BUSINESS SITE LOCATIONS
Weisbrod and Pollakowski (1984) examined how downtown improvement efforts affected the entry, growth and exit of retail and service establishments in those areas. They studied eight downtown revitalization projects that reflected geographic diversity and a range of city sizes from medium to large. Downtown improvement projects are generally intended to stimulate the revitalization of declining retail districts; they rely heavily on improvements in physical amenities and aesthetic image to increase the attractiveness of the downtown shopping district.
The researchers measured differences in establishment profile and growth trends between the downtown improvement zone, the rest of the central business district and other retail districts in the central city. They found significant variation in the impact of the projects, ranging from large increases in new entry and growth of existing establishments to a continuation of trends of establishments leaving the area.
They determined that variation in retail and service activity reflected the health of the local metropolitan economy and the relative importance of the central business district as a commercial center. However, they found no evidence that areas that had experienced growth in retail and service activity did so at the expense of other nearby retail areas. They also found that improvement projects tended to affect establishment entry more than it affected the growth of existing establishments.
Weisbrod and Pollakowski concluded that the most successful projects included coordination of sponsored activities and promotions, improvements in transit services, trash collection, street and sidewalk maintenance, but stopped short of a complete ban on vehicular traffic. The less successful strategies relied on the physical-design strategy of building a pedestrian mall without specific strategies for sponsored activities, promotions and improving auto or transit accessibility.
A report issued by the Brookings Institution (Murphy 1998) documents the 15-year experience of Cleveland's MidTown initiative, a private-sector-driven effort to stimulate reinvestment in an inner city commercial and industrial district. The city's midtown corridor was characterized by serious physical decline and social problems.
After a six-month feasibility study, 46 corporate, small business and institutional leaders in the immediate area made the decision to incorporate. Their goal was to address issues of security, neighborhood appearance, public image, productive uses of land and buildings and development of a cohesive business community.
MidTown Cleveland defined an agenda for physical development and sought state and federal grants and loans for a land-banking project that would make central city brownfields more competitive with suburban greenfields. They participated in a Job Match program to help make the link between residents and jobs and they adopted a marketing strategy to change the public perception of the area.
Between 1983 and 1997, the midtown corridor experienced an increase in assessed values in commercial (55 percent) and industrial (47 percent) real estate that far exceeded that of the city, the central county and suburban counties. There was also evidence of a rise in reinvestment activity that included 425 new companies; 400 expansion, renovation, new construction or expansion projects; 6,000 jobs retained due to expansion, substantial capital investment and/or relocation of existing companies within MidTown; and 5,500 new jobs gained from expansion and/or relocation.
Several lessons were learned from the MidTown experience: the private sector can mobilize its economic power to increase the competitive advantage of inner cities; the private sector can help shape a competitive market environment by changing both the perception and reality of safety; to be competitive, central business areas must be safe, clean, green and outfitted with updated infrastructure; competitiveness strategies must include consistent, sophisticated public relations and marketing programs to promote the advantages and products of an inner-city location; reinvestment successes bring increasing demand for shrinking supplies of marketable land and buildings, and some inner-city areas are surprisingly rich with employment opportunities.
Lugar and Goldstein (1990) studied the impact of research parks on regional economic development. They conducted a case study of North Carolina's Research Triangle Park (RTP) as well as a broader examination of research parks across the country.
For the RTP case study, the researchers surveyed businesses in the park vicinity after the park was created. For those who located outside the park, 41 percent reported that the presence of RTP was of high or moderate importance to their location decision, but 59 percent said it was of minor or no importance. One-third of those who located within RTP said it was unlikely or very unlikely they would have located in the region had the park not existed; however, 44 percent said the opposite was true. Those who reported that they would have located in the region even if the park were not there cited the proximity of the three research universities as being key to their location decision.
The researchers concluded that the park has been responsible for a considerable amount of technology-related employment in the region, but that park-induced growth accounted for less than 25 percent of the overall employment growth in technology-related businesses. They reasoned that the primary engine of economic development in the region has not been the park itself, but the three research universities.
Lugar and Goldstein's broader analysis compared employment growth rates in counties with research parks to employment growth rates in counties without research parks but with the same metropolitan status and population size and within the same census region. They found that half of all research park start-ups failed as real estate ventures. Half of those that remained were converted from research to more general business parks. While this may have turned them into successful real estate ventures, it did not meet the original goal, which was to attract research and development activity. Furthermore, of the parks that remain in existence, only about half were considered successful if judged on their ability to create jobs that otherwise would not have existed.
Fitzgerald and Green Leigh (2002) studied various economic development strategies across the country. While their work focuses on "best practices" rather than formal program evaluation, they offer several key lessons for economic developers dealing with different aspects of real estate development.
Many central cities and older suburbs are plagued by an abundance of underutilized, aging office and industrial buildings, dying commercial corridors, and brownfield sites. Fitzgerald and Green Leigh suggest that economic developers take advantage of the growing interest in downtown living and adapt former office or industrial sites into residential units. They also advise upgrading the information technology infrastructure of older buildings as a means for attracting new businesses.
They cite the importance of addressing contamination issues associated with industrial sites and note that older, centralized warehouse space may be attractive to firms relying on rail or small transport vehicles.
With respect to revitalizing commercial corridors, Fitzgerald and Green Leigh recommend that any effort should begin with a market analysis that assesses what retail goods and services the community needs and can support. They believe that grassroots endorsement and community building are essential and that efforts must involve the area's existing merchants. They point out that older commercial districts may not attract traditional anchors, but economic developers can seek out alternative anchors to bring people back to the area, such as government service offices, cultural or recreational centers or churches.
Having said this, they acknowledge that traditional big box retailers may recognize untapped retail potential and be willing to consider design alternatives that will accommodate the older commercial space. Finally, Fitzgerald and Green Leigh offer important advice to economic developers involved in brownfield recovery. They stress the importance of understanding the pattern and extent of a community's brownfield problem, which requires inventorying and mapping all sites. They caution against cleaning up only those sites that are in the most marketable sections of the community, as this may help to widen inequalities.
They also underscore the importance of evaluating where the private sector will take the initiative and how public programs and incentives will encourage that initiative. They suggest that communities offer incentives for non-brownfield related development costs, since many brownfield sites suffer from other problems, such as lack of infrastructure and community services.
Fitzgerald and Green Leigh believe there are five primary barriers to
brownfield redevelopment (liability, information gaps, costs, time and
uncertainty) and that a successful program will minimize these barriers.
One-stop business centers that package efforts to reduce these barriers
can be a useful tool.