Mid tier universities may be in more trouble than I realized

The university campus in Syracuse, N.Y. TED SHAFFREY/AP

The Wall Street Journal had an interesting article on Syracuse University ("Why Syracuse Can’t Attract the Students It Needs to Pay the Bills"). 

In general, colleges these days are facing the demographic cliff of fewer students.  

That's especially affected small private colleges with high tuitions.  This has been a particular issue in New England, which the Boston Globe has covered in depth, to the point that they've just started a weekly newsletter on the topic.  This is the first edition, "These Mass. colleges’ finances are full of red flags."  From the article:

More than two dozen colleges in New England have closed since 2015, and almost all of them enrolled new students shortly before announcing their closures. Parents and faculty members from shuttered campuses have told me about the supposed reassurances they received from school administrators before the end came.

Colleges are required to post annual financial statements online, so one might think that it would be easy enough to identify a school in trouble. I am here to tell you that it is not so easy.

A college’s net assets may increase from one year to the next, but that does not necessarily mean all is well. On the other hand, a one-time operating deficit is not necessarily a crisis. Prospective students and their families do not have the time and the know-how to pore over institutional finances during the already complicated and stressful process of applying to college.

And that can have disproportionately negative impact on cities ("Small college economic issues threaten their ability to function as a community asset"), like the closure of in Albany, or Birmingham-Southern College in Birmingham, Alabama, or the University of the Arts in Philadelphia.

This blog entry started a few years ago, wrt the closure or merger of arts-related colleges ("Revisiting entries: Should community culture master plans include elements on higher education arts programs?,").  But the point should be extended to master planning more generally, to be aware of the economic health of institutions in your community, with a plan to act if circumstances become negative.

While most cities require colleges to do and update master plans, usually on a ten year cycle, that's more about building, not reaping more economic value from them, which aligns with my point that DC in particular doesn't do a very good job leveraging the economic development potential of universities.  

-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC" (2016)
-- "HBCUs and the city: Relocating Cheyney University to Philadelphia" (2021)
-- "The other George Miller idea: creating multi-college innovation centers in (cities) Philadelphia | Creating public library-college education centers as revitalization initiatives" (2021)
-- "Freeman Hrabowski and 'urban universities" (2021)
-- "Universities as elements of urban/downtown revitalization: the Portland State story and more" (2014)
-- "President of Washington State University dies: fostered development of the "University District" adjacent to Downtown Spokane" (2015)

-- "John Fry, president of Drexel University, and universities and cities" (2022) -- since his tenure conditions for DU have deteriorated, now he's the president of Temple University, which has its own problems

-- "Morgan State University should move their architecture and planning school to Downtown/Station North Arts District" (2014)

But those aren't the only schools at risk.  In Michigan, the three top tier universities, Michigan, Michigan State, and the urban Wayne State University in Detroit continue to maintain or add enrollments ("UM Ann Arbor remains largest university in state as competition to get in intensifies." Detroit News), while the other state schools are losing enrollment ("Michigan college enrollment rate slips, despite $1B in state scholarships," Bridge Michigan), and smaller colleges are closing.

• It's accentuated by the anti-immigrant focus by the Trump Administration, which has resulted in a 10% across the board reduction in international student enrollment with disproportionate impact on some schools more than others
• Foreign students mostly pay full tuition, so the economic impact is greater than the number of students.
• Northern colleges are losing students to southern colleges
• Limits on the total amount of money that can be lent in federal student loan programs

The new dorms at Michigan look like they could be from the 1930s, another period of large growth for the university and the construction of multiple dormitories.  Architect: Robert A.M. Stern and Associates (RAMSA).

Meanwhile the Ivies and the premier public universities do well, grabbing more students.  Many like the University of Michigan, are opening new dorms ("Take a look inside University of Michigan’s new Wolverine Village," Detroit Free Press).

Urban design initiative.  In 2017 I mentioned an interesting initiative by Syracuse University in the context of the Purple Line series, about how they were investing in making better urban design and other connections between the campus and the core city.  Apparently, it hasn't been enough.

From the 2017 entry:

The Syracuse Connective Corridor is a wide-scale approach on improving the connections between the campus of Syracuse University and the city, while simultaneously emphasizing sub-districts within the city center ("Is Syracuse's Connective Corridor work transforming downtown?" and "Syracuse's Connective Corridor: 2 miles long, $47 million better," Syracuse Post-Standard; "The Connective Corridor – a message from our Publisher," Syracuse New Times).

Although there is some criticism that the project is shaped more to benefit the university, which is the primary funder.

The description of the Connective Corridor in promotional materials sums up the elements that comprise a "Signature Street" or sustainable mobility district:

The Connective Corridor is a collaboration between Syracuse University, the City of Syracuse and Onondaga County to connect University Hill with downtown Syracuse. The project includes new streetscapes to make the city more pedestrian and bike-friendly, a free public transportation system with smart bus technology, a network of green infrastructure, public art, wayfinding systems, façade improvements and innovative illumination projects that highlight Syracuse’s beautiful historic buildings and public spaces. The Corridor also connects the city’s vibrant arts and cultural district, as well as downtown dining and the great local food scene. Take the bus, walk or ride your bike...

Part of the Connective Corridor.  The Sheraton Hotel next to campus became a student residence hall. Debra Millet/Alamy

What the WSJ says about Syracuse.  Besides the problems of declining college aged students and the fall off of international student enrollment,  

• It's not an Ivy League school and they can't market themselves like they are
• It's got a lot of debt from their construction program, which besides replacing older buildings less well equipped for today's needs, built more besides, and the enrollment and research funding hasn't kept up (West Virginia University overbuilt too, leading to major problems ("West Virginia University makes wide-ranging cuts to academic programs and faculty," AP)
• The past history of having good football and basketball teams is old news.  As the teams flail, the  marketing value of (un)successful sports teams has diminished 
• Winter weather is not a draw
• Decline in federal research funding due to the Trump Administration's hatred of knowledge
• That its urban peers--NYU, Boston University, Northeastern University--are doing better and have double the number of students paying full tuition
• They have cut low enrollment academic programs
• Still have many highly rated programs
• the safety rating of bonds issued by the university is okay but declining
• Need to improve recruitment, post-admissions communications, and financial aid offers to increase enrollment yield, to get more students who've been admitted to actually enroll

From the article:

Syracuse’s competitors can concentrate their financial-aid budgets on a smaller percentage of students, while Syracuse has to spread its allotment over a broader pool. That means that for students who get some sort of financial aid, Syracuse costs thousands more than its competitors.

Moderately selective private colleges are caught in the middle. They aren’t elite enough to dictate the market, and they attract a student-body that is still concerned about the price tag, said Robert Kelchen, a professor at the University of Tennessee, Knoxville, who specializes in education finances.

“The stream of students willing to pay something closer to full price is drying up,” Kelchen said. “Even if they’re not terribly concerned about how much it costs, they know that they can shop around and get a better deal.”

Boston Globe indicators.  The paper published an article, "Worried your college could close? Higher ed watchers say to look for these warning signs," listing the factors that students and parents (and communities) should look out for in assessing the financial stability of a college.

1. Low enrollment.  Small endowment.
2. Financial reports don't make sense for an institution that claims to be stable.
3. The college has a plan but no long term strategy.
4. The campus looks empty or shabby.
5. Cuts are continuous.
6. Making decisions and creating initiatives out of desperation.
7. Land is for sale
8. Financial aid awards are especially generous
9. Recruitment is over-eager.

Cities need to pay attention and monitor the health of higher education institutions.  To reiterate the point above, yes, cultural master plans should include an element on higher education programs in the arts.  But city economic planning should monitor the economic health of higher education institutions more closely as well.

Land redevelopment/How to revivify institutional campuses?  This is especially important because colleges tend to have a large contiguous piece of land that is best suited for institutional use, but it's much harder to find appropriate users, and redevelopment is likely necessary.  And just as hard because it requires zoning changes, community input, etc.

-- Town–Gown Collaboration in Land Use and Development, Lincoln Land Institute

Marygrove University in Detroit dissolved, but the Kresge Foundation stepped in to assist in transitioning from a college campus to a community nonprofit campus ("Interesting community initiative in Detroit: Marygrove Conservancy," "Big Plan on Campus: At a Shuttered Detroit College, a Community Development Experiment Takes Root," Lincoln Land Institute).  Most communities won't have that as an option.

In Albany, New York, the county created the Pine Hills Land Authority to buy and redevelop the College of Saint Rose campus.  But at 23 acres, it isn't a hugely difficult problem, and many of the campus blocks are integrated into the city.

The Birmingham-Southern College campus was purchased by the federal government and is now an training center for the US Coast Guard.

In Massachusetts, Hampshire College is dissolving and private equity gave the school a loan to finish its last semester and work towards dissolution ("A Boston-based LLC is lending Hampshire College $29.5m to finish the fall semester — and plan for what comes next," Boston Globe).  PE probably then gets the campus.  The campus is about 1.3 square miles.

Cy pres.  Cy pres is a legal doctrine where the State AG has a say in how assets are distributed, and the nonprofit uses preserved when a nonprofit institution closes ("When governments sell land always put in clawback provisions").  

This has been a particular issue with the dissolution of the University of the Arts in Philadelphia ("University of the Arts’ $77 million endowment remains mired in court proceedings two years after the school closed," Philadelphia Inquirer) and also in Philadelphia, how Drexel University has taken over troubled cultural institutions but now finds it doesn't have enough money to improve facilities and or maintain these programs ("Closing a 200-year-old institution will wound both the city and science," Philadelphia Inquirer).

WSJ says Seattle and DC buck the trend and are retaining families

 The Wall Street Journal--the best way to access it is through your local library system, which probably provides access, my registration evaders no longer really work on it--writes in "Seattle and D.C. Are Bucking the Trend by Attracting Families With Kids" that most cities are losing families but not DC and Seattle.

This family lives in DC's Mount Pleasant neighborhood--which is great.  And the daughter goes to the local Spanish-English immersion elementary school.

More households with six figure salaries are staying as they add children.

It comes down to amenities, schooling options--DC has a plethora of charter schools plus Pre-K education/child care for 3-5 year olds), cheaper housing compared to the suburbs--sadly we can thank Trump's evisceration of the federal workforce and the impact on the DC housing market ("A housing market on the precipice: New insights from the DMV Monitor," Brookings, "Did DOGE Cripple Northern Virginia’s Housing Market?," Arlington Magazine) and incomes.  

Interestingly, both cities are losing population of lower income families.  But this makes sense economically, as the cities are increasingly expensive, and job income growth and job growth are slowing as the effects of the Trump economy trickle throughout DC's microeconomy.

Rare example of a corporate return to the city: Sherwin-Williams and Cleveland

So reports the Cleveland Plain Dealer, "The return of Sherwin-Williams’ workers may revive downtown Cleveland — but not without resistance."

Companies did move back to the city.  While there was a trend of corporations that had moved to the suburbs moving back to the city--examples like Compuware and Rocket Mortgage in Detroit, and Panasonic to Newark, it wasn't universal.

I had hoped DC had a shot with this, and companies like AES, Nestle, and Hilton, but it wasn't to be.  

Remember, MCI was based in DC for a long time, mostly because of accessibility to its regulator, the FCC, and all the cases it brought to open long distance telecommunications to competition.

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?" (2015)
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"" (2017)

And corporations left legacy cities for the South.  Plenty of corporations moved out of legacy regions altogether to the South, especially Atlanta and Texas ("Next Phase of Clustering of Business away from the Midwest"). 

For example, while Panasonic was moving to Newark ("A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center"), Mercedes-Benz moved their headquarters from New Jersey to Atlanta, leveraging the naming rights they've paid for the Atlanta Falcons football team.

Companies continue to leave smaller cities.  Like Caterpillar from Peoria to the Chicago suburbs and then to Texas ("Caterpillar to move headquarters to Texas, marking second major corporate departure from Illinois in 6 weeks," Chicago Tribune), and Winston-Salem ("Smaller cities lose out when it comes to business consolidation and headquarters relocation: WInston-Salem, North Carolina").  

A big concern is airport access and size, needing convenient connections to multiple places from a close by airport.  Plus, as manufacturing shifts South, eventually, so do companies 

Car versus transit accessibility.  Or companies choosing locations for branches, like State Farm in Dallas and Atlanta, they chose based on freeway access, unlike the quest by Amazon HQ2 made transit accessibility a major criterion ("Amazon's HQ2 Hunt Is a Transit Reckoning," Bloomberg) .

CEOs move to get away from progressive taxation and politics.  And corporations like those owned by Ken Griffin ("Ken Griffin poised to pay extra $1.4M in taxes for NYC properties thanks to Mamdani’s pied-à-terre tax: report," New York Post) and Starbucks ("Is Starbucks breaking up with Seattle?," Seattle Times) continue the trend of companies moving out of cities where they believe the regulatory environment is unfavorable.  

Griffin doesn't want to pay extra tax on his $238 million condo in NYC, after leaving Chicago because of its crime ("Billionaire Ken Griffin says Citadel’s Chicago exodus was ‘not hard,’ cites crime, taxes," Fox").  Starbucks isn't happy with Seattle City Council's passage of an employment tax.

Corporate consolidation.  There is still the issue of corporate consolidation cutting businesses, like banks and railroads.

And aging buildings.  A counter-force to in city location is aging building stock.  As buildings age companies don't want to pay the high renovation cost, so they move to new facilities, often in the suburbs where the company can spread out, on a campus ("Dallas Is Booming—Except for Its Downtown," Wall Street Journal).  From the article:

This city is a hotbed for commercial property. The metro area’s population is booming and financial-services firms are flocking here, earning the area the sobriquet “Y’all Street.” Yet at its heart is one of the country’s worst-hit central business districts: Downtown Dallas.

Companies are abandoning this neighborhood and its aging office towers. They are heading to the Uptown district or the thriving suburbs, often over concerns about crime and homelessness. Left behind are defaulted loans, foreclosures and deeply discounted property sales.

Plus new buildings generally are outfitted with the kinds of amenities that younger employees seek ("10 Must-Have Commercial Building Amenities That Attract (and Keep) Top Tenants," Fooda).

Cleveland.  Has a new corporate headquarters with a worker mandate to work in the office every day.  The addition is a boon after the recent closure of the Downtown Heinen's Supermarket (" Farmers market replaces Heinen’s in Cleveland," Supermarket News).  But it comes with costs.

... Sherwin-Williams has opened its new roughly 1-million-square-foot headquarters near Public Square, requiring office employees to show up in person five days a week.

For the city, that is welcome news. The deal was written to protect jobs and taxes. And the return of so many workers has become something bigger: the spark city officials and business leaders hope will finally bring a pandemic-battered downtown back to life.

For many of those workers, however, it feels like a loss. The return-to-office mandate ended a hybrid arrangement many had built their lives around. They arranged child care, bought homes and reshaped their daily routines around working remotely — and now that flexibility is gone.

The result is a 36-story tower standing at the intersection of three competing interests: a company’s push for in-person collaboration, a city’s fight to bring downtown back to life and a workforce that had reorganized life around working from home.

In any case, in recent times, it's a win for legacy cities, and "the Rust Belt."

Where should cities focus their economic development resources?  However, some economists make the point that cities do better when building up and developing smaller businesses, than focusing on large corporations who may stay just a short time ("How U.S. Cities Lost the Economic Development Plot," CommonEdge).  I call this the difference between "building a local economy" and traditional "Economic Development."

I suppose I come down in the middle.  Some companies seem to be worth recruiting, like Amazon HQ2, although post covid it hasn't worked out as well.  High paying jobs, reasonable amounts of subsidy, secondary development, e.g., with Amazon HQ2, that's seeded a Virginia Tech campus.

But as pointed out in the aftermath of the closure of the Pfizer research lab in Ann Arbor, and the number of companies that developed out of it, that many small companies rather than one big one reduces risk for the local economy ("How the closure of a Pfizer research center in Ann Arbor, Michigan led to the development of a more robust and independent biotech sector").

Doubles and triples, especially in a stage of the US economy that is focused on smaller companies, rather than the big corporations of past decades.  E.g., big GE is now three smaller companies with others sold off.  Same with Honeywell.  Large corporations of the old days are smaller or non existent today.

Goldman Sachs is building a new campus for more than 5,000 employees in Dallas, its largest in the U.S. outside New York City. (Shelby Tauber/For The Washington Post)

This trend is furthered by how new technologies such as electrification of automobiles or AI make it easier for new entrants and harder for legacy companies ("Factors undergirding the decline of economic clusters").  

NYC under Mayor Bloomberg made a good move in funding the start of a new "technology and engineering higher education institution"--Cornell Tech--as a way for the city to stay relevant economically in the face of shrinkage of the financial industry among others ("Bankers are leaving Wall Street for ‘Y’all Street’," Washington Post).

Interesting story on the Encore Casino in Everett, Massachusetts, across the Mystic River from Boston

Photo: The Encore Boston Harbor casino was bathed in the warmth of the setting sun as it towered over the streets of Charlestown from its location in Everett. John Tlumacki/Globe Staff ("Encore was built to be a destination. It became something else," Boston Globe).

Casinos are promoted pretty much the same way.  Lots of permanent jobs.  Lots of tourism and visitors from other places spending their money.

The reality is that outside of Las Vegas, casinos mostly draw upon local residents and significant new streams of revenue aren't created.

From the article:

... “Encore” shimmering in gold script at its top like a $2.6 billion monument to the idea that everything in its glow, including the hardscrabble city of Everett, would be transformed.

That was the promise of owner Wynn Resorts, when it opened seven years ago. The casino would replace a contaminated industrial waterfront that had sat empty for a century, create thousands of union jobs, generate millions in tax revenue, and build a luxury destination that would bring visitors to a long-overlooked corner of Greater Boston to stay, eat, and, of course, gamble.

Encore has delivered spectacularly on several of those promises, but the sheer ambition of some of them also highlights how many things this project was expected to be.

A dockmaster at Encore Boston Harbor helped to tie off the boat in 2019. Customers can take a free water taxi from Boston to Encore every 30 minutes.David L. Ryan/Globe Staff/David L Ryan, Globe Staff

Revenue at Encore has remained relatively stable over the past two years, roughly around $210 million a quarter. But it’s becoming less profitable: Once around $62 million to $63 million a quarter two years ago, adjusted operating profit declined to $50.5 million in the first quarter of this year, before rebounding somewhat to $56.1 million in the second. Still, Encore posted the largest decline in profit among all Wynn properties in the second quarter.

After winning a hotly contested license to build Greater Boston’s only casino in 2014, Wynn executives promised a destination that would attract travelers from around the world, with high-quality dining and nightlife and entertainment “unlike anything the region has ever seen.” It wasn’t just marketing talk; it’s partly why they prevailed, with state gaming officials weighing the broader boost it would bring to the region’s economy.

Today, Encore is indeed lavish, if largely self-contained. It has become a major regional casino. But has it become the destination it was supposed to be? That might depend on where you look.

Casinos are businesses that don't want to share customers.  This last point is key.  Casinos are built to keep their patrons inside as long as possible.  They want 100% of the consumer spend.  They don't want to share customers with other businesses.  Therefore such facilities aren't so great at building up an area beyond the four walls of the building.

Just like stadiums and arenas (except in Las Vegas--"5 years later, Raiders in Las Vegas ‘a home run for the NFL’," Las Vegas Review-Journal, and Japanese tourists going to LA to see Shohei Otani--"The Shohei Ohtani Economy: A two-mile ride to Dodger Stadium, for $85," Los Angeles Times), most customers are local, and the money they spend ends up being shifted from other forms of entertainment.  It's not new spending.

But if high-rollers and tourists have their place, most of Encore’s players are local, according to former executives. For all of Wynn’s ambitions to create an international destination, its bread-and-butter clientele — as is the case with most casinos outside of Las Vegas — consists largely of people who can drive there.

“It’s a place for middle-class people to have an upper-class experience,” said Michele Baker, 58, of Brookline, who often turns to Encore’s posh hotel rooms for a staycation.

... “Why would you go to Everett” for those things when Boston already has them, said Raymond Pineault, the former president of Connecticut’s Mohegan Sun Casino. “I don’t know what their expectations were, but I wouldn’t say it’s the international destination they were hoping for. It’s a nice regional casino.”

Most of the time, new casinos have competition.

And Encore faces tough competition: Long-established tribal casinos in Connecticut with so many amenities that gambling feels almost like an afterthought. New casinos in New Hampshire. Two others in Rhode Island. And the explosion of sports betting, which generated nearly $755 million of gross gaming revenue in Massachusetts in 2025.

In-city casinos usually lack the amenities of a destination like a city with multiple casinos (Las Vegas) or a resort.

But unlike Foxwoods and Mohegan Sun — not to mention Las Vegas casinos — Encore lacks the sort of amenities that draw non-gamblers and multiday visitors. With little available land, there’s no golf course, pool, or shopping mall. Nor is there a theater or arena for major concerts or big comedians to perform; state law, designed to protect nearby concert venues, prohibits Encore from operating on-site entertainment facilities of between 1,000 and 3,500 seats.

As for retail, options are few: a gift shop called “The Drugstore,” a Wynn women’s clothing boutique, and a watch store. At least one storefront is empty and available on the ground floor.

Photo: John Tlumacki, Boston Globe.

Broader revitalization is a slow process.  As I write elsewhere with sports, and it's just as true with casinos and resorts, if you want broader development you need a plan ("Framework of characteristics that support successful community development in association with the development of professional sports facilities").  And some places, whether or not you have a plan, might not have the right preconditions to improve.

But, the broader transformation of Everett remains a work in progress. Encore has helped spur development beyond its campus, including the proposed New England Revolution soccer stadium across the street. But much of the surrounding area remains industrial. Other projects are still in the works.

... “Encore needs to evolve into becoming much more of an all-around Boston-area entertainment resort,” said John Boyd, principal of gaming consulting firm The Boyd Company. “Rather than: just casino plus restaurants plus hotel.”

In other words, to truly succeed, it needs to become a regional destination. When asked how that’s going, a company spokesman offered a pointedly local answer: Wynn “is proud to call Everett home.”

A charter bus for Encore Boston Harbor picked up passengers on Essex Street, a block from Chinatown, in February. John Tlumacki/Globe Staff

Asians drive casino revenues on the East Coast.  Earlier this year, the Globe ran a great series about the impact of gaming and the Encore Casino on the Asian community ("Casinos in Massachusetts/New England deliberately target Asians").

Ukraine keeps bombing refineries in Russia, and gas is still cheaper in Russia than it is in Utah

Labor Day is one of those holidays that's a big generator of travel ("Gasoline prices, over $4 per gallon, hit record high for Labor Day," CNBC). 

Meanwhile in Russia, according to the Daily Beast article, "Humiliating Truth of Putin’s Homeland Crisis Exposed," the War with Ukraine is being felt at home in Russia as drone attacks hit critical infrastructure, especially oil refining. 

Refinery burning in Moscow.  Social media footage via the New York Times

Lines for gas have become a common image coming out of Russia this summer. 

 Anadolu/Anadolu via Getty Images

While that's true it's ironic that gasoline is about $3.32 per gallon in Russia--granted some of it is no longer produced at the right octane level and damages car engines, it's about $4.35-$4.60 per gallon right now in Utah (and we have five refineries about 8 miles away from our house so theoretically it should be a bit cheaper).

Ironic that the closure of the Strait of Hormuz and Trump's War with Iran is more costly to Americans in terms of gas prices and the subsequent costs pushed out amongst various supply chains than the War in Ukraine is on Russian motor vehicle operators--albeit they have to wait for hours in long lines.

(Early on in the War, Trump chortled about how much it cost Iran every day, about $1 billion.  I calculated that the daily cost to consumers for gasoline which went up because of the war as more than the cost to Iran.)

=======

WRT the War in Ukraine, Phillips's Newsletter (Boring War) is one of the only Substacks I pay for.  I think I learned about it from Paul Krugman.  It's worth it.  He's a professor of military history at the University of Saint Andrews in Scotland.

WSJ says Seattle and DC buck the trend and are retaining families

The Wall Street Journal--the best way to access it is through your local library system, which probably provides access, my registration evaders no longer really work on it--writes in "Seattle and D.C. Are Bucking the Trend by Attracting Families With Kids" that most cities are losing families but not DC and Seattle.

This family lives in DC's Mount Pleasant neighborhood--which is great.  And the daughter goes to the local Spanish-English immersion elementary school.

More households with six figure salaries are staying as they add children.

It comes down to amenities, schooling options--DC has a plethora of charter schools plus Pre-K education/child care for 3-5 year olds), cheaper housing compared to the suburbs--sadly we can thank Trump's evisceration of the federal workforce and the impact on the DC housing market ("A housing market on the precipice: New insights from the DMV Monitor," Brookings, "Did DOGE Cripple Northern Virginia’s Housing Market?," Arlington Magazine) and incomes.  

Interestingly, both cities are losing population of lower income families.  But this makes sense economically, as the cities are increasingly expensive, and job income growth and job growth are slowing as the effects of the Trump economy trickle throughout DC's microeconomy.

Hourcar and the Minnesota State Fair

Hourcar is a nonprofit car share organization serving Minneapolis and St. Paul, Minnesota.  It's a rare non profit organization in the field that has survived--many of the initial firms sold themselves to for profit providers around the time that they needed to raise funds for the first wholesale replacement of the original fleet of cars as they aged.

The Minnesota State Fair works with vendors to provide a unique food and drink program.   Branding focuses on the Fair more than the individual firm, at least with cups for beer.

Judging by all the articles in the Minneapolis Star-Tribune (especially about food and drink, like this article about Pyres Brewing, "Pryes Brewing is going big at the 2026 Minnesota State Fair. Here’s why."), the Minnesota State Fair is a big deal.  This year, instead of providing a special drop off area for cars at the Fair, they're encouraging people to use special drop offs set up at the parking lots that are staging points for free transit shuttles to the fair.

That makes more sense than warehousing individual cars at the Fair.

Factors undergirding the decline of economic clusters

Having the throne doesn't make your firm impregnable.  One of my lines is that once McDonalds made it to the top of the fast food restaurant industry, they were always going to lose market share as the segment was vulnerable to niche operators and new business models.  

They're still the King, but always on the defense.  It's difficult to come up with huge breakthroughs that maintain preeminence in the face of constant competition.

Agglomeration economics.  Business clustering, or agglomeration economies, occurs because a firm develops in a place for particular circumstances--access to resources, capital, transportation efficiency, etc.--and as the economic segment develops, support businesses, financing, and other firms are created, strengthening the place as the center of that industry.

But over time, other places compete for pieces of that industry, diminishing the strengthen and preeminence of the original cluster.  This is abetted by how older firms have higher costs, such as pensions and wages, because of a more mature workforce, etc.

There are a couple of good articles about this.  

Washington, DC as a center for business around government.  One is in Greater Greater Washington, "DC has officially lost over 83,000 jobs. The reality is even worse," about Washington DC's economic decline, which results from three things: (1) work from home as a response to covid meant people left the city for cheaper places to live while retaining their high "in Washington DC" incomes, shrinking the local economy and the demand for housing; (2) federal government shrinkage; and (3) decline in international business and tourism.

This is abetted by what is called the multiplier effect, how each direct job supports indirect jobs either within that industry, or in consumption related jobs.  So the 22,000 jobs cut by the federal government has a total effect of 66,000 to 88,000 lost jobs.

DC's competitive advantages.  When I first got involved in revitalization 25 years ago, I identified what I believed were DC's primary competitive advantages.

These were, before covid and work from home, the city's competitive advantages.  WRT the federal government, the city also has to contend with the disinvestment agenda of the Republican party, including relocation of agencies to other parts of the county.

1. The steady employment engine of the federal government.
2. Historic residential, commercial, and civic architecture
3. Historicity (the nexus of people and place)
4. Walking City Urban Design.
5. Transit Network allowing for mobility without automobile dependence

Foremost was the steady employment engine of the federal government, even though long before the Trump Administration, other states and Congressmembers cherry picked agencies for their communities, like West Virginia at the behest of Senator Robert Byrd, a bunch of agencies are in Maryland, etc.  

Wholesale dismantling of agencies and bureaus like the Agency for International Development or the Department of Education both reduce the capacity of government to perform--which supports the neoliberal principle that government is less effective than market-based solutions--and the employment advantages to DC.

Just as bad, both Trump Administrations have moved agencies out of the city as a stratagem to reduce government capacity and employment, in moves like placing the USDA Economic Research Service in Kansas City or BLM to Grand Junction, Colorado--a majority of the extant employees didn't move. 

This is happening with the Forest Service division of USDA, which is consolidating, firing people, and moving its headquarters to Utah--a state at the center of fighting for the sale of public lands or their use for mining, oil production, etc., rather than for conservation.

The destruction of the US Agency for International Development wiped out the "international organization and contractor" economic cluster.  Etc.

Hollywood: LA and film and television production.  Los Angeles became the center of film production because it had a lot more sun than most places, which meant filming was rarely interrupted by negative weather.  But even Greater LA couldn't "stand in" for all environments, which led to Vancouver, British Columbia becoming an alternative.

And like McDonald's, Hollywood, the King of media production, always was vulnerable to losing elements of its business environment.  More and more places began offering tax incentives and other inducements that California didn't think it needed to provide.  To the point where the loss of business was substantial and too far along to reverse.

The LA Times covers this in "How L.A. stopped being Hollywood’s leading star."  From the article:

Film activity in the L.A. region plummeted in the second quarter of this year, with shoot days for feature films and TV productions falling 20% and 30%, respectively, compared with already anemic levels from a year ago, according to FilmLA.

The fallout has been devastating for local film crews and businesses. L.A.’s signature industry has shed some 57,000 jobs in the past four years, while more than 80 film and television production services businesses have closed since 2022. The production crisis has even become a political flashpoint alongside affordability, crime and homelessness in the race for mayor and governor.

The story of how L.A. steadily lost much of its homegrown industry to other locales is a tale of hubris, escalating costs, political inaction and fierce competition from states and countries hungry for a piece of the Hollywood pie. California eventually adopted a very limited film tax credit plan in 2009, but even then production had already gone elsewhere.

Additional lessons: changes in production and technology are "earthquakes" in industry tradition that support industry shake up and relocation.

-- "Next Level Clustering of Business away from the Midwest" (2022)

Emerging versus mature markets.  There are many ways to look at how to assess vulnerability.  One is the Alexander Gerschenkron thesis of "the economic advantages of backwardness."  His point is that established economies have vast investments in maintaining legacy systems of production.  While emerging economies can adopt the latest technologies without having to strand billions of dollars in previous investments.

The perfect example is China and electric cars.  Its automobile industry was nascent and did focus on traditional technology at first.  But as the new technologies of EVs were developed, just on the basis of the size of its market, it was well positioned to be a first mover in the field.  This was probably furthered because China isn't a large oil producer and therefore centering its car industry on alternatives to the internal combustion engine had other benefits of reducing demand and dependence on oil for transportation.

New technologies within industries.  This is an issue within industries as well.  The US automobile industry is a good example as the development of electric cars has allowed new entrants, although Tesla is the only real successful firm in the car market.  The truck sector, the most profitable for the old Big 3, faces competition from new entrants like Rivian.  But even so, because the US automobile market is so mature, with demand for "only" a few million vehicles per year, it can't compete with China.  

Film and video is another example.  Not only was Hollywood vulnerable to other states angling for a piece of the production pie, but as the industry atomized and vastly expanded from four main broadcast channels to hundreds, and then from centralized to decentralized distribution such as through streaming via the Internet IT infrastructure.

Now the big companies are all Internet based--Netflix, based in the SF Bay as is Apple, and Amazon, using its Prime platform as a media delivery system, is based in Seattle.  The traditional firms keep merging, and none seems to have the heft to make video streaming content profitable, unlike Netflix.

Centralized versus decentralized distribution.  This repeats from above.  Video media is a primary example.  But its enabled by the Internet and its massive "back of the house" information technology infrastructure.

It's comparable to the difference between "big iron" more centralized computing as typified by Boston and Route 128 businesses like Data General versus the microcomputer oriented Silicon Valley.  This is discussed by AnnaLee Saxenian in Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (review).

Which has also spawned "cloud computing," although the foundations of such systems, starting with ADP payroll processing, are quite old. Amazon and Microsoft make a majority of their profits from cloud computing services--which is also driving the demand for data centers.

The Internet as a platform has similarly made direct distribution, complemented by extensive package delivery systems, much cheaper than before, allowing companies to sell products directly to customers with minimal transaction costs.

Previously, wholesale and large scale retail stores were the primary distribution points for goods, because this minimized transaction costs for the producer and the customer.

Electricity is now proving vulnerable to decentralized delivery through the adoption of solar energy systems and distributed energy resources (batteries) at the point of individual households and businesses ("Are plug-in DERs going to spark a grid revolution?," Volts).

New versus old companies and legacy cost structures.  New companies have the advantage of small workforces earning less money and benefits than established companies.

High fixed costs, e.g., for the automobile industry pensions and insurance for current and retired workers, make it harder to take risks.  

Marketing's Five Ps: Product, Price, Place, Promotion, and People.  There's a maxim in business: your choice of price, quality, or speed of delivery, pick any two.  The 5 Ps are the shorthand for how products have been developed and promoted.  Changes in the conditions of any of those Ps provide a space for business opportunities to develop, threatening existing agglomeration economies of various business segments.

Source: Corporate Finance Institute.

For example, place means where a product is sold, but also how it gets there.  Cheap gas and the highway network trumped railroads.  Before railroads, many industries developed across the country, such as stove production, because the cost of transporting heavy items was so high.

Promotion no longer means the newspaper or broadcast television, but all sorts of digital media.  This has made Facebook and Google the largest sellers of advertising, supplanting traditional firms.  And social media--yes there are paid influencers--mean businesses and products can get great exposure without payment of any kind.

Drought in Europe dries up rivers

 This was an issue a couple of years ago with the Rhine, which I didn't realize also went into France.

People walk around a dried section of the Danube River in Budapest on July 30. Photographer: Robert Nemeti/Anadolu/Getty Images.

It's an issue now with the Danube River in Hungary and Romania, which may force the closure of nuclear power plants, because the water level is likely to drop below the intake piping ("East Europe Braces for Power Curbs With Danube at Record Low," "As the Danube Hits Record Lows, Every Centimeter of River Counts," Bloomberg, " Europe’s rivers are running dry, and the knock-on effects are disastrousS," Guardian).

In the US this is a worry with Lake Powell (Utah) and Lake Mead (Nevada), affecting hydropower electricity generation at the respective dam generating plants at each lake.  

An RFP isn't a plan: redux

I caution against cities releasing RFPs--requests for proposals--without being built upon a planning process.  Without a plan, anything can come over the maw and what comes reflects the developer's preferences, not necessarily either "the city" or "the public".  And proposals tend to be conservative because cities are conservative.

A great example of this is the redevelopment of the Walter Reed Military Hospital Campus in DC.  Hey, they've done a good job.  But it's mostly housing and retail, because the city economic development group is most comfortable with that ("Nice looking five story brick apartment building, Parks at Walter Reed development, Washington, DC," 2026).

Some of the RFPs included wacky hope of getting MIT involved, etc., because the campus included the Armed Forces Institute of Pathology, which basically was a set of buildings turnkey that could have been used to start a medical school, biotechnology campus, etc.

That happened sort of, but not by the city's hands.  The Children's Hospital of DC separately lobbied Congress to get control of that property and they did.  Stuff's happening there, not sure about how breakthrough it is.

I wasn't involved at all in the public process around Walter Reed even though it's less than two miles from our DC house, because I had been working on a bunch of other stuff.  

Later, some people came to me with their concept of using the new hospital building (since torn down and it cost more than $125 million to do so) and the Pathology facilities to create a graduate medical education program (the aim was to get the Royal College of Surgeons Dublin to open a medical school, and with Washington Adventist University--there is a medical school at Loma Linda University and many Adventist colleges have medical professions education, and other institutions, open other allied medical education programs) and a biotechnology research initiative/research park.  And I wrote it up.

We were far too late in the process, again the city is conservative, and it didn't help that the leaders of the effort were somewhat wacky, one's focus was to use the H1B Visa program for funding, and we couldn't get either the Royal College or Washington Adventist to sign on the dotted line so that the city would take it seriously.

But in contrast to the housing and retail, it could have supported thousands of high paying jobs, including technology associate positions that didn't require postgraduate work.

St. Elizabeths East campus (West is for the federal government).

Later I wrote it up as a proposal for the city's St. Elizabeths campus in SE DC.

-- "Ordinary versus Extraordinary Planning around the rebuilding of the United Medical Center in Southeast Washington DC:  Part Two: Creating a graduate health and biotechnology research initiative on the St. Elizabeths campus," (2018)

And after that went nowhere, suggested the University of Maryland could do it at the new Largo Hospital--UMD's biomedical research is mostly in Baltimore.

-- "University of Maryland could seed a complementary biotechnology and medical education initiative in Prince George's County" (2021)

I learned the importance of pre-planning from the example of Kennedy School in Portland.  Residents wanted a say in how it would be sold and remade.  They ended up supporting the idea of a bed and breakfast ("Vision and Versatility: The Story of McMenamins," Spirited Magazine, "Preservation Brotherhood," Chicago Tribune, 2004, "Preserved in Alcohol: Case Studies of Adaptive Reuse Projects by McMenamins, Inc.," thesis). And the McMenamins Company came up with an amazing response resulting in an award winning property.

Edgefield Manor

But they moved from brewpubs and cinemas to larger property redevelopment earlier, buying the 300 acre Multnomah County poor farm,  Edgefield Manor..

By the time they got the property it was pretty much wrecked.  They found the money to rehabilitate it.  Now it has a hotel, golf course, brewpubs, distillery, gardens, and other amenities.

They've gone on to do this with many properties in Oregon and Washington, they didn't stop with Kennedy School.

Sadly, it's rare to find a developer that is (1) super creative, (2) committed to historic preservation, and (3) willing to work with "white elephant" properties that are difficult and costly to redevelop.  (Note that while the firm doesn't deal that much with former public buildings, Jemal Development is fine with historic buildings, first in DC, then in places like Frederick, Maryland, Richmond, Virginia, Pittsburgh, and Buffalo, among others.)

Northampton State Hospital in 2007.

Other cities have either been good or bad at this dimension.  This article laments that such a path and a company like McMenamins isn't active in Massachusetts, ("Miracle Manor," Valley Advocate), suggesting that the old Northampton State Hospital could have been developed similarly.

-- "A planning process done right | NYC to build affordable housing on a city parking lot & points about DC and Montgomery County" (2026)
-- "Adaptive reuse of a high school to a concert space in Portland, Oregion: Revolution Hall" (2023)
-- "One way to encourage community input into development planning" (2010)

TGM photo by Sammy Kogan.

Toronto Waterfront.  Conclusions in the Toronto Globe & Mail article "A bigger Biidaasige Park is another waterfront triumph for Toronto," encapsulates this argument, also mentioning the failure of the Province of Ontario in its quest to "revive" Toronto's waterfront separate from the City.

There is a lesson for other governments about how to make a place. Think hard up front, with public input, about what your goals are; then hire excellent designers, give them direction, and rigorously defend their vision.

... Mr. Glaisek says success began with decades of public advocacy – the citizen group Bring Back the Don was central – and basics: “We had strong leadership, we had funding, and we had the continuity of an organization that could focus attention for 20 solid years.”

While city staff and others helped realize the project, Waterfront has been at the helm. In meeting after meeting, year in and year out, their staff has defended the idea of “leading with landscape” and the specifics of this huge, complex, fragile project.

Of course, that presumes the local government doesn't blow off the opportunity.  In DC, like with Walter Reed, St. Elizabeths, and many other civic building projects. Which the writer points out is a problem with Toronto's city agencies.

Over at Toronto City Hall, none of those conditions exist. The parks department’s output is chaotic and nobody seems to know how its decisions are being made or by whom, much less what the guiding principles and design standards might be.

Waterfront has been different. The expanded Biidaasige invites thoughts of a city that can build great things, and whose greatest times are still ahead of it.