Abandoned warehouses, shrinking jobs and residents leaving town for brighter futures elsewhere.
It’s an all too familiar story that residents have lived through in cities across the country. Yet we’ve seen many of those cities turn around what some would call rock bottom into ample opportunity.
By looking at some of the most successful turnaround cities, it becomes clear that they all share some very similar aspects to their success.
Here are five of the key factors that helped lead cities from the brink of economic disaster to thriving hubs of innovation:
Affordable and ample real estate
With major shifts in multiple industries as the digital age takes hold, many businesses were unable to weather the changes. For many cities, this left entire neighborhoods full of empty warehouses and other industrial-era buildings.
But all of that empty space opens the door for affordable real estate to entrepreneurs and investors who may have otherwise looked elsewhere. Typically, these once-abandoned spaces will attract startups or other innovative businesses, providing not only more affordable space than other urban centers, but architecture that developers want to retain and highlight.
Take Denver’s RiNo neighborhood, once described as “one part tumbleweeds and two parts railroad tracks.” Today it’s a thriving hub of craft breweries, startups and mixed-use spaces. Oh, and it’s also the site of one of the biggest development booms the city has ever seen.
This boom was only possible because of the affordable spaces that drew innovative investments to the neighborhood many years ago.
Diversification of investments
Pittsburgh was a steel town. Detroit was a car town. And when those industries were disrupted, it affected entire urban populations.
Putting all of your economic eggs in one basket worked for a long time, but in the digital age, where disruption occurs quickly and sometimes without warning, investment must come in a variety of forms.
Cities that have successfully revived their economies did so because city and financial leaders came together to develop a wide range of investment opportunities. This might include investing heavily in innovation in certain areas, as Pittsburgh has done with healthcare, but it also means investment in vibrant downtown areas and local businesses that will support a growing workforce.
If you have any personal investments, you’ve probably heard the word “diversification” in reference to your portfolio, and for good reason — it works. It works because it reduces risk. This is true for your 401(k) and for cities looking to revive their economies.
Quality of life
Sometimes the best investment for a city is simply to get people to want to live there.
It’s tough to spark economic growth without a critical mass of residents, including current residents, new migrants and boomerangs (residents who left and eventually came back). In particular, urban economies need young workers with disposable incomes who will work, live and spend money locally.
Cities that have successfully attracted young workers to move and stay there have cleaned up industrial areas and installed recreational trails, or developed living spaces and shopping districts along waterfronts. They also support regular public events that bring people together, such as farmers markets, art walks or weekend festivals.
All of this adds up to making the city a nice place to live, which goes a long way in overall economic development.
Commitment to innovation
In the next 10 years it’s predicted that half of the current S&P 500 companies will have been replaced.
As the digital revolution continues to transform industries across the spectrum, encouraging innovation is critical to weathering the accelerated change of the new economic reality. It’s not a matter of if disruption is coming, it’s a matter of when — even if it’s seemingly already occurred in specific industries.
Cities that are looking to drive economic turnarounds are ripe with opportunity for increased innovation. Affordable real estate will draw in younger workers and entrepreneurs in need of more affordable space, and as more innovative startups move in and grow, more college graduates will stay to work at what they see as desirable jobs. As more workers fill in once-desolate urban areas, local businesses such as bars, restaurants and boutiques are able to thrive.
Committing to encouraging innovation also helps to diversify investment and create flexibility. Long-term economic success requires a willingness to be open to new ideas, whether big or small, and creating infrastructures and incentives that support innovation.
Passionate leaders committed to transformation
For a city in economic crisis to spark a turnaround, it takes committed leadership across the sectors of government and private investment moving towards a unified vision.
In Detroit, boomerang citizen Mike Duggan came back to fix things that he was personally appalled by. As he told POLITICO, he was bothered “That the buses just weren’t running and people stood out on the corners in the winter for hours at a time. That every vacant building in the city was covered with graffiti and nobody cared. The lack of anybody caring was heartbreaking.”
Duggan cared, and he started transforming Detroit piece by piece, fixing stop lights while simultaneously encouraging smart downtown investment from engaged financial leaders, like Quicken Loans founder Dan Gilbert.
Duggan’s passion for his city was the initial spark it needed, but he also had to engage other local leaders and create a clear vision of what the future of the city would look like.
Without leadership dedicated to transformation, all of the other key components to economic turnarounds may not be possible.
Removing the need for economic turnarounds
While it’s inspirational to learn about cities that hit rock bottom and were able to turn into thriving economic hubs, ideally no city should ever have to go that low before learning these lessons.
By studying the blueprints left by cities that have successfully navigated economic crises, leadership in other urban areas can begin developing strategies to avoid ever hitting the rocks below, and hopefully never even find out what’s down there.