Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Friday, September 18, 2015

Businesses moving back to the center: not a universal trend

Motorola--a much smaller company compared to its heyday--announced it is moving its headquarters to Downtown Chicago from suburban Schaumburg ("Motorola Solutions moving headquarters, 800 jobs to Chicago," Chicago Tribune). From the article:
In making the move back to Chicago, Motorola Solutions adds its name to a growing list of companies that have decided to jettison the suburbs for downtown digs, primarily in the city's Loop and West Loop neighborhoods. The list includes such venerable names as Kraft Heinz, Hillshire Brands and United Airlines, and they are all after the same thing: A tech-savyy, younger workforce that wants to work in the bright lights and big city, not on a sprawling suburban office campus. ...

Motorola Solutions is the 36th company to locate its headquarters in Chicago since 2011, according to the city.
State Farm--one of the nation's largest automobile insurers--has announced that they are locating new regional facilities in transit-adjacent locations in Tempe (Phoenix), Dallas ("New development to bring 650 apartments to Rowlett," Dallas Morning News), and Atlanta.  To me the Dallas location is more about automobility than transit, but the company has made statements that transit access is key to their decision-making going forward.  From the Arizona Republic article "Light rail now a must for central Phoenix development":
... State Farm Insurance Co. is going to lease almost all of a two million square foot, $600 million development on [Tempe] Town Lake because it is "vibrant." And a big part of being vibrant is its availability of public transportation. 
"Access to public transportation and multiple transportation options is critical to our operations going forward," said State Farm's chief operating officer about the company's choice of Tempe. That is corporate-speak for: We wouldn't be here without the light-rail.
Note that the Richardson Texas site is urban, but not the center city.  It will be interesting to see if the CityLine development there has good walkability and placemaking elements comparable to something like Northern Virginia's Reston Town Center.

And the Atlanta Business Chronicle terms State Farm's focus as more about "reshaping suburbs" than relocating to city centers ("How State Farm will remake 'outdated' suburbs"). The Dunwoody location is across the street from a MARTA subway station.

But the Philadelphia Inquirer reports ("Center city losing its position as a corporate metropolis") that other than Comcast's construction of a new headquarters, which includes bringing some NBC-related jobs in since they acquired NBCUniversal, corporations aren't moving back to Center City Philadelphia in the way that it has been reported in other cities.

From the article:
In the last two years, publicly traded Cigna, Sunoco, Arkema, Dow Chemical's advanced materials division (formerly Rohm and Haas), and Destination Maternity all moved their headquarters to the suburbs or out of state, following the vanished banks, insurance companies, railroads and manufacturers. 
A few public companies have moved downtown - DuPont spin-off Axalta Coating Systems from Wilmington, and construction-project manager Hill International moved in from South Jersey. 
But mostly, since 2000 Philadelphia "has witnessed a long, slow march to branch office-ville," says Howard Trauger, boss at Schuylkill Capital Management and a student of the local corporate scene since his days managing family fortunes at the former Girard Trust Co. Pittsburgh, less than one-fifth Philadelphia's size, can brag of bigger banks, manufacturers and energy companies, Trauger says.
According to Joseph DiStefano the author of the PI story, Paul Levy, the director of the Center City Philadelphia BID:
identified three groups of communities as to their attractiveness to corporate headquarters: those relatively attractive due to low costs and (by now) existing corporate concentrations (Texas cities, Atlanta); those with higher costs that are willing to spend a lot of money in subsidies to attract or keep companies (New Jersey, Illinois/Chicago, Connecticut); and those Northeastern cities like Philadelphia where the cost structure is high but there is not political will for very large subsidies.
DiStefano says "some of my readers disagree and say the new-construction tax breaks in Philadelphia are a large unfair subsidy." That can be an issue when tenants in existing buildings are attracted to new buildings also in the Center City but with lower rents because of tax breaks.

It's reported that DC is keeping the Advisory Board ("Exclusive: Advisory Board Co. picks new headquarters location," Washington Business Journal), but DC hasn't experienced the kind of relocation of businesses to the center city comparable to Chicago or San Francisco ("Blending Tech Workers and Locals in San Francisco's Mid-Market," New York Times).  It's more focused on not losing organizations, especially federal agencies, to the suburbs.

And clearly, at least with the suburban business center "relocations," placemaking and urban design elements are likely to be an ongoing issue (also see "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").

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At 8:58 AM, Anonymous charlie said...

Yes, I think a lot of smart growth promoters are confused between subsets of trends.

There is a return to downtown in some areas. Others much less so.

In term of ABC staying in DC, I suspect the devil is in the details.

would offer the Advisory Board a tax abatement package worth an estimated $60 million over 10 years.The deal is expected to generate about $300 million in net new real estate and other taxes over course of the 16-year lease.

David Bradley loves real estate. In fact he bought the original ABC HQ -- 600 New Hampshire in the watergate -- and leased it to the corporation. I wound't be surprised to see the same thing again. (It was disturbing to see DBE as the caller ID for friends in ABC).

With DC, the consistent claim I hear is parking is too expensive and they don't want to pay an extra 300/M per person for spots. Hence Tysons/Dulles.

In terms of SF, some links:

(In the context of salesforce changing the move to downtown movement in the bay area)

Again, the complaint I hear from CEOs and startups isn't the real estate price in DC, it is the extra cost of parking.

At 9:08 AM, Blogger Richard Layman said...

RE -- that's a common tactic for small businesses, having the RE owned privately.

That was an issue with the Market Basket debacle a couple years ago in Boston. Two families owned it, one family really ran things, and allegedly set up the RE piece to benefit themselves.

And it happens at the corporate level, as you know with subsidiaries, REITS, etc.

Interesting that it happens at such a big level with David Bradley.

2. wrt parking as an issue, hmm. It'd be the same issue in any other big city (Chicago, SF, NYC, Boston, Philadelphia). I guess it's hard to break the suburban mindset about free parking.

At 8:48 AM, Anonymous charlie said...

A bit off topic:

But, as the unorthodox thinker and writer Jane Jacobs used to argue, the natural unit of macroeconomic analysis is not a nation state at all. It is a city and its surrounding region."

At 1:08 PM, Anonymous Richard Layman said...

thanks for the cites.

At 2:01 PM, Anonymous charlie said...

Another one, again off topic:

I've had to buy a FT subscription, but they paywall is easily defeated with the google news trick.

At 2:35 PM, Anonymous Richard Layman said...

I'm reasonably intelligent, but not super great at macroeconomics. WRT QE though I agree, QE is a function of the weakness, not the producer of it.

For years I argued that the reason that interest rates were low was because demand was low. Of course, that low interest cost generated extranormal conditions for housing and commercial real estate development, as you point out a lot.

The criminal thing of course, is how with this low interest rate, the nation hasn't been investing in infrastructure with long term extranormal ROI.

At 2:37 PM, Anonymous Richard Layman said...

the other thing ... it seems to me that we are in a crisis of capitalism, overcapacity relative to demand, in large part because of the lower production costs that yield from globalization and marketing and producing on a global scale (I mean, the proposed InBev/SAB-Miller combo is quite astonishing).

I don't see a real solution, other than some redistribution of wealth, more taxation, etc.

At 3:08 PM, Anonymous charlie said...

RE: crisis of capitalism, QE and all that. Probably above my pay grade and understanding. I think a lot of it is just monopoly power enabled by the post-Bork understanding of antitrust (small is NOT beautiful).

The FT Alphaville blog is very decent, and free if you register with them. Captures about 70% of the macro content of the FT.

I had a chance to ride the MBT for the first time this weekend and see the "Art walk" in brook land. Maybe the future is all Etsy. We'll see.

At 3:22 PM, Anonymous Richard Layman said...

I ride through there a couple times a week. It looks cool, great idea. not much action. Were it in a highly trafficked place, maybe it'd be different, have a different impact. (E.g. there's an article in the NYT about how big NYC galleries are taking galleries in Downtown LA in part because they can get such big (and tall) spaces cheap compared to NYC.

... we go to estate sales, and seeing all the junk at houses, we joke "landfill" and it's a kind of an admonishment to not buy unneeded stuff.

That's the problem with the Art Walk. Who really needs that stuff.

But great way to activate space that otherwise wouldn't have much market value.

At 9:09 PM, Anonymous charlie said...

Take a look at the second FT link, you'll like that project.

Are there are plans to landscape the MBT?

I was astonished how quick it was from Brookline to Union station. Not having to deal with stoplights is nice.

At 3:21 PM, Anonymous Richard Layman said...

Over the past few months, the Minneapolis Star Tribune had an article about Artic Cat agreeing to move from Plymouth to Downtown. They have headquarter type employees and expect to add more.

AND, TCF, the regional bank, moved out of Downtown, to Plymouth.

That's 1500 employees leaving.

a more recent article mentioned some workers regret the loss of urban-transit access, etc.

At 3:28 PM, Anonymous Richard Layman said...

Good question about landscaping. I just downloaded another copy of an article on "A Railroad Beautiful" from the 1902 volume of House and Garden. Apparently there is another piece, not in a magazine, on "Railroad Gardening" or landscaping the rights of way, by Frances Copley Seavey. I have to track down a book published in 1916 for the best version of that piece.

We've moved away from that way of thinking unfortunately. But something I will write about again wrt transportation infrastructure as civic architecture.

2. wrt the speed of your trip. YES! I didn't use to ride trails much, until I worked briefly at Balt. County. It was not until those rides that I realized how much mental energy is spent on defensive cycling.

anyway, after that job, doing work with the BicycleSPACE people, I was encouraged to try to the MBT -- I used to ride to the MARC train by going down North Capitol St., because I didn't want to lose time in not going the most direct way.

And yes, avoiding all those lights, traffic, etc., is very nice.

On regular roads though, if you're ever up in Petworth, I highly recommending riding 5th St. west from Grant Circle (it turns into 4th around Howard U). You go by the AFRH, the McMillan Reservoir, Howard U. It's really a great ride.

At 12:05 PM, Blogger Richard Layman said...

article from Bisnow about the "office" market east of the Union Station railyard, H St., including a new speculative development within the Union Market district at 350 Morse st. (There should have been an easement for a walking street at 2nd St. to go through.)

About how more traditional companies wouldn't be interested in space east of the tracks, but media and tech firms are interested.


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