General Electric CEO Jeff Immelt, left, takes questions from reporters as Massachusetts Gov. Charlie Baker, center, and Boston Mayor Marty Walsh, right, look on during a news conference in Boston, Monday, April 4, 2016, held to unveil more details about GE’s move to the city. GE is pledging to spend $50 million on a series of initiatives in Boston. (AP Photo/Steven Senne)
(Note: I posted this last week at my new outlet with Forbes online. If you haven’t had a chance to view that site and bookmark it, I invite you to do it. I’ll occasionally repost some of the pieces I publish there as pieces here, but also provide new and original content at the Corner Side Yard. I hope you enjoy it. -Pete)
This past winter, General Electric stunned many when it announced that it would relocate its headquarters in Boston, after being in suburban Fairfield, CT, outside of New York City, since 1974. GE’s move will bring a corporate headquarters and more than 800 jobs to Boston’s Seaport District in downtown Boston. Although the move represents a small fraction of the company’s 360,000 employees, it does represent a sea change in how the company will view itself and how it will present itself to the world.
As is often the case, lucrative incentive packages were at the heart of the decision. GE was attracted by a hugely generous incentive package (estimated at $145 million, with $120 million in grants and programs from the state and another $25 million in property tax rebates from the City of Boston), and fought off similar packages from New York, Rhode Island, Georgia and Texas. There are concerns — and rightfully so — that city and state governments may never fully recoup their investment in such relocations, or that a $250 billion corporation like GE should even have to be incentivized in such a way.
But GE had other motivations for making such a move. GE went on the record by saying that they wanted to move to a place that had a walkable urban environment and access to transit. GE also wanted to be in a vibrant, innovative environment that would be stimulating to workers. Boston certainly fits the bill.
GE’s move is as much a reaction to trends as it is a proactive measure. Why? Demographics. Young talent, particularly educated tech talent, is relocating as well. They’re moving to large cities, and jobs are following. Corporations want to be where the talent is.
I recently looked at population growth rates for the twenty largest cities in the U.S. between 2010 and 2014, and found some interesting pieces of data that are likely informing the decisions of large corporations. Over that four-year span:
- Overall population in the twenty largest cities grew by 4.9%.
- However, population growth among young adults (ages 25-34) grew by 8.8%.
- Furthermore, for young adults with a college or post-graduate degree, population grew by 19.6%.
- The greatest growth for educated young adults is occurring in the largest knowledge centers of the nation (New York and Philadelphia on this list), and is even occurring in cities where overall population is falling (Chicago and Detroit).
Today’s educated young adults are attracted to cities by the things GE cites are reasons for its move — walkable urban environments that often stand in sharp contrast to their suburban upbringing; access to public transit that can make a car an option rather than a necessity; educational, entertainment and cultural amenities that add to the dynamism and vitality of cities.
Any continuation of this trend could have profound meaning for three groups impacted by the decisions of educated young adults: cities, suburbs and corporations.
What would it mean for cities? Cities should continue to build on their strengths. Continue to let the educational and cultural anchor institutions lead the way in shaping the city’s story. Emphasize your unique qualities. But use this as an opportunity to broaden the spectrum of urban revitalization as well.
What would it mean for suburbs? Amenities mean more to young talent than ever before. Suburban municipalities would be wise to focus on building dynamic mixed-use communities where possible and feasible, rather than a laser focus on homogeneous clusters of homes and commercial uses. The wise suburban municipalities will figure out that their makeup will be more crucial to their success than any incentive package.
What does it mean for business? This is an opportunity to lead, and not just follow. Corporations know what type of worker they want; workers know what type of living environment they want. Business can take a more proactive approach in cities or suburbs; doing more to create the kinds of communities their employees want so they are better able to attract more of the talent they need.
There are legitimate questions about whether this trend is an enduring one. Are educated young adults expressing a preference in living patterns? Is this simply an aftershock of the Great Recession? Will the prospect of school-age children send young families to the suburbs, as has happened for generations? At this point, we don’t know. But cities, suburbs and business can certainly react and respond to what’s happening before our eyes.