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Spencer Levy
I'm Spencer Levy and this is The Weekly Take. We've looked at cities from a lot of different angles on this show, but today's guest offers a unique view. On this episode, we're joined by one of the nation's foremost authorities on urbanism and the future of city life.
Joel Kotkin
I think the key thing for cities, this is what I would tell the city leaders, make the places livable, make them more attractive.
Spencer Levy
That's none other than Joel Kotkin, a professor at Chapman University in Orange County, California, and the author of 10 books. Joel is an expert on demographics, geography, economics and more, a thought leader on social and political trends. We recorded this episode as part of a virtual forum organized by CBRE Econometric Advisors Group. The formal topic was The Future of Office but our conversation ranged further. We shared discussion and debate about the state of urban areas across the map, about globalization, about people and policy and, yes, even pastrami. Coming up, exploring a world of cities with professor Joel Kotkin. What's driving the evolution of urban life in America and beyond? That's right now on The Weekly Take.
Joel Kotkin, author of over 10 books, New York Times writer, Chapman University professor, and if I read your entire bio, Joel, that's all we would do today it's that impressive. So, Joel, thank you for joining us today.
Joel Kotkin
It's my pleasure.
Spencer Levy
So, Joel, let's get right into it. The future of cities. Many people are saying that people are going to be moving out of New York, San Francisco, Chicago, Boston and moving to the new school cities of Nashville, Denver, Raleigh, Tampa, Orlando. Is this happening and will that be a permanent shift?
Joel Kotkin
Well, first of all, it's already been happening. It's been happening for most of the last decade and accelerated well before the pandemic. Does that mean that New York City is going to become the new, you know, empty prairie? No, there will be people who will stay in New York. I think it will change somewhat. I don't think you're going to have the kind of growth that, let's say, someone like Michael Bloomberg predicted about, you know, a city of 10 million people. I don't think we're going to see that in our lifetimes. I don't think we were going to see it before the pandemic. But I think that what we're doing is we're seeing somewhat of a reordering other words, more economic energy in a the emerging cities that you talk about, but also within the metropolitan regions to the suburbs and finally to smaller towns. Even in the last few years, there's been more migration to smaller cities than bigger cities in general. So these trends were already happening before the pandemic and before the disorders this summer. And both of those things have accelerated that trend.
Spencer Levy
Well, Joel, I'm holding up a copy of a book here called The City by Joel Kotkin. As a matter of fact, in this book, I think you suggest that the history of the world surrounds megacities. How the biggest cities in the world, from Carthage to Cairo to Paris to London to New York, set the tone for the history of the world. Have we now reversed that trend?
Joel Kotkin
I don't think we've reversed it. I think it's changing other words, where we're not likely in our lifetimes to see the dominance, let's say, of London in nineteen hundred or New York in nineteen fifty. I think we're going to see many more centers of influence. And I think we're going to also see that a lot of even the very creative and innovative companies are going to be dispersed. They're going to be much more dispersed. That's not going to be everybody that you need to talk to is all within walking distance. They may be within zooming distance. It's a change in the configuration, not the end of the of the big cities. And you're certainly not going to have the kind of dominance of one, two, three cities that you had in the past. There are just too many new players. You know, there's Shanghai and there's Beijing and there's Singapore and there's Mumbai. And, you know, so it's going to be a many different cities and dispersion within each country.
Spencer Levy
While all these cities are different, looking at your book, there seems to be a common theme among those cities that have succeeded. You point to Lisbon, Portugal, back four or five hundred years ago. That was an early adopter of globalization. Globalization right now is certainly being called into question in certain ways. But is the Lisbon example still valid? Are cities that embrace globalization going to be more successful than those that embrace more of a regional approach?
Joel Kotkin
I think it's going to vary, but I think that globalization isn't going to go away. I think it's still a major factor. I think one of the really interesting changes in the United States, and I think they're also beginning to happen in other countries, but particularly the United States, is the movement of the foreign born to cities that they traditionally did not go to in large numbers. And look at the rate of growth in the foreign born in Dallas, Houston, Nashville, Orlando, Atlanta, Phoenix is now much faster than the growth in New York or Los Angeles or Chicago. So these cities are just becoming global players. So I think the global stage will just become more crowded. And I think the movement of the foreign born is a great indicator of that.
Spencer Levy
This question of where the foreign born workers go really gets to the heart of so many macro issues, specifically around growth, particularly in the face of what you point out is the birth dearth that we have in the United States, in China, in Western Europe. So will immigration be the key to the future success of cities?
Joel Kotkin
I think it's going to become increasingly important and it's going to become important also in the sense that those cities that can accommodate the upwardly mobile and accommodate families, I think are going to be in a stronger position. You know, if you take a look at the birth rates in Houston, Dallas, Nashville, Atlanta, and compare them to the birth rates in San Francisco, Seattle and certainly Manhattan and increasingly New York City in general, there's an enormous sense that the demographic trajectory is much stronger in these emerging cities and within regions, again in the suburbs. I think what you're going to see is something H.G. Wells wrote about this about one hundred and twenty years ago, and he said that eventually the core city would become a place of concourse and rendezvous, that we would go there because of the experiential nature of cities. That gives you something that you can’t get someplace else. He also mentioned that families would go elsewhere. So he said the future of the big city would be a culture of luxurious extinction. So I think what we're going to see and this has already been happening, is our cities are going to be made up largely of certainly in their cause of people without children, except for the very wealthy, because they're the only ones who can afford to have children in the big cities anymore. And so I think you're going to see just this continually changing sort of demographic, which is going to make certain areas more vital than others. What will be the function in this place of conquest and rendezvous? And I think we've talked about this offline as well. It's going to be the place where the twenty five year old who wants to meet somebody wants the network, wants to meet a person of the same or opposite sex. They're still going to go to Manhattan or Chicago or San Francisco even to have that experience. But I think by the time they get to their 30s, mid-thirties, begin to think about buying a house, having a family, they're not going to have to say, how do I stay within striking distance of San Francisco? They're going to say, maybe I can move to Salt Lake City, maybe I can move to Denver, maybe I can move to Dallas and still do my job. And that's going to be an enormous change.
Spencer Levy
You use the dichotomy of San Francisco versus Dallas. We certainly could talk about the United States of California versus the United States of Texas as a paradigm. But I'm going to push back on you because I agree with you that the demographics in New York and San Francisco certainly don't look positive in an aggregate sense in terms of the total number of people. But the quality of the people, the education levels, the amount of capital in and going to the cities, we project that they’ll only increase. So I while I see great strength in Dallas, I am not prepared to throw San Francisco or New York under the bus. As a matter of fact, I'm recommending to our investors to back up the bus or the truck to invest there. What do you think, Joel?
Joel Kotkin
I would invest there if the price is dropped enough. I think that's probably not where the future goes. In terms of the quality of the education, actually, the increases in the education levels of many of these cities like Nashville, is actually more rapid than what you see in other places. I think you're going to see a lot of movement into superhigh educated, smaller places. You know, the boulders, the Santa Fe’s that these kind of places that are very attractive to educated people. Remember, a lot of the educated people are going to be people in their 50s, 60s and 70s who are looking to locate in someplace that's less expensive, one of the things you look at is when places like New York and San Francisco and even L.A. to some extent have is they have an attraction to people who can buy themselves out of the negativity, although they do it because they're young and Daddy's paying the rent or they're there are very wealthy. And so they can send the kids to private school. And if there is a pandemic, they can run off to the Catskills or they can go to their condo in Florida. This class of people, which has been growing as our society has become increasingly feudalist and increasingly concentrated with a certain group of people. Those people are going to pick the San Francisco's and the New York's and the LA’s. Not they may not stay there or they may have secondary residences, but these places do have a kind of appeal. And those industries that are most dependent on that labor pool will stay. But what we do see now is if you look at where the tech growth is, New York has, you know, tech LQ about one about the same as the national average. You know, there's the Raleigh, Durham, the Austins. These are the places that are seeing the biggest increases over time. So I think that it's going to be a mixed picture. And I believe as somebody who studies cities that the biggest enemies of urbanism are those who are denying that anything has changed, that we're going to go back to where we were before. And I don't think that's the case. I think it will be different, which means you have to have a different strategy.
Spencer Levy
Well, Joel, maybe I'm one of those enemies that you're referring to, because while I agree with you that we will not go back exactly the same as we did before, like we didn't go back exactly the same post 9/11, post Hurricane Sandy, post the Triangle Shirtwaist Factory fire, if you want to go all the way back to 1912, these things were transformational. But when you mention cities like Raleigh and Nashville and Denver, you put all those little guys together. They don't add up to one New York or one Los Angeles in terms of size. So, yes, they may be growing faster, but New York still has this enormous critical mass advantage in capital, in infrastructure, in people. And I do believe that its future is very bright, but it will be competing with some of these other places. But one of the things you bring up as well is this move to the suburbs. That's true. People are moving to the suburbs, but will they work in the suburbs? Will it be office buildings put there or will they gather strength? I'm not so sure. What do you think, Joel?
Joel Kotkin
I think they're going to be a couple of things. First of all, I think the nature of work is going to change. Other words, a lot of the people who live in the suburbs and people will work at home. So the person who has been going to work in, let's say, Irvine or taking the subway or train into Manhattan, you know, instead of going five days a week, they're going to go two days a week. I think that's going to change. I think there's also going to be a big change in business travel. People are going to say, OK, let's say even this event five years ago, maybe you would have bought a plane ticket and flown to New York to do the show. Now I do it in Zoom. I saved myself all sorts of money. So, you know, I think it's going to have a different configuration. I think that the real problem beyond the technical one and first of all, the comparison with 9/11, you didn't have you didn't have the option of the online that existed, by the way, after 9/11 you did start getting the first breakdown in some of the concentration in the financial service sector. But I think where you really going to see some changes is that people are going to start to look at different places, different options, different ways of doing things. And I think the key thing for cities, this is what I would tell the city leaders, make the places livable, make them more attractive. And I think a bigger problem than the pandemic is the breakdown of law and order and the rise of crime that there's no recovering from. I think these things are really important issues, and I think cities should focus on how do you control that first.
Spencer Levy
Looking at your writing, you mentioned Carthage as a city that failed in part because it was too commercial, didn't have a I think the word that you use is transcendental values, which I would suggest is some combination of arts, religion, Kumbaya together. And you see that in some of the cities you mentioned, you see that in Boulder. You see that in smaller cities in the arts district of L.A. You see it in the Wynwood section of Miami. So it's not just the small cities, it's some of these subsections of these bigger cities. So what are some of these things cities can do to put themselves at the head of the pack?
Joel Kotkin
Well, I'll tell you, the key thing is going to be neighborhoods. What makes a great city is neighborhoods. And Americans, you know, have always been I would say villagers, you know, there was that great book, The Urban Villagers, talking about immigrants moving into the Northeast. People lived in the neighborhood and the neighborhoods. What's really interesting is I've been looking at it while the downtowns are struggling. Noël Valley is doing OK. Ditmas Park in Brooklyn is doing OK. I'm sure that Echo Park in L.A. and Silverlake are doing OK. I mean, the key to the building of cities I think is going to change. We had this period of intense focus of everyone in big buildings in the center of the city. I think the next phase is going to be thriving neighborhoods that knowledge workers want to live in. And then coming up with institutions, though, those knowledge workers will stay. I mean, education is going to be a key thing right now a very unfortunate trend in cities has been the attacks on both American public schools and public charters. That was a way that middle class families of any race could stay in the city and send their kids to public schools. Look, the biggest reason I'm living in Orange County instead of L.A., where I live for 40 years is the public schools were just terrible. And I didn't want to pay for private school with excellent public schools here in Orange County and now a great charter school public charter that my daughter goes to my youngest daughter. So I think you need a more grassroots attempt. You know, in some ways, a little dose of Jane Jacobs wouldn't be bad and a little less Robert Moses would be good, I think we have to talk about. Look, you take a look at New York City, which is my native city, as you can tell from my accent, most of the people I work with in in the creative industries in New York live in Brooklyn now, the reality is that the strength of New York, the strength of New York is the neighborhood. The strength of L.A. is neighborhoods strength of San Francisco is neighborhoods. So if we start thinking about how do we improve the daily life of those very important creative professionals who live in these cities, let's focus on the neighborhood first.
Spencer Levy
You said something in your book, The Coming of the New Feudalism. It warned us against a future that we're going to become a renter society versus an ownership society. Now, rent is what we do, but what does this mean? And in particular, what does it mean for the future of cities and the middle class?
Joel Kotkin
Well, I think what's really critical is in all the surveys that we've done, we just did one with the L.A. Times, with Reality Check. One of the things that you find is that, first of all, millennials and minorities view homeownership as key to being in the middle class. Roughly 50 percent say it's absolutely critical. Another 30 think it's very critical. I think the reality is that most people, except for the very wealthy, make most of their asset advances from ownership, and it also provides some stability. It's certainly much better for communities if most of the people or owners, if we become a renter, society becomes more transient, we become more dependent on government. And you just don't get the same kind of civic values that you get when there's lots of people who are owners. And one of the big problems you have, let's say, in a city like Los Angeles, is we were always a homeowner centered cities. That was always a restraint on what's still very much a liberal culture. If we become a city of renters and we become a city where when people are upwardly mobile, they start thinking about what city might move into, that's not going to be very good for the future of Los Angeles.
Spencer Levy
Can you relate urban agglomerations theory and the productivity efficiencies of cities to working in a physical office versus work from home? In other words, aren't cities just a lot more productive than working from home?
Joel Kotkin
Well, first of all, the results so far on this on the work at home is actually managers have been pretty happy with it. And I mean, there again, there are going to be certain functions like I would say an architecture firm, for instance, where having people together on a collaborative basis is probably pretty important. But I think and also this agglomeration theory, it turns out if you look at it, it has nothing to do with density, has to do with size of the region. And I think there will be some advantages to size. That size does not have to be heavily concentrated. Right now probably the most successful mega sort of emergent mega city in America is Dallas. Dallas is certainly not concentrated. It has all different sorts of options. Phoenix, another very successful city, is very it's both big, but also not concentrated. So I think that that and then the last part of it is it really depends on what you're doing. I mean, one of the things that I'm concerned about as a Californian, even though I have a New York accent, one of the things I'm concerned about in California is that the new wave of tech companies that are connected to social media have no need to necessarily have large office footprints or be in a particular place. One of the things that I'm pushing in the work I'm doing here in California, which I'm doing for a member of the legislature in part is industries like space where you need that concentration of scientists and you need the people who can do the assembly. You need, like the old semiconductor industry, which you had to have a bunch of people in the same place because there were a bunch of very rare skills at the time. I think that there are going to be those industries that will need to have some concentration. Some of the medical industries may need it as well. But the reality is, when you look at patents, the vast majority of the patents are created in suburban locations. That's continued all the way through. So, you know, again, there are going to be industries that are going to be uniquely dependent on urban densities. But I think that's not the vast majority.
Spencer Levy
Well, Joel, let me let me push back here. Based upon all the studies we did of the office, pre-COVID people wanted to go to the office covid did not completely change the mindset of what made humans, human. Humans to want to go to restaurants. They want to go to hotels. And yes, they want to go to office because they want to be more productive at the same time. And this is where I'll push back on the data. The data that is being collected today is being collected under duress. People are going to have a different opinion in six months than they do today. Your reaction?
Joel Kotkin
OK, first of all, they were already beginning to go online and they were already working at home. Most major metropolitan areas of America have more people working at home than taking transit. In L.A., the densest urban area in the United States about five years ago, the online people were bigger than the transit people already. So they were already voting with their feet. Then where are they moving? Where are educated millennials moving? Remember, millennials are getting in their 30s now. They were already moving to the Nashville's and the and the Dallas’s and the Phoenix. That was already happening when I asked the kids in my class here in Orange County, which is as nice and environment as exists, and I asked them, how many of you out of thirty five, how many you plan to stay here after the age of thirty, maybe two or three, because they know I can't buy a house, I can't have a family here. The other thing is that fundamentally people have been already expressing these things. Before I was able to write these almost exact same things before COVID. So to me, COVID is just an accelerator of these trends. It's like when you play basketball, you're supposed to watch people's feet, you know, when you're playing defense, let's watch how people vote with their feet. Where are they moving? And we can tell that overwhelmingly they're moving to suburbs in smaller cities. Will there be an elite that will stay in the great cities like New York and San Francisco? Yeah, I think there will be. And I think those cities will be magnetically attractive to young people, pre marriage, pre family for sure. And again, to the very rich, because the very rich don't have to suffer. You know, I remember. Having lunch with an editor of mine at The New York Times, when I used to write for them and he said to me, I've lived in the Upper East Side. He said, what's his favorite time of the year was the summer because there was nobody around. You know, these are people who have summer homes, have winter homes. You know, those people, I think, will be able to survive and do really well. Now, by the way, on restaurants and culture, there's several things. One, we are in a very different world culture wise now than we were. I think it was Lenin who said that there are decades where months happened then and there are months where decades happened. And I think I think he was pretty much right about that. I think we've gone through that over the last year and a half. So I think that what you're going to see is you're going to see a lot of people who are looking at things very differently. I think that, you know, again, I don't think these cities will go away, but I do think a lot of these speculative developments probably won't do as well as some people think they're going to do. And I think that you're not going to see 40 percent of people working at home. You'll see 20 percent working at home, and you'll see a lot of hybrid. And I think it's going to be a really interesting thing for office developers. How do you develop hybrid workspaces also in restaurants? One of the things that's really interesting to me was whereas New York, for instance, has become less interesting for restaurants, particularly Manhattan, from when I was a kid, the suburbs, which were mind bogglingly terrible for restaurants, are now have good restaurants. You know why? Because the immigrants have moved there. And let's face it, what makes American food great is the immigrants, whether as entrepreneurs or because of the cooking. You want great Vietnamese food. You come to Orange County, you want great Indian food, you go to New Jersey or Fort Bend County, Texas. If you want great Chinese food, you go to the San Gabriel Valley, east of Los Angeles, you know, other words, the cultural life is change. Plus, we now access culture increasingly online through Netflix. So the lastly, if we ever get to a point where we're opening up things again, which I assume we will, there's now greater cultural amenities. Suburbs have picked up some of the smart cities here in Orange County. When we moved to Orange County six years ago, I thought, oh, well, we'll be going to L.A. a lot. We almost never go except to go to the airport. In Orange County, we have the South Coast Repertory Theater, one of the five best theaters for new plays in the country. We have this Eckerstrom that there are there's there are arts communities that have developed in suburban Chicago, in Cobb County, Georgia. In other words, the suburbs are no longer the sort of boring, homogeneous places that they once were. I think they're changing dramatically. I think suburbs can't stay the same either because they're now in this competition that they weren't in before.
Spencer Levy
So, Joel, we only have a few minutes left, so I'm going to ask you for your final thoughts. It certainly seems to me that the media has changed since you first got into the business some time ago. And, you know, you remember, Joel, the famous headline of the New York Daily News in the mid 1970s, New York drop dead, which was Gerald Ford when he wouldn't bail us out. Do you think that there are some in the media today that are saying to the big cities, we want the cities to fail?
Joel Kotkin
I don't think that that's the predominant view of the newspapers and newspapers are urban enterprises. They would be committing suicide to do that. I think The New York Times in particular, when I was there, I think we talked about this and we used to you know, I was doing a monthly grassroots business column at one of my editors said, you have to understand the one thing about The New York Times. It's not liberalism that's the Holy Grail. It's Manhattan real estate. You know, that was the holy of holies. And certainly you're going to see a lot of people, a lot of newspapers tried to bring back and advocate for offices. What's going to be really interesting to me is the dispersion of media, some of the new media, which is less concentrated. I increasingly do find that editors and reporters are now located in suburbs and sometimes smaller cities because they're able to do it remotely. Things that you had to be in Manhattan for, you don't necessarily have to be there. But I think there's also kind of like an emphasis on the story over what is actually happening. And I'm really interested in what is actually happening.
Spencer Levy
Well, there is one thing you do have to be in New York for in Manhattan itself may not be the holy of holies, but Katz's Deli on Houston Street near pastrami sandwich. That to me is one of the holy of holies. And I can't wait to be there and eat it in person, hopefully with you one day, Joel.
Joel Kotkin
I hope so, too. And look, one of the great tragedies of this and the last 20, 30 years in urban areas is how many wonderful, unique institutions are no longer there. So many of the great restaurants that I went to when I was a kid, they're not there anymore. And unfortunately, what I'm afraid of is in this tsunami, this retail tsunami that's going on, that trains are going to replace the last remaining locally owned restaurants, as so many restaurants have been under so much pressure. The good news could be, and I'll leave you with a happy thought, maybe now that the rents go down, maybe there'll be some great new innovative restaurants and other facilities that will come up because there's a real estate crash and hopefully that will make cities more interesting. I'm very I always think about walking in Manhattan with my grandmother, who came from Russia in about nineteen hundred, and she would tell me that, well, you know, this was this neighborhood, this was this neighborhood and how different they were and going and seeing the Ukrainian neighborhoods and the Spanish neighborhoods and the Chinese neighborhoods and the and the Irish neighborhoods and the German neighborhoods, a lot of that's now gone. It would be great if some of those interesting, unique characteristics, there may not be ethnic, they may be different, that they do come back and that maybe the city, after all this will be more interesting and more dependent on its ability not to force people to be there, but to have people choose to be there.
Spencer Levy
Well, my grandmother, too, came to Manhattan in around nineteen hundred, and she just passed away, by the way, one hundred years old a couple of years ago. And, you know, when she knew she was rich, Joel, when she had her own bathroom. And it wasn't until her actually until she was in her 30s and she'd moved to the Bronx. So things changed for sure. So Joel, the next time we get together, I hope it is over a pastrami sandwich at Katz's or in Newport Beach at one of the great restaurants along the boardwalk. Thank you very much, Joel.
Joel Kotkin
Thank you.
Spencer Levy
To learn more about what work will look like our work forces will be impacted and what this will mean for real estate footprints visit CBRE’s The Future of Work. You'll find our latest data, insights and solutions at CBRE.com/TheWayForward. And for more info on our show, check out CBRE.com/TheWeeklyTake. Send us your feedback as well. Whether you found us on Apple podcast, Spotify or in other platforms, please subscribe rate and review us wherever you listen. Thanks for joining us. Until next time, I'm Spencer Levy. Be smart. Be safe. Be well.
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