Couldn’t Have Said It Better

OK, maybe I’m being lazy.  But maybe I am simply deferring to a better intellect.  Charles Rosenblum’s cover piece in the online edition of the “Pittsburgh City Paper” deserves to be read by all.  Thank you Mr. Rosenblum.  I concur and only wish I had written about this sooner myself.

Go Here: http://www.pghcitypaper.com/pittsburgh/why-cant-pittsburghs-building-boom-produce-better-buildings/Content?oid=1824154

Some History for Perspective?

Thursday April 16, Allegheny County Executive Rich Fitzgerald is shown on front and landing pages of local media officiating at an opening event for a new gourmet market in downtown Pittsburgh.  So is this grand opening a rare enough event for the Allegheny County Executive that it warrants this much media coverage?  This takes us back a few years when the first piece of economic development at Greater Pittsburgh International Airport was the grand opening of a Sunoco gas station and county and State politicians all showed up to celebrate.

At the end of 2006, IBM released a marketing piece touting a “partnership” with UPMC using the following headline: “University of Pittsburgh Medical Center partners with IBM to make tomorrow’s patient care a reality”.  OK that sounds great and over the last seven years one would think IBM could be made to see the advantages of establishing some research programs in healthcare information near its partner, UPMC.  But that has not occurred.  Meanwhile in Austin, TX, AthenaHealth of Watertown [Boston], MA announces it will take 110,000 sq/ft of office in downtown and hire over 600 employees for a new development center taking advantage of Austin’s “dynamic talent pool”.  Obviously, despite the presence of CMU, Pitt, Duquesne and two dozen other higher ed institutions in metro Pittsburgh, we lack a sufficiently dynamic talent pool.

This year Pitt, CMU and UPMC announced a partnership to develop the most current technology in data analytics for the healthcare field; a great idea.  Meanwhile Massachusetts economic development officials this week announced that IBM is establishing IBM Watson Health and will be locating its new health care analytics division in the Boston area, hiring “hundreds of employees” and partnering with some of the biggest names in health care to provide an analytical software able of capturing and analyzing all a person’s health information.

On April 8, 2015 Dennis Yablonsky of the Allegheny Conference on Community Development delivered the economic development scorecard for the Pittsburgh region.  At what was called “Win Day” in previous years this year was played low key with no splashy title.  Job creation in the region dropped 22% from 2013: with 5,406 new jobs created due to the Conference’s efforts.  [Note the importance of those six extra jobs suffixed onto that number.]  On April 16, 2015 State of Georgia and Atlanta officials announced the creation of 900 new jobs by Kaiser Permanente for a midtown Atlanta location.  In one swoop and for one employer, Atlanta gains 16% of the yearly total for metro Pittsburgh.

All this is with the backdrop of the US economy gaining economic momentum.  Is Pittsburgh still locked in much of the same ol’ same ol’ where we look good when the rest of the US is suffering because we’re already so far down that we can’t drop further and thus our region looks good by comparison?  But then when economic growth returns to majority of other places, Pittsburgh and western PA is left further behind.  I’m one of those who is sick and tired of the “slow and steady” apologia that local leaders offer when it comes to discussions of Pittsburgh’s economic vitality.

On April 15, 2015 GSK, the international pharmaceutical company, announced the closing of its Moon Twp regional offices losing 274 jobs and moving operations to New Jersey.  And from all reports and plain old logic, reports have it that sooner rather than later Kraft Heinz [note the order of names in that combo] will consolidate headquarters in Kraft’s 900K sq/ft suburban Chicago campus, removing one of Pittsburgh’s most venerable and historically identified corporate names.  That would be a cruel blow for more than just the jobs and prestige: Illinois is a governmental basket case about to go bankrupt.  And no one can claim Chicago area weather is better than Pittsburgh’s.  But a more diverse corporate community and an international airport hub served by the world’s two largest carriers does have attractions.  [Ask Seattle about losing Boeing which relocated to Chicago a few years back, much to this blogger’s amazement.]  But I’ve previously blogged on losses like these as well as our minor wins like retaining downsized corporate headquarters like US Steel and how Pittsburgh simply needs to replace these legacy companies with growth engines of the future.  Kaiser Permanente, AthenaHealth, IBM Watson …where are the new companies for the 21^st and 22^nd centuries.  Is this the best we can do?

Various Things

HJ Heinz is buying Kraft Foods.  Or merging with them.  Dual headquarters of Chicago and Pittsburgh will be kept.  For now.  And so Pittsburghers are apprehensive as we smell the upcoming loss of another corporate name locally.  But really, we’re talking “old school” here. While Heinz is a venerable name, woven into the fabric of Pittsburgh and western PA, and is in fact a very relevant consumer products company, it is not an entity that will create economic wealth that Pittsburgh going forward needs.  So don’t sweat it.  Work toward the future.

A similar case is Mayor Peduto and the City Planning Commission prodding US Steel to revise their architecture plans for US Steel’s new headquarters building in the Lower Hill development.  I agreed with their assessment of its design from the first time I saw it – it looks like any ol’ suburban office building in any ol’ city in America.  But instead of tweaking the nose of a local corporate mainstay, that is downsizing their HQ office from 400K square feet to close to 250K, just celebrate the fact that US Steel is staying in Pittsburgh when Chicago was clearly an option.

 

Which leads us to this: recently Pitt and CMU announced [another] joint technology development effort, this one to focus on medical information and health care data.  An excellent 21^st century strategy.  Here’s hoping this one produces needed technology with attendant spin-off enterprises for western PA.  The reason this effort is more newsworthy and noteworthy than anything to do with Heinz or US Steel can be seen in a couple real estate deals in San Francisco, which are in fact an indication of employment numbers.  Within the last year, two Bay Area companies, Uber [who we should be proud to say just established a Pittsburgh robotics research center] and Salesforce.com announced new office leases in the heart of downtown San Francisco.  The square footage numbers are eye popping: Uber is taking 900K sq/ft and Salesforce.com taking 2.1M, that’s million, sq/ft.  Combined, that’s more than another 600 Grant Street building.  Pittsburgh could use some of that.

We should still be hopeful that when oil and gas prices rebound, and they surely will, both Shell Oil and Chevron Corp will be putting regional offices in or around Pittsburgh.  I’m not a “city snob” – anywhere in the metro area they want to establish those will be great for what we all call Pittsburgh.  But again, those enterprises only have so much airspace in which to grow.  The future is calling.  Let’s see if Pittsburgh’s movers and shakers can push the City to embrace it more fully.

The Struggle Continues

No I am not referring to the struggle for full racial equality even though a recent University of Pittsburgh study pointed out that Pittsburgh still has a ways to go in the area of economic equality for its African American residents.  No, I am talking about the overall economic development of the city and region.  A series of reports this year point out base level weaknesses in Pittsburgh’s economy that can only be addressed through continued hard work.

The Brookings Institution’s Metropolitan Policy Program ranked the world’s 300 largest metro areas for economic vitality and Pittsburgh was a sorry 253 out of 300.  Admittedly only two US cities cracked the top 50 – Austin and Houston, Texas – but that illustrates how much catch-up we, and the rest of America, need to play.

Related to that report is one from the US Conference of Mayors on projected job growth for 2015 with Pittsburgh forecast to have a paltry 1.6% job growth or 18,000 total new jobs this year.  While any job growth is welcome to those of us who lived through the death of the local steel industry, this percentage is very weak compared to more dynamic cities with which Pittsburgh must compete.

And which cities might those be? An example is found in “The Wall Street Journal” story on Google building fiber optic cable systems in the next round of cities [currently in Kansas City, MO and Austin, TX] including Atlanta, Nashville, Charlotte and Raleigh-Durham.  Note that all of these cities [excepting KC] are listed in a Forbes ranking of the 10 fastest growing cities in America.  Along with the expected Seattle, Denver and San Francisco, cities in Forbes’ ranking share one thing: a vibrant high tech sector. The existence of a fiber optic network, already found in many European and Asian cities [not to mention municipal systems in Provo and Chattanooga], will only enhance these cities reputations among job creators, both corporate and individual.

I am confident Pittsburgh is making strides developing a critical mass of high tech jobs.  But these reports are evidence that no one involved with local economic development can rest for a moment in that effort.  High tech is not some silo of employment similar to manufacturing or agriculture.  High tech is today’s only means of job creation in substantial numbers.  Every job category that is quantified – from agriculture to manufacturing to finance to health care – is dependent on high tech advances for its job growth.  Period.

The last down notes to add to my dirge are negative headlines related to two employment sectors that helped Pittsburgh limp through the Great Recession better than most: oil and gas, and healthcare.  Headlines in both Pittsburgh newspapers note falling oil prices are lowering Marcellus shale employment, with Chevron “paring its workforce” in its Appalachian division as one example.  And the “Post-Gazette” this week reported that healthcare employment at Pittsburgh area hospitals dropped 2.5% from 2014 levels.

Never end on a bad note, I’ve been taught.  So here goes: in almost each of the negative reports, when the associated authors were asked specifically about Pittsburgh, all of them ended with some statement expressing real optimism for Pittsburgh’s future.  Yes our city has “buzz”; positively so.  Just go to NEXTPittsburgh.com to see a listing of promising new high tech start-ups for evidence of such.

But the struggle must continue.  New hotels and restaurants and stores all enhance the overall quality of life and in the long run make Pittsburgh a more attractive place for a creative population.  But the bottom line is that all these things need income – money - to grow and thrive.  And income comes from jobs.  And in the new worldwide competition for jobs, no one, especially a comeback story like Pittsburgh, can rest for one moment.

Sitting at a Fortuitous Crossroads

Some recent press has been given to a consequence of the “new urbanism” trend that we in the US are experiencing.  Whether because of Millennials’ delayed household formation, the increasing numbers of childless Baby Boomers, or simply a cultural shift from a suburban to an urban lifestyle, city living is way cool with even small and mid-sized American cities becoming destinations.  However, as resources are poured into destination cities from DC to San Francisco, Portland to Salt Lake, and Grand Rapids to Chattanooga, a new issue has cropped up: displacement of poorer, largely minority residents.

Two recent pieces caught my eye, both based on a study by Eric Tang of the University of Texas and the Institute of Urban Policy and Research Analysis.  To simplify his study’s model here, Mr. Tang looked at large cities and divided them into “progressive” and “conservative” based on historical voting patterns.  He then looked at the percentage of minority populations in each city.  While we might expect “progressive” cities to be more racially tolerant and thus have growing minority populations, Tang found that for the most economically successful of these cities, the minority population was falling as a percentage of the overall population.  And in one, Austin, which is regarded as this decade’s gold standard for urban success, the African American population is decreasing at an absolute rate.

So of course that got me thinking about Pittsburgh.

Pittsburgh is not yet in the same economic powerhouse league with San Francisco or Austin.  Our job creation quite simply is anemic at best.  We’re still building our momentum.  But momentum is building and now is as good a time as any to think about the consequences of success.  The new urbanism found in East Liberty and Lawrenceville, which is spreading to Garfield and Bloomfield, will eventually make its way to the Hill District and Homewood.  What we want for all these neighborhoods is a social, economic and racial mix.  That’s the ideal and it will never be perfect.  The percentages and type of mix are not as important as the freedom to have such.

Pittsburgh stands at an exciting crossroads where its position as an economic powerhouse and destination city is being re-established for this new millennium.  We need, indeed must make it a goal to raise the living standards of all the City’s and region’s citizens.  Those people who have stuck by Pittsburgh and western PA through the bad times and the less bad times deserve to benefit from renewed growth.  We simply cannot lazily rely on or hope that in-migrants with more desirable demographics replace current residents in our region, City and neighborhoods.

But what’s the prescription?  I’ll start with this one: education.  Better educational opportunity is the standard answer but it is, proven time and again, the absolute best, most efficient and effective solution.  Programs like the Pittsburgh Promise are prime examples of what’s needed.  Institutions like CCAC as well as outlying counties’ community colleges should continue developing programs targeting local workforce needs.  And our four year colleges and universities need to further encourage “entrepreneurial DNA” within their student bodies while taking full responsibility to provide the infrastructure that allows and encourages that talent to stay in the region.  New employment grows from these seeds and outside companies migrate into places where the workforce is trained, talented and smart.

A Good Move at PIT

It is widely reported this week that Pittsburgh International Airport – PIT in the language of airline personnel and frequent fliers – experienced a 1.5% monthly increase in passenger traffic compared to the same month a year ago.  More importantly, this is the fifth straight month of passenger increases.  Travel media names from Ben Mutzabaugh in the “USA Today” to Michael Boyd the oft quoted airline analyst are calling the bottom for PIT’s traffic declines and we can look forward to gradual growth for our once impregnable fortress hub now turned into an O&D, origination and destination, airport which means we must rely on growth in the local economy and its flying public.

I’ve often wondered why Pittsburgh, with a regional population over 2.5 million, generates relatively little airline traffic when metro areas half its size generate much more.  One example is Austin, TX with a metro area population slightly more than 1.5 million.  Yet their airport, which is not a hub for any airline, last month reached a monthly level of one million passengers.  PIT’s most recent month is reported at 657,000.  Can the difference be in tourist levels?  That has a bit to do with it considering Austin’s signature events such as SXSW and its ACL Music Festivals.  But I doubt that explains 50% higher numbers.

My theory on this is related to what I consider the best news out of this week’s announcements for PIT: Sun Air Express will be using PIT as a regional hub for service to small-market airports in Pennsylvania.  I believe a big part of the high passenger numbers in cities like Austin as well as traditional airline hubs such as Denver, Salt Lake City and even Dallas and Houston stems from their position as true transportation alternatives to driving.  Distances are greater as we travel west.  Populations simply become comfortable flying between business centers and then, by extension, geographically dispersed family and friends.  When Southwest Airlines started the concept of short, quick, inexpensive flights between cities in Texas, a transportation planner friend of mine pointed out that Texas suddenly had its own “Metrorail link” similar to the Boston-Washington corridor.  It was just one that took to the skies rather than the rails.

I believe there can be demand generated in sufficient numbers that Pennsylvanians [and maybe West Virginians and western Marylanders and some Ohioans] will use this sort of service for trips that would have meant car travel and all the problems that form of transport presents.  Will it take PIT to the million-passenger-a-month level?  Not by itself certainly.  But it’s part of the plan that will re-establish PIT as a larger, more important airline “hub”, even without status as a hub to a major carrier.  A good move.

This an’at

I have both said it and blogged it before and I will do it again here: Holly Brubach is a joy and a great resource for Pittsburgh.  Her proposal to turn the Granite Building into a true boutique hotel is very exciting.  She is the real thing and developing a one-of-a-kind hotel property exhibits the integrity that reflects the Pittsburgh’s narrative.  The news blog site NEXTpittsburgh.com, which itself is awesome, quotes a story of how a local business executive told her boutique hotels were for cool people and “cool people don’t visit Pittsburgh”.  Let’s have less of those like him and more of people like Holly.

This week Pittsburgh was named on the Huffington Post as one of the 40 Prettiest Cities in the world.  Who knows who throws these lists together but it was nice to be noted alongside Venice, Paris, Sydney, Rio and the other more usual cast of characters.

The latest employment numbers for metro Pittsburgh are, to me, perplexing.  So many statistical measures of the region’s economy are positive: businesses are opening, young people are coming into the city – or simply staying after graduation, and the real estate development activity is higher than it’s ever been.  So while unemployment is declining, there is still a relatively low labor participation rate in western PA coupled with anemic job creation.  7,400 new jobs were created in September 2014 but most local economists say that something from the high teens to 20,000 new jobs a month are needed for a labor pool of 1.2 million workers.  What’s up?  Taxes?  Heck, look at New York, New Jersey, Minneapolis or even across state at Philly.  High taxes don’t seem to hold them back.  Lifestyle?  Can’t use that excuse any longer especially when Pittsburgh keeps appearing on so many “hot lists”.  So what gives?  More to think about.