Opportunity Space Episode 4: Recipe for a Vibrant City

Join us as we speak with Richard Florida, a renowned urbanist and professor at the University of Toronto, about the ever-changing dynamics of cities. 

We explore the challenges of housing affordability and the case for density, while examining how the pandemic has shifted priorities, emphasizing the desire for inspiring workspaces and the evolution of the traditional CBD.

Listen in on Spotify or view the video and transcript below. 

 

 

Takeaways

 

• A great city is diverse, energetic, and has social infrastructure and walkable spaces.
• Housing affordability is a challenge, and there is a need for family-friendly multi-family housing.
• Tolerance and diversity are important in cities, but there is still backlash and divisions in society.
• Creativity and innovation are essential for economic growth, and the US excels in these areas.
• Cities go through waves of change and reinvention, finding a way to recast themselves even in the face of significant challenges.
• The pandemic has highlighted the importance of choice and control in the workplace, with people wanting to work with great people in great spaces and great places.
• The traditional CBD is evolving into a central connectivity district, and cities need to create a portfolio of spaces that cater to different needs and moods.
• The spatial division of labor in the US may involve a movement from big cities to lifestyle centers and back again over a person's life cycle.
• Successful cities follow talent. 
  
  

Transcript

 

Tod Lickerman (00:21)

On the podcast today, we have a distinct honor of hosting a leader in the world of urbanism. Joining us is Richard Florida, the renowned urbanist, pioneering researcher, and professor at the University of Toronto. He's co-founder of the Bloomberg City Lab, the leading publication devoted to cities and urbanism. Richard's an international bestseller of the Rise of the Creative Class and founder of the Creative Class Group, which advises companies such as BMW, Audi, Starwood Hotels, Microsoft, and several others. He serves as a board member on many of the leading real estate, urban innovation, and venture capital firms across the globe.

I'm a huge CityLab fan, and I've been looking forward to this conversation for some time. Also joining us is Craig Van Pelt, head of research here at Cresa. Craig has 20 plus years of experience in real estate research and land use consulting. So, Richard, welcome to Opportunity Space.

So, in your view, what's the function of a great city? And just why does it matter? Why should we care about cities?

 

Richard Florida (01:25)

Well, again, I'm so biased on this, you know, and my idea of a great city is Newark when I was a really little kid or New York City when I was a teenager. It's a city that's diverse, that has what we now, you know, these are all words I learned in graduate school, street level energy, a city to kind of the Jane Jacobs, you know, a young woman who was from Stanford and moved to Scranton and moved to New York City in the 40s and 50s. It has this hustle and bustle. It has this energy, and it has what we now call “third spaces” restaurants and cafes and places people go to socialize and that's what a great city is to me, and I think as much as cities have changed and Lord God in the time I've been on earth, they've changed a lot. That has stayed a constant and I think people still very much desire that all those things, whether they live in cities, like New York City or whatever, big cities, or they live in suburbs, even in suburbs and rural areas today, people like this kind of walkability and third places and shops. 

And in a way, even as our cities have been challenged, certainly in my life, and then again, with the COVID pandemic, many of the factors we like about urbanism, what I find so interesting, is that they're now moving. They're not just in cities, we're seeing them in suburbs, in older suburbs, in newer suburbs. Even in some of these rural places, the so-called “Zoom towns”, the ones that got really popular tend to have some of these like little tiny main, that's not Park Avenue or it's not Greenwich Village, but they have walkable main streets and coffee shops and antique stores. So anyway, I think those are the things that are main constants. And I think people really enjoy, not everyone, I mean, other people have other preferences, but I think that's what makes for a great city.

Tod (03:23)

You know, just to add onto that, one of the things that I think is really important to cities is housing, right? And living in the city. You know, I, I grew, I grew up as a suburban kid with the mall in the 70s and all the disintegration of cities, but during the eighties in my early career, cities are being pulled back together, right? And housing is so important, right? When people live in the city and you can walk and you can get to what you want and you get to work and you have transportation.

That's not the city as a destination, that's a city as a fabric of a really wonderful place to live.

Richard (03:58)

Yeah, and I think, I mean, maybe you call it social infrastructure. I don't know if I have a great word for it, but all the things that push different kinds of people together, which partly we lost when we moved to more homogeneous suburbs. And suburbs have changed dramatically, right? Suburbs are now very integrated and lots of immigrants have moved there and there are African-American. I mean, suburbs are very different than the suburb I grew up in or perhaps you grew up in.

So I don't want to put a label on it, but I think this idea of social infrastructure and housing, and one of the real challenges, I'm sure we'll talk more about this, is how darn expensive housing has become. And then for me, I'm talking to you from a condominium where we live part of the year, in Miami Beach, we live the other part of the year in a house in Toronto, and we have two kids, six and eight. And in America, and I think this is true also in Canada.

The dream is that you raise your kids in a suburban house. And I think one of the real gaps, young people love cities and then empty nesters love cities. But in American particular, in contrast, and maybe New York City, New York City is different. But in most American cities are different than in Europe or in Asia where families live regularly in multifamily units. And I think one of the things, I often say if I had one thing that I could do over or maybe I'll do now. Is when I wrote Rise of the Creative Class about young people moving back to cities and empty nesters moving back to cities and the gay and lesbian. And that's because when I started to write that book, people wrote off cities. They thought cities were dead, right? So, I saw all these groups moving back to cities. I think this emphasis on families and cities, when you said housing, family-friendly, multi-family housing is a big thing that we need to think about. And not just because I have kids now, but it's something that I think, when you look at what happened during COVID, It was really the families that left cities. Most of the other people stayed. The families, I want more space, I want a yard, I want a place for the kids to run around. And we began to see that our cities, and now with the housing prices going up so high, to buy a nice condo in here, our townhouse in cities is so expensive that people go, oh, maybe I can go where I can more afford it. So yeah, I think housing is critical. I just wanna say, emphasize, I think multifamily housing for families is something that America needs to put front and center in its agenda.

Tod (06:18)

Well, you know, in the US, so we all moved out to the suburbs, and we got big houses and moved further out and got bigger houses. And I think we got hooked on very big McMansions, right. Or, or space and cars. You go to a city, you go to New York, right. You go to San Francisco, you go to Europe and people live in much smaller, high quality places, but they use the streets. I had an architectural professor that's called it street as a room. Street is your living room. Right. And your apartment is your bedroom. And that's a really interesting concept is this idea that if you get into the city, you're living in the overall city. You're not having to create your own acreage. It's, I am part of a much larger fabric and the entire city is my front room. Very different way of living.

Richard (07:05)

And I actually think part of the affordability crisis, I often say, I'll use a different word than McMansion. And this doesn't mean anything, because everyone wants to live like a Kardashian. I kind of like the Kardashians. I don't have anything against the Kardashians, but they see that house, that big house. And I say to my students now, in America, we've heard about the 15-minute city. The big trend I see is the one-minute city. The one-minute city is the big suburban home with a home office for you and your partner, with an independent bedroom for every child with their own little office space, with your own in-home gymnasium. And now people are putting the TV room and the home studio room and the family room. And don't get, some people think that's rich people, but it's trickling down to the professional. You know, I grew up in a house that was, we probably had 1,500 square feet. My parents rented the second floor to a tenant. We had a living room, a dining kitchen, and one bathroom a bedroom for mom and dad and a bedroom for the kids. And a yard, we thought it was like hog heaven, we were living in hog heaven. And I think what you say is so important that what that does then is create isolation. And we know that isolation is probably one of the biggest health issues in America, especially people are not connected with, now I think a majority or plurality of Americans are living in single house, single family, the single member households. People are lonely, there's a loneliness epidemic. And yeah, what you really want is people to use the environment of the city, the social infrastructure, the street, the restaurants, the cafes, the meeting places. 

You know, you see that in Tokyo, you see that in Hong Kong, you see that in Singapore, you see that in London, you see that in Paris, you see it in, like, in New York, you're seldom invited over to somebody's house. You go meet in a restaurant. But in most American cities, when you meet someone, you go in to their, or most American communities, you go to their house, which is lovely. But yeah.

And you see it even with condominiums and apartments. People want more and more and more space. And so I think we have to get over this addiction to space. And why I think that's important is I think the more space you consume, the more it drives up the prices. So a lot of what we're seeing, like housing is affordable and the cost of land is a big factor of that, but another part of it is that people think living in 1,200 square feet, ick, I can't live in 1,200 square feet. I need something bigger.

And my hunch is that what we have to get to, especially if we want to live in denser environments, is that people have smaller amounts of space for themselves and then use shared spaces out on the street and in the community.

Tod (09:40)

And that density provides a very rich experience, a very, very rich experience of examples all over.

Richard (09:48)

I have a six and an eight year old and.

You know, you fight this, you go, oh, the city's dangerous, the community's dangerous. There's a homeless person here. I want to shelter them from that. I don't want them to see that. I don't want to see them police on the street. And then you think, they're gonna have to grow up in this world. You know, and I'll be really honest. And what are you sheltering them from? And that's a more rich way. So our choice is to try to embed them in diversity. But then people look at you like you're nuts. Like, you know, I was talking to a guy today. He raised his kids in New York, and he said, you know, when his son was 13, to go to school, he put them on the subway. Then that was probably a decade or a decade and a half ago. I think now if you did that, I might do it. People would think you're nuts, and somebody might even try to call the school board on you. But no, I think that this, there's a richness in a diversity. And what we've tried to do is kind of cancel that out or live in these more homogeneous environments.

I understand the choice. I understand why people would feel safe in that. But in a way, it's not good for you. It's better to be exposed to the human experience. And there's, you know, when people think about cities, when you're on that transit, I give you another, transit is a great example of park. Like in New York City, and we had an apartment in New York City when our kids were really, and you'd go to the park, even in a gentrifying neighborhood, it was way different than a suburban park. There were people of every walk of life, and that's good. And the one humanizing experience, both of our kids were born in Toronto where there's public healthcare. And I'm not gonna exaggerate this. We were probably the, when our children were born, the only middle-class or professional-class family in that labor and delivery ward. That was great for me. You know what I'm saying, that we all shared the same healthcare.

And I couldn't buy a bigger room. You know what I'm saying? I just thought that was a great humanizing experience for me. And I think that exposure to humanity is what cities are great at. And I think in the United States, we've tried to erase or over-navigate too much of that.

Craig Van Pelt (12:05)

So I, we're all, I'm an urban planner by training. You're an architect by training. I'm an urbanist and I love cities as well. And I read your, I read your book 20 years ago and I reread it. Cause I know you updated it recently Richard, but even what stuck with me from 20 years ago, we were talking about this earlier, uh, is you talked about the three T's right. Uh, which was technology, talent. And what I found interesting even 20 years ago was tolerance.

I don't think a lot of people were talking about tolerance in the early 2000s, like they do today. So, you know, that's what makes the fabric of cities unique, and different cities have different tolerance levels, and they're more or less diverse. But he talked maybe a little bit about how that has changed over the last 20 years.

Richard (12:50)

Yeah. So remember, if I wrote that book 20, published that book 20 years ago, I wrote it 25 years ago. So people forget this when they come to that book. Now, no one expected cities to come back. Everyone at that point thought cities were dead. And what I was observing was there was this beginnings of a comeback.

And that the young people I was teaching at Carnegie Mellon really liked cities in ways that I did not expect. I did not expect them to say they wanted to live in these highly, and you know, I was giving talks, and I always say my mom was a simple woman, and she always talked about the three Rs. And I had written a bunch of books and articles that nobody read except my mom and dad and my brother. And I was trying to think, like, I kept going to my head, the three Rs, reading, writing, and arithmetic, which aren't Rs.

So I said, what would my mom, and I said these three T's, and first they were technology, which makes sense. I was teaching at Carnegie Mellon, there was technology, high technology companies and spin-offs. Talent was pretty easy too, because I was always saying that in Pittsburgh, the problem we were facing in Pittsburgh was our greatest export was no longer steel and heavy industry, it was the talented kids who were growing up there or coming to Carnegie Mellon that none of them stayed. Like they all wanted to go to San Francisco or Seattle or Austin or New York or LA or Boston, whatever. 

And for a long time, I had used trade as my third T. And one day, a dean, a former dean at Carnegie Mellon said, Richard, you need to meet this guy named Gary Gates. And I'm like, great, I'll meet Gary Gates. He's a doctoral student in our program. You and him are coming to similar conclusions. He's studying the location of gay male households.

He was trying to study the propagation of, he's a gay man, trying to study the propagation of the AIDS epidemic and identify hotspots of transmission and how to mitigate it. And what he was finding is that gay men tended to locate in cities with high levels of amenity. That's how my deans were the connection. Richard Florida is seeing college educated people and tech workers go for amenity. Gary Gates is seeing gay men go for amenity. And I remember Gary said to me, name your five leading high tech cities. And I said, well, that's San Francisco, you know, outside of San Francisco, Silicon Valley, San Jose, that's Seattle, that's Austin and Boston. He's named you've just named five of the 10 gayest cities in America. And we started laughing hysterically. And, and when we did that analysis that showed, and this is really important, because I took a lot of criticism over this, you know, my arguments were disassembled over this, what we were not saying is that gay people equal high technology clusters.

What we were saying is the same characteristics of a place that were attractive to gay men. We're also attractive to this group of younger people in professions, in technology, in arts and culture that wanted a cluster of amenities. And we were using gay men, along with other indicators, our Bohemian index of where artists and musicians are, as proximate indicators of those amenities. So we were saying there's this indirect effect, not direct effect. It's not like high tech people are attracted to the gay community. They don't even know they exist. But they were attracted to the similar underlying characteristics. Of course, it was fun because it gave a teachable moment. The funny thing for you guys is that, as an academic, you're usually, the criticism is vociferous but polite. When I wrote this, people called me all sorts of names. They said I was inflicting a gay agenda on America.

They said, how can a product of Catholic schools be undermining, I mean, Judeo-Christian civilization? I was like, no, I'm just trying to figure out what's going on in cities. How have things changed? I think there's been a little bit of a backlash, to be honest with you. I think. I think if I had to characterize this to both of you, I was a little bit naive. A kid from Newark who has experienced racism, didn't like racism. Cared deeply about the civil rights movement and the women's rights movement, learned later in life to care about the gay rights. I think I believed our society was on this upward path to a more ethical and moral high ground. And I think what we saw in the past seven or eight years is that maybe people didn't like it, they didn't say much, and then all of a sudden they came out of the woodwork and there was this backlash. And yeah, I think I would have been more tempered. And I think I was overly naive in believing that we had this path towards a more utopian society. And looking back, you know, it makes sense. Rich people were moving to cities, highly educated people were moving to cities, the creative class was moving to cities, cities were becoming more secular and less religious and more open minded. And then there were people like my long deceased relatives, the Italian American community and others and other communities that were saying, no, no, no. We have more traditional values. We don't like this stuff. It scares us. And I think there's still ongoing backlash. And that's been an interesting learning process for me, to understand that our society still is divided. I didn't believe it. I couldn't process. I mean, I was naive that our society is still divided along these lines.

Tod (18:08)

Well, you know, cities have room for all of that, right? If you look at any big city, they have deep enclaves, right? And they could be around affinities or religious or historical or where you came from. Right. And those things all live in the same city. Right. And that's an important thing. So I think the tolerance is right. Right. Because civilization, if you're going to come together, you're going to work together. There's a lot you're going to get out of it, but you have to have rule of law and basic tolerance, right? Or otherwise you're just going to live in a forest.

Richard (18:38)

Yeah, I mean, the great quote, city air makes men free, city air makes men free. I mean, yeah. And I think the arc, you know, I'll be honest with you. Look, I mean, when you go through rapid change, which is so disruptive economically and socioculturally, now it makes sense that you would have this backlash, but I think the arrow of history points in the direction. 

And what, what makes me optimistic is that the look at artificial intelligence today and look at digital technology which can do more and more, like we've eliminated, first we eliminated, most people worked on farms. Then we mechanized farms and got very productive and now 1% of the workforce works on farms. Then most people worked in factories and 70% of people worked in industrial related occupations, manufacturing, now five or 6% of the workforce works in production occupations. And then people started to gravitate to professional work and personal service work and service delivery. 

Now I think the economy depends on the unleashing of human creativity, human creative capabilities, human intellectual capabilities. That requires tolerance because creativity doesn't care about gender, race, sexual orientation, age, place of birth, like creativity is in everybody and it's everywhere and we all have different versions of it. So my own view is very deterministic that the economy requires creativity. If the economy requires creativity, if it means that we have to harness more creativity, that requires more diversity. So sooner or later, the competitive effect will be positive movement. But right now, I think we're in a little bit of a backtracking. 

Tod (20:16)

Well, we do. Well, look, we do know that the strength of the U.S. is innovation and creativity and freedom of thought. Right. So those are things that those are things that, you know, weave their way through many generations.

Richard (20:22)

I mean, didn't mean to interrupt, but I'll tell you, my dad with a seventh-grade education was a pretty sophisticated guy, two quick stories. 

The first thing he told me is during World War II, the Russians were dismantling the machines and trying to take the machines back to Russia. And he said, the American GI's are like, take the machines. But if you're a German, if you're an Italian, if you're European, it wants to come to America. And my dad always said, the mass migration of Europeans to the United States in the war period, changed the ballgame. And the second thing he said to me in the factory, you know, he'd take me to the factory, his little kid, when I'd beg him, and he'd show me there would be Italian American, African American, Hispanic American, German American, and he would bitch. He'd bitch about the... and I teach it in MBA program. He'd bitch about the MBAs, and he'd bitch about the engineers, and he'd say, look at these people. Look at these people. Look at their ability. He said, these machines are terrible.

There's worse machines, but look at our factory because it's there. He wouldn't call it creativity. It's them. It's in them. They know how to do this stuff and stop squelching out. Stop the MBA telling you what to do. He saw that creativity. I learned it from coming up from the simple factory worker. And he's like, these people know how to make this stuff. So I think I learned that from my dad and it was in the simplest factory work.

You know, the working-class guy, my dad saw this cauldron of creativity. I think you're right, Todd, that it's, there's something, and I don't mean, look, this is in every society, but America has this magic at activating it.

Tod (22:06)

Richard, let me ask you this. What are some examples of a dysfunctional city? What does it look like when cities stop working, right?

 

Richard (22:14)

Well, you know, I mean, it's so funny. So I'm from Newark, my wife's from Detroit. Historically, those would have been two examples of pretty dysfunctional cities that have turned themselves around so much so. I mean, I've actually done some research on Newark recently and it's the crime, the way they've mitigated crime. It was used as an example during COVID of effective policing. But Detroit, I gave a talk about two months ago to the CEOs of the US Travel Association.

And they were very concerned what's going on in certain of our big cities, where there's been a lot of homelessness, vagrancy, urban disorder. And they asked me, not knowing my wife's in Detroit, they're like, why has Detroit rebounded? Like, what's going on in Detroit that people are going to the downtown and it's exciting and it's safe? And of course I told them what happened and the effort.

So I think what's interesting is that cities go through these waves and maybe...
I love San Francisco. I love Chicago. I love some of the cities that are challenged now. And I think a lot of what we hear may be partly true and partly magnifies for political reasons. But somehow, even in cities that are far more challenged, in Chicago or San Francisco or today, the Newark's in Detroit, they find a way to begin to recast themselves. And I think what's interesting is so much of the deck has been stacked against cities, right?

You guys were talking about suburbanization, the incentives, the highway programs, the mortgage incentives. And even in the face of that, it's almost as if the deck was so stacked against cities, how could they come back? So yeah, and I think now maybe people are overreacting a little. I don't see the doom loop that some people see. I see some really fundamental challenges, but I don't see the doom loop. I see in most of these cities that people talk about a group of business people, foundation people, political people, civic actor, labor activists, coming together and say, we wanna build up our city again. So I don't see the doom loop that we saw in the 70s and 80s, but yeah, I think there are cities with some more significant challenges than I would have anticipated a decade ago.

Tod (24:29)

You know what I always come back to is after 9-11, right? New York city, especially downtown, you know, you would have written that off easy, easy enough to do. Right. And then look just a few years later, right. And what is it? It's talent. It's young, smart, educated people who choose a place to live. And guess what we all follow, right? We're in the office space business. You know, we help companies find the right environment. We follow talent, right? Look at lifestyle cities, right?

We're talking about cities today that you would have written off 20 years ago, right? Some of these mid and small sized cities, you would have written them off. All right. What do they have to offer? Right. And now they're vibrant places. Why? Cause they're following talent.

Richard (25:13)

So it's funny, and I mean, that's one thing I'll give myself a little credit for, this whole idea that talent matters is an argument that I tried to make 25 years ago when people thought I was insane.

Like they thought if you got the jobs, that people would come, and I was like, no, no, no, people have choice. And I think one of the things the pandemic did is it was a giant experiment, and these digital technologies gave us more choice. And it gave, no, not everyone. Not less fortunate people, not essential workers, but affluent people, educated people, and the creative class got a lot more choice and a lot more leverage. 

But I think there's something that I find constant. And I don't think it's change. And I'd love, we could talk about this because you guys are far more expert in this than me. 25 years ago, when I asked people what they want in a great place to work, I heard this answer. And when I asked people this, tomorrow. Recently, I'll hear the same answer. I wanna work on great projects with great people in great spaces, in great places. And I think people heard remote work and they thought, oh, well, we're like us. I'm in my little study, which is, we can make this a guest room, it's my study. It has the camera, it has a little shelf. And I do Zooms from here, whatever, conversations from here. Everyone's gonna stay there, but no, what I keep here. Is yes, there's times I want to work flexibly. There's times I want to work from home. There's times I want to work for wherever. But I want to work in great spaces and great places. 

And I want to emphasize this. Great spaces and great places were the most important. People told me and continue to tell me what's a differentiator in the company I work for is that it's a great space and a great place. And I think what happened, which you guys know better than me, people somehow mistook a cubicle farm in a giant vertical tower, and that's not a great space. I called that the last vestige of the industrial age. That's a horrible space. That's an inhuman space. 

I always tell the story where I was invited up to WeWork in the old days, and fortunately, I didn't have to do body shops with Adam, so it was a good day for me. And I hit my wife, I elbowed her, and I said, this creative class shit really works.

What I saw in that headquarters environment was a place that people wanted to be. Now, I think that was just the, you know, much more about that. That's just the beginning. The whole work environment is much less what we think of as the industrial age office and much more a place of coming together, meeting people, social. It, it's almost like more like hospitality than office. I have all the wrong words for it. It's more like your living room than your classroom. And I think we haven't figured that out. I think you guys are at the cutting edge of it. 

And then what is the portfolio of spaces that human beings need to be in? I'm in one in my house now. But I'd go stir crazy if I was in one of my house 24-7. What are the others, some of which are a corporate or a corporate affiliated office, some of which is a third space or a third place, a coffee shop or restaurant or something else?

And how do you manage both as an individual and as a business that portfolio of spaces? And I think we're only now, and that's why I'm glad we're talking. We're only now getting to that point where we understand it's not about a space. It's about a portfolio of spaces.

Tod (28:50)

Yeah, I think what we saw during the pandemic was just a forced disintegration of the workplace, right? And I don't say that in a bad way, right? Because there's a lot of things we picked up, but there's an awful lot of things we picked up, technology adoption, and the ability to focus and destroying commutes. And there's an awful lot that got done.

Now, I think what you're seeing is starting to put it back together, right? If you run an organization, if you're in an organization that's based on the collective work of a number of people in different departments, there is a convening that has to be done. Sometimes it has to be done to get work done, sometimes it has to be done to train and cross pollinate, but the convening is a big part of it, right? Just being all on the Zoom won't do it.

Richard (29:36)

We need each other's energy. Like you just get down and don't get me wrong. There's times where I don't want to be around anyone. I'm writing, I'm focused. But I was writing Rise of the Creative Class, this story, somebody told me the story of this famous physicist who worked at the Princeton Institute of Advanced Study. He would be in his office and then he would get bored and he'd start roaming the hallways and finding people to talk to. And anyone, like the assistant, the graduate student, because he needed, I find the same thing. Like I have to go for a walk, I have to go for a bike ride. And then somebody said, no, this isn't about a walk and a bike ride, it's about resetting your mind for a second working day. Human beings do not thrive in isolation. And I think when we, I love the way you put the disintegration. The office is a cubicle for isolation, that doesn't work. It's not even an office, right? Where does the office come from? It comes from the London Cafe. It's some mechanism for giving you social energy.

And I think what's interesting is no one's quite figured this in the portfolio. I mean, we're seeing this experiment in real time. It's not a coffee shop. It's not just a coworking space. It's something new. And you see the gravitational pull of it. And I think you're so right. What's so hard in the US, of course, is that the young people need this. And then people our age who have families go, well, I bought that big house out in the suburbs. I'm commuting 45 minutes and that's horrible. And we have this demographic divide. 

So yeah, and I think you're right. I just looked at the placer data. And I always think if you're gonna say that New York is dead, that's the great way, it should end your career, but it never does. Like it's a prediction, we always get wrong. But it showed that, placer data showed that New York City had one of the highest, if not the highest, back to office rates. I think Miami was second.

And that's interesting because Miami has been under-officed, right? It was the highest back to office rate in a place that you would argue is pretty over-officed. I thought that was really interesting about this getting back, that people are getting back. And it takes a while. I mean, I studied pandemics. These are multi-year phenomenon of getting back. There's a big shock.

Tod (31:50)

New York is such a good example. So New York during the pandemic, rents went down 40%. And then six months into the recovery, rents were up 40%. And then it peaked above that. So that's really interesting. So back to work lags, but I think a lot of it has to do with reinventing what the work is. But people, in terms of just look at rent and housing stock.

Craig (32:19) 

What people want now that they've had it is choice and control. And now that they've had both of those things, it's hard to put the genie back in the bottle for people. Because I think the more people I talk to, they want an option. They don't want to just work at home. They want the option to come in. But they want it when they do come in, it's gotta be meaningful. There has to be a reason to draw me back into the office. 

Tod  (32:39)

It's that portfolio space. I think you're onto something with that term. And I think the other thing we're onto is/ you’re onto is that if you're younger, if all of us were 23, the company's doing a disservice to us, isolating us. And we have a podcast with a Stanford professor and he says, you can't recruit the best and the brightest young people unless you're going to bring them into an office. Unless you're going to bring them into an environment where they're learning from others.

Richard (33:05)

100%. That is so constant. Great projects with great people in great spaces and great places. I don't know how people forgot that. But if you talk to these kids, because I do, they will not go to a place that's remote only. Now, maybe I would, because I'm older and I have two kids, six and eight. You might hear them yelping around in the background. But the youngsters, these young, talented kids, great spaces and great. And I think what you said is so important.

It's choice of that space. And it's not a space. It's multiple kinds of spaces that fit my mood and fit the day I'm gonna work. And you know, it was so funny when writing Rise of the Creative Class, I was asking kids about nightlife and they're like, no, no, no, no, no, no. We're not baby boomers. We don't wanna get hammered, which I found really interesting. We need 24/ 7 nightlife because we're working so hard. We never know if we wanna go to a show or go to a concert. We wanna be in a city. It's almost that the city offers that choice of spaces. Like, we don't know, maybe we want to go to the office today, maybe we want to work from home, maybe we want to go to this cool coffee shop. 

And, you know, I always use the same example. When I started to work, everything was wired. I was tethered to my desk. There was a phone, there was a computer wire, and there was an assistant who gave me those pink things. 

There's my office. I take it wherever I go. So, I am untethered. Wouldn't I, like you just said, have choice and wanna exercise choice? And where you see it the most, I mean, look at super rich people or business leaders. Look at Jeff Bezos deciding he wanted to live part of the year in Miami, even though his headquarters are in Seattle and he built another one in Washington, DC. The people have the capability for the most choice, wanna exercise it the most. So it makes sense to me that people want more choice.

Tod Lickerman (34:59)

And I think, so our clients tend to be the heads of real estate, corporate real estate for those companies, right? And it used to be that what they thought about was cost. It still is, but, but it's not number one. Number one is accessing talent. And we have seen, I think it shocked us all the fast rise of the sort of job crunch and the talent crunch. We knew it was coming demographically. You could see it coming, but the fast rise of the talent crunch.

And now there's never been a tighter connection between space and portfolio places and workplace and company branding and access to talent. And that's a great thing for us because it gives, you're serving a higher purpose, right? Look, real estate's 10% of the cost of labor, right? And really great labor is in the driver's seat, right? For how it wants to work, where it wants to work and what it will be paid.

And we again are following talent, which is a great thing.

Richard (36:02)

Yeah, and I think there is a revolution. You know, it's funny. I'm an urbanist. I guess 20 years ago, I started talking to residential real estate developers about how to build housing to attract the creative class. And they were very flattering and said, your book is so important to us. To be honest with you, it's only with the pandemic that I started to talk to people in the office business. And, you know, I think there's a reason for that because the industry didn't rest on its laurels. There was beautiful space and beautiful corporate space and beautiful law offices and the Googles of the world, understood that they made these place with the cafeterias and the foosball tables. And then they moved to the city, to New York because they knew there was talent there. 

But I think there's now what you just said, this recognition that it's not an office. We don't have quite the word for it, but that this space is really important to attracting talent. And that's why we get so much of the noise in the dialogue.

Offices are dead, commercial real estate's dead. No, nonsense. Crappy shitty, sorry for my French, crappy shitty cubicle farms are dead. Great spaces are more alive than ever, and people need them because we're more isolated than ever. So, then what are we going to invent to be those spaces?

Tod  (37:23)

Let me ask you this. So, cities are undergoing all this change, right? And there has been a real sort of repositioning of the office in the CBD. How do cities wrestle with this change when office has retreated in many ways, right? Not fully, but partially. And how do they think about the fabric of their cities going forward?

 

Richard (37:50)

So first, don't get freaked out. This is a necessary culling. You said it's the disintegration. You said that nicely. This is the sh- look. I have a book here on my shelf. I think it's fantastic. It's by Robert Fogelson. It's a history of downtowns. I don't know if people can see it. The title is Downtown, it's Rise and Fall, 1880 to 1950. Fogelson thought that the traditional downtown CBD was dead in 1950. I think he's right. This book is now my Bible. I think the rise of the creative, when I say this, not my book, the rise of the creative class, this creative outburst in the 1990s and 2000s actually was a false, a band-aid, a band-aid, where it artificially propped up the conventional office, the credential CBD. But if you look more deeply, what you begin to see is it was already changing. Lower Manhattan added residents. It added hospitality. It added restaurants.

I was part of it, you know, as a Newarker and a person who went to school in New York, I was part of those charrettes arguing lower Manhattan should be a creative engine. And in fact, that new building, the new performance center, people say is one of the greatest things that's happened down there. And the second thing that happened, of course, is the CBD started to move. It was no longer the professional office tower district like Midtown. It started to go out. Chicago River North, Chelsea, Flatiron, Tribeca, Soho. Google's not in the CBD. It's in, you know, whatever you call it, that area of Soho, Hudson Square, I forget the name of it. It's in the Port Authority building. The high tech companies almost started to follow the artists to the old loft in industrial buildings. So I think the CBD was changing, and you used the best example of deindustrialization. That was an existential challenge.

Like when cities lost their industrial base and cities remade themselves, it took a decade or two or three. This is not quite the existential challenge, but it means I think one, the traditional CBD has outlived its shelf life. It's now becoming something bigger and I call it a central connectivity district. Others call it a central social district, a central recreational district. I like my word, a place for humans to connect.

But I think it's growing in space and size, that the platform of the workplace of the city is growing. And it's expanding outside that CBD. And then, of course, residential conversion. And an emphasis, I think, on third spaces. According to that study I wrote about that Paul Levy did, offices back 75% to 80%. Residential in the 26 downtowns he studies are back over 100%. There was only one downtown less than 100%.

And visitors are really important. And I think that's been a big learning for me. I don't think I ever thought, like, I never really figured out how important local and non-local visitors are to the center of a city. And so that's something that cities should really think about, not just live, work, but live, work, connect and how important that visitor, both the business tourist and the local tourist are. 

Tod (41:10)

You know, in those cities, New York's a fantastic example. The number of B and C grade, what we would call an office term is B and C grade buildings that are interesting, complex, small in neighborhoods, right? That you could see, just go to Paris for a while or go to any major European city and half the Asian cities, and you'll see if that comes alive with people living in different textures.

All of a sudden the CBD, it's just like downtown was in the 80s, right? Used to be a place you go to work and then leave or every downtown in the 70s. Once you start adding housing, right? And the other things around it and the experiences, the whole thing starts stitching back together.

Richard (41:54)

And I think, you know, I'm sitting here in Miami Beach, like now people thinking about, well, we can put office near Lincoln Road, we can put office near Sunset Harbor. We can now, they're smaller, they're more boutiquey, they're not big conglomerations, but people seem to love that. And I remember at meeting, I told you at WeWork, I'm there with all the top executives, right? And the first thing I say is why aren't you putting these things in the suburbs? There's a lot of people in the suburbs who work in the suburbs, men and women, a lot of moms, who would love some other kind of space to go to work in. And they laughed at me. They thought it was the funniest thing they ever heard. Like they were on the floor thinking, this guy's lost his mind. But now you see this demand for higher quality. And even in the report on the future of New York City that Dr. Roth and the other deputy mayor did, fascinating. They talked about repositioning the CBD, but moving employment zones. Now that didn't include Connecticut and New Jersey, because it was a study of New York City, moving more work out to Brooklyn, out to Queens, out to the Bronx, out to Staten Island. 

I think this is what's so interesting. You have the opportunity to create more and better workspace closer to these residential centers, and I almost think they need it more. And then in the center core and in the urban core, you make the brand, I think of retail, the brand, the really spectacular thing, where people go to connect with one another and meet with one another. 

And it's less, I think it's probably less about workspace. You know, I don't want to say that because I like a workspace, but it has to be a lot about connection space, connectivity space. And I think you know this, we're seeing this in real time. People are now figuring this out. Like, yeah, we can do this.

Tod (43:40)

Well, and what's happened to us is younger folks, millennials and others have taken their expectations of their environment to the suburbs, to these lifestyle cities. And it's interesting to see, right? It's interesting to see things that look like they could have been in Soho now in the suburb or in another city. And that's a good thing, right? That's a really, they're taking, bringing the best of where they came from.

Richard (43:49)

Yes. Well, the thing, you know, when I wrote The New Urban Crisis, I went on a book tour. And this is like 15 years after Rise of the Creative Class. And I went back to many of the same small cities, Milwaukee, Indianapolis, Columbus, you know, these are Tulsa and all the, and I'm like, holy shit. What happened? Like everyone I went to had spectacular restaurants, nevermind Nashville, spectacular restaurants, spectacular, great boutique hotels, Louisville, Kentucky. I could go down the list. I could chapter and verse. I'm like, you know, I do, I now do a lot of work in Tulsa with the Kaiser Family Foundation, and then it became obvious. Well, they got a lot of great chefs here because the space is affordable. And then I heard Danny Meyer say one day, the New York, he said, I don't think I could make it in New York any more space. So what happened, I think, Jane Jacobs would have figured this out right away. Cities got, the big cities, the New Yorks, the London, the San Francisco's got so expensive. And this creative revolution, right? Lifestyle revolution went on so much that people started to go first to Nashville and Austin, but then they got expensive. Then it just goes down the line. 

And what's so interesting about the pandemic is you started to see this in rural areas. That's the one place I wouldn't have expected. You started to see now these rural areas with the little main streets become fascinating places. And I do think it's right that people have taken their expectations. And it may be, see, the United States might be interest in unique in that we may have a spatial division of labor that's different than Europe. That what we might have is these big giant superstar cities for the young and the ambitious. Now don't get me wrong, there'll still be young and ambitious people who choose to stay in New York City or San Francisco or LA. But many of them might say, I want more affordability. And in the past, they would have gone to the suburban catchment zone. Now they go, oh, I could go to Miami, Austin, Nashville, Tulsa, Bozeman, Jackson Hole, Park City. I can go any, not any, I can go almost anywhere, or Hudson Valley, Hudson River towns. And I think maybe you get this, then when there's a family, people go to these lifestyle centers, and then when they're empty nesters, they make a third choice. 

This idea of multiple locations over a life cycle, I find fascinating. And that might be more the case in the US, where if you're in London or Paris, you stay there. But if you're in the US, you go from big city to lifestyle center, back to big city, something like that.

And we'll see, only time will tell.

Tod  (46:32)

I think there's something to be said for that. The big cities, I still look at them like big engines, right? When you're going to make your career, to make your name, to learn, figure out, to go deep on something, to create wealth, it's hard not to go to a big city and do that, right? But you may not be there forever. And those, I think there's a level of economic engine and social engine there, as well as all the other things that work for transportation, housing and everything else that will continue and we'll bring them back. But you're right, they're part of a larger national organism, which is pretty fun.

Richard (47:08)

And for organizations, that's a challenge. Like I met Peter Jackson right after I wrote Rise of the Creative Class when I gave a speech in New Zealand. I went to visit him in Wellington and he's like, when I was a young filmmaker, I had to live in LA. I couldn't live, but when I became Peter Jackson, I could move. And I think the hard part of organizations now is once you've developed your network, your mid-career, you can move. But I think the hard part is that those younger people suffer from the lack of mentoring or acculturation. And I think that's a huge organizational challenge. How do you do that when different groups in the career cycle are making different life's living choices?

Tod (47:53)

Well, but recognizing that's the work to be done is the first step. Right. That's when we come back to its convening and you're not convening for convenience sake, you're convening to drive the organizational supply chain. 

Hey, look, this has been tremendous, right? We've just gotten started. We could go all day, but look, my takeaways are cities are important parts of civilization. They always undergo change. They continue to undergo change. And there's a real interesting dynamic going on now, both in the biggest cities and in the smaller cities and the entire nation. We know when it comes to workplace and development of cities is very, very important. And we know that ultimately a successful city follows talent, right? And so you keep an eye on talent and you have a pretty good chance that something's gonna happen good in that city.

Richard  (48:44)

But I started with some stories about my mom and dad. Let me tell you why I have great hope in cities today. When I started working on cities, I worked in an intellectual ghetto. If I said I worked on cities, people were like, what the, what? You study cities and you like an urban planner? Who cares about that? Now you go to a dinner party or a cocktail party and you tell people, where should I move? Where do I go? I'm thinking about these cities. I've never thought about any, all I care about is where am I gonna go? I'm gonna go to Miami national, I'm gonna go.

Like, I've never seen this subject. I started when nobody cared, and now it's all everybody wants to talk about. That's the signal to me that this is the greatest time. Like, I just feel like the luckiest person in the world. Like, I started because I love it, and nobody cared about it, now everybody wants to talk about it. So, yeah, I think we're on to something, and these predictions that cities would somehow go away were wrong to begin with. And now I think it's emerging on everybody that they're not. And it's just great to talk to you guys, so let's keep talking.

Tod (49:48)

You bet. So Craig, thank you very much. Richard, thank you very much. This was really fantastic. And thanks for joining us everyone on this version of Opportunity Space Podcast. And we look forward to seeing you on the next one.