Downtowns are Thriving Around the Country

When Sharon Leicham moved from California to Memphis, Tenn., she was looking for an artsy neighborhood similar to ones she’d known in the San Francisco Bay Area.

Before her jump halfway across the country, Leicham was living in the hills above Oakland. And while that locale offered great views, she’d grown weary of having to drive pretty much everywhere to fulfill any of her daily needs. So being able to walk to shops, work, the grocery store and entertainment was high on her priority list for her next home.

Leicham says she found just what she was looking for in the South Main neighborhood of downtown Memphis. Always adventurous, her first apartment was in a converted auto parts store that had cement floors with holes that would fill with water when storms blew rain under the front door.

Leicham, who has since moved up to a higher-end townhouse, is far from alone. Thousands of others are flocking to downtowns around the country, according to figures from the U.S. Census Bureau. These core areas in many cities are particularly popular with young people in their 20s and 30s and some empty nesters who are no longer wedded to living where their kids can go to school.

In fact, according to census figures, downtowns have grown at a faster rate than the suburbs over the past four years. In 19 out of the country’s 51 largest metro areas, city center growth outpaced suburbs last year, a phenomenon dubbed “the great inversion” by some demographers. Figures show that many cities grew more in the nearly four years since the 2010 Census than they gained for the entire previous decade.

“I wanted a more urban experience, so I took a leap of faith,” says Leicham, a merchandizing consultant, writer and baby boomer. “South Main, which is in the arts district, just caught my fancy so I decided to give it a try. This area really did remind me of some of the wonderful little neighborhoods in Berkeley and Oakland that had grown up with good restaurants.”

Though she knows that some people who live in East Memphis still won’t venture downtown, she says she’s never felt unsafe and is pleased with her neighborhood. So much so that she now serves on the Downtown Memphis Commission (DMC) and several other city boards.

“Downtown is evolving in a positive way,” she says. “My neighborhood now has a dozen restaurants in a six-to-seven block area. Right across from my townhouse, 400 units are going in. I think this area is a great place to live, filled with lots of history and character. They’re also building lots of bike lanes, which makes it all the more attractive. I couldn’t be happier with where I live.”

Bill Frey, a Brookings Institution demographer, says the surge in downtown population growth is due in large part to the desire by young people — and some boomers, too — to live in core areas of cities. The second reason, he adds, stems from the lingering effects of the mortgage meltdown, which stalled the growth of suburbs.

“Downtowns are attractive to young people who are extending adolescence and putting off getting married and having kids,” he says. “Instead, they are investing in their careers. This cohort has historically liked living in cities because of the bright lights and night-time culture. In the past, they’d settle down after a time, have kids and head off to the suburbs.

“But many of them are delaying this step. And I think the jury is still out on whether they will eventually move out of downtowns. A lot of it depends on what cities do to get them to stay, like add schools for their children when they eventually have them. That may be a lot to ask, however. Most school systems are in tough fiscal straights. But opening new schools would be a big plus for downtowns.”

The mortgage meltdown of the past decade also altered the housing market, which for decades favored the suburbs over downtowns, he says. A lot of young people may have seen their parents or acquaintances lose their homes, making them reluctant to take on the debt and responsibility of owning. Instead, they choose to rent.

“That meltdown seems like an old story,” he says. “But we’re really not out of the woods with it yet in lots of ways and places. It’s part of the reason we’ve seen the flip in the past two or three years where downtowns are growing faster than suburbs. If you look at the broad span of time, some might say this is just a blip. Only time will tell as the economy improves.”

Frey also emphasizes that all downtowns are not alike.

“San Francisco, Denver and Seattle are not Detroit,” he says, noting that while some downtowns are thriving, some cities are struggling overall. “Downtowns have been attracting young people for some time. But over the past few years, most cities in general have been doing better because of generational preferences and the housing market, which has kept downtowns holding onto people who might have otherwise moved off to the suburbs.”

Paul Morris, president of the Downtown Memphis Commission, says the core area is growing much faster than the rest of the city. Since 2010, the downtown has grown by 7 percent, while the rest of Memphis has increased by just 1 percent. He moved to the South Main neighborhood in 2002 and drove to a suburban law firm to work. He hated the commute.

“Right now, we’re at capacity for the downtown,” says Morris, who grew up in suburban Memphis, went to law school and worked for a time in Manhattan.

“There are about 24,000 people living in our downtown and we’d have a lot more people if we had places to put them,” he says. “As fast as housing units are built, they get filled up. And it’s happening because the downtown is awesome. I live here because I enjoy the vibrancy, the activity, the diversity and being able to walk to a Broad-way show, NBA basketball, professional baseball or 100 restaurants. It’s just a great place to be.”

According to DMC statistics, a third of downtown residents are aged 18 to 34, while those 45-plus make up another 33 percent. The smallest group are those from 35 to 44, who make up around 16 percent.

“Where we are weakest is families with school age kids,” says Morris, who is 44 and whose children are 5 and six months. “When it’s time for them to go to school, we’d like to stay. In our downtown neighborhood there are a lot of families with young children, so others are in the same boat.”

To keep the ball rolling, he said DMC is encouraging investors to redevelop historic buildings “to capitalize on the character and authenticity of the downtown. We have more historic listed buildings per square mile than most downtowns. We’re fighting blight and trying to repopulate areas that were depopulated in the 70s, 80s and 90s. We’re attracting with new restaurants and retail. We’re also incentivizing and spreading the word with marketing.”

Joe Marinucci, president of the Downtown Cleveland Alliance, said his city has experienced what he calls “significant growth” in its downtown in the past few years — thanks to some major capital investments.

“We’ve had two major projects, one of which was a new, $450-million casino in the core of downtown that opened in the spring of 2012,” he says. Builders transformed an abandoned department store into the Horseshoe Casino, a joint venture between Caesars Entertainment and Rock Gaming.

The other big development was a new convention center, which cost more than half-a-billion dollars and replaced one that was functionally obsolete and “had ceased to be an attractive venue for conventions for a long time,” says Marinucci. Yet another recent project is a 450,000-square-foot office complex called Flats East on the Lake Erie waterfront.

“As those projects were developing, we also saw a surge in residential demand with a number of housing projects coming on line,” he says. “The good news now is that we have about 12,500 people who live downtown, and that’s a 60 percent increase since 2000.”

During the same period, according to census bureau figures, the overall city of Cleveland lost 6,702 residents in what demographers say is a 60-year trend. The city’s total population is now roughly 390,000.In the heart of Cleveland, however, Marinucci says developers can’t build apartments fast enough.

“Right now, we are running at about 98 percent occupancy in terms of our downtown portfolio,” he says. “We have a number of other projects in the pipeline that appeal to people who want to live, work and play downtown.”

The city also landed the Republican National Convention for 2016 and has five new hotels under construction. When finished, that will add 2,000 rooms for a total of 5,500 in the core, he says.

“All these factors are coming together to create the momentum that we are experiencing right now,” he says. And the city got another big boost this spring when basketball star LeBron James announced he would return to the Cavaliers — which plays in the Quicken Loans Arena in downtown Cleveland.

“We have a very strong amenity base in our core. We are probably one of the very few downtowns in America where you can literally walk from your office or your apartment or condo and go to three major sports facilities and never get into your car. In addition to the Cavaliers, the Cleveland Indians are in the Gateway complex which is in our downtown and the Browns play downtown as well. We also have the second-largest theater complex in the United States, outside of the Lincoln Center in New York, with 29,000 subscribers and 10 stages in the complex. We’re continuing to push the envelope to attract more people to this area.”

Marinucci said downtown Cleveland is especially popular with millennials who want to live and play close to where they work.

“They are much more interested in walking and biking and are more apt to use public transportation than automobiles,” he says. “We’ve had a 68 percent increase in the number of 25- to 34-year-old college grads moving into downtown. But we’re also seeing empty nesters moving into the area. In fact, our expensive product is leasing at a faster pace than others because boomers and retirees want to be down here, too.”

Marinucci says the opening of a 33,000-square-foot grocery store in an old, domed bank building, complete with a Tiffany glass ceiling in its rotunda, new parks and a business development center that has attracted 30 new companies and 5,000 tech jobs should keep downtown Cleveland growing. He says he hopes Cleveland Metropolitan School District will open a magnet or charter school campus downtown to serve the children of residents.

“Our challenge now is to create amenity bases or packages that will help those families make the decision to stay downtown,” he says. “Schools definitely need to be part of our future.”

In the northwest corner of the country, Seattle’s downtown population has surged to 65,000, up 7 percent in the past five years. Jon Scholes, vice president for economic development and advocacy with the Downtown Seattle Association, says the key to that growth was changes in zoning that allowed for taller buildings to be constructed in the city core.

“We also believe we have the right fundamentals that every downtown strives for: a great natural setting, a great transit system, a lot of amenities and strong job growth in downtown since the end of the recession,” he says. “Amazon.com, which moved its urban campus into the South Lake Union neighborhood of downtown in 2010, is really driving a lot of the economic activity.” Amazon doesn’t release employment numbers, but Scholes estimates it will have a whopping 30,000 workers in downtown Seattle when its two office towers planned and under construction are filled.

As in other cities around the country, he says it’s both young professionals and empty nesters who want to live in the city’s core. Roughly a third of the people who live downtown now are between 25 and 34 years old, a significant increase from the past decade.

“There are a lot more families with kids, too,” he says. “It’s not a huge percentage of the population, but the growth there has been very strong. There are now about 3,000 kids under the age of 18 in downtown. We expect that number to continue to grow. Unfortunately, we don’t have a public school downtown, so we’re working with the school district to locate a K–5 school here. That is a big priority of ours. We’ve seen other downtowns around the country in recent years get public schools developed, so we are kind of behind the curve with that here.

“A 45-minute bus ride to get to a school outside of downtown is not a popular idea. In some cases, kids are now going to schools that are outside downtown, which sort of defeats one of the purposes of living here. We know if we want to keep young families, we need to have a public school.”

Scholes says his group tracks a lot of data. Four key metrics that are strong indicators of the downtown’s health are number of residents, workers, total taxable sales for retail and total taxable sales for entertainment, arts and sports.

“We coin that ‘live, work, shop, play,’” he says. “In each of those areas since 2009, we are increasing market share relative to the region. The rate of growth for population, employment, taxable retail sales and then spending on arts and entertainment is about twice the rate that we are seeing in the surrounding metro area. That wasn’t the case a decade ago, as far as employment goes.

“The suburbs were gaining jobs then and we were sort of holding steady. That’s completely flipped and it’s what is driving a ton of the investment and population growth downtown. Everywhere you look around here, you see construction cranes. And four more other big employers from the suburbs south of Seattle have announced they are going to relocate downtown. That’s an impressive shift.”

Brian E. Clark is a Wisconsin-based journalist and a former staff writer on the business desk of The San Diego Union-Tribune. He is a contributor to the Los Angeles Times, Chicago Sun-Times, Milwaukee Journal Sentinel, Dallas Morning News and other publications.

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