I just read Richard Florida’s op-ed “The Joys of Urban Tech” that was published last week in The Wall Street Journal.
Florida makes a good cultural argument about why technology companies are relocating to cities after previously headquartering in suburbs–namely to keep their young employees happy. Why would the brightest engineers and software developers want to live and work in Silicon Valley when San Francisco represents a funner environment. I’m assuming San Jose doesn’t exist in this scenario, or represent a “true” city in Florida’s argument.
That aside, Florida doesn’t mention a couple things that would make cities (using the Bay Area as an example) more attraction to this workforce demographic. First, technology companies employ high-salaried people. These workers can actually afford to live in high cost cities like San Francisco; sure, they may not want to live in big houses, but SF rental housing isn’t what you would call cheap. Add the fact that couples are waiting longer to start families and you have people that have much more disposable income.
Second, Silicon Valley is almost completely built out (i.e., there aren’t many vacant lots to build campuses and new development on). There really isn’t enough office space in the South Bay to expand, unless you can convince those cities to accept denser neighborhoods and build up. Some of the companies have chosen to relocate to cheaper parts of the cities. Florida himself states that Zappos moved to Las Vegas’ “old city hall” and Twitter moved to the “formerly derelict Art Deco building in San Francisco’s Mid-Market neighborhood.” With the latter, San Francisco officials bent over backwards to persuade the company to move in a blighted neighborhood. In other words, the decision to move back to cities may be financial as urban real estate may be cheaper and local tax breaks may be possible.
While I think Florida’s cultural argument has merit, he glosses over a more plausible financial argument that cities could just be cheaper to locate nowadays.
[photo via PJ]