Cities, Growth and Amazon

I’ve been spending time the last couple years in downtown Nashville, where the most common street sign is either the first or the second one below.

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It’s nearly impossible to walk or drive two city blocks in any direction without having to maneuver around at least one of these.

Nashville is booming, thanks to its three big industries:  country/pop music, healthcare and state government.  The Economist reported last year that 81 people were moving into the metropolitan area each day; some say the number is higher.  Home prices are increasing, and so is construction of apartment buildings and townhouses and, farther out, single-family homes.

In addition, the city is playing a huge game of infrastructure catchup.  Its population, 174,000 in 1950, has blossomed into an MSA (metropolitan statistical area) population of 1.8 million as of last year.  Traffic is pretty bad, and while there is talk of a five-spoke light-rail system, there is no plan to fund such a thing, whose buildout would take perhaps 20 years.

This of course is the sort of problem many cities would love to have.

 

Where Tower Cranes Are

One rough measure of the health of a city is the number of tower cranes employed on major construction projects in its area. Recently the Nashville Business Journal crowed about the number of tower cranes here — 28 — and ran this national map.  Only New York, Chicago, Los Angeles and Seattle had more tower cranes.  If you’ve about increasing rent rates in those areas, you won’t be surprised.

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Actually, the map is now inaccurate.  One tower crane that had been working just down from our Nashville building was dismantled last month.  The process took a full week and closed all the traffic on the entire block.  Next month, the new 45-story tower of apartments and condos will open.

 

Where Tower Cranes Are Not

The US population is shifting.  Some cities like Nashville are attracting new residents.  Other cities have been shedding population for decades.

Here are a few of those population losers.

–Detroit.  Its population crested at almost 1.85 million in the 1950 US Census and then dropped more than 60 percent by 2010.  Since then, another 50,000 people have left, leaving 672,000 people to maintain a built infrastructure designed for many more.

–St. Louis.  Its 1950 population was more than 850,000 but is now 320,000.  As is the case in other cities, residents seem to have relocated to surrounding suburbs.

–Memphis. For most of its history, Memphis had twice as many residents as Nashville. Its metro area population now trails Nashville’s by 500,000, and the downward trend seems to be continuing.

–Cincinnati had 300,000 residents in 2010, down from more than 500,000 in 1950.

–Cleveland had 400,000 residents in 2010, down from 900,000 in 1950.

I could go on about Buffalo and Akron and other cities, but you get the point.

 

Amazon

Recently Seattle-based Amazon has announced plans to build a second, equal-sized headquarters facility somewhere else in the country.  Every city and town in the Midwest and East craves this business, and for good reason:  Amazon estimates it will need 50,000 employees to staff the new facility, with an average compensation level of $100,000 per year.

Cities and states are being invited to submit proposals next month, which sounds similar to a professional sports team hinting that it might move its franchise to a city in exchange for construction of a locally financed arena.  We’ll see if that analogy holds up.

Nashville, a go-getter kind of town, naturally wants the new Amazon headquarters.  When civic leaders talk of bidding for the project, they fret that Tennessee’s failure to enact a suitably progressive transgender bathroom bill could hurt the city’s chances.

More to the point, I would think, is the fact that Nashville is crowded already.  Home prices are expensive relative to local incomes, and traffic, especially for commuters, is very congested and getting worse.

Many commenters have offered free advice to Amazon about where to locate its new operation.  CNN, for instance, has suggested these eight cities:  Atlanta, Pittsburgh, Toronto, Dallas, Austin, Boston, San Jose and Washington, D.C.

The selling points for these places, CNN argued, were good schools and large populations of high earners.  In effect, the recommendation was to choose a city that already is winning and to make it even richer.

(There are people who like Amazon because it has lowered vegetable prices at its recently acquired Whole Foods stores and because it pays its workers well.

(I’m less sanguine.  It’s not that Amazon has demolished the traditional bookstore trade, or that it is doing much the same for retail generally, or that it appears set to try to control the grocery business, or that its owner has bought one of the most politically influential newspapers in the country.  My problem is that Amazon, a company based on algorithms, has done all of these.  To me, this looks like a prima facie case for the expansion of the definition of antitrust.  But I digress.)

If I were advising Amazon, I would encourage it to set its new headquarters in a hollowed-out city like one of the ones I described above.

Here’s what’s in it for Amazon:

–Those cities have infrastructure — road systems, empty school buildings, underused airports, cargo rail tracks and, in many cases, abandoned intracity rail tracks waiting to be used again for new urban transit development.

–Those cities also have largely empty central business districts and abandoned industrial sites ripe for repurposing and available at lower cost than similar sized, less well-located properties in Atlanta or Boston or Washington, D.C.

–Amazon could show itself to be a good corporate citizen by showing how a city of the industrial past could be turned into a successful city of the future.

That last point is important.  Such a project might inspire Alphabet (Google) to abandon its plan to build a new techie-oriented city and focus instead on updating an older urban area.  Maybe even Facebook could adopt a company town (although personally I would prefer never to live there.)

 

Conclusion

Our country has cities that are thriving and cities that are not.  It also has big companies with grandiose plans for controlling larger portions of the economy.

In the US, we admire people who change their lives and succeed when the odds are against them.  Maybe it’s time to show our struggling cities a similar way to change their destinies.

If big companies like Amazon took an interest in such projects, they would gain broad respect and the country itself might regain some of its now-tattered can-do spirit.

I don’t see any downside to this idea.

 

 

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