April 21, 2013

Recession slows flight from urban business districts

City centers gain a greater share of employment as the shift to the suburbs declines.


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The San Francisco Bay area has relied on office-park sprawl to accommodate its growing technology community. Now area leaders are trying to draw some of those companies to downtown San Jose, San Francisco and Oakland. Two years ago, Twitter Inc. said it would expand its workforce in downtown San Francisco, signing a lease in central Market Square after the city exempted it from a local payroll tax.

Since then, technology jobs in the city have surged 50 percent to 42,326, while the number of tech companies has jumped 20 percent to 1,826, according to state data through the second quarter of 2012 analyzed by Colin Yasukochi, director of research and analysis at brokerage CBRE Group in San Francisco.

"Can we say it's a full-blown reversal? We'll have to wait and see," said Miriam Chion, director of planning and research at the Association of Bay Area Governments in Oakland. "The recession gave us a pause to collect our thoughts and look with calm perspective at what the trends were and where we could take advantage of more sustainable development in environmental terms but also in economic and social terms."

Since the end of 2010, offices in central business districts have recovered faster than their suburban counterparts, with vacancies falling to 14 percent at the end of 2012, when suburban vacancies were 18.8 percent, according to data firm Reis Inc. in New York.

In the Phoenix area, Klein Johnson is going against the grain. Between 2010 and 2007, that city's jobs sprawl actually worsened, with the share of jobs near the central business district falling to 18.1 percent from 18.8 percent, Brookings found. At the same time, employment in the outer ring grew to 46 percent from 44.5 percent of the region's total.

Between 2000 and 2010, Phoenix posted the largest increase in jobs sprawl in the U.S., with growth in the outer suburbs increasing more than 10 percentage points, according to the report.

Two weeks ago, Klein Johnson bucked the Phoenix trend a second time when she and her husband gave up their yard and suburban cul-de-sac for a home about a mile from the office. While she enjoys the "buzz" of downtown, what's important for the 75 entrepreneurs employed through her nonprofit is the business opportunities the location offers.

"Think about where those employees spend their money," Klein Johnson said. "They're spending it where they live. The more proximity you can get around office and home and life, the more those taxpayer dollars and their spending power stays in their city."


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