For Modern Urban Growth, Don’t Forget the Ballpark and River Walk

In the late 19th and early 20th centuries, major cities across America created massive Beaux Arts public spaces — from the Benjamin Franklin Parkway in Philadelphia to the fabled White City of the Chicago World Exposition in 1893 — as part of a City Beautiful movement aimed at putting a clean and positive face on the nation’s rush toward urbanization.

At the end of the 20th century, with those same cities under siege from a rapid loss of manufacturing jobs and suburban flight, urban planners again looked to salvage cities by improving civic spaces, but now with a more commercial bent toward attractions like new ballparks, aquariums or shop-lined river walks.

But can these new urban amenities — targeted toward an era of consumerism and leisure — actually stop the loss of population in America’s central cities while attracting new residents with higher education and more attractive job prospects? Wharton real estate professor Albert Saiz and Gerald A. Carlino of the Federal Reserve Bank of Philadelphia sought to quantify the advantages of a city’s leisure opportunities in a paper titled, “Beautiful City: Leisure Amenities and Urban Growth.”

They discovered that American cities with consumer leisure opportunities that appealed to visitors were also able to attract additional new residents over the course of the 1990s, the decade they examined. On average, cities offering more leisure advantages — like an attractive waterfront or museums — gained an additional 2% in population over less attractive counterparts during this 10-year period; some “beautiful cities” like Boston and New York that didn’t have the ability to add housing to meet increased demand instead saw a sharp increase in housing prices and rents.

Cities with increased leisure activities “are growing faster than they would have otherwise,” Saiz says. The survey showed that leisure amenities in particular were helping to stabilize cities that don’t necessarily have the advantages of great weather, immigration or low taxes that some booming Sunbelt cities — such as Atlanta or Phoenix — offer. “A city like Philadelphia with so many low indicators in the 1970s, such as a low level of education, would have declined even further were it not an attractive city with its beautiful architecture and its access to the zoo, culture, theatres and restaurants. It seems to be true from the data that these cities are perceived as attractive.”

Saiz and Carlino collected and analyzed data on the number of leisure visits to the leading metropolitan statistical areas, or MSAs, in the United States, and determined that the 1990s growth rate increased by 2 percentage points in cities where the number of leisure visits had doubled. The researchers took into account the number of jobs directly related to tourism, and showed that these do not provide the explanation for why “attractive cities” are growing faster. This is perhaps not surprising since employment in the travel and tourism industry accounts for a very small share of total employment for the typical metropolitan area (3.3% in 1990). In addition, they discovered that increased leisure amenities also helped to forecast out-of-sample growth for American cities from 2000 to 2006. Finally, the report found a correlation between the amounts of money local governments invested in recreation projects and related amenities, and their relative attractiveness for leisure visitors.

According to Saiz, while the goal of the report was to quantify the importance of leisure amenities in urban growth since 1990 and not to look at specific policy remedies, the study does provide city officials with evidence that spending public dollars on leisure and cultural activities may offer more long-range benefit than traditional economic development focused on job creation. “It does raise the question of whether it makes sense to subsidize industries,” Saiz says. “For the last 50 years, we have been trying to bring businesses to cities, but maybe it makes more sense to get people in there — and the businesses will follow them.”

Indeed, underlying the statistics that Saiz and Carlino obtained is a revealing saga of the changing nature of American cities over the last century. Saiz became interested in the concept of leisure amenities as engines of urban development with an earlier co-authored research paper that studied the role of consumer-oriented activity in powering cities and their growth — in contrast to more traditional notions that urban areas are focusing on the production of goods and related services.

City beautification and the provision of leisure amenities as local public policy are certainly not new ideas, as the streets of Istanbul, Paris, Rome or Vienna attest today. In America, the City Beautiful movement flourished primarily in the 1890s and 1900s, at the height of the Industrial Revolution when new factories led to rapid urbanization as well as squalor, crime and other growing pains. Large public parks with classical-style edifices — such as the National Mall in Washington, D.C. — were motivated by a progressive impulse to bring order to cities both through the architecture itself but also through instilling a sense of civic pride. The original City Beautiful movement died out with the arrival of the Great Depression as the 1920s came to a crashing end.

Relocating for Lifestyle Reasons

But Saiz says he and Carlino wanted to study a modern trend that arose after the long era of urban decay peaked in the 1970s. He notes that urban planners have been seeking to develop leisure activities — usually through public-private partnerships — that would bring people back to the decimated urban core. For example, Saiz pointed to Camden, N.J., where waterfront projects have included a minor-league baseball stadium, an aquarium and a concert center, and to Oklahoma City, where voters approved a sales tax to finance $300-plus million to build a downtown canal and entertainment center. Explains Saiz: “It’s all because cities want to attract skilled labor, and skilled labor is attracted by a beautiful environment.”

Over the course of a century, Saiz notes, there has been a fundamental change in the factors that have drawn people to live in cities. Since the earliest days of America, the primary motivation for the growth of regions of the country has been the pursuit of job opportunities, from tobacco growing in the 1700s to coal mining in the 1800s and eventually to factories which promoted urban growth. But, he says, the rise of computer technology and the Internet and the increasing globalization of the economy has freed many people — especially highly-educated higher wage earners — to relocate based on reasons of lifestyle, such as access to restaurants and the arts rather than to be close to a workplace. Carlino and Saiz’s paper notes that increased desire for consumption coincided with the doubling of real per capita income in the United States from 1959 to 2005.

“The paradigm has changed,” Saiz says. “Of course people still follow jobs,” but urban growth is increasingly driven by other factors such as climate and proximity to an attractive waterfront. “People are richer now than they were in the mid-20th century, and so there’s a focus on ways to make the city more attractive for living and enjoying and for families and leisure.”

In seeking to develop a methodology to establish the importance of leisure amenities, Saiz and Carlino selected the number of leisure tourist visits in an MSA, since tourists are drawn by many of the same factors — architecture, outdoor recreation and culture — that also attract permanent residents. The researchers noted that the tourism statistics would prove a more objective standard than typical quality-of-life evaluations. The results showed that leisure visits to a city were the third most important predictor of its growth during the 1990s, trailing immigration levels and a low-tax structure.

In addition, the researchers found that the so-called “beautiful cities” tended to attract more highly-educated people. But another critical discovery was that urban population growth was not uniform by neighborhood and that the core downtown areas — or central business districts (CBDs) — often were not the sections of the city that experienced the greatest growth in population or earning power. Saiz and Carlino created a new term to describe the urban sectors that are growing because of their leisure amenities: Central recreation districts, or CRDs. These CRDs (which the researchers determined by using each city’s main tourism office as a central mapping point, and by calculating the distance of each neighborhood to historic places and its accessibility to recreational amenities) offered the prime leisure and recreational characteristics of a “beautiful city.”   

“We found that initially these areas were looking like they were going to decline along with the central city. When we looked at the demographics, we saw lower average income, lower average education, more young people, more immigrants. These were areas where we would have expected the population, income, education, housing prices and rents to decline further, but we found the opposite,” Saiz states.

Data in the study showed that many of these CRDs, or “beautiful areas,” contained considerably more recreational and historic sites than did nearby neighborhoods that fared poorly in the study. One related discovery was that these attractive neighborhoods were also areas where minority populations were disproportionately displaced, even as nearby sections of the city had become more densely populated by non-whites. Saiz and Carlino also found that population did not necessarily increase in these CRDs because of an inability to build more housing.

The study showed that all other factors remaining equal, the growth rate of rents in the cities with twice as many leisure visitors was 1 percentage point higher, and the rise in housing values was 3% greater, but these gains were obviously not distributed equally across cities or even across neighborhoods. Some sections in older cities such as Boston, New York and San Francisco posted dramatic gains in housing prices during the 1990s and the 2000s because of the inability to construct additional units to meet demand. “In areas where it is very difficult to build and there are high rents and land regulation, that demand will translate into price increases,” Saiz says.

The research seeks to refine how we look at the American city and its central purpose in an era when personal choices, including where to live, are increasingly made on the basis of consumption and leisure and rely less on employment factors. It also urges us to look at why some urban neighborhoods thrive while others falter. As the report concludes: “While the American central city generally did not ‘come back’ during the 1990s, the ‘beautiful city’ within flourished.”

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