URBAN ECONOMICS

1. Suburbanization facts

% in Central Cities		1948		1990
Population		64		39
Manufacturing		67		45
Wholesale Trade		92		49
Retail Trade		75		48
Selected Services		85		52

2. Suburbanization of population

What caused the suburbanization of population?

a. Increase in real income

• Has ambiguous effect - pull toward CBD because of lower commuting costs, pull toward suburbs because of lower housing costs

b. Decrease in commuting costs

• Due to streetcar, automobiles

• Suburbs became relatively more attractive

• Land along routes became more attractive

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c. Central city problems

(1) Old housing

• Newer housing available in suburbs

(2) Race and income

• Escape racial problems, avoid living near low-income households

(3) Central-city fiscal problems

• High taxes causes flight to suburbs, weakening tax base, leading to higher tax rates

(4) Crime

• High crime rates in central cities

(5) Education

• Schools usually better in suburbs

d. Following firms to the suburbs

• Manufacturers, retailers, and offices moving to suburbs

• People go where jobs are

• Residential bid-rent function has several peaks

3. Suburbanization of manufacturing

What caused suburbanization of manufacturing employment?

a. Intracity truck

• Trade-off between locating close to CBD (lower transport costs) and locating farther away (lower labor costs)

• Intracity truck made it less costly to transport finished products

• Firms locate in suburbs, with less costly labor

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b. Intercity truck

• Long-distance travel feasible

• Could compete with rail and water, particularly for short hauls

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• Firms no longer tied to central export node - could locate in suburbs if access to highways available

• Interstate highway system (authorized in 1956, mostly built by late 1970s) made truck transport easier

• Circumferential highways (beltways):

Other examples: Dallas, Denver

• Manufacturers locate near suburban beltways, bid rent functions affected

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c. Automobile

• Workers can reach plants from anywhere in metropolitan area

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d. Single-story plants

• Switched from multistory plants on small lots to single-story plants on big lots

• Wanted to exploit new production technologies (assembly lines, forklifts)

• Land cheaper in suburbs

e. Suburban airports

• Air freight increasingly important.

4. Suburbanization of office employment

Improvements in communications technology significant - reduced need for face-to-face contact

a. E-mail

• Firms can be decoupled:

-  Back-office functions (accounting, record keeping, etc.) can be located in suburbs

-  Face-to-face operations located in CBD

b. Teleconferencing

• Face-to-face meeting not required - not perfect substitute

c. Facsimile machines (FAX)

• Can transmit documents

5. Suburbanization of retailers

Followed customers to the suburbs

a. Impact of the automobile

• Before automobile, streetcar delivered customers to CBD - retailers with large economies of scale located there

• Automobile reduced intraurban travel costs.

• Customers could get to suburban retailers.

• More parking available in suburbs.

b. Shopping center hierarchy

(1) Convenience center - basic needs (bread, milk, beer, gasoline, basic drugs)

• Small groceries, drugstores, minimarts

• Includes other stores as well

(2) Neighborhood center - wider variety of lower order goods

• Anchored by supermarket, large drugstore

• Includes barber shop, liquor store, branch banks, ice cream store, fast food

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(3) Community center - shoppers goods mixed with lower order goods

• Anchored by discount department store - low price, low quality

• Includes supermarket, clothing stores, shoe store, bookstore, theater, restaurant

• Open air, linear or L-shaped, large parking lots

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(4) Regional center - almost exclusively higher-order shopping goods

• Anchored by major department stores

• Includes clothing stores, shoe stores, bookstores, jewelry stores in larger quantities, food court, nonretail functions (professional offices, cultural centers)

• Open or closed malls, parking structures or lots

(5) 1990s - "Superstores," "big box," "category killer"

Ex. -

Central place theory applies:

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6. Stages of suburban development

Hartshorn and Alexander (1988):

Stage I - Bedroom community.

• Middle class move to suburbs for single-family detached housing - still worked in city

• Low-order services (grocery stores, gas stations, fast food) developed

Stage II - Independence

• Industrial and office parks, shopping centers brought jobs and high-order retail to to suburbs - more people working in suburbs

• Light industry, warehouse, and distribution functions utilizing trucks

• Clerical, back office functions not requiring external contact

Stage III - Catalytic growth

• Expansion of high-income housing, more specialized office functions (banking, legal, accounting, middle and upper management, headquarters)

7. Suburban subcenters

• Due to economies of agglomeration

• Types - mixed industrial (Mira Mesa), mixed service (Kearny Mesa), specialized entertainment (Universal Walk), specialized manufacturing (aerospace), specialized services (medical, education)

• Edge cities - concentrations of retail and office space outside of core areas

Ex. - UTC, Mission Valley