Economic Perspective: Destination Downtown

https://soundcloud.com/user-653135353/10-10-16-economic-perspective-destination-downtown

MARY WALDEN:

“Today’s program looks at destination downtown. Mike, there are reports of a big shakeup in where companies are locating their offices. In past decades, the preferred site was the suburbs. Now it seems downtown locations are being chosen. Why the change?”

MIKE WALDEN:

“Well I remember when I was a very, very young budding economist in the 1960s. This is something I was very interested in, in terms of research, and the big concern then was all the big headquarters of all the big companies were fleeing the inner city and going out to the suburbs. And that was one of the reason inner cities were deteriorating.”

“Now we’re actually seeing the opposite. We’re seeing headquarters come back to the inner cities. Now there are several factors behind this. One is that the young crop of workers today, we’ll call them millennials, really for a variety of reasons like to live in inner cities. So it makes sense for businesses to locate their headquarters, if they’re using that labor force, in the inner city. Second reason is that a lot of those headquarters that were developed decades ago in the suburbs are now old, and the suburbs are actually congested. So it’s time for the headquarters to move.”

“But there’s a couple cautions here. One is that when you look at the size and the employment of the new headquarters that are going downtown versus where they were in the suburbs they’re smaller. The headquarters are smaller in square footage. The number of people they hire is also smaller. And then the second concern is, again, that job base. The millennials. Those born between 1980 and 2000 who serve as the core people employed in downtowns by these new headquarters.”

“What’s going to happen when they start to marry and partner en masse and start to have children, which many of them don’t now. Will they want to move to the suburbs and therefore, will the headquarters eventually move back?”