In this episode, hear an exclusive speech by author, professor, and renowned urbanist Richard Florida with a bonus Q&A on the relationship between remote work and housing prices, downtown revitalization, and myths about the future of cities.
At a recent event held at Harvard University the author, professor, and renowned urbanist Richard Florida spoke to chiefs of staff and deputy mayors of 30 large US cities, and we're releasing the audio of that speech with a bonus question and answer session. Listen to Florida talk about the way the pandemic spread the housing unaffordability crisis, why cities must stop chasing businesses to the bottom, and beliefs he's rethinking about the future of cities in this exclusive episode.
Music credit: Summer-Man by Ketsa
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Betsy Gardner:
Hi, and welcome to the Data-Smart City Pod. This is Betsy Gardner, senior editor at the Bloomberg Center for Cities at Harvard University and producer of this podcast. We have a really special episode for you today. First, a recording of a keynote speech given by professor and renowned urbanist, Richard Florida, who spoke at our recent Project on Municipal Innovation convening.
This event brings together chiefs of staff and deputy mayors from 30 of the largest US cities, and we're excited to be able to share this moment from the convening.
Next, you'll hear the Q&A I conducted with Richard after his talk. You will hear some background noise during his keynote speech, but we hope you enjoy this exclusive content.
Thanks for listening.
Richard Florida:
It's always great to be back here. I was a visiting professor here in the Center for Science Technology of Public Policy, which is in the Center for Science and International Affairs in the late nineties. And then the only applicable note you need to know about me is I'm from Newark, New Jersey. I think that alone explains everything about my interest in cities.
I was born in 1957, so the arc of my life took me from a city that was a vibrant, multiracial, my folks... Well, my dad only went to seventh grade. He had to get a job in the factory. My mom went to high school. Mixed-race high schools, mixed-race neighborhoods. There was ethnic and racial conflict, of course, a thriving business district. And when I was a boy, eight, nine, and 10, I got to witness racial tension, Civil Rights Movement, the city in flames, and it had a big effect.
I didn't know it at the time it had a big effect. So that's the biographical note. Obviously, a few things on the table. When the pandemic struck almost three years ago to this very week, I said, "It's such a big event that I want to throw in and learn about it." And what I learned very quickly is no one... I've had a course in everything, cities and economics, cities and cultural crisis, cities and sociological crisis, cities and race, cities and natural disasters. There wasn't a single thing written on cities and pandemics. And then I thought back, my mom and dad were born in the 1920s. They were the youngest of their families, big Italian-American families. All my aunts and uncles were born during the Spanish flu. No one ever mentioned the Spanish flu once. They talked about the Depression. I couldn't get them to stop. World War II, they went on and on.
So I really tried to learn about it and I wrote a piece, they published it at CityLab, and I basically said in that piece everything I'm going to say tonight. Cities will not die because cities are the most resilient thing we've ever built. And I want to write a new essay. And we have the end of cities, the death of cities, the urban exodus, the crisis of death. I mean, they were just coming out one after another and I'm making my head spin. And then I thought to myself, how did our cities in this country ever survive with all these naysayers? And I thought the pandemic is bad, but look at what Newark survived. If Newark survived the abandonment, the whole suburbanization thing, and then the industrialization. Think about it. The massive de-industrialization, the closing of factories, the abandonment of what we now called the brownfields, the suburbanization of offices, the suburbanization of middle class population, concentration of poverty, disorder, and crime.
If they came back from that, they are going to make it through this just fine. So I figured... That didn't take me long to figure out. But just a couple of things, and I made some notes on what we know or don't know or what we learned from the pandemic.
The first thing is there was never any great urban exodus. It's all a lot of bupkis. And the new census data came out today. Our friend Jed Kolko, who went to school here and is now under Secretary of Economic Affairs, Department of Commerce wrote a great Twitter thread. And basically, what we found is it was a temporary exodus. People with money left. They went to their vacation homes for a little while. Young kids left. All my nieces and nephews came back home to Mom and Dad. Mom and Dad didn't want them in the city. Moving back home.
That is a big chunk because remember, you think about what brought cities back in... When I wrote Rise of the Creative Class in the 2000s, it really was young people and a little bit of empty nesters. I think over half the growth in city population was college-educated, young people between the ages of say 22 and 35, roughly. Immigration was cut off. And one of the things we saw in the new census data today, is that immigrants have been coming back. Cities have grown in the United States really for one reason: the empty nesters coming back, the creative class coming back, young or at least cities are still run from gateways. If I get this right, New York added population. Manhattan added quite a few people. Chicago didn't add population, but downtown Chicago added population. Downtown Philadelphia added population, and San Francisco, which is often been known as the center of the urban exodus, actually lost only 3000.DC added people.
If you look at most moves during the pandemic, they were local. They were not long distance. For all we hear about everyone leaving New York, Chicago, San Francisco, and LA, that happened, but not to a great degree. So we didn't really see widespread urban abandonment. For all the talk of the rise of new tech hubs, the geography of innovation in America looks pretty much the same now with some emendations. So that's something I studied, right? Innovation is something I studied. San Francisco Bay Area still accounts for nearly a third of all US venture capital finance startups. New York is second, about 50%. LA is 10%. Boston is about 10%. You take those four largest tech hubs, they are about two-thirds of all venture capital finance startups in the United States. And when you look at the rise of new tech hubs, Boston and Miami to take two in particular, they attract about the same level of venture capital startups as Washington DC or Philadelphia, and quite a bit, significantly less in Chicago. Not that... They have grown, but they're not what they are made out to be.
So the geography of innovation looks pretty much the same. The big change is really less about the geography of where we live. It is true. I mean, I always say this, as a kid from Newark York who lived in New York City for a long time, New Yorkers are absolutely crazy. When they move, they will pay anything to go to your town. If they go to Austin or Miami or Nashville, you should say, "Okay, for that you should go for three." "We'll pay 3 million. We'll take it." And I think that is a consequence of remote work. It stretched the boundaries, but it doesn't take a lot of people to relocate to a changing housing market. And so I think that happened and that remote work is the bigger... The change in the geography of work is the big one.
The way I like to think about this is for all of you in history, when we thought about city and metropolitan areas, we thought about them as co-located places of residence and work. An actual definition of a metropolitan area is a shared labor market.
What remote work does is break that connection, talking about the rise of a new kind of city we call the meta city, which is a city that is not only a physical cluster, but a set of digital linkages. And when we look at that, you really see some interesting patterns. Like Miami, where I spend the winter is not really an independent thing. If you look at the data, it is the sixth borough of New York City. It really is. You look at Austin's linkages, they are more than San Francisco Bay Area, and there is a long history of that. If you look at Nashville's link, Nashville is much more connected to LA in the entertainment economy. And you can look at this and you see the patterns. You see a pattern in Chicago and other Midwestern cities. So it stretches those boundaries. Remote work is here to stay. I don't think it's what many other people think.
If you look at the most recent data, remote work started to increase well before the pandemic. It increased from about 1% of the workforce in the eighties and nineties to 6% of the workforce work from home in 2019. It has tripled. It has gone from 6% to 18% work from home. But even people who work from home don't work from home, right?
According to the best data we have, about a quarter of the people who say they work from home, either work in a co-working space, a library, a friend's house, or a coffee shop. So what the reality is not work from home versus work from an office. It's a new reality of work. And when I wrote Rise in the Creative Class 20 years ago and interviewed people, what did they tell me? I want to work on great projects with great people in great spaces, in great places.
And I don't think that has changed. Although we think that most remote workers are scattering to the ends of the earth. In fact, the largest promotion of remote workers live in big cities and in urban centers. And there is a great study for the American Enterprise Institute, which looks at this and says there is a reason for that. A lot of people who work remotely like... Well, some people like to be off near the lakeside or the mountaintop or green space or far away, but a larger percentage actually like to have urban amenities at their disposal. And Jonathan Miller, a great real estate expert based in New York said this a long time ago. He repeated this in the Wall Street Journal today. He said, "Every time we went to look to sell an apartment in New York City, we found a remote worker there." And in his view is there were many more remote workers in New York City than there were in Scarsdale and Rye and the Hamptons.
So the point is that big cities are great incubators for remote work. The big challenge that the pandemic brought on, and I said this then and I think it's dawning on all of us now, is the central business district. That is the one I think that we are here to talk about. But the point is, it was there before the pandemic. Jane Jacobs, who is my idol, a woman I got to know. The essay she wrote, before her classic book that every urban historian reads, The Death and Life of Great American Cities, the title of that essay was Downtown Is For People, 1956. Her argument was that these monocultural-works, all office only, tall tower downtowns were not viable. There is a great book written by Robert Fogelson called Downtown: Its Rise and Fall, 1850 to 1950. Robert Fogelson, the greatest historian said, "Downtowns were dying."
And they were. And then what happened after 1950, '60, '70 is the little thing that I glued onto. The young people who tired with their parents of urban living that I called the creative class. My editor actually came up with that term who were looking for a more exciting way of life, wanted a more open-minded, tolerant, interracial, gay-friendly... They wanted to be in places that stayed thing they grew up with. They wanted the excitement, the verve. They wanted not only the job opportunities, the social opportunities. They were moving back to these cities that propped it up. And look, we all said, "Well, it's better than what was there before." Nobody. And then a few empty nesters probably because their kids were there trickled along and followed them. So it created this sense of an uptick. But now we know that these work only downtowns are troubled.
And you see it. The ones that have the greatest concentration of office buildings, the lowest residential densities, the least mixed-use, they are the ones that are in the biggest trouble. That is the issue. And the problem is if you live in a big metro where the commutes are long, that is the real boundary. People don't want to do those big commutes as you know. Downtowns were already changing. Think about it.
They were no longer called the central businesses. Oh, we got to have an innovation district. We have to have an entertainment district. We got to have a recreational district, a cultural district. What I think downtowns really are is they are not just places to work. They are places to recreate, to innovate, to do cultural stuff. But I call them central connectivity districts. That's my word for what they are. They are the places we all go to connect.
And I think that's the framework we need to think about. And it has caused me to rethink. I was not a big fan... I'm still not a big fan of big stadium subsidies, but now I've become like, "Stadiums are kind of useful." They bring people together. I see you nodding. They are useful. They bring people together. Arenas are less controversial. But how do you make it more than just a stadium? How do you ring it with other things? How do you make it an anchor of a neighborhood? We have to think in new ways.
I get bruised in Toronto because we have a little downtown airport that flies direct here. It's called Billy Bishop Downtown Airport. And all of my friends on the progressive left want to get rid of it. I say, no way. That downtown airport is an anchor of commercial activity in flights of tourism. So it has caused me after 40 years in this field to think differently, to think particularly about this connected fiber. I can go on and on. I'm going to say one more thing and then we throw it open. I got lots of statistics there if you want to get them. The thing that no one talked about with the pandemic when it started, and I think the single most lasting impact of the pandemic is even bigger than what's happening downtown.
My friend Steve Case talks about the rise of the rest. The rise of the rest. The places that are outside of the established innovation centers, tech hubs, superstar cities, New York, LA, Seattle, and how we need to get them to rise. The pandemic led to some rising of the rest, but the bigger impact is the rise of housing prices. This is the single biggest impact that for the first time in my life, housing is now becoming unaffordable for just about anyone who isn't super wealthy. When you look at housing prices in Boston, man, I can tell you... Dallas Fort-Worth. Miami? People can't buy a house. Professional people. Harvard professor could not buy a house there. It is astronomical what this has done, and there was a great study that came out and I'll end on this, and they talked about this appreciation and how bad it has been. Over 50% in many cities.
And then what has happened, of course, is the neighborhood, the New Yorkers and the LA people want to live in, there aren't a lot of those neighborhoods. They want to live in the cool, walkable neighborhood. And where do they go there? They've gone up 5X, not 50%. Those neighborhoods have gone on 5X. The study that came out that said if you are a house over the first two and a half years of the pandemic, you earned more than double or triple on average the salary of the average American worker. Average American worker makes about 50 grand a year. But if you're a house just sitting there, you made 100 to 150 grand. And in many metros, 200, 250. That's a sad comment. So I do think what I wrote in this book, The New Urban Crisis, that we thought of was a crisis of Boston and a few other places has now become across the country crisis. Anyway, enough for me. And I'm sure we have plenty of time for a bunch of better questions.
Stephen Goldsmith:
Yeah, as Sly [James] said, I'm so old that I kind of was influenced by your writing in core competitive edge of the inner city, right? So if we listen, if think about the stresses of empty office buildings and the hope of a vibrant social mix downtown, how do you think about the fact that there are daytime vacuums, right? I understand the theory about nighttime folks will come down and socialize, but what should the strategy and what are the levers? How should the audience think about downtown, bring it back to life reutilization?
Richard Florida:
I mean, look, I'm going to say this first. The industrialization was a much bigger existential threat to cities than this. And look what happened as a result of the industrialization. Over 20 years, those old spaces were reused. The old factory buildings were used. Some were torn down. So look, we know this. Downtown 101 is that they have to be mixed-use neighborhoods.
So I know it's painful, and if I held a lot of commercial real estate, I wouldn't want to hear me say that. But look, we are going to have to remix downtown uses and it's going to take a decade or more. New York has to decentralize its employment options. It has to move employment out to the outer boroughs. Holy shit, man. Whoa, are you nuts? And at the same time, it has to remake midtown in the financial district as mixed-use residential neighborhood. And some of the buildings can be repurposed and some of them can be used for other things and some just have to come down...
[music]
Betsy Gardner:
So to follow up on your talk with these questions, how do we tell this story to real estate folks who have big property holdings in the downtown?
Richard Florida:
Well, for better or worse, I think the market is already speaking to them. It takes a while. With any kind of real estate, it takes a while for reality to sink in. And if you think about it, you always want to sell your house for more than you pay for it. Or you want to sell your house, your condo, for what you think it was worth at the peak. And sometimes it's not worth that and it takes time. So I think the market for commercial real estate has been so strong with the boom of cities and the young people and highly educated people moving back to cities and then in some cases biotech and biomedical labs, high-tech companies moving in, big gains in lots of cities with high-tech companies moving in. But then all at once, office jobs started to disappear with remote work.
The tech community has this recession. First one we've seen in a while, maybe 20 years. So it takes a while for it to sink in, but it is sinking in. And I think the reality is, I hate to say this, as in all things that are difficult, there are going to be losers and some losers here are going to be the holders of commercial real estate. We shouldn't be bailing them out. They made their bets. They made a lot of money during the boom times. Real estate is a boom and bust industry. And I don't think mayors should be yelling and screaming about 'go back to work, get back to work' for people. People should be able to work where they want. Some people like to work in the office. Some people like to work at home. Some people like to work in a co-working space.
Some people like to work at a coffee shop. That's fine. But I think what mayors could be doing is talking to real estate owners, other partners, universities, medical centers, and anchor institutions in one sort of another about what makes sense. And I think the big one, if you ask me would be the downtowns that are really struggling are the ones that are too work-only, mono-functional. They need more residential.
The strongest downtowns are the ones that have the most residential and the most mixed-use. Well, maybe you can partner and provide some subsidy if people are willing to...transition those buildings or reuse those buildings as affordable housing. I don't think we should be subsidizing rich people housing, but we could be using public money to support affordable housing and also maybe anchoring neighborhoods. And one of the things in our cities is when suburbanization occurred, city schools, which were once terrific, many times became more challenged, maybe anchoring those neighborhoods in those communities with more schools and better schools. So maybe the incentives or public subsidy goes for affordable housing in some of the services that families need.
Betsy Gardner:
So you mentioned anchor institutions, particularly universities. And I know a concern for some cities with a lot of universities are that they are actually tax-exempt. What do you say for places that are dealing with downtime revitalization and have an anchor institution, but are dealing with that tax-exempt status?
Richard Florida:
I think these are hard conversations there. There is no way around it that a university or a medical center or a group that has been a nonprofit and has been tax-exempt isn't going to be thrilled at the prospect of increasing their taxes or being made to provide taxes. That said, cities across the country have been striking these partnership arrangements in lieu of tax benefits and maybe also providing more community benefits. Maybe it's not just a straight money transfer. Maybe it's more affordable housing. Housing for not just faculty, but staff. Improvements for neighborhood residents and other institutions. But yeah, universities and medical centers have... I mean, they were never really mom-and-pop operations, but they were smaller. Now, they are very large-scale organizations. So I think a set of honest conversations among communities, their anchor institutions, and maybe in some cases where state government is willing to come to the table, maybe state government.
But yeah, I think those are conversations. The problem is the system of revenues we have set up for cities is so problematic in so many ways that one, municipalities can fragment and fracture and create boundaries almost... Not fictitiously...political boundaries. And then one lives in the city or one lives in the suburb and they don't combine their revenues.
And maybe that means the case for more metropolitan-based special districts and special revenue districts. But the other thing is, yeah, also at the metropolitan level, it's kind of contingent upon people living and working in the same place. And what we know with remote work is for a significant share of the workforce, between 20% and 25% of work days arguably are being conducted remotely. Well, that's big. That's not a small number. And so now thinking about how you develop revenue systems and structures, which take that into account, yeah, that's something we all have to do.
Betsy Gardner:
So speaking of workforce, obviously remote work has changed a lot of things for a lot of cities, although potentially maybe not as much as we all thought at the beginning of the pandemic. When there is a mismatch between affordability and jobs, how does that affect the talent pipeline and what are the levers that mayors have?
Richard Florida:
I've been thinking about this a lot and writing about it, and we had a lot of predictions at the dawn of the pandemic. Cities would die. Density would be a problem. Everyone would move to the Sunbelt or the zoom towns or the suburbs or rural areas. None of that actually panned out. I mean, when you look at the data, more or less, the places we live today look almost the same. But what happened with the pandemic is there was just a bulge in family formation moves. A lot of those young people who moved back to cities in the early 2000s got older and began to form families and, like it has happened for the past half century, they moved to where housing was more affordable. But the big thing that no one thought about and still few people talk about is that it really drove housing prices sky-high.
I think the big lasting legacy of the pandemic is going to be this reset of housing prices. So in a sense, instead of solving the housing affordability, ironically the pandemic spread the housing affordability problem. I mean, housing according to every sliver of data I've looked at is less affordable in the United States now than at any other point in my life. So that's telling you something.
It used to be a crisis. I called it the new urban crisis of Boston, of Seattle, of San Francisco, of LA, of New York, the "chichi" coastal cities... Now, it's an everywhere crisis. I think that this crisis of... Every community I go to in America, and I mean urban, suburban, and rural, large and small, I hear a story of 'I can't afford it.'
Betsy Gardner:
It's pretty incredible, the whiplash in the past 15 years in terms of housing, housing prices, the housing market, housing stock, and I know for some cities the big concern is how to get the private sector to care about affordable housing. There is always going to be housing advocates and housing activists who are really interested in making sure that there is safe, resilient housing for families and individuals and seniors. But how can city leaders work with the private sector to engage them in the affordable housing conversation?
Richard Florida:
Well, this is something I've thought about a lot. And my hometown of Newark, New Jersey, Newark was devastated during the 1960s and 1970s, all the factories closed. The factory my dad worked at closed. A lot of the businesses moved out. Affluent middle-class people moved to the suburbs. The retail stores moved out. But there was this company called Prudential Insurance that stayed there and really worked. It could have moved. It could have moved to New York. It could have moved to a suburb, but it stayed there and worked hard to do all the tough things. People need to find more Prudentials. And I think the problem now is that many of these high-tech... Not all of them, but a subset of these high-tech companies, and I think it started with the Amazon HQ-2, but I think there are more and more companies that are doing that, that are saying, "If you don't want us, if you're not paying us or you're not giving us a deal, we're going to go elsewhere."
That's the kind of recipe for the race to the bottom. That worries me. I do see... You can see certain companies going to these new hot hubs and saying, "I like it there. It's more business-friendly. They treat me better. The states are not blue states with tax heaviness. They have more work rules that are more favorable." I get it, but maybe that is also a race to the bottom. And that's not good. Our federal government has cut spending for social programs. Many of our red states, the cities were the only thing left. And I worry now that there is this new competition among cities. Companies are trying to provoke competition to cause cities to make cuts, to reduce taxes, to become more business-friendly and it creates a race to the bottom. And I'm hoping that's a trend that we can revert.
And I think, look, one of the good things about a city... I said this in my book, The New Urban Crisis. A city is different than a suburb. A suburb is almost by definition more homogeneous, smaller, in many cases, more affluent. A city is always home to everybody, rich and poor, majority and minority. It's much more contested terrain. So you can think, well, I'm going to go to Miami because it has a mayor that is business friendly. But then the community groups go 'Enough of that. We don't want that. We actually want affordable housing and services and we want healthcare services.' So I think the thing is that it's hard to create an overwhelming race to the bottom in cities because the political constituencies are diverse.
But yeah, I think for cities, they've got to pick the business leaders that fit them. And if others don't fit them, let them move on.
Betsy Gardner:
All right. So the last question that we have, some of this can feel kind of heavy or probably a little bit pessimistic. So what makes you optimistic about the moment right now?
Richard Florida:
Well, I mean I think there is a historical reason and the current reason. The historical reason is cities have survived far, far worse. I mean, one of the things I did during the pandemic is read a lot about the history of cities and pandemics. I mean, there were much worse pandemics. There were much worse infectious diseases and cities survived them. But I actually think there is something happening in the United States now, which is quite intriguing.
For the past 20 or 30 years, we thought that we could build an economy on these coastal superstar cities like New York in finance and real estate, in Los Angeles and entertainment, San Francisco and Boston and maybe Seattle in tech, but a very small number of these vibrant superstar cities in finance, real estate, technology and entertainment. And I think we finally come to the realization that this is not working. And that in order to make America competitive on the world stage and to make America a stronger country, we have to rebuild the heartland.
So there is now a lot of effort going into reshoring manufacturing, bring back semiconductors, rebuild our auto industry. And at the same time, the places that look down and out, these rust belt cities like Cleveland and Detroit, those metropolitan areas are some of the most affordable left in the United States. And look, their urban schools may be challenged, but they have good public schools and they have pretty good state universities that are affordable.
So I actually think we can now begin to think about how do we rebuild our cities and communities across the country. And for the first time in my life, I can see that conversation happening. And it's one that's about every place, and everybody wants the same thing. They want to live in a nice place, have a nice place to live, a good place to send their kids to school, and good opportunity. Yeah, I think we have big challenges ahead, but if we continue to bring together city leaders and not just the mayors, the mayors are important, but the staff people, the chiefs of staff, begin to develop this community where we are sharing ideas and best practice. It doesn't happen overnight. These changes take a generation, but there is a growing awareness that we have to do this. It wouldn't surprise me to look back in 20 years and go, 'we did a pretty good job.'
Betsy Gardner:
Thank you so much for talking to our folks tonight and for answering these questions.
Richard Florida:
It's great to be with you. Thank you for having me.
Betsy Gardner:
If you like this podcast, please visit us @datamartcities.org or follow us at Data-Smart Cities on Twitter. And remember to subscribe at the new Data-Smart City pod channel on Spotify, Apple Podcasts, or wherever you listen. This podcast was produced by me, Betsy Gardner, and hosted by Professor Steve Goldsmith.
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Thanks for listening.