Private firms and holistic development in second-tier US cities : a case study of repopulating, re-urbanizing Cincinnati and Pittsburgh

Abstract

America's secondary cities are enjoying a well-documented urban renaissance. New residents and their dollars are reversing decades of disinvestment in the urban cores of conventionally less attractive, mid-sized US metro areas. Rising urban populations are largely due to new residents flocking from the suburbs; flat or declining metro populations suggest the cities themselves aren't becoming more competitive, but their urban areas are. Whether they seek a lower cost of living versus larger or coastal cities, or merely reflect the shifting preferences of millennials and empty nesters, many of these new urbanites say they seek vibrant and diverse living environments - value drivers that are sometimes undermined by unchecked private development in larger cities. As public and private forces in these places grapple with how best to meet this emerging demand, second-tier cities present a tremendous opportunity for holistic, community-minded economic growth that isn't possible in more competitive, established urban markets. This thesis explores the ways in which market-driven real estate development can be uniquely holistic and long-term focused in re-urbanizing centers, while also being financially advantageous for the private firms that can lead the way. The paper analyzes the extent to which, unlike for-profit developers in cities with more established urban preferences, firms in these secondary cities engage in long-view, community-minded projects as a means of creating or maintaining social diversity, as well as the factors that seem to encourage or hinder such efforts. I also analyze the extent to which these civic-minded approaches are regarded as drivers of long-term financial stability by the firms considered. I find that most for-profit firms in these cities have not, to date, made significant investments in holistic neighborhood-building. That said, a number of conditions have allowed for progressive, long-view projects to take place: public-backed development corporations, creative financing tools, and proactive local institutions, foundations, and corporations all lay the groundwork for private developers to do projects that create or maintain urban diversity. Conversely, I find that still-low rents, political favoritism, and other challenges often make it difficult for projects in second-tier cities to justify investing in the public realm. I conclude by presenting ideas for new programs that may unlock holistic-minded, profitable development. These include crowdsourced funding for creative subsidies, programs that tie support for local entrepreneurs to public loans and grants, and responsible development consortia, among others.