Archive for economic development

Renting in dynamic cities

Richard Florida’s work, The Great Reset, has launched a great discussion about the place of home rental in American life and the American economy.  I’ve been doing a lot of research and thinking on apartment renting myself, and have a few thoughts on what could be happening now, and in the future.

I would argue that high rates of home renters (vs owners) is a sign of a dynamic economy, rather than the cause.  Places like New York, San Francisco (and in Canada Vancouver & Toronto) are places with jobs, especially “creative” knowledge and service/experience economy jobs.   These cities attract tens of thousands of both national migrants and international immigrants annually to work in and experience the dynamic financial, high-tech and artistic clusters (these are typically well educated immigrants and migrants).

Newcomers to cities (almost any place, actually) have high propensities to rent–especially in expensive places, which these cities are.

Many of these migrants are probably not intending to stay when they relocate to these cities.  They are coming to experience them.  Creative, smart people are attracted to these dynamic cities because they are full of other creative, smart people (interacting with other smart people makes you smarter [Ed Glaeser]).  They are also full of great amenities and interesting — even unique — clusters.

Young, smart people go with the idea of experiencing the jobs and amenities for a few years, and then perhaps moving “back home” or at least closer to family.  Therefore renting is ideal.

A concern for the future: 

In the past, if they did decide to stay, they might have bought a place in nearby suburbia, or perhaps a condo or townhome closer in.  This made room for more newcomers in the rental, which helped to keep these cities’ economies humming.

If suburbia becomes less appealing, because of fewer amenities and poor transit and automotive congestion, will these newcomers along with born-and-raised residents end up renting for much longer periods of time?  Even if they want to buy a small urban home, this will not be cheap.  Tighter mortgage lending rules may mean saving for much longer before buying, or making it impossible for some.

This will mean fewer rental spots for newcomers, which might end up serving as a break on economic growth in that city. It will also drive rental rates up further, creating an additional social, political and economic challenges.

What other challenges will the rental society bring?

An overlooked technology in shaping the city

The birth control pill turns 50 this week.  This technology has arguably been a key ingredient in shaping 21st century North American and European economic and urban life.  And yet, I don’t ever recall hearing urban theorists mention it.  So here’s the argument for the Pill as a key technology in shaping the new urban geography emerging today.

Since coming into widespread use in the 1970s, the Pill has allowed women to choose when or whether to have children, and how many.  This in turn has allowed women to imagine themselves in professional careers–and to fulfill those dreams.

Here are four ways the Pill has been re-shaping urban life.1. The fertility rate has dropped from 4 children per woman in her lifetime in Canada in the late 1950s to 1.6 children per women in Canada (and likely similar in urban areas of the US).    Women working in all variety of professions (not just nursing and teaching), is one of the drivers reshaping North America’s cities.

2. The knowledge economy built on collaboration and communication; psychologists will readily tell you that more women than men tend to excel in these areas.  Can you imagine a knowledge economy company with no women working there?  Women now earn more than half of all Bachelor’s and Masters degrees, which has been key to many knowledge occupations.

3. Experience economy–increasingly people have become more interested in consuming experiences rather than goods.  People from most income backgrounds today will spend money on fine dining, the spa, travel, a concert, etc.  Having the spare money and time to indulge in these is a direct consequence of having children later in life and/or having fewer of them. This allows both women and men some disposable income and time with which to have experiences.

4. Apartment and condominium living in dense, walkable and amenity-rich areas has been growing in popularity.  Living in small spaces suits a family of 3 much better than it would suit 6 people.  Suburbia made sense when having 4 or more children was normal.  Plus, living in an apartment near where both parents work, allows for more family time instead of commuting.

In his book The Great Reset, Richard Florida describes a new urban geography emerging in response to the growing “creative” economy (just as suburbia emerged in response to the industrial age).  Unless I missed it in reading the book, he doesn’t mention the Pill as perhaps the greatest labour saving technology for women (pun intended)–having fewer children to mother means more time and energy for contributing to the knowledge economy and makes dense urban living work much better.

What will make Toronto better

As discussed in my previous post, I find Toronto fascinating and enjoy visiting.  But it’s also a city with some immediate challenges that are perhaps holding the city back.

So what changes will improve Toronto and help it evolve faster into a global, international knowledge-economy hub?

#1.  Better transit.  The metro system hasn’t been upgraded since 1967, apparently.  Certainly feels that way to ride it.   The entire system needs an overhaul.  The stations each need a facelift and the network needs to go more places like Pearson Airport, “downtown Mississauga” (Square One) and York University.  This will help get people out of their cars and prolong the life of the existing freeway system.  If oil returns to $170/barrel, or more, I worry about how the automobile-centred suburban ring around Toronto will function.

#2 Simultaneous with better transit, the city needs to deal with certain freeway bottlenecks like the Gardiner Expressway exit by Union Station into downtown.  New condo and office towers opening and pending in the area will surely generate more traffic.  It’s insane now. I hope the city has a plan to deal with this.  Maybe congestion pricing? electronic tolls?

#3 Better recognition within the business and political community that Toronto’s future economic growth may need to be less centred on the financial services and traditional manufacturing sectors, and more based upon knowledge-economy production, including information technology, business services, or new media.

For people who live in Toronto, there is probably a list that might involve parks or schools.  But I can’t comment on that (however, feel free to do so in the comments if you live there).  This is the outsider’s perspective of what seems to be holding the city back–and it’s a list that would apply to many cities that also need better transit, solutions to automotive gridlock and a broader recognition of new economic growth possibilities.

Toronto needs a boost

This is the first of two posts on Toronto.  First, before anyone accuses me of being a self-centered Torontonian (which tends to happen when I say nice things about Toronto), let me say that I’m not from there.  I was born and largely raised in Vancouver and after stints elsewhere have chosen to make Vancouver my home once again. 

No city is 100% unique.  In fact, many of the things I like about Toronto are also great in other cities, but Toronto does have its own unique blend of messy urban spaces and realities.  Those of you less familiar with Toronto will hopefully be able to see aspects of your own city in these thoughts.

Why I like Toronto:

  • Downtown Toronto offers a history of central North American residential and office architecture all squished together.  You can see 100 year old Edwardian brick houses, next to a 70 year old office building with the new RBC Dexia glass office tower in the background along with new glass condominium towers.
  • Toronto has so many cool, interesting walkable streets (too bad the weather isn’t always conducive to appreciating them), built in the day when automotive transport did not rule. Kensington Market, Bloor & Spadina area, Queen Street, for example, offer food, sounds and goods from around the world.
  • Toronto has this messy, interconnected international urbanism where people, sounds and foods mix.  If you haven’t watched K-Naan perform live with his Toronto band, check this clip from before he became the famous 2010-World-Cup-Theme composer and singer.  I love the look of the whole group – so reflective of the new Toronto that is over 45% foreign born.

What else is exciting about Toronto

  • Toronto is evolving into a 21st century knowledge economy hub. Manufacturing has been in a long term decline and although still important to the region’s economy, the job growth over the past 15 years has been in financial services. In fact over 11% work in financial services in Toronto, the highest percentage of any city in North America.  Yet, Toronto is not all about banking.
  • Toronto is where so much of Canada’s media is based.  It’s where people interpret national and world events for the entire country; so many TV shows are filmed there.  Yes, this can create a Toronto-centric perspective in the media, but it also makes it a cooler place to visit (in a similar way that New York and Los Angeles are fun to visit because US media emerges from these poles). 

To be sure, Toronto has challenges.  See my next post.  But it’s also becoming–or is already– a cool, fascinating, international city to watch.

What puzzles me is how pessimistic so many people in Toronto seem about the city in its current form, and prospects for prosperity over the next few years.  Feeling an ambivalence among the locals last week made me think that the city needs a boost, and inspired this post.

Does a city (or a country) need corporate head offices

Three years ago I pondered whether all the fretting about Vancouver losing corporate head offices had merit — and concluded that it did not:

If we look at the causes of head office decline in Vancouver, we see that it comes from a position of corporate success — not failure. Successful companies have been acquired by the global players who want their product or service. The MacMillian BloedelWeyerheuser merger is an example from the forestry sector. Flickr’s acquisition by Yahoo! offers a smaller yet equally valid situation. Local entrepreneurs created a successful product and company that a global player wanted badly enough to buy the company at a high price.

Another cause of head office decline has been the mergers of BC-based businesses. … Driving these mergers has been the need to compete on the global stage — to improve corporate efficiencies and cut costs. No government policy will change this.

Many entrepreneurial creative or knowledge economy companies also do well in Vancouver and once purchased, receive large boosts of funding from the new parent company, creating more creative jobs. [For example] Radical Entertainment [was] bought by Vivendi and now expanding rapidly.

This week, Stephen Gordon at Worthwhile Canadian Initiative shared statistical evidence that indeed it does not matter where in the world the CFO sits:

Just what is the problem with foreign ownership, anyway? The usual stories about low productivity and R&D being done elsewhere are hopelessly out of date. A 2005 StatsCan study (pdf) found that “foreign-controlled plants are more productive than domestic-controlled plants” and “are also more innovative, more R&D intensive and use more advanced technologies.” Their presence also has spillover effects, forcing domestic rivals to increase their productivity as well. What’s not to like?

Given what we know about the knowledge economy, it makes sense that foreign acquisitions of local companies make them better.  After all, they bring new ideas to an already successful business (if it wasn’t successful, or otherwise have incredible potential, it would not have be purchased).

We therefore need to stop measuring cities by the number of corporate head offices, and focus even more on creating the  environment in which talented people can think and thrive.  This will foment successful startups — that could get bought by a bigger player, with fresh new ideas and the money to make those dreams a reality — as well as attract global players to locate new facilities nearby.

Maybe in the future cities will be measured by the number of Fortune 500 firms with locations there.

The coming blurred boundaries between work and home

Over the past year I’ve spent a lot of time analyzing the intersection of workplace trends and urban living trends.  It’s becoming probable that the urban knowledge economy will require many workers to supply their own private workspace.  Employers — or the city milieu itself — will be responsible for supplying the space for collaboration. This has pros and cons for individuals, employers as well as the city itself.

Increasingly, many office-based employers are literally breaking down walls to create a much more open environment for workers, often with the goal of increasing cross-communication among employees from different divisions and backgrounds.   Gone will be the days of many individuals hunkered down in private offices or high walled cubicles.  Those that have not yet done so often have making this change within their 5- year or 10-year  plan.

Having worked in both environments, I have found open plan to be far more efficient for idea generation and collaboration.  However, when I really need to focus and write down the results of the idea generation, or to build an Excel model or other tool to move a project forward, uninterrupted, private time can be essential.   Most knowledge-based workers I speak with feel similarly, at least when it comes to the need to focus.

Some companies that have moved to open plan offer silent workspaces for such concentrated efforts — or even small bookable  private offices.  Many also allow employees to work from home when they feel the need for privacy.

Thinking ahead, I suspect many knowledge economy companies will increasingly rely on the employees to provide their own private spaces (which might be at home, might be at the library, might be on a park bench).  The employer will offer only collaborative options and allow or expect people to find their own way to block-out or escape distractions when necessary.

Will this work? I think it might.  It will allow employers to save some money on office space. (Although typically technology costs rise to supply more mobile options, thus possibly negating any real savings here.  Time will tell.)  And, it may allow many employees to better manage their own productivity as well as work-life balance needs.

Will employees resent being expected to supply their own workspace?  I keep thinking that many will.  But, I’ve yet to find anyone who will admit to being anything but excited at the prospect of generally being allowed to work from wherever they feel most productive.

Indeed, a major US financial institution I interviewed found that when given a choice, over 80% chose to go mobile — which meant giving up an assigned office, but having the privilege of working from anywhere.  Most still came into “the office” 3 or 4 days per week, needing to stay in the loop on company happenings, collaborate with team members, and catch up with supervisors and mentors. Those that didn’t want to go mobile had typically only recently been promoted to a role with a private office and were therefore reluctant to give up this perceived status symbol.

This shift toward mobile work could really benefit the functioning of cities.  What if everyone didn’t commute at the same time?  Some people might find it more productive to work from home for a few hours, then head to the office mid morning.  Others would come in early and leave early, finishing their workday from their patio in the sun.  Those who prefer suburban living might not commute everyday.

What about you?  would you resent or embrace the more flexible workplace, or the mobile-worker based city?

What other pros or cons do you see?

American cities facing challenges

As the United States grapples with the worst job losses since World War Two, the nation’s cities need to be centers of solutions and incubators of private sector jobs.  Yet, with government bank balances at all levels in the red, finding the resources to provide infrastructure and even maintain basic services will be challenging.  Municipalities may be forced to cut payrolls, which will make it that much harder to provide a fertile place for employers and employees.

The Brookings Institute will be hosting a forum on November 19 2009 at 9AM– that will be live streamed (and re-playable)– related to this issue, involving mayors, the Wall Street Journal and even VP Joseph Biden.

The discussion will focus on the deepening fiscal challenges many cities face, the  adjustments that will be required in 2010 budgets, and the and the tough choices on city services and payrolls that may drag down national jobs numbers and economic recovery.

In the meantime, here are my thoughts on the big issues for American cities:

The US is facing the need for structural economic change, finishing the shift from an industrial economy to a knowledge and experience based one.  The latter requires dynamic, vibrant cities filled with talented people and clusters of different companies doing innovative things.

But, how to get there from where so many cities are — that’s a big question.  I look forward to hearing what the Brooking’s Institute’s forum participants come up with. But I can’t help but think the challenges here generally cannot be solved at the municipal level alone — it’s a national economic structural shift that needs to happen, and will require a devalued currency, inflation, and perhaps a decline in living standards for millions of Americans.

Changing urban jobs, new urban lifestyles

How is the changing nature of urban employment changing our cities?

Many cities, particularly in North America, emerged as centers for manufacturing, primary industry and some natural resource processing and trade.  In recent decades, manufacturing finished products has become more automated and global.  Making primary products like steel has undergone a similar transformation.  And many of North America’s resources are gone, and those that remain are often more costly to harvest than comparable products in other countries (forestry and the fishery being good examples).

That has changed.  Urban jobs increasingly are based in the knowledge economy or urban experience economy.   The former often  involve engineering, accounting, financial or other analytical work.  The latter involve providing others with experiences, whether that perfect morning latte, a spa treatment, a personalized workout, retail service or the presentation of fine food to name a few.

There is still construction employment and jobs driving containers of Cherrios or designer clothes to warehouses will not disappear.    But so many other jobs often considered masculine and male dominated are gone.

Our cities are changing along with attitudes about gender.  Most women today have less than 2 children (1.5 children per woman in her lifetime is the current fertility average); women earn 55% of bachelor and masters degrees, often needed (or an advantage) in the knowledge economy and skilled experience-service economy positions.

As women take skilled positions in the knowledge economy, it creates positions for child care workers (a skilled, service economy role) and perhaps more demand for lower maintenance apartment living rather than suburban single family home ownership.

Immigrants to Canada come with higher education levels than the typical native born person (50% of immigrants to Canada over the age of 24 have degrees, in comparison to 20% of Canadian born in the same age group).  This is making Canada’s major cities more multi-cultural than ever.

With many of the resource and manufacturing companies gone, there seems to be fewer large employers and more smaller ones.  Does this empower talented people or is it a loss to job security? or both?

What other ways do you see changing employment patterns in cities affecting the look and feel of urban areas, or the way people live in them?

Urban jobs – tale of two countries

Want to compare urban employment across all major North American cities? and with historical perspective?

Here:‘s a graph that allows you to see, on a monthly basis since 2002, the year-over-year job gains or losses.

If you look at the most recent month, across North America, what a “tale of two countries.”

H1N1 manufactured panic inconsistent with urban living

Back in the late spring when the “swine flu” migrated out of Mexico, public health officials and the media quickly told the story of how it was proving to be a widespread, yet reasonably mild influenza virus.  Other than people with certain pre-existing conditions, most who contracted it only had mild-to-moderate flu symptoms.

Flash forward to October and November 2009, and the story has changed — yet the virus hasn’t.  Some media and even public health agencies are claiming the same H1N1 virus is more deadly than the seasonal flu.   The facts simply don’t support this.  In British Columbia, for example, the Centre for Disease Control (BC CDC) has recorded 12 deaths from swine flu so far since April, whereas with a typical seasonal flu, up to 800 deaths would be common during a flu season.

The panic to get vaccinated combined with the paranoia about being exposed to the bug could reach levels that will start to shut a city’s economy down.  The world’s urban residents, their media and public health agencies need a more balanced message if we’re going to: live in closer quarters, work less in private offices and more in small groups collaborating and innovating; spend more time and money on experiences like restaurant dining and latte sipping.  We can’t stop being urban every year during flu and cold season.

Viruses and bacteria are in many ways part of human society.  They have always been with us.   Fighting them makes us stronger — both our immune system and the scientific community, vaccine producers, information communication, etc.

But this time, our arsenal may be overkill.  If we get people panicked such that they take days off work to line up for vaccines, if we get society so panicked that everyone with a mild sore throat some fatigue and muscle aches feels they can’t go to work, city services, businesses, and other aspects of urban life will cease.  This can’t happen every year — and there is a new flu strain every year, usually more deadly than H1N1!

This isn’t just a “national” health policy issue — it’s also an urban issue.  If over half the world’s population is going to live in cities, they can’t be shut down with a manufactured panic.


As a disclosure: My family and I are just getting over H1N1 (or the full list of symptoms consistent with it — you can’t get tested unless you’re critically ill here).  Other than about 24 hours of the bug, it’s been one of the mildest set of symptoms I’ve ever stayed home from work for or kept the kids home from daycare for.  Before we caught it, I was someone scrambling to get a vaccine, believing some of the scaremongering.  Now I’m wondering why I wasted the time.

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