Creative Class

CNBC’s Big Idea is doing the entire hour on creativity. It airs at 10PM most places in the States. I’m in it, so I haven’t watched it, but from my participative vantage point it looked very interesting.

Paul Krugman:

But here’s a question rarely asked, at least in Washington: Why
should ever-increasing homeownership be a policy goal? How many people
should own homes, anyway? …

In
effect, U.S. policy is based on the premise that everyone should be a
homeowner. But here’s the thing: There are some real disadvantages to
homeownership.

First of all, there’s the financial risk. Although
it’s rarely put this way, borrowing to buy a home is like buying stocks
on margin: if the market value of the house falls, the buyer can easily
lose his or her entire stake. This isn’t a hypothetical worry.
From 2005 through 2007 alone — that is, at the peak of the housing
bubble — more than 22 million Americans bought either new or existing
houses. Now that the bubble has burst, many of those homebuyers have
lost heavily on their investment. At this point there are probably
around 10 million households with negative home equity — that is, with
mortgages that exceed the value of their houses.

Owning a home
also ties workers down. Even in the best of times, the costs and hassle
of selling one home and buying another — one estimate put the average
cost of a house move at more than $60,000 — tend to make workers
reluctant to go where the jobs are. And these are not the best
of times. Right now, economic distress is concentrated in the states
with the biggest housing busts: Florida and California have experienced
much steeper rises in unemployment than the nation as a whole. Yet
homeowners in these states are constrained from seeking opportunities
elsewhere, because it’s very hard to sell their houses.

Finally,
there’s the cost of commuting. Buying a home usually though not always
means buying a single-family house in the suburbs, often a long way
out, where land is cheap. In an age of $4 gas and concerns about
climate change, that’s an increasingly problematic choice.

Your thoughts?

The New York Times Business section reports:

We’re in the midst of a boom in devices that show where people are
at any point in time. Global positioning systems are among the hottest
consumer electronics devices ever … All of these devices churn out
data that says something about how people live.  Such data could
redefine what we know about consumer behavior, giving businesses early
insight into economic trends, better ways to determine sites for
offices and retail stores, and more effective ways to advertise …

It’s
hard to make sense of such data, but Sense Networks, a software
analytics company in New York, earlier this month released Macrosense,
a tool that aims to do just that. Macrosense applies complex
statistical algorithms to sift through the growing heaps of data about
location and to make predictions or recommendations on various
questions — where a company should put its next store, for example … The Macrosense tool lets companies engage in “reality mining,” a phrase coined by  Sandy Pentland, an M.I.T. researcher who was also a co-founder of Sense and now  advises it on privacy issues. Sense is not the only company engaged in reality mining. Inrix,  a Microsoft
spin-off, uses traffic data to predict traffic patterns. Path
Intelligence of Britain monitors traffic flow in shopping centers by
tracking cellphones.

Not so long ago universities were closing down their geography departments. For my money GIS, (geographic information systems, high-tech mapping data and software) looks like it has to be one of the hottest fields around.

The New York Times:

For the high-profile crowd that turned out to celebrate a new home in
Venice, Calif., the attraction wasn’t just the company and the
architectural detail. The house boasted the builders’ equivalent of a
three-star Michelin rating: a LEED platinum certificate.

Full story here. Image from the NYTimes

“Cities are not the problem. Cities are the
solution.”

Barack Obama at the U.S. Conference of
Mayors meeting in Miami (via CEO for Cities, h/t Kevin Stolarick).

A transcript of the speech is here; video, here.

A new book (via Tyler Cowen). Here’s a related website. What Manhattan was to the 20th century, the author argues, Mexico City will be to the 21st.  It’s a strong statement, but I believe he has a point.   I adore Mexico City.  Now imagine it as a critical hinge-point or hub in a truly integrated North American economy. It is already a huge mega-region. It has incredible energy, culture and diversity.  As a real hub and part of a continental structure stretching from say  from Toronto and NY, Vancouver to Los Angeles, Miami to Mexico City and beyond … The possibilities are endless … A question I always ask myself when evaluating a truly global city is:  Would my friends and colleagues move there?  A 21st century Mexico City, creative and connected, could be a powerful draw.

The New York Times:

The percentage of households headed by homeowners, which soared to a
record 69.1 percent in 2005, fell to 67.8 percent this year, the
sharpest decline in 20 years, according to census data through the end
of March. By extension, the percentage of households headed by renters
increased to 32.2 percent, from 30.9 percent…

The bloom is off of homeownership,” said William C. Apgar, a senior scholar at the Joint Center for Housing Studies at Harvard University who ran the Federal Housing Administration
from 1997 to 2001. “We’re seeing more dramatic growth in renters and a
decline in the number of owners. People are beginning to understand
that homeownership can be a very risky venture. ”Mr. Apgar said
the Joint Center had predicted an increase of 1.8 million renters from
2005 to 2015, given expected population trends. Instead, they saw a
surge of 1.5 million renters from 2005 to 2007 alone. In the first
quarter of this year, 35.7 million people were renting homes or
apartments, census data show.

The full story is here. Graphic from the NY Times.

The article focuses mainly on how the mortgage meltdown has made it harder for low income families to buy homes, shifting them into the rental market. This, for sure, is part of the issue. But the deeper and more fundamental issue for me is that homeownership which was a key element of fordist industrial society now looks to be increasingly out of sync with the flexibility and more compact, denser urban form required for a creative, idea-driven economy and society.  Homeownership, research shows, impedes mobility. Single family ownership is often associated with sprawl.   In Who’s Your City? I speculate that the creative economy will require new forms of housing tenure that are  more like commercial leasing.

In my own case, I recently bought houses in DC and Toronto.  The reason? Not because I’m in love with home ownership, but because we could not find the kind of unit we want on the rental market.  So we bit the bullet and took on the “extra” cost for lifestyle.  I look at a market like Miami Beach.  It is makes great sense to rent in that kind of market, and many would be willing to pay a premium for furnished short term rentals.  But most properties on the market there are a different kind of short term rental, individually-owned units whose owners are renting them while really trying to sell.  So often times people suck it up and buy, just to avoid the hassles of searching and finding a new place season-to-season.

Seems to me what the market requires is large scale rental companies who can provide a range of rental properties tailored to tenant tastes and preferences. This kind of thing exists in large cities, like New York and DC, but often the units are quite generic.  When I lived in Pittsburgh I came across a few “boutique” development-rental companies who provided this kind of offering.  I’m sure there are others elsewhere.

But, with the condo glut across many American cities, seems to me a perfect social and economic space for this kind of housing alternative to emerge.

Any other examples or thoughts out there.

Ken Gray at the Ottawa Citizen outlines the case in a very, very interesting article:

Cities do not consist of freeways, buildings, transit systems,
houses, malls, sidewalks, hydro wires, sewers, water mains, snowplows,
corporations or government.

Good cities consist of good people.
Like a vibrant company, they tap their best people — those with
intelligence, energy, integrity, goodwill and a large well of
experience — to do the best things. With a critical mass of good
people, all the other elements of urban living — transit, wealth, a
healthy environment … the list goes on and on — fall into place.

The
key to successful cities in this age of increasingly specialized labour
demand and a slowly eroding petroleum economy is to attract topnotch
people who can adapt to the fundamental changes occurring in our
community now.

I’ve been getting to visit and to know Canada’s city-regions much better over the past nine months. Now working on the Canadian edition of Who’s Your City? our team is amassing integrated North American data.  So Gray’s column is most insightful and helpful. I’d love to see similar pieces on other Canadian cities and metros.  And promise to have more to say about this in the coming months … and certainly with the release of the Canadian edition of the book.

The full story is here.

Some critics of Rise said I had the Bay Area all wrong. The techies live in Silicon Valley – the classic nedistan.  The “yuppies, sophistos, trendoids, and gays” like in San Francicso – the “ephemeral city.”  We countered – lots of commuting going on. Then came the Google bus, then my visit to Google where I saw the map of where  Google employees live – lots in San Fran.  Now Business Week is reporting (pointer via Planetizen)

Autodesk is one among a raft of tech companies, including Google (GOOG), Microsoft (MSFT), and newer players like professional networking Web site LinkedIn,
striving for that same San Francisco symbiosis. These companies have
long occupied suburbs to the south, east, and north of the city. Now
they see expansion downtown as a way to attract and retain some of the
brightest talent, quicken the travel time to meetings, and impress
customers from around the world. “There’s a lot of talent we can
attract” who don’t live near Google’s Mountain View, Calif.
headquarters 36 miles south, says engineering manager Julie Pearl, who
works in San Francisco. “It’s very appealing for folks.” Soaring gas
prices have only enhanced the appeal of ditching a 40-mile commute.

Since October, Google has moved more than 600 workers onto three
floors of an office near San Francisco’s Ferry Building that used to
belong to The Gap. Google plans to hold an opening event, featuring
keynotes by executives and demos of new technology, to showcase the
space in July. Several engineering teams, the Google.org philanthropic
arm, plus workers in sales, PR, and other areas, have moved up from
Mountain View. Though Google offers free shuttle buses from the city to
headquarters, some workers don’t want to commute, Pearl says. “It’s a
huge difference to be able to get off the Muni [train] right in front
of the building,” she says.

Microsoft, too, is widening its Frisco footprint to attract
city-dwelling engineers. The company, which has long operated a
satellite campus in Silicon Valley, in December more than doubled its
main San Francisco work space, moving from 42,000 square feet at One
Market St. (where Autodesk is moving in), to a nearly
92,000-square-foot office at the city’s new Westfield Centre complex
eight blocks away. Microsoft has nearly tripled its number of San
Francisco employees in the past year, to 520, across four locations, a
company spokesman says. It’s also expanding office space near the
city’s downtown ballpark for Rapt, a maker of advertising software
bought by Microsoft in March …

It’s not that San Francisco real estate is cheap; the average asking
price for office space in the city rose to $43.10 a square foot in the
first quarter, compared with $42.02 at the end of the fourth quarter,
even as vacancies rose 0.3%, to 8.7%, according to commercial real
estate broker CB Richard Ellis Group (CBG). By contrast, rents in Silicon Valley averaged $36.24 a square foot at the end of the first quarter.

But the migration toward SF has sped up amid a pitched hiring battle
among companies for technical talent, a desire to retain top employees
who live in the city, and the advent of $4-a-gallon gasoline. The move
also reflects a larger national trend toward urbanization that’s seeing
many workers in their twenties and thirties eschew suburbs for hubs
like San Francisco, Boston, and Atlanta. While the overall economy is
slumping, and industries like banking and auto making are cutting back
on staff, tech companies are still hiring and competing for job
candidates.

Yup.

Here’s a link to my interview today. Here’s their blurb:

Why “Where” is More Important than “Who” or “What” For the first time ever, says author and Toronto University’s Business and
Creativity Professor Richard Florida, many of us have the freedom and economic
means to choose our place — and the opportunity to find the place that fits us
best is even more important than choosing a career or even a spouse.

Check out the interesting, ongoing conversation, here.