There is a new hot spot for business, and it can be found in the downtown districts of most large and medium-sized cities. Employment in city centers is growing, especially among young professionals and recent graduates, reversing a longtime trend toward centralizing jobs in suburban office parks – the standard setting for most people working in metropolitan areas over the past few decades.
As population rises in urban centers across the U.S., employers are following. For the first time since the 1950s, employment growth in cities is undergoing a major shift, migrating from surrounding suburban areas to the heart of downtown cores.
A new report from City Observatory documents this trend, noting the slight but significant increase in job growth in city centers in recent years, just as employment in suburban centers has started to shrink. According to the report, employment in city centers – defined as areas within three miles of a central business district – climbed half a percent between 2007-2011, while employment in surrounding metros declined one-tenth of a percent. Before 2007, employment outside cities was climbing much faster than growth inside.
Some cities like New York, Chicago, Philadelphia and others hemmed in by water have always had healthy business districts, but even these megacities as well as smaller metros like New Orleans, Austin, Orlando, Charlotte, and Milwaukee are seeing a renewed rigor to urban job growth. Many of these jobs tend to fall in highly skilled, high-paying industries like finance and technology, while working-class jobs like retail, construction and manufacturing are still mostly concentrated in areas outside the city core.
Core Comeback
What is driving this surge of investment back to central business districts? The economic downtown and ensuing recession played a small role, accelerating the decline in urban sprawl. Industries based outside cities like manufacturing and construction were hit much harder than traditionally urban-based enterprises like business and professional services.
Even more significant, though, are the rising class of young professionals who desire shorter commutes and want to live, shop, play and build their lives in the same vicinity where they work. These young professionals represent the educated, enterprising and creative talent that companies hope to attract. And many employers, as well as cities, are willing to invest in them by finding ways to make living and working in these urban centers more attractive.
Interestingly enough, this preference is a throwback to the way things were a century ago, when people lived and worked in high-density areas and walked where they needed to go – in the days before cars and commutes became widespread options.
Up-and-Comers
Of the cities analyzed by City Observatory, Austin showed the biggest gains in urban job growth at 3.4 percent, followed by Charlotte, Oklahoma City, Chicago and New Orleans.
The Windy City has seen significant investment in its urban core, with companies like Motorola Mobility and Archer Daniels Midland relocating from suburban campuses to downtown Chicago. United Airlines recently brought 4,000 employees to the city’s most famous skyscraper, the 110-story Willis Tower, where the airline company has established its global headquarters. And the city’s financial district, which used to shut down at 5 p.m., is becoming a hot spot for entertainment, music, arts and culture after-hours.
Nashville is also attracting a record number of urban jobs, especially as its downtown centers expand and gain visibility, along with its arts, culture, entertainment and hospitality scene. The city’s mix of amenities and affordability is making it a top location for young professionals. And a growing group of companies are moving their headquarters downtown in response, including Bridgestone Americas, which recently announced plans to bring 1,700 jobs to a new 30-story tower that will serve as its global headquarters.
Clustering these type of knowledge jobs into dense urban areas can only benefit cities, economists say, because it creates opportunities for more ideas and innovation to blossom as workers interact inside and outside the office. The influx of highly skilled jobs in urban centers also has the potential to create a ripple of other jobs in industries such as food service, construction, education, health care, and others needed to support those who live and work downtown.
How can cities make their downtown areas more attractive to employers looking to locate and expand in urban centers? Please share your thoughts below.
