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Debating the Suburban Revival: Conor Sen, Noah Smith, Justin Fox

Suburban resurgence as at least partly a policy failure wrought by not-in-my-backyard activists, messed-up zoning rules, freeway-besotted transportation officials and the like.

(Bloomberg View)—After years of excited talk about the comeback of America’s cities, evidence has been piling up in recent months that the suburbs are doing much better, with even those quirky-but-ubiquitous millennials now moving there in large numbers and buying SUVs. Bloomberg View columnists Justin Fox, Conor Sen and Noah Smith gathered online to discuss what’s going on.

Fox: As a child of a car-dependent suburb in 1960s/1970s California who has spent almost his entire adult life living in places where one can walk to the store, I was a big believer in the whole urban comeback narrative. I’m still sort of a believer, but it’s clear there were at least two things wrong with it:

The fact that millennials weren’t buying homes or cars a few years ago was more the product of economic hard times than an expression of changing tastes. The supply of walkable, transit-friendly neighborhoods in the U.S. is limited, and it’s really hard for political reasons to add density to them or build more of them.

As a result, while we’re still seeing signs of an urban comeback in real estate prices, corporate relocation decisions and even population trends in some older cities with lots of housing stock, most of the population growth in the U.S. is again happening on the fringes of fast-growing metro areas in the South and West. I just don’t know how much of that is because millennials really want to live in a new subdivision in Frisco, Texas, and how much is because we’ve been so bad at providing them with attractive urban alternatives. That is, I can’t help but see this suburban resurgence as at least partly a policy failure wrought by not-in-my-backyard activists, messed-up zoning rules, freeway-besotted transportation officials and the like.

Sen: As you referenced, the “urban renaissance” in the early 2010s was as much about the particular circumstances of that era as anything. To your point about millennials and hard times, I would add that 23-year-olds in any generation tend to prefer renting to homebuying even if economic conditions are more favorable, and the early 2010s were when the “modal millennial” was in their early 20s.

When it comes to the future of population, and hence to some extent overall economic growth, the supply of land is stickier than demand for it. And the supply of walkable, transit-friendly neighborhoods in U.S. cities is limited. That means growth should continue to shift towards the suburbs.

But there are a couple reasons why we should expect the future to be somewhat different than the past. First, people are waiting longer to get married, buy houses and have kids than they were in the past. This should keep people in cities longer than in the past, perhaps into their early-mid 30s rather than their mid- to late 20s. And second, suburbs are increasingly going to try to adopt urban sensibilities to attract these migrating 30-somethings. Consumer amenities like trendy coffee shops and yoga studios are easy to build, and then some level of walkability and transit as political will allows.

Smith: I think there’s another huge force pushing people toward living in cities: the changing industrial mix of the United States, and the world. We keep talking about cities vs. suburbs as consumption goods -- where people enjoy living. But I think we should think about the production side.

First of all, the U.S. economy has shifted toward knowledge-based sectors like software, business services, biomedical, etc. Part of that is because we’ve outsourced low-end manufacturing to other countries or automated it away. Those knowledge-based industries rely on smart people working together a lot more than they rely on cheap land and power. Additionally, the whole world is shifting toward service industries, which are also very human-capital-intensive.

This means cities will keep being more important than they used to be. See Enrico Moretti’s book, “The New Geography of Jobs,” for more on this. Economic forces are pushing smart people to live near each other in cities, and therefore there’s also a great need for service workers to live there too. Whether cities allow that to actually happen, of course, is up in the air as you’ve both pointed out.

Fox: That does leave the question of which cities. Conor -- who lives in metropolitan Atlanta -- has been arguing that high prices and crowded conditions in places like New York and Silicon Valley will push economic activity to other metro areas. He’s definitely right in terms of overall population and job growth. But Moretti showed that the best-paying jobs have for the past few decades been gravitating toward a small group of elite cities. Is that changing now or not?

Sen: There’s no reason to think that these decades-long trends will reverse. One difference may be that mid-level white collar jobs are to our era what blue collar jobs were to the late 20th century. So whereas before it was blue collar jobs leaving older, high cost metros, now it will be mid-level managers, back office and other cognitive work where physical proximity to other people is less important. You’re seeing that on Wall Street as firms look to move jobs from Manhattan to places like Denver and Salt Lake City. So knowledge workers feeling priced out of high cost metros can move to cheaper Sun Belt metros, creating affordability problems in places less familiar with them historically.

Additionally, the remaining “mega-elite” workers in top-tier cities like San Francisco will struggle to find adequate service labor -- teachers, police, firefighters, healthcare workers, not to mention restaurant and retail workers. And we’ll have to see how they end up dealing with that.

Smith: I definitely think we see some new cities getting in on the “tech city” game. The main examples I’d cite would be Columbus and Raleigh. Both are making strong pushes to attract more knowledge-based industries, using their universities as anchors -- basically, the Austin model. But I also see a lot of smaller cities, based around universities, growing rapidly -- places with just 100,000 or 200,000 people. One good example is my hometown: College Station, Texas.

And something interesting about these smaller cities is that it’s not clear whether they’re urban or suburban. We think of “suburbs” as extensions of big metros, but a lot of these smaller, thriving places have a distinctly suburban feel -- ranch houses, strip malls, etc., maybe with a few blocks of walkable restaurant/clothing shop areas. But they depend on the clustering of smart people for their productivity, and their populations keep growing. Is that kind of place a city, or a suburb? I don’t even know.

Anyway, I’d like to ask you guys a question: What are the stakes in this debate? Is this about how to spend infrastructure dollars? Or are we just trying to forecast trends, maybe make a bit of money in the markets?

Fox: I’m just trying to decide whether or not to buy real estate in College Station, Noah. Oh, and the infrastructure part seems pretty important.

Sen: Noah, we’re trying to figure out which places “are going to be okay,” which ones aren’t and which policy levers have the most impact to help out the places that currently lack a path to success. Our shared destiny depends on it.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

To contact the authors of this story: Justin Fox at [email protected] Conor Sen at [email protected] Noah Smith at [email protected] To contact the editor responsible for this story: Tracy Walsh at [email protected]

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