since all of these data are from surveys).

    Only 2.3% of millennials lived in the CBDs in the most recent year for which there is data (2011). This is up, but only from 2.2% in 2000. That gain was offset by a troubling loss in the inner core from 18.6% to 17.5%. The millennial share increases were all in the suburbs and exurbs (Figure 2).

    In numbers, the population aged 20 to 29 increased in the suburbs 20 times that of the CBD and the increase in the exurbs was nearly 9 times as high. Altogether, more than 90% of this cohort’s growth took place outside the urban core in the major metropolitan areas (Figure 3). Overall, the millennial gains in the CBD were approximately 80,000, while the gains in the inner ring were approximately 240,000. By contrast, the millennial gains in the suburbs and exurbs amounted to more than 2.75 million (Figure 4).  

    A Matter of Perspective

    The story on millennials is simply a matter of perspective. Those most interested in the small but influential urban core, depict a rising tide of millennials, with some justification. Those most interested in all the entire metropolitan area, are compelled by the overwhelming numbers to recognize that the story of millennials in the urban core is less significant in the larger context. But we are far from, and may well never achieve, a return to the imminent "Nirvana" of restoring pre-World War II cities or even a substantially smaller role for cars, which continue to drive the urban form in much of the world.

    Continued progress in the urban cores does not depend upon the "death" or decline of the suburbs. If cities are to best perform their crucial role of providing better standards of living and enabling lower poverty rates, they could boost prosperity throughout the city from the urban core through the suburbs to the exurbs.

    Note: ACS 5 Year Data: The data were collected by the American Community Survey of the US Census Bureau from 2009 to 2013. One fifth of the survey is completed each year, and therefore the data most closely approximates the middle of the period,  2011.

    Note: City Sector Model Criteria: This article continues a series examining the 52 major metropolitan areas (those with more than 1,000,000 residents) using the City Sector Model, which allows a more representative functional analysis of urban core, suburban, and exurban areas, by using smaller areas, rather than using municipal boundaries. The City Sector Model thus eliminates the over-statement of urban core data that occurs in conventional analyses, which rely on historical core municipalities, most of which encompass considerable suburbanization.

    The City Sector Model classifies 9,000 major metropolitan area zip code tabulation areas using urban form, density, and travel behavior characteristics. There are five functional classifications: the CBD, the inner ring, all will earlier suburbs, later suburbs, and exurban areas.

    The general criteria is as follows: The CBDs include any small area with an employment density of 20,000 or more per square mile. The inner ring has lower employment density, with high residential densities, older housing and substantially greater reliance on transit. The CBD and inner ring together form the urban core, which resembles the population density and travel patterns of the pre-World War II city. The suburbs constitute the balance of the built-up urban areas and the exurbs are beyond the built-up urban areas.

    The revised City Sector Model criteria are illustrated in the Figure: "City Sector Model Criteria: 2015," below.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo:  The revitalizing CBD of St. Louis (by author)

  • Misunderstanding the Millennials

    The millennial generation has had much to endure – a still-poor job market, high housing prices and a generally sour political atmosphere. But perhaps the final indignity has been the tendency for millennials to be spoken for by older generations, notably, well-placed boomers, who often seem to impose their own ideological fantasies, without actually finding out what the younger cohort really wants. The reality, in this case, turns out far different than what is bespoken by others.

    Nowhere is this tendency clearer than in the perception of what kind of life – and what places – will millennials find attractive. Generally, the narrative goes like this: Millennials are different, they don’t care about owning homes, detest the suburbs and would prefer to spend their lives in dense apartment blocks, riding the rails or buses to whatever work they might be able to find.

    Urban theorists, such as Peter Katz, insist that millennials (the generation born after 1983) have little interest in “returning to the cul-de-sacs of their teenage years.” Manhattanite Leigh Gallagher, author of “The Death of Suburbs,” asserts with certitude that “millennials hate the suburbs” and prefer more eco-friendly, singleton-dominated urban environments.

    Such assessments thrill the likes of real estate speculators, such as Sam Zell, who welcomes “reurbanization” as an opportunity to cash in by housing a generation of Peter Pans in high-cost, tiny spaces unfit for couples and unthinkable for families. Others of a less-capitalistic mindset see in millennials a post-material generation, not buying homes and cars and, perhaps, not establishing families. Millennials, for example, are portrayed by the green magazine Gris as “a hero generation” – one that will march, willingly, even enthusiastically, to a downscaled and, theoretically, greener future.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050.  He lives in Los Angeles, CA.

    New home photo by BigStockPhoto.com.

  • What’s This Place For?

    I was recently asked by Gracen Johnson (check out her site here) to elaborate on the possible future of suburbia. How are the suburbs likely to fare over time? This coincided with a city planner friend of mine who asked a more poignant question about the suburban community he helps manage. “What’s this place for?” If we can answer that question we might be able to get a handle on the possible trajectories of various suburbs.

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    For example, we all understand what a farm town is for. Small rural towns produce food. The people who live in the countryside are actively engaged in the business of feeding society. They take soil, water, plants and animals and convert it all into breakfast, lunch and dinner. For the people who want to live this way there are tremendous benefits: fresh air, open space, privacy, independence, a direct connection to nature, strong family bonds, tradition, and so on. Whatever else we might say about farm country we can be certain that it will carry on one way or another or else civilization will grind to a halt pretty quickly.

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    We also know what industrial cities are for. They take the raw materials from the surrounding countryside and transform them into finished goods. Grain becomes flour and bread. Timber becomes lumber, then homes and furniture. Iron ore and coal become machinery and power. Crude oil becomes gasoline, petrochemicals, and plastics. There are obvious trade offs for industrial workers, but for many people it’s a pretty good arrangement. If we expect to have manufactured goods in the future these cities will have to continue somehow.

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    The new post-industrial locus is a bit trickier to pin down. The service economy doesn’t actually produce any “thing” so the workforce is liberated to live just about anywhere in a way that farmers and factory workers can’t. Oddly, well educated highly paid people don’t actually spread out and inhabit a million cabins in the woods as you might expect. Instead they clump up in a handful of regions that provide abundant cultural amenities. At the same time the post-industrial economy exists in a physical world and all those people and electronic components rely on the underlaying farms, factories, and raw resources that support them. The so-called dematerialization of the economy still requires a serious amount of real “stuff” to function.

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    So what does this all mean for the suburbs? The nature of suburbia has always been consumptive rather than productive. People move to the suburbs in order to purchase and enjoy things: a spacious home, a good school district, security, a clean environment, more respectable neighbors, and so on. The majority of the commercial activity is actually in service to suburbia itself. The mortgage brokers, insurers, real estate agents, landscapers, school teachers, firefighters, orthodontists, pancake houses, and auto body shops are all there to help keep the suburbs humming along. But they’re all consumptive in nature. No one is making the tennis shoes sold at the mall or growing the oranges at the supermarket. This is compounded by the fact that the suburbs are maintained largely through debt. Private debt is required for all the mortgages, car loans, credit cards, student loans, and business loans while municipal bonds prop up many essential suburban government functions. The fact that many people don’t understand the difference between production and consumption is one of the big problems the suburbs are going to have to sort out in the future.

     

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    I’m going to get a lot of push back on this concept. I’m sure many of you think that your suburb is full of productive enterprises: the Krispy Kreme, the Jiffy Lube, the dozen Shell and Exxon stations, the Applebee’s, the Foot Locker, the Honda dealership, and the Kroger’s. But these are merely outlets for things that were produced elsewhere. Let me offer another example from my own life. I spent a chunk of my childhood in the San Fernando Valley in Los Angeles. Back in the 1960’s and 1970’s nearly everyone had some connection to companies like Rocketdyne, Litton, and General Dynamics. Those were the engines of the local economy for decades. And they did in fact produce real physical things. But they were all funded entirely by the federal government. Tax money was skimmed off the national productive economy (all those farms and factories) and then spent on missile guidance systems, satellites, and fighter jets. The same was true in Huntsville, Alabama and Marietta, Georgia. Remember what happened to all those places when the feds turn off the spigot during budget cuts? Money flowed in, not out. There’s a reason Peru doesn’t have a space program. The underlying national economy isn’t productive enough to support such extravagant government spending.

    As the material abundance we enjoyed in the Twentieth Century tightens up suburbs will have to become much more efficient places that provide things the outside world needs and is willing to pay for. At the same time internal consumption and debt are going to have to be pulled back. That doesn’t necessarily mean a lower quality of life, but it does demand that suburbs retool and ask themselves, “What’s this place for?”

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

  • Prairie Metropolitan Areas Drive Canada’s Growth

    In Canada, growth is moving west, but not all the way. The big growth now is in the Prairies between central Canada and British Columbia, the Canadian part of the Great Plains.

    Yet you can’t talk about metropolitan Canada without first mentioning the Toronto region.

    The Greater Golden Horseshoe continues to dominate Canada’s population, according to the latest census metropolitan area estimates from Statistics Canada. Anchored by Toronto, the metropolitan areas of the Greater Golden Horseshoe (Hamilton, Kitchener, Oshawa, Brantford, Barrie, Peterborough St. Catherine’s – Niagara and Guelph) now have a population of 8.7 million residents, 23.4% of the national total of 35.5 million.

    The Major Metropolitan Areas

    Canada has six major metropolitan areas (populations over 1 million) and a total of 33 (Table 1).

    Table 1
    Canada: Census Metropolitan Areas
    Population: 2001-2011-2014
            Annual Change
    Metropolitan Area 2001 2011 2014 2001-2011 2011-2014
    Toronto                       4,883     5,770     6,056 1.68% 1.63%
    Montréal                      3,533     3,886     4,027 0.96% 1.20%
    Vancouver                     2,075     2,373     2,470 1.35% 1.35%
    Calgary                          978     1,264     1,407 2.60% 3.62%
    Edmonton                         962     1,206     1,328 2.28% 3.27%
    Ottawa           1,110     1,270     1,318 1.35% 1.24%
    Québec                           704        777        800 0.99% 0.97%
    Winnipeg                         696        746        783 0.70% 1.61%
    Hamilton                         689        742        765 0.75% 1.01%
    Kitchener-Waterloo        432        493        507 1.34% 0.93%
    London                           453        489        502 0.78% 0.87%
    Halifax                          369        402        414 0.86% 0.98%
    St. Catharines-Niagara        392        403        406 0.27% 0.28%
    Oshawa                           309        367        384 1.76% 1.51%
    Victoria                         326        352        359 0.78% 0.62%
    Windsor                          321        328        334 0.23% 0.57%
    Saskatoon                        231        270        301 1.58% 3.62%
    Regina                           197        218        238 1.00% 2.98%
    Sherbrooke                       184        205        212 1.07% 1.18%
    St. John’s                       176        203        212 1.39% 1.49%
    Barrie                           155        193        200 2.18% 1.30%
    Kelowna                          154        184        191 1.76% 1.38%
    Abbotsford        154        174        179 1.25% 0.88%
    Kingston                         153        164        168 0.74% 0.78%
    Sudbury                  161        165        166 0.23% 0.09%
    Saguenay                         162        159        160 -0.18% 0.16%
    Trois-Rivières                   143        153        156 0.67% 0.56%
    Guelph                           129        146        151 1.20% 1.20%
    Moncton                          122        140        146 1.38% 1.37%
    Brantford                        129        139        143 0.82% 0.87%
    Saint John                       126        129        127 0.20% -0.34%
    Thunder Bay                      127        125        125 -0.14% 0.04%
    Peterborough                     115        122        123 0.58% 0.29%
    Metropolitan Areas   20,851   23,759   24,859 1.31% 1.52%
    Outside Metropolitan Areas   10,172   10,586   10,684 0.40% 0.31%
    Canada   31,023   34,345   35,542 1.02% 1.15%
    In thousands
    Source: Statistics Canada

     

    Toronto remains the largest metropolitan area in the nation, at 6.1 million residents. The population has increased nearly 1.2 million since 2001, 300,000 of it in since the census year of 2011. In the past half-century, Toronto has steadily increased its share of Canada’s population. In 1961, 11 percent of the nation’s residents were in the Toronto metropolitan area. By 2014, 17 percent of the population was in Toronto. Toronto’s has built a margin of 2.0 million over second-ranked Montréal, an expansion of more than one half just since 2001. Montréal had been the largest metropolitan area in Canada until 1976.

    Montréal continues to be Canada’s second largest metropolitan area, at 4.1 million. Montréal’s annual growth rate was higher between 2011 and 2014 than in the previous 10 years, though is still growing at less than the national average. 

    Vancouver is Canada’s third largest metropolitan area. In the second half of the 20th century, Vancouver grew at a rate considerably greater than that of the nation as a whole. However over the last three years, Vancouver’s has grown at a rate less than that of Canada as a whole. Vancouver is nearing a population of 2.5 million, which it should achieve in 2015.

    Among Canada’s major metropolitan areas (over 1 million residents), Calgary is the fastest-growing. Calgary has reached a population of 1.4 million and is growing at 2.5 times the national rate (3.62 percent annually).Since 2001, Calgary has added more than 400,000 residents. Calgary’s growth rate has been spectacular. In 1951, Calgary had fewer than 150,000 residents, but has since grown into a major center specializing in energy. Calgary has the distinction of having built by far the largest post-World War II downtown area in either Canada or the United States (see photograph at the top of the article).

    Edmonton has grown almost as quickly. From a population of under 200,000 in 1951, Edmonton has grown to more than 1.3 million. Edmonton’s annual growth rate since 2011 has been 3.27% and has added more than 360,000 residents since 2001.

    Ottawa, the national capital (see photo below), stretches across the Ontario-Québec border, with Gatineau the largest municipality on the Quebec side. In 2011, Ottawa had been the fourth largest metropolitan area since 1941, but has been passed by both Calgary and Edmonton since 2011.


    Photo: Centre Block, Parliament Hill, Ottawa

    Moving to the Prairies?

    The population estimates of the last three years indicate considerable growth in the Prairie metropolitan areas relative to the rest of the nation. The Prairies provinces are include Alberta, Manitoba and Saskatchewan (Table 2).

    Table 2
    Canada: Census Metropolitan Areas by Region
    Population: 2001-2011-2014
            Annual Change
    Region 2001 2011 2014 2001-2011 2011-2014
    Atlantic Provinces        794        874        900 0.96% 0.97%
    Québec                        4,997     5,498     5,683 0.96% 1.11%
    Ontario     8,587     9,830   10,231 1.36% 1.34%
    Prairie Provinces     3,765     4,474     4,846 1.74% 2.70%
    British Columbia     2,708     3,083     3,199 1.30% 1.24%
    Metropolitan Areas   20,851   23,759   24,859 1.31% 1.52%
    In thousands
    Source: Statistics Canada

     

    Calgary and Edmonton have experienced strong growth for decades. The same was not true of Saskatchewan’s two largest cities, Saskatoon and Regina. After years of near population stagnation, both metropolitan areas, and the province added population at an accelerated rate. Saskatchewan’s growth pattern has paralleled that of North Dakota, which has shared the energy boom and experienced unprecedented growth after decades of stagnation.

    Saskatoon’s annual growth rate tied with that of Calgary, at 3.62%. This is more than double the 2001 to 2011 growth rate. Regina nearly tripled its annual growth rate from 1.00% between 2001 and 2011 to 2.98% between 2011 and 2014.

    But perhaps the biggest surprise was Winnipeg. Winnipeg was for many years Canada’s fourth largest metropolitan area, a title it relinquished to Ottawa in the 1960s. By 2001, Winnipeg had fallen to eighth place, its population exceeded by not only Calgary and Edmonton, but also Quebec City. However, in a major turnaround, Winnipeg’s annual growth rate has more than doubled since 2011.

    The strength of the Prairies is evident in the regional data (Table 2). The metropolitan areas in the Prairie Provinces grew at more than double the rate achieved by the metropolitan areas in the other regions of Canada between 2011 and 2014.

    The metropolitan areas in all of the four other regions of Canada grew at rates below that of the nation as a whole between 2011 and 2014. The slowest growth was in the Atlantic Provinces (New Brunswick, Newfoundland, Nova Scotia and Prince Edward Island). The annual growth rate of Québec’s metropolitan areas was the second lowest. However growth edged up in Québec’s metropolitan areas. Ontario and British Columbia had grown an approximately the national metropolitan area rate between 2001 and 2011. However, both provinces saw their metropolitan growth fall below the national rate in the last three years.

    The Prairies are likely to experience a reduction in their population growth rate as a result of lower oil and commodity prices. It is an open question how long the lower prices will prevail. The proximate cause of the lower prices is OPEC’s relaxed rationing of its supply to the world. That could change by political whim at virtually any time, or due to disruptions in the Middle East or West Africa, sending prices higher.

    Meanwhile, non-metropolitan Canada continues its very slow growth, which now stands at one-third that of the nation and one-fifth that of the metropolitan areas.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Top Photo: Downtown Calgary (by author)

  • 10 Most Affluent Cities in the World: Macau and Hartford Top the List

    The United States and Europe continue to dominate the list of strongest metropolitan areas (city) economies in the world, according to the Brookings Institution’s recently released Global Metro Monitor 2014. This is measured by gross domestic product per capita, adjusted for purchasing power parity (GDP-PPP). Brookings points out that this does not indicate personal income, but "proxies the average standard of living in an area."

    The Global Metro Monitor 2014 provides detailed ratings for the 300 largest metropolitan economies in the world, measured by gross domestic product adjusted for purchasing power parity. The list is defined by total size of the economy, with some cities with very high GDP-PPPs per capita, but small populations are excluded. For example, Midland, Texas, with the highest GDP-PPP per capita metropolitan area according to the United States by the Department of Commerce Bureau of Economic Analysis, is excluded.  Other cities, with large populations and low GDP-PPP s per capita were included, such as megacity Kolkata, with a GDP-PPP of $4,000, a fraction of the top 10 average of $77,000. Megacities such as Lagos, Dhaka and Kinshasa were excluded from the top 300, owing to their low GDP-PPPs per capita

    According to data in the Global Metro Monitor website and report, 90 of the top 100 cities were in the United States or Europe in 2014, 68 in the United States and 20 in Europe. The US figure matches that of the previous Global Metro Monitor (2012), while Europe has fallen from 22 to 20 cities.

    Macau: The Most Affluent City

    Last year’s most affluent city, Hartford, was replaced by Macau, which, with Hong Kong is one of China’s two special economic regions. Brookings estimates Macau’s GDP-PPP per capita at $93,849, opening a substantial lead on Hartford of more than $10,000.

    Macau’s economy has expanded rapidly the last decade, principally due to legalized gaming industry and related tourism. Macau displaced Las Vegas as the largest gaming center in 2006. According to the Las Vegas Review Journal, Macau’s gaming revenues had exploded to nearly seven times that of the Las Vegas Strip ($44.1 billion compared to $6.4 billion). Revenue declined, however, in 2014, partly due to China’s anti-corruption drive and competition from other growing East Asian centers, such as Singapore and the Philippines.

    Macau is the one of the smallest cities in the Brookings 300, with a population of only 575,000. Only three other richest cities have populations less than 600,000 including Durham, North Carolina the smallest, ranked 12th, Pennsylvania’s capital, Harrisburg (with a core city that filed for bankruptcy), ranked 25th and Scotland’s capital, Edinburgh, at ranked 37th.

    Balance of the Top 10 Cities

    As was the case last year, nine of the 10 largest GDP-PPP’s per capita were in the United States (Figure). Like Macau, the second and third ranking cities were also smaller than the average, a population of 4.7 million. Second ranked Hartford, with a GDP-PPP per capita of $83,100 has 1.1 million residents. Hartford’s economy strong in finance, especially insurance and benefits and is an important government center, as the capital of Connecticut.

    San Jose, with 1.9 million residents, ranked third, with a GDP-PPP per capita of $82,400. San Jose is home to the larger part of the world’s leading technology center, suburban Silicon Valley. Tech and University hub Boston ranked fourth.

    Leading energy hub Houston ranked as the fifth most affluent city, with a GDP-PPP per capita of nearly $75,000 (Note 1). With 6.4 million residents, Houston is the largest city among the top five. Among the top ten, only New York is larger.

    Bridgeport, Connecticut, a metropolitan area adjacent to New York that includes suburban business centers such as Stamford, Westport and Greenwich is ranked 6th.

    The balance of the top 10 also includes cities specializing in technology, finance and government. Number seven Washington has probably the world’s largest government complex   and has nurtured a huge technology center centered in the Virginia and Maryland suburbs. Seattle ranks eighth, continuing its historic leadership in the technology driven aerospace industry besides its emergence as one of leading information technology centers in the world.

    San Francisco which includes part of the Silicon Valley in its suburbs (sharing with San Jose) and has a strong social media industry in its urban core, ranks 9th. The top 10 was rounded out by New York, perennially ranked as one of the two top global cities, along with London (see: Size is not the Answer: The Changing Face of the Global City, referred to as the Global Cities Report, described further in Note 2)

    Additional Highlights

    Europe:Unlike the United States, which placed 37 of its most affluent cities in the top 50 and 31 in the second 50, Europe’s 20 most affluent economies were concentrated in the second 50, with only six in the top 50. Comparatively small Edinburgh, cited above, was the most affluent, at 37th. Paris was ranked 40th most affluent by Brookings and 3rd in the Global Cites report, just ahead of London at 42nd, the perennial global city co-leader (which was ranked number one in the Global Cities Report).

    Hong Kong:Along with Macau, China’s other special economic region, Hong Kong continued to be among the world’s most affluent, at 39th. The Global Cities Report ranked Hong Kong as the sixth Global City, with a GDP-PPP PPP higher than that of former its former imperial capital   London.

    China: Perhaps most significantly, mainland China has begun to enter the top 100. Suzhou, partly exurban to Shanghai (Kunshan), now ranks 68th. Suzhou has been the recipient of considerable business park investment, including cooperative ventures with Singapore. China’s economic prosperity may be shifting toward the Yangtze Delta (which extends from Ningbo and Hangzhou, through Shanghai to Nanjing). Along with Suzhou, Wuxi, Changzhou and Nanjing now have GDP-PPP’s per capita exceeding $30,000. By contrast, among the large manufacturing centers of the Pearl River Delta, only Shenzhen exceeds a GDP-PPP of $30,000, while Guangzhou, Dongguan and Foshan are below that level (Note 2). According to a new Economist Intelligence Unit report, Jiangsu (which includes the urban corridor from Suzhou to Nanjing) now accounts for more manufacturing employment than any other province.

    Surprisingly Low Rankings: Some cities that might have been expected to be among the world’s most affluent, ranked comparatively low. For example Tokyo, the world’s largest city, ranked fourth in the Global Cities Report, made it only to the third 50 in affluence. Seoul-Incheon, a burgeoning corporate and tech center, remained outside the top 100.

    Canada’s largest city, Toronto managed only a ranking of 100, well below the Prairie behemoths of Calgary (11th) and Edmonton (23rd). Australia’s largest city, Sydney also barely made the top 100, at 95th, far below energy and commodities capital Perth (17th).

    European cities with reputations for unusual prosperity also ranked lower than expected. Financial center Zurich was ranked 45th. Scandinavia’s most affluent city  was Stockholm (48th), followed by energy leader Oslo (62nd), Helsinki (87th) and Copenhagen, which failed to make the top 100 and ranked in the third 50. Singapore,which the Global Cities Report ranks fourth, is ranked 14th most affluent.  

    Evaluating City Performance

    Cities grow as migrants are attracted by hope for better lives. This is as true in Africa and India as it is in Europe or the United States. Cities achieve their primary purpose when they produce a higher standard of living for their residents. Some cities do very well at this, as the Brookings data indicates, and some do less well. The Global Metro Monitor provides crucial information that can be used by national, regional and local officials to measure how well their policies are performing in improving living conditions in relation to both their own past and other cities.

    Note 1: Purchasing power can vary greatly even within nations. Because of this, the United States Department of Commerce, Bureau of Economic Analysis has developed a regional price parities (RPP) program to adjust for metropolitan area costs of living. For example, in 2012, the unadjusted per capita income in San Jose was 30 percent above that of Houston. In the same year, the per capita income-RPP (or in international terms, the per capita income-PPP) in San Jose was just six percent above that of Houston, indicating cost of living at least 20 percent higher in San Jose. 

    Note 2:  Joel Kotkin was principal author of Size is not the Answer: The Changing Face of the Global City, which included contributing authors Ali Modarres, Aaron M. Renn and me. The report was jointly published by the Civil Service College of Singapore and Chapman University. The report is available here.

    Note 3: The 2012 Global Metro Monitor ranked some cities of China higher, though Note 19 expressed concerns about population data for some cities, which might have excluded migrant populations (the "floating population"). There are no such difficulties in the 2014 Global Metro Monitor.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: St. Paul’s Church (Facade), Macau, photo by authors

  • The New New Thing: Suburban Bunker Buildings

    I have a theory about where the next culturally dynamic neighborhoods are likely to emerge and which building types will be the engine of that transformation. It may not be exactly what most people expect.

    As American industry receded in the later half of the Twentieth Century it left behind an alluvial delta of redundant buildings that sat vacant for years, no longer useful or productive. All effort was focused on building the new suburbs. These abandoned inner city warehouse districts became so cheap and run down that they were eventually colonized by artists, immigrants, and bohemians seeking cheap rent and an environment where landlords and municipal authorities looked the other way. They weren’t necessarily safe, or clean, or attractive, but they provided a kind of freedom for the people who lived there.

     Screen Shot 2015-02-10 at 8.38.05 PM  Screen Shot 2015-02-10 at 8.39.46 PM Screen Shot 2015-02-10 at 8.40.07 PM  unnamed-2 unnamed
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    The photos above are of friends in their 8,000 square foot live/work space in Philadelphia. The general dismissive attitude of many suburbanites is that such people exist outside the mainstream and are irrelevant to the lives of “real” people. Contrary to this common misconception all the creative types I know are highly skilled and hold down jobs as welders, carpenters, accountants, and technicians of various kinds. I know a couple who spend half the year in video production making car commercials and then pursue their art during the long hiatus. I know another guy who worked like a dog for a few years after college at a prototype lab for the pharmaceutical industry in order to pay off all his student loans and other debts. Now he’s free to do what he really wants without the burden of debt. These folks simply choose not to spend their money on a mortgage on a suburban home with multiple car payments, but their lives and economic productivity are very real.

    Technically, living in an old warehouse involves breaking a hundred different rules and regulations, but they’ve been there for years and no one cares. It’s that kind of space and that kind of neighborhood. Unfortunately, the area is rapidly gentrifying and they may be priced out of the space soon as nearby warehouses are being converted to luxury lofts. That begs the question – where are the cheap funky emerging neighborhoods these days? You can’t live and work this way in a suburban tract home. Neither the physical space nor the local culture will allow it.

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    A couple of years ago I was in Salt Lake City having lunch with a prominent well-connected real estate agent. She’s the kind of charming knowledgable person I always seek out so it was a pleasure to see her again. I had explored various parts of Salt Lake from the downtown core all the way out to Daybreak in the distant suburbs. She spoke of the urban renaissance, the new streetcar system, and the many new developments in previously blighted areas. But I explained that the part of town that really interested me was the neglected and undervalued areas in the lackluster middle distance just beyond downtown that were neither sophisticated and urbane nor verdant and domestic. These semi-commercial, vaguely industrial, half-assed residential zones were neither fish, nor flesh, nor fowl. But they had the two qualities that fascinate me: they’re relatively inexpensive and generally ignored by the Upright Citizens Brigade. They’re close enough to downtown and the university that you could still ride a bicycle to access culture and employment, but just a short drive to suburban conveniences farther out. It’s the wrong combination for people with conventional tastes, but the perfect sweet spot for a certain kind of subculture that needs to be left alone in order to thrive. They need wiggle room that doesn’t exist in the highly supervised downtown or manicured suburbs. And many of these brick and concrete buildings are little bunkers where you could do just about anything within the raw space. They offer the one thing that’s in terribly short supply. Slack. 

    unnamed-2 unnamed-3 unnamed-1

    I sent these photos over to her and explained that these nondescript aging suburban bunker buildings were the next great building type. She was gracious and polite, but she obviously thought I was insane. Now granted, she isn’t the only person to come into contact with me to come to this conclusion – and not just because of my irregular taste in property.

    Screen Shot 2015-02-09 at 5.01.50 PM  Screen Shot 2015-02-09 at 5.05.02 PM Screen Shot 2015-02-09 at 5.04.39 PM

    This conversation came back to me this afternoon as I walked past a building that used to house a discount bakery outlet. As a much younger and poorer person twenty years ago I used to frequent this establishment myself to buy day old bread and not-quite-expired donuts. This month the bunker building was transformed into an upscale furniture store with in-house designer services. I poked around and explored the shop. I had no particular interest in the furniture itself and don’t think this kind of business could succeed anyplace other than a prosperous part of town. But it was the bones of the building itself that fascinated me.

    Screen Shot 2015-02-09 at 5.01.18 PM Screen Shot 2015-02-09 at 5.01.02 PM Screen Shot 2015-02-09 at 4.54.42 PM Screen Shot 2015-02-09 at 5.02.40 PM Screen Shot 2015-02-09 at 4.55.46 PM

    It’s a big flexible durable space like the old inner city industrial buildings. The walls and floor are concrete and the ceilings are exposed wood and steel. The former loading docks make perfectly segmented rooms with high ceilings and the ability to adapt to many uses including indoor/outdoor applications. Paint and some inexpensive drywall partitions transform the space very quickly. The front room was mostly glass and open to the parking lot, but the vast majority of the building was entirely private. This is a perfect example of the new new thing. This is where the starving bohemians will end up if they want to continue doing their work in a big, affordable, mostly unregulated spot. In an expensive real estate market people will colonize any vacant building and make their luxury furniture showroom work. But in depressed suburban markets these buildings are ripe for economically displaced artists. Gather enough interesting and entrepreneurial types in one such neighborhood and it could be the social and cultural engine that pulls up an entire dying suburban strip.

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

  • Is Jakarta the World’s Most Congested City?

    The world’s second-largest city, Jakarta, is its most congested according to the Castrol Magnatec Stop-Start Index. The Start-Stop Index estimates the average number of starts and stops per vehicle in 78 cities around the world. Jakarta drivers had 33,240 starts and stops annually according to the survey. A higher number of starts and stops is associated with more intense traffic congestion and more intense greenhouse gas emissions per mile traveled. This is an indication of a roadway system that provides insufficient capacity for the travel demand (including commercial truck traffic). The Start-Stop Index did not include the world’s largest city, Tokyo–Yokohama.

    Measuring Traffic Congestion

    The Castrol Magnatic is one of three international traffic congestion measures that provide information over broad geographical areas. The other two indexes, the Tom Tom Traffic Congestion Index and the INRIX Traffic Scorecard provide measures of traffic congestion by travel time losses. These indexes generally follow the method pioneered by the Texas A&M Transportation Institute, the results of which are reported annually in its Urban Mobility Report.

    The Castrol Magnatic Start-Stop Index measures congestion by the number of starts and stops experienced by drivers. The three traffic congestion indexes also measure different geographies. The Tom Tom Traffic Congestion Index provides scores for cities in the United States, Canada, China, Australia, New Zealand, Europe, South Africa and Latin America. The INRIX Traffic Scorecard provides information on cities in the United States, Canada and Europe. The Castrol Magnatic Start-Stop Index provides by far the greatest geographical coverage, with data from the United States, Canada, China, Australia, New Zealand, Europe, South Africa, Latin America and Southeast Asia. However, over its larger geography, fewer cities are evaluated in this survey than in the Tom Tom and INRIX indexes.

    The state of traffic congestion reporting is has improved and it seems likely that the remaining portions of the world not yet reported upon will soon be added.

    Rating Starts and Stops

    The Castrol Magnatic Start-Stop Index relies on data automatically collected from its subscribers by traffic index publisher and vehicle navigation company, Tom Tom. Castrol Magnatic rates each city on a "three color" matrix. Cities with an average of more than 18,000 starts and stops annually are rated "red." This indicates a "severe" level of start-stop driving. The second level is "amber," with annual starts and stops between 8000 and 18,000. This is considered "heavy" level of start-stop driving. The least critical level is "green," which indicates a "moderate" level of start-stop driving.

    Megacities and Start-Stop Driving

    Fourteen of the worlds 34 megacities were included in the Start-Stop Index. The Start-Stop Index provides the first information for Jakarta, which has often been cited anecdotally for the worst traffic congestion, a title is now bestowed by Castrol Magntic. Some, but not all of the megacities have been previously rated with high levels of traffic congestion in the other indexes.

    Istanbul ranked second among the megacities with 32,520 starts and stops annually. This Istanbul was also second worst in the Tom Tom Congestion Index in 2013. Mexico City had 30,840 starts and stops annually. Mexico City was also among the most congested cities in the 2013 Tom Tom Congestion Index, ranking fifth.

    Moscow was the fourth most congested megacity in the Start-Stop Index, with nearly 29,000. Last year, Tom Tom ranked Moscow as having the worst traffic congestion.

    Like Jakarta, Bangkok has often been anecdotally cited for having the worst traffic congestion in the world. Traffic is bad in Bangkok, but ranks only fourth worst in the world in according to the Start-Stop Index, with approximately 27,500 stops and starts annually.

    Buenos Aires had the six the worst traffic congestion at nearly 24,000 stops and starts annually. Shanghai was rated seventh among the megacities with approximately 23,000 starts and stops, but did not make Tom Tom’s most congested 10.

    São Paulo was the eighth ranked megacity in nearly a tie with Shanghai. Sao Paulo was ranked seventh by Tom Tom.

    Beijing, London and Paris rounded out the 11 cities with severe start-stop driving levels ("red"), with at least 18,000. Beijing ranked as the ninth most congested megacity, the same as its Tom Tom ranking. London’s was ranked 10th among the megacities, compared to its the current "London Commute Zone" ranking of third worst in the INRIX Traffic Scorecard. Paris was not ranked in the worst 10 by either INRIX or Tom Tom.

    Three of the megacities had heavy start-stop driving levels ("amber"). Megacity Rio de Janeiro ranked 12th, compared to its third worst ranking by Tom Tom.

    It may come as a surprise to harried commuters, but the two American megacities were ranked least congested. New York ranked 13th. By far the lowest number of annual starts and stops registered for a megacity were in Los Angeles, at approximately 9,400. This is more than 40% better than for New York and is less than one third of the annual starts and stops in Jakarta (Figure 1). Los Angeles is currently rated as having the fourth worst congestion by INRIX, following Honolulu, Milan and the London Commute Zone, though is not ranked in the worst 10 by Tom Tom. The least congested ranking among the megacities for Los Angeles is at considerable odds with the near domination worst rankings for the three decades of the Texas A&M Transportation Center Urban Mobility Report  (which includes only US cities).

    The Developing World and the New World

    The developing world dominated the most congested rankings among all cities. Among the 10 most congested cities, only one high income city was included, Rome.

    Most of the other cities of the New World (Canada, Australia and New Zealand) had fewer than 10,000 starts and stops per year. This included Toronto, Melbourne, Sydney, Auckland and Wellington. The exceptions were Vancouver and Sydney, both with approximately 13,000 starts and stops per year. A number of smaller cities (below 500,000 population) also had fewer than 10,000 starts and stops per year, such as Tampere, Finland and Brno in the Czech Republic.

    Environmental and Economic Costs of High Density

    Generally, the worst start-stop congestion ratings are associated with cities that have higher urban population densities (Figure 2). This is consistent with the association of greater traffic congestion analysis with higher urban population densities,   also found in the Tom Tom Traffic Congestion Index and the INRIX Traffic Scorecard.

    More starts and stops impairs fuel economy, which also materially increases greenhouse gas emissions. Moreover, greater traffic congestion lengthens travel times. Economic growth is greater in where there is rapid mobility throughout the entire metropolitan area (labor market). Yet, urban plans often seek higher densities in their quest for reduced greenhouse gas emissions. The Castrol Magnatic Start-Stop Index results underscore the need for rational urban planning that takes into full account both the economic and environmental consequences of strategies that lead to greater traffic congestion.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Jakarta: low capacity main artery from busway station (by author)

  • America Needs The Texas Economy To Keep On Rolling

    In the last decade, Texas emerged as America’s new land of opportunity — if you will, America’s America. Since the start of the recession, the Lone Star State has been responsible for the majority of employment growth in the country. Between November  2007 and November 2014, the United States gained  a net 2.1 million jobs, with 1.2 million alone in Texas.

    Yet with the recent steep drop in oil prices, the Texas economy faces extreme headwinds that could even spark something of a downturn. A repeat of the 1980s oil bust isn’t likely, says Comerica Bank economist Robert Dye, but he expects much slower growth, particularly for formerly red-hot Houston, an easing of home prices and, likely, a slowdown of in-migration.

    Some blue state commentators might view Texas’ prospective decline as good news. Some, like Paul Krugman, have spent years arguing that the state’s success has little to do with its much-touted business-friendly climate of light regulation and low taxes, but rather, simply mass in-migration by people seeking cheaper housing. Schadenfreude is palpable in the writings of progressive journalists like the Los Angeles Times’ Michael Hiltzik, who recently crowed that falling energy prices may finally “snuff out” the detested “Texas miracle.”

    Such attitudes are short-sighted. It is unlikely that the American economy can sustain a healthy rate of growth without the kind of production-based strength that has powered Texas, as well as Ohio, North Dakota and Louisiana. De-industrializing states like California or New York may enjoy asset bubbles that benefit the wealthy and generate “knowledge workers” jobs for the well-educated (nationwide, professional and business services employment rose by 196,000 from October 2007 through October 2014), but they cannot do much to provide opportunities for the majority of the population.

    By their nature, industries like manufacturing, energy, and housing have been primary creators of opportunities for the middle and working classes. Up until now, energy  has been a consistent job-gainer since the recession, adding  199,000 positions from October 2007 through October 2014, says Dan Hamilton, an economist at California Lutheran University. Manufacturing has not recovered all the jobs lost in the recession, but last year it added 170,000 new positions through October. Construction, another sector that was hard-hit in the recession, grew by 213,000 jobs last year through October. The recovery of these industries has been critical to reducing unemployment and bringing the first glimmer of hope to many, particularly in the long suffering Great Lakes.

    Reducing the price of gas will not change the structure of the long-stagnant economies of the coastal states; job growth rates in these places have been meager for decades. Lower oil prices may help many families pay their bills in the short run. But there’s also pain in low prices for a country that was rapidly becoming an energy superpower, largely due to the efforts of Texans.

    Already the decline in the energy economy, which supports almost 1.3 million manufacturing jobs, is hurting manufacturers of steel, construction materials and drilling equipment, such as Caterpillar. Separately, the strengthening of the dollar promises harder times ahead for exporters  in the industrial sector, and greater price competition from abroad, amid weakening overseas demand. Factory activity is slowing, though key indicators like the ISM PMI are still signaling that output is expanding.

    Right now in Texas, of course, the pain is mounting in the energy sector. Growth seems certain to slow in places such as Houston, which Comerica’s Dye says is “ground zero in the down-draft.” Also vulnerable will be San Antonio, the major beneficiary of the nearby Eagle Ford shale. The impacts may be worst in West Texas oil patch towns like Midland, where energy is essentially the economy.

    Yet there remain reasons for optimism. Cheaper energy prices will be a boon for the petrochemical and refining industries, which are thick on the ground around Houston and other parts of the Gulf Coast. The Houston area is not seeing anything like the madcap office and housing construction that occurred during the oil boom of the 1980s. Between 1982 and 1986 the metro area added 71 million square feet of office space; including what is now being built, the area has added just 28 million square feet since 2010. Compared to the 1980s, the residential market is also relatively tight, with relatively little speculative building.

    The local and state economies have also become far more diversified. Houston is now the nation’s largest export hub. The city also is home to the Texas Medical Center, often described as the world’s largest. Dallas has become a major corporate hub and Austin is developing into a serious rival to Northern California’s tech sector.

    Texas needs to increase this diversification given that oil prices could remain low for quite a while, and even drop further after their recent recovery.

    This is not to deny that the state is facing hard times. Energy accounts for 411,372 jobs in Texas, about 3.2% of the statewide total, according to figures from Austin economist Brian Kelsey quoted in the Austin American-Statesman. If oil and gas industry earnings in Texas fall 20%, Kelsey estimates the state could lose half of those jobs and $13.5 billion in total earnings.

    Low prices also could also devastate the state budget, which is heavily reliant on energy industry revenues. A reduction in state spending could have damaging consequences in a place that has tended to prefer low taxes to investing in critical infrastructure, and is already struggling to accommodate break-neck growth. The only good news here is that slower population growth might mitigate some of the turndown in spending, if it indeed occurs.

    But in my mind, the biggest asset of Texas is Texans. Having spent a great deal a time there, the contrasts with my adopted home state of California are remarkable. No businessperson I spoke to in Houston or Dallas is even remotely contemplating a move elsewhere; Houstonians often brag about how they survived the ‘80s bust, wearing those hard times as a badge of honor.

    To be sure, Texans can be obnoxiously arrogant about their state, and have a peculiar talent for a kind of braggadocio that drives other Americans a bit crazy. But they are also our greatest regional asset, the one big state where America remains America, if only more so.

    This piece first appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050.  He lives in Los Angeles, CA.

    Photo:
    “West Texas Pumpjack” by Eric Kounce TexasRaiser – Located south of Midland, Texas. Licensed under Public Domain via Wikimedia Commons.

  • The Emerging New Aspirational Suburb

    Urban form in American cities is in a constant state of evolution. Until recent years, American suburbia was often built without an appreciation for future evolution. This has left many older suburbs in a deteriorated state, and has accelerated claims of a more generalized suburban decline.

    The Indianapolis suburb of Carmel represents a response to this historic pattern. While responding to today’s market demands with a new aspiration level designed to make it nationally competitive, it’s also trying to position itself for success tomorrow and over the longer term.

    This is a critical issue for many suburbs. Like big cities before them, many older suburbs have now aged, and no longer necessarily meet the requirements of the marketplace.  

    There are many reasons for this.  The early, usually small-scale Cape Cod-style housing common to many 50s vintage suburbs is not what today’s market is demanding. It’s the same for older enclosed malls – today “lifestyle centers” and other formats are preferred – many of which are now vacant, their grim remains featured on web sites such as DeadMalls.com. Many suburban areas were also built out with “infrastructure light” without upgraded streets, sidewalks, etc. leaving a big backlog of infrastructure need.

    Across the country many of these older districts have fallen into decay and become increasingly poor, taking on many of the characteristics of the inner city. As the Brookings Institution noted  over a decade ago, they “are experiencing some signs of distress—aging infrastructure, deteriorating schools and commercial corridors, and inadequate housing stock.”1 Today, the public is more aware of the trend, and events in Ferguson, MO recently gave a wakeup call to newer and still-thriving suburbs that they too may be troubled at some point.

    Like other American cities, Indianapolis has many of these older, struggling suburban areas. In its case, many of them are within the core city limits due to a 1970 city-county merger. As regional growth continues to expand outside the central urban county, newer generation suburbs have a chance to learn from the struggles of many of their predecessors.

    Carmel – pronounced like the Biblical Carmel – is the first suburb directly north of the city of Indianapolis. It is an upscale residential and business suburb similar to many others around the country such as Dublin, OH; Naperville, IL; and the Cool Springs, TN area.  Its 2013 population of 83,573 made it the 5th largest municipality in the state. While not monolithically wealthy, its 2013 median household income of $100,358 is the 14th highest in the United States among communities of 65,000 people or more.2 It’s a preferred area for the estate homes of wealthy Indianapolis area residents, such as Indianapolis Colts owner Jim Irsay. But it’s not just a bedroom suburb; real estate brokerage Cassidy Turley reports that the Carmel submarket has over six million square feet of office space.3

    Being located in the center of the favored quarter of the Indianapolis region, Carmel grew as an upscale area. This gives it a leg up in long term sustainability out of the gate.  

    Yet Carmel has not relied just on its wealth to insure against decline. Rather, it has embarked on a transformation program now nearly 20 years old from which three major themes emerge:

    1. Responding to current market forces to build a “state of the art” community that is competitive globally, not just within the Indianapolis region.

    2. Building a full spectrum of amenities and infrastructure to create a “complete city” with a high quality of life and intrinsic appeal that is a) not based solely on newness or low costs, and b) which has broad demographic appeal.

    3. Attempting to create unique cultural and regional attractions  to turn Carmel into a destination in its own right, as much city as suburb.

    The primary driver of this transformation has been Mayor Jim Brainard, a Republican currently in his fifth term.  Carmel long had top performing schools – it’s the top rated district in the state   – houses with generous yards, low taxes, and other standard attractors of suburbia. Previous administrations had put in place key policies such as reserving the Meridian St. corridor for high end office space and banning billboards. But Brainard brought numerous changes in Carmel during his tenure including:

    Annexation. Carmel has undertaken a series of annexations – nearly 20,000 acres since 2001 alone.4 With over 47 square miles of territory, Carmel has now largely achieved its desired geographic scale.

    Parks. Carmel’s park acreage increased from 50 to 1000 acres and it has spent heavily on building out its parks. This includes building a $55 million Central Park, which includes a showplace community and fitness facility called the Monon Center.5 And the popular Monon Trail, a rail-trail through the length of the city that extended a previous project built by the City of Indianapolis.


    Monon Trail at Main St.

    Road Infrastructure. Carmel has invested heavily in upgrading the legacy network of county roads that it overgrew. This includes an aggressive deployment of modern roundabouts. Carmel now has over 80 of these, more than any community in the United States.6 It has upgraded miles of collector roads to urban standards with enclosed drainage, curbs, extra-wide travel lanes, landscaped medians, eight foot multi-use side paths on both sides of the street protected by a landscaped buffer zone, and decorative street signs and other detailing.

    Roundabout at Main St. and Illinois St. in the fall


    An upgraded segment of River Rd. in early winter

    Two major state highways passed through the town, Meridian St. (US 31) and Keystone Ave. (SR 431). These were designed as rural style divided surface highways as is common in Indiana. Carmel convinced the state to relinquish Keystone Ave. to the city and give it $90 million for upgrades and future maintenance. Carmel converted this into a mostly free flowing parkway by spending $108 million to replace stoplight intersections with roundabout interchanges. These not only dramatically improved traffic flow, the bridges over the busy highway provided a high quality, safe connection – especially for pedestrians and bicyclists – connecting eastern and central Carmel, which had previously been separated by this “great wall” of a road. The state is currently performing a similar freeway upgrade on Meridian St., the principal office corridor.


    Roundabout interchange at 126th St. and Keystone Parkway.

    Water and Sewer Upgrades. Part of Carmel previously received water from the Indianapolis water utility. The City of Indianapolis had privatized this utility but sought to repurchase it. Carmel intervened in the process to pressure Indianapolis into selling it the water lines inside Carmel. Carmel has since undertaken significant infrastructure upgrades such as new wells and pumping stations. During a recent summer drought, Carmel, unlike Indianapolis, did not put in place a mandatory restriction on lawn watering.7

    New Urbanism. Beyond core infrastructure, Carmel under Brainard has sought to change its style of development to embrace some of the more positive aspects of New Urbanism such as creating more urban nodes and walkability.

    Unlike some traditional railroad suburbs or county seats, the historic center of Carmel was very tiny, and its Main Street populated mostly with one story buildings and empty lots. This was the first focus area, and started with fixing the physical infrastructure.  

    The city rebranded the area as the “Arts and Design District” and utilized Tax Increment Financing to promote multi-story, mixed use development. The result is a mostly occupied and often well-patronized Main Street district. The surrounding historic residential blocks have seen significant redevelopment activity as well.


    Main St. at western fountain and gateway arch entryway to rebranded “Arts and Design Distrct.”

    Beyond the historic downtown, Carmel has also implemented multiple New Urbanist style zoning overlays, including on Old Meridian St. and Range Line Rd. (the city’s original suburban commercial strip). These promote mixed use development, buildings that front the street, and multi-story structures. Infrastructure improvements and TIF have been used in these areas as well. There’s also a major New Urbanist type subdivision in western Carmel called the Village of West Clay.

    Strip mall and traditional suburban development along Range Line Rd.


    New Urbanist style development along Range Line Rd.


    New Urbanist development and street improvements under construction on Old Meridian St.

    The historic downtown was deemed too small to function effectively as the downtown of a city the size of Carmel today. The city thus decided to create a new downtown area called City Center. The location for this is an area south of the historic downtown area in an older suburban industrial zone that had fallen into a blight pattern. Much of it was vacant and what’s now the principal City Center development was built on the site of a failed strip mall. TIF was aggressively used here as well to redevelop the area.

    The City Center development is only partially complete. A veterans memorial and other civic spaces are complete, as are several small office buildings, apartments, and a large mixed use complex. The anchor is a publicly funded $175 million concert hall called the Palladium and an associated theater complex with three stages.8 While these are complete, significant development remains to complete the City Center vision. The city also wants to redevelop the area between City Center and the old downtown, which they now label Midtown, but very little has been done to date.


    Interior street of City Center development.

    The goal of all this development is not the full urbanization of Carmel; this city does not aspire to be dense metropolis, or even Indianapolis. It’s rather about creating more town center type districts with the walkable feel that’s increasingly in favor, but without compromising the fundamental suburban character of the city. It’s also designed to create a city with options. Having a diversity of development styles within the city is part of a strategy of appealing to a more diverse demographic base, including singles and retirees, not just the stereotypical younger family with kids. Traffic flow has been improved, but short trips are now easier to undertake by foot or bicycle, not just by car.

    Retro Architecture. Carmel has de facto mandated traditional architectural styles. There’s no one consistent style. Major buildings have been done in Georgian, Second Empire, and Neoclassical type designs. But modernism has been rejected, further differentiating suburban Carmel from urban areas that frequently elect for starchitecture that is unapologetically “of the now.”

    The city has also attempted to prevent large corporations from building their standard architectural templates. Brick is effectively mandated, even for big box retailers like Lowes. Retailers like CVS and Kentucky Fried Chicken were forced to build second stories on their structures to locate in certain areas. Another Carmel CVS has an art deco façade.

    The city wants high quality aesthetics and a unique sense of place. They also want “timeless” design, though like much New Urbanism architecture it can sometimes come across as pastiche.

    Arts and Culture. As part of the attempt to appeal to more arts minded middle aged consumers, as well as members of the  so-called “Creative Class,” Carmel has heavily invested in the arts. The City Center performing arts center was paid for almost entirely with public funds (TIF), an investment in the arts dwarfing even that of Indianapolis. The city has also paid for an extensive public art program, mostly statues by Seward Johnson. And it makes operating grants to local arts organizations such as the Carmel Symphony Orchestra.


    Interior of the Palladium concert hall. Photo by Zach Dobson.

    Seward Johnson is not a favorite of urban sophisticates. His statutes illustrate the type of play it safe art generally featured by Carmel. More sophisticated or cutting edge fare is not as prevalent. And there have even been some complaints by a limited number of citizens about items such as the classical nudes featured on the door handles of the Evan Lurie Gallery.

    Brainard is thinking about the long term when Carmel is no longer the shiny new thing. As he put it, “Because we are designing a new city that will be in place for hundreds of years, the responsibility of doing it right falls to this generation…Carmel is a young city – we are still building our parks, trails, roads and sanitary sewer and water systems that will be here for centuries.”9

    He’s also keenly aware of global economic competition and the fact that Indiana lacks the type of geographic and weather amenities of other places. He frequently uses slides to illustrate this point. In one talk he said, “Now this picture, guess what, that’s not Carmel; but this picture is the picture of some of our competition. Mountains – that’s San Diego of course, mountains, beautiful weather, you know I think they have sunshine what, 362 days out of the 365…. What we’ve tried to do is to design a city that can compete with the most beautiful places on earth. We’ve tried to do it through the built environment because we don’t have the natural amenities.”10  While the claims to want to equal the most beautiful places in the world may be grandiose, the key is that mayor believes Carmel’s undistinguished natural setting and climate requires a focus on creating aesthetics through the built environment.

    What have the results been to date?  Economically and demographically, the city has performed well. It has managed to create an environment that is proving competitive for business opportunities that might have previously bypassed Indiana. For example, American Specialty Health relocated its headquarters to Carmel from San Diego, with the CEO of the company personally making the move from La Jolla to Carmel.11 Geico also recently expanded. Numerous other corporations are either based in Carmel or have major white collar facilities there. The income levels are very strong, as noted above.

    The city’s demographics have also expanded to become much more diverse. The minority population grew 295% between 2000 and 2010, adding 9,630 people and growing minority population share from 8.7% to 16.3%.12 12% of the city’s households speak a language other than English at home.13 Many of these are highly skilled Chinese and Indian immigrants working for companies like pharmaceutical giant Lilly. Even black professionals are increasingly moving to Carmel, with the black population growing 324% in the 2000s and black population share doubling to 3%.14 Carmel is not a polyglot city today, but it’s far more diverse than in the past.

    Carmel has also attracted both national press and national awards. Money magazine ranked Carmel as the #1 best small city to live in 201215, and it’s scored highly in other surveys as well. Drew Klacik of the Indiana University Public Policy Institute notes that in an echo of the transformation of the city of Indianapolis since the 1970s, “Carmel has transformed itself from a desirable community within Indiana to a desirable and competitive community nationally.”16

    However, it’s hard to argue that Carmel’s results materially outperform peer cities in other regions. Places like Dublin, OH and Cool Springs, TN have significantly more office space, for example. Many of those places are, however, implementing policies similar to those in Carmel . Most Carmel New Urbanist development continues to require TIF subsidies and is not yet sustainable at market rates. The city has obtained better financial terms in some recent deals, however.  And despite major public investment and construction in the central city, many central area census tracts lost population during the 2000s.

    The changes have also attracted significant criticism and opposition in some quarters.  While the public remains largely positive on the results, there have been many critiques of the way they were done, some of them legitimate.  A number of the projects had significant cost overruns. The mayor originally said that the Keystone project could be completed for the $90 million the state gave it. The actual cost was nearly $20 million higher.17 The Palladium was originally sold as an $80 million facility, but ended up costing $175 million. The city also said it planned to pay for ongoing operations by raising a $40 million endowment, but was unable to raise the funds, leaving it on the hook for $2 million in annual operating costs. These are not small misses.

    Critics also pointed to state figures showing Carmel with nearly $900 million in total debt.18 While it is a wealthy community that can afford the payments, in a conservative state like Indiana, a suburb accumulating nearly a billion dollars in debt raises eyebrows. Carmel’s tax rates remain among the lowest the state, however.

    The way the debt was accumulated has been criticized as well. The Palladium was paid for with TIF funds. Rather than bonds, the Carmel Redevelopment Commission – the authority that manages the TIF program and which was controlled by mayoral appointees – structured the Palladium debt as Certificates of Participation to circumvented the need for city council approval, incurring higher interest rates in the process. The city council later refinanced the debt at a lower rate using a general taxing power guarantee in what some called a bailout. In return for the refinancing, the council obtained more oversight over TIF activity.19

    Though some controversy is inevitable and some criticisms are legitimate, ultimately the change program in Carmel has proven popular with the public and the city is booming, a boom that’s lending an increasingly bitter tone to the longstanding hostility Carmel has enjoyed from the region due to its status as the highest profile “rich suburb” in the region.

    Yet for all the controversy, many regional suburbs are copying some aspects of Carmel’s approach, with roundabouts now a regular feature in area communities and major park programs and New Urbanist style town center developments as well. This includes the massive sports-oriented Grand Park in Westfield and the Nickel Plate District in next door Fishers’ town center.20

    It’s also clear that peer type suburbs around the country are adopting similar strategies, such as Dubin, OH’s Bridge Street Corridor proposal21 or Sugar Land, TX’s $84 million performing arts center.22 Imitation, they say, is the sincerest form of flattery. Carmel represents the leading edge of the emergence of a new type of post-Edge City aspirational suburb. It’s something we may be seeing a lot more of in the future.

    Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile.

    ————————————-

    1 Robert Puentes and Myron Orfield. “Valuing America’s First Suburbs: A Policy Agenda For Older Suburbs in the Midwest,” Brookings Institution, 2002.

    2 U.S. Census Bureau, “American Community Survey 2013 1-yr”, Table B19013.

    3 Cassidy Turley, Indianapolis Office Market Snapshot (Third Quarter 2014), 3.

    4 Ellen Cutter. “Explaining the annexation process,” Greater Fort Wayne Business Weekly, June 12, 2014. Accessed January 8, 2015. http://www.fwbusiness.com/opinions/columnist/businessweekly/article_f42da036-6182-575a-8445-274cd82ca296.html

    5 Matthew VanTryon. “Carmel then and now: World’s Apart,” IndianapolisNewsBeat.com, December 16, 2014. Accessed January 8, 2015. http://blogs.butler.edu/multimedia-journalism/2014/12/16/carmel-worlds/

    6 James Brainard, transcript of speech at 2014 International Making Cities Livable Conference, June 23-27, 2013.

    7 “Why no watering ban in Carmel,” WISH-TV News, July 12, 2012. Accessed January 8, 2015. https://www.youtube.com/watch?v=y51BJYM4Fgc

    8 David Hoppe. “The Palladium’s boffo budget,” Nuvo Newsweekly, June 20, 2011. Accessed on January 8, 2015. http://www.nuvo.net/indianapolis/the-palladiums-boffo-budget/Content?oid=2275080

    9 James Brainard, notes for 2014 State of the City Address.

    10 James Brainard, transcript of speech at 2014 International Making Cities Livable Conference, June 23-27, 2013.

    11 Andrea Muirragui Davis. “Wellness provider beefing up new Carmel office,” Indianapolis Business Journal, October 29, 2014. Accessed on January 8, 2015. http://www.ibj.com/blogs/11-north-of-96th/post/50241-wellness-provider-beefing-up-new-carmel-office?id=11-north-of-96th

    12 U.S. Census Bureau, calculations by author from Census 2000 and Census 2010.

    13 U.S. Census Bureau, “American Community Survey 2013 1-yr”, Table B05007.

    14 U.S. Census Bureau, calculations by author from Census 2000 and Census 2010.

    15 “CNNMoney Ranks Americas Best Places to Live,” Daily Finance, August 20, 2012. Accessed January 8, 2015. http://www.dailyfinance.com/2012/08/20/cnn-money-ranks-americas-20-best-places-to-live/

    16 Drew Klacik, telephone interview with author, December 29, 2014.

    17 “Brainard seeks bonds to finish Keystone,” The Indianapolis Star, October 18, 2009. Accessed January 8, 2015. http://archive.indystar.com/article/20091018/LOCAL/910180409/Brainard-seeks-bond-finish-Keystone

    18 Indiana Department of Local Government Finance. “Local Government Debt Report,” September 21, 2012, 15.

    19 Kathleen McLaughlin. “Brainard seeks deal on maxed-out TIF,” Indianapolis Business Journal, March 31, 2012. Accessed January 8, 2015. http://www.ibj.com/articles/33569-brainard-seeks-deal-on-maxed-out-tif

    20 Cara Anthony. “New look for the Nickel Plate District in Fishers,” The Indianapolis Star, June 28, 2014. Accessed January 16, 2015. http://www.indystar.com/story/news/local/hamilton-county/fishers/2014/06/27/new-look-nickel-plate-district-fishers/11537251/

    21 Brent Warren. “Dublin Moves Ahead With Bridge Street Corridor Plans, Connecting Across River,” Columbus Underground, March 23, 2013. Accessed January 8, 2015. http://www.columbusunderground.com/dublin-moves-ahead-with-bridge-street-corridor-plans-looks-to-connect-across-river-bw1

    22 Rebecca Elliott. “Sugar Land breaks ground on $84 million performing arts center,” Houston Chronicle, December 9, 2014. Accessed January 12, 2015. http://www.houstonchronicle.com/neighborhood/fortbend/news/article/Sugar-Land-breaks-ground-on-84M-performing-arts-5946247.php

  • Go East, Young Southern California Workers

    Do the middle class and working class have a future in the Southland? If they do, that future will be largely determined in the Inland Empire, the one corner of Southern California that seems able to accommodate large-scale growth in population and jobs. If Southern California’s economy is going to grow, it will need a strong Inland Empire.

    The calculation starts with the basics of the labor market. Simply put, Los Angeles and Orange counties mostly have become too expensive for many middle-skilled workers. The Riverside-San Bernardino area has emerged as a key labor supplier to the coastal counties, with upward of 15 percent to 25 percent of workers commuting to the coastal counties.

    In a new report recently released by National Core, a Rancho Cucamonga nonprofit that develops low-income housing, I and my colleagues, demographer Wendell Cox and analyst Mark Schill, explored the challenges facing the region. Although we found many reasons for concern, the region’s overall condition and its long-term prospects may be better than many might suspect.

    Population trends

    The region’s once-explosive growth has slowed considerably. From 1945-2010, the area’s population soared from 265,000 to 4.25 million. Already the nation’s 12th-largest metropolitan area, the I.E. could pass San Francisco and Boston by 2020 (unless faster-growing Phoenix does so first).

    Yet, contrary to expectations (and, perhaps, hope among anti-sprawl campaigners), the area continues to be a beacon for people from the rest of the region. There is a notion, widely expressed in the mainstream media, that Southern California’s growth will now focus more on the urban core around Downtown Los Angeles. Yet, as is often the case, what planners and pundits desire is not widely shared by the vast majority of people.

    People continue to vote for the Inland Empire – and other peripheral areas – with their feet. Census Bureau data indicates that, from 2007-11, nearly 35,000 more residents moved from Los Angeles County to the Inland Empire than moved in the other direction. There was also a net movement of more than 9,000 from Orange County and more than 4,000 net migration from San Diego County.

    Several long-standing demographic trends favor a continued shift to the Inland region, according to Cox and Schill. Immigrants and their offspring may prove the critical factor. Over the past decade, the Inland region dramatically increased its population of foreign-born residents, more than three times the number and at nearly 18 times the rate of the coastal counties.

    The influx of immigrants and their children is largely responsible for the region’s relatively young population, compared with the rest of Southern California. As recently as 2000, the proportion of population ages 5-14 in Los Angeles and Orange counties stood at 16 percent, the sixth-highest level among the nation’s 52 largest metropolitan areas. Thirteen years later, that proportion had dropped to 12.8 percent, 33rd among the 52 largest metropolitan areas. In terms of a dropping share of youngsters, the area experienced a 20 percent reduction, the largest in the nation.

    In contrast, the Inland Empire remains a bastion of familialism, with 15.3 percent of the population aged 5-14, among the highest levels in the nation. This follows a general pattern; according to recent analysis of Census data, high-cost areas tend to repel families. Of the nation’s most expensive areas, such as the Bay Area, New York and Boston, all tend to have well below national norms in terms of families among their populations.

    Perhaps more surprising, younger educated workers also are heading to the region. In fact, from 2011-13, according to American Community Survey data, Riverside-San Bernardino witnessed the 12th-largest increase among the 52 major metro areas in the share of college-educated residents ages 25-34. No major California metro area, including Silicon Valley, could match it. From 2000-13, the Inland region experienced a 91 percent jump in population with bachelor or higher degrees, just less than twice the increase for either Orange or Los Angeles counties.

    Overall, the I.E. has become something of a growth area for millennials – basically, adults ages 20-29. San Bernardino-Riverside ranked second among 52 metro areas, adding 50,000 millennials, an 8.3 percent increase since 2010. Los Angeles and Orange counties – older, settled areas with far lower population growth – together registered 18th.

    Economic Restructuring

    These trends also may reflect improving prospects for the region’s economic recovery. The area remains some 30,000 jobs below its 2007 level, notes California Lutheran University economist Dan Hamilton, but is now growing faster than the rest of the Southland. The region created jobs over the past year at a 2.2 percent rate, well above the 2.0 percent increase in Orange County and almost twice that of L.A.’s 1.3 percent. Foreclosures have diminished to the lowest levels since 2007 and appear back to something resembling normalcy.

    One important source of new employment is grass-roots entrepreneurship. Overall, the Inland Empire accounted for a large proportion of the new businesses created statewide from 2012-13 – despite hosting only 7.4 percent of the total businesses in California. A recent report by Beacon Economics suggested that growth will accelerate over the next five years.

    At the same time, some of the core industries – such as manufacturing and warehousing – have shown signs of recovery. Industrial vacancy rates have fallen from nearly 12 percent in 2009 to roughly half that level today.

    Much of the growth has been for “middle-skilled jobs,” paying $14 to $21 per hour, including positions in medical services, trucking and customer service. Overall, according to one recent survey, the Inland Empire ranked 13th among the nation’s large metropolitan areas in creating such positions. These jobs, notes economist John Husing, are critical to a region where almost half the workforce has a high school education or less.

    Even the housing sector, the driver of the post-crash employment decline, has improved considerably. Today, the Inland Empire is experiencing a far greater increase in construction permits than either Los Angeles or Orange counties. This has also helped boost construction employment, although not to anything like the levels experienced a decade before. Construction employment, although up recently, still totals barely half the people it did in 2006.

    Some, such as University of Redlands economist Johannes Moenius, express concern that important industries, like warehousing and manufacturing, are increasingly using part-time workers. Positions paying $15,000 to $30,000 annually constitute nearly half of all new jobs.

    The ambiguity in the recovery is reflected in a recent survey by Cal State San Bernardino, which found the percentage of those saying the economy was excellent or good had almost doubled since 2010, from 9 percent to 17 percent, but this was considerably below the 40-plus percent seen before the crash.

    The Path Ahead

    The fate of the Inland Empire remains in the balance. The recovery of the region depends largely on continued widespread population growth, largely stimulated by the production of affordable housing. Yet, at the same time, state regulations, spurred on by the environmental lobby, which seeks to slow, or even eliminate, single-family construction, threaten to force up prices and drive young families outside the state.

    Many other core industries of the area – such as warehousing and manufacturing – also face growing regulatory barriers. High taxes and energy costs originating from Sacramento are particularly difficult for industries that require power to operate. Southern California Edison’s rates, for example, are almost twice those found in Salt Lake City, Seattle or Albuquerque.

    Some may celebrate these policies that encourage people to say “good riddance” to a region too sprawling and insufficiently cultured. Yet, it’s hard to see how Southern California can continue to add workers – notably, younger middle-class families – without a vibrant Inland Empire. It remains the one Southern California region with the land, and the housing cost structure, to accommodate much of the hard-pressed middle class. Without growth inland, Southern California will be largely relegated to a torpid economy and rapidly aging demographics, a fate that would compromise the aspirations of future generations.

    This piece originally appeared in The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050.  He lives in Los Angeles, CA.