Today I reviewed the same 15 emails that I receive from the same 15 brokers every Wednesday. I’m sure I’ll do the same tomorrow. They are very nicely done. Some take you to lovely web sites which extol the values of the property. Some lead you to floor plans. All list 3 or 4 brokers ready and waiting to answer your call. The vacancy never changes.
Product brokerage is dead, and it is the entire landlord community that has allowed it. The typical broker feels that he is actually marketing and leasing a property if he or she does four things:
1. Stick a listing on CoStar.
2. Send the same lame email out weekly.
3. Present his or her client with a list culled from any responses to the above together with the classic and useless “tenants in the market.”
4. Wait for the phone to ring.
Product brokerage is a discipline that brokerage has given up on. The discipline is really quite simple but requires hard work. And the “big houses” don’t like hard work anymore as long as nobody demands hard work from them.
Product brokerage requires that a broker fully assess the attributes of the property-its location and neighboring submarket; the current tenant roster and why those tenants chose the property; its perceived class in the market—A, B, or premier; the reputation of ownership and management; all of its physical attributes from floor plate size to HVAC capacity.
From knowledge of the property attributes, a true product broker will match these against the tenants most likely to have an interest in the property. But a good broker can only do this if he or she maintains a detailed database of all tenants in the Boston market, appropriately categorized by submarket, lease expiration, preferred building quality, industry, and history of relocation, among other attributes, and the contacts at each firm.
Brokerage houses don’t have this information and that’s my challenge to the entire brokerage community. And my challenge to the entire landlord community. Tomorrow, ask your broker to provide you with his or her own list of the target tenants he or she is pursuing, EXCLUDING calls from CoStar, calls from emails, and the ubiquitous but useless “tenants in the market.” Your broker will not have a list. I guarantee it. They do not have demand side information that they have developed themselves. They may ask for a few hours but don’t give it to them.
Then the landlord community may just realize that, in their broker’s opinion, no matter how slick their latest email may be, or how fascinating their web site may appear, that you’re just another building with a “for lease” sign on it. Along with the other 10 buildings they’ve hung a shingle on.
Wouldn’t it be nice if brokers actually marketed your buildings?
Wednesday, October 19, 2011
Monday, October 3, 2011
Why urban Planning Fails--especially in Boston
The Boston Globe’s article “Urban Analysis” (Monday, October 3, 2011) is another self-indulgent look at what urban planners want to do and what urban planners can do. And none of it is new or cutting edge.
The Romans were perhaps the world’s most successful urban planners. Why—because Rome, at the height of its power, was an absolute dictatorship, with a Senate thrown in for good looks. It was a lot like Mayor Menino’s Boston with the City Council along for the ride. Urban planners hold tight to the belief that a good plan creates good development. The problem with that thinking is that there is a complete lack of recognition that land transfer and ownership in this country is private. Yes, government must and should control infrastructure and common land uses such as parks and recreation. But you can plan your heart away and if the CEO of a company doesn’t agree that point x generated by some type of Urban Network Analysis toolbox, the game’s up. Planners cannot execute.
And adding more and more data does not help. Nigel Jacob, in the Mayor’s office, who, by the way, needs to realize he works for a man who gives lip service to urban planning but absolute interest in Menino planning, needs to take a serious course in what is and is not “revolutionary” in urban planning. Nigel and the weekend data warriors should stop playing with numbers first and spend some time realizing they are not urban planning revolutionaries. Some suggestions: Ptolemy, Erastotshenes, Alexander von Humboldt, William Hunt Morris, and Robert Moses. Phone apps for removing graffiti and choosing great spots for bike racks is not exactly the stuff of revolution.
There is a fine line between setting a context for development and developing. Vornado and Filene’s come to mind. Ouch, that hurts. The planner and his toolbox are on the context side. Private capital, motivated by no set rules, is on the other. I have a good sense of this. I studied geography and economic development in college and have practiced commercial real estate for 29 years in Boston.
I must say I didn’t foresee “Occupy Boston” as a land use for the so-called Greenway. Was that in the plan?
The Romans were perhaps the world’s most successful urban planners. Why—because Rome, at the height of its power, was an absolute dictatorship, with a Senate thrown in for good looks. It was a lot like Mayor Menino’s Boston with the City Council along for the ride. Urban planners hold tight to the belief that a good plan creates good development. The problem with that thinking is that there is a complete lack of recognition that land transfer and ownership in this country is private. Yes, government must and should control infrastructure and common land uses such as parks and recreation. But you can plan your heart away and if the CEO of a company doesn’t agree that point x generated by some type of Urban Network Analysis toolbox, the game’s up. Planners cannot execute.
And adding more and more data does not help. Nigel Jacob, in the Mayor’s office, who, by the way, needs to realize he works for a man who gives lip service to urban planning but absolute interest in Menino planning, needs to take a serious course in what is and is not “revolutionary” in urban planning. Nigel and the weekend data warriors should stop playing with numbers first and spend some time realizing they are not urban planning revolutionaries. Some suggestions: Ptolemy, Erastotshenes, Alexander von Humboldt, William Hunt Morris, and Robert Moses. Phone apps for removing graffiti and choosing great spots for bike racks is not exactly the stuff of revolution.
There is a fine line between setting a context for development and developing. Vornado and Filene’s come to mind. Ouch, that hurts. The planner and his toolbox are on the context side. Private capital, motivated by no set rules, is on the other. I have a good sense of this. I studied geography and economic development in college and have practiced commercial real estate for 29 years in Boston.
I must say I didn’t foresee “Occupy Boston” as a land use for the so-called Greenway. Was that in the plan?
Monday, March 28, 2011
When the law is not the law--destroying the New England fisheries
The Gloucester Times reported today that a long-standing Congressional mandate (1954) that 60% of tariffs on imported seafood were to be directed to fishing industry projects has been ignored virtually since it came into existence. Instead the monies have been "redirected" to the NOAA. How's that for gallows humor. The NOAA, which has been suffocating the local fishing industry with its everchanging regulations, has also been pocketing the money the industry needs to recapitalize and rejuvenate itself.
Oh yes, I guess I forgot one important thing. Over the past ten years, the diversion has only been $400 million. In 2009, the total tariff was $108 million. Under the law, $65 million should have been spent on the fishing industry. Instead, the total allotment was------ZERO.
But at least the NOAA has those sporty new SUV's they use to patrol Provincetown Harbor to make sure the 3 fishing boats docked in what was a thriving port aren't breaking the law by overfishing.
I wonder how our wonderful rice growers in Texas would respond to a similar "diversion." And then there's all those patriotic farmers growing corn for ethanol. I don't think they'd take this very well. But this is fishing where we seem determined to erase the last ship from our fishing ports.
Oh yes, I guess I forgot one important thing. Over the past ten years, the diversion has only been $400 million. In 2009, the total tariff was $108 million. Under the law, $65 million should have been spent on the fishing industry. Instead, the total allotment was------ZERO.
But at least the NOAA has those sporty new SUV's they use to patrol Provincetown Harbor to make sure the 3 fishing boats docked in what was a thriving port aren't breaking the law by overfishing.
I wonder how our wonderful rice growers in Texas would respond to a similar "diversion." And then there's all those patriotic farmers growing corn for ethanol. I don't think they'd take this very well. But this is fishing where we seem determined to erase the last ship from our fishing ports.
Friday, March 18, 2011
Mutual Funds Still Drive the Boston Economy
Before we attack the largest industry employer in the city of Boston—the mutual funds industry—let’s remember that the tax breaks referenced in the recent decision of Fidelity to vacate its space in Marlboro were granted to all mutual fund companies. The mutual fund industry alone occupies over 35% of the Class A office market in Boston and vendors to the mutual fund industry are a major source of occupancy and employment as well. Mutual funds drive the Boston economy.
And the mutual fund industry in Boston is a proven success. We are not talking about subsidies and incentives to unproven or unstable industries. The Evergreen Solar debacle is the best example of the latter.
If we are going to provide tax breaks or subsidies at all, and I often question that wisdom, the least we can do is to make them available to all of the companies within a target industry. And we should begin by making sure we work with our successful industries first. The success of many other industries depends on the success of the core industry of a region.
And the mutual fund industry in Boston is a proven success. We are not talking about subsidies and incentives to unproven or unstable industries. The Evergreen Solar debacle is the best example of the latter.
If we are going to provide tax breaks or subsidies at all, and I often question that wisdom, the least we can do is to make them available to all of the companies within a target industry. And we should begin by making sure we work with our successful industries first. The success of many other industries depends on the success of the core industry of a region.
Saturday, March 12, 2011
Massachusetts' Gateway Cities to Nowhere
Apparently, Massachusetts has 24 “Gateway Cities”, including Fitchburg, Pittsfield, and Springfield. As Gateways Cities, the State has spent hundreds of millions ($247 million on housing alone) to “revitalize these gateways. Which begs the question: gateways to what?
We need to accept the fact that some cities will never recover their former standing whether as industrial centers, mill towns, or fishing ports regardless of how much taxpayer money is spent attempting to do so. Over time, functions of all cities change relative to each other. Springfield was founded as an armory because British ships could not navigate up the Connecticut River. While its role as a major maker of munitions did lead to a thriving small machine tool industrial town, it has been on the decline for decades. No amount of money is going to bring Springfield back, and I emphasize back, to its past heydays. And there is really no functional objective that Springfield currently offers locationally that justifies continued subsidies.
Fitchburg was one of the nation’s leading centers of furniture production. I need say no more.
Perhaps some of the Massachusetts “Gateway Cities” have futures in a new economy. But spending millions of dollars on imaginary revitalization is an exercise in fantasy, an invitation to patronage, and an enormous waste of capital in a state whose trains don’t run on times and whose school systems are crumbling.
If we are going to put money into true growth cities, we should put it into those cities that are currently successful and thriving. This may sound counterintuitive but it is the success of these cities that will pull the train of success for the entire state.
We need to accept the fact that some cities will never recover their former standing whether as industrial centers, mill towns, or fishing ports regardless of how much taxpayer money is spent attempting to do so. Over time, functions of all cities change relative to each other. Springfield was founded as an armory because British ships could not navigate up the Connecticut River. While its role as a major maker of munitions did lead to a thriving small machine tool industrial town, it has been on the decline for decades. No amount of money is going to bring Springfield back, and I emphasize back, to its past heydays. And there is really no functional objective that Springfield currently offers locationally that justifies continued subsidies.
Fitchburg was one of the nation’s leading centers of furniture production. I need say no more.
Perhaps some of the Massachusetts “Gateway Cities” have futures in a new economy. But spending millions of dollars on imaginary revitalization is an exercise in fantasy, an invitation to patronage, and an enormous waste of capital in a state whose trains don’t run on times and whose school systems are crumbling.
If we are going to put money into true growth cities, we should put it into those cities that are currently successful and thriving. This may sound counterintuitive but it is the success of these cities that will pull the train of success for the entire state.
Sunday, February 13, 2011
Buildings Do Not Create Jobs--Let's Cut the Rhetoric
It’s time we put an end to the political rhetoric that “buildings create jobs.” Companies create jobs and a building is but one of the three classical components of production, along with labor and capital. But it has become the norm in every announcement of a new commercial building for the government official and/or private developer to announce that the building of “One XYZ Place will create 100 construction jobs and 600 permanent jobs.” The claims are pernicious because it is often the rationale for government approval or public financing for the building and for public infrastructure expenditures (see Assembly Square link).
Buildings do not create jobs. Companies create jobs and then, as needed, assemble the factors of production necessary to produce a product or service. One of these factors of production is land, which, for our purposes, can be considered commercial space. The other factor is capital, such as the machinery necessary to manufacture a product or the telecom system necessary in a new office. The third and most important is labor.
To say that one factor of production—land (or commercial space) -- creates another factor of production—labor-- is not only theoretically wrong, it is absurd on the common sense level. A building is a box. If, and the” if” goes to the very core of commercial real estate, the building attracts a user, it will still be a box. It will not create the jobs; it will only house the jobs. And if the company leaves, it will not sprout new jobs. It will still be a box.
Buildings do not create construction jobs either. If the building is constructed by and for a specific user, the user, by creating the building, creates the construction jobs. If the building is constructed on a speculative basis, derived from an investor’s perception of the need for commercial space, then the construction jobs are created by the investor, not by the building. Again, the building is a box, just one factor of production.
One might argue that this is an issue of semantics. I beg to differ, because the “buildings create jobs” battle cry is used as a justification for virtually every new commercial construction project. If a private investor constructs an office building purely on the basis of its judgment of supply and demand and exactly within the zoning and building codes, I have no problem with semantics. Of course, this happens in the Land of Make Believe. Every office building constructed in Boston, even those meeting zoning and building codes, must still receive Boston Redevelopment Authority approval at the design level. And then the sensational claims come gushing out about buildings creating jobs. And then come the requests for public financing or incentives. And then the taxpayers start coughing up money based on an untruth. This is not an issue of semantics when semantics become a weapon of deceit.
The citizens of Massachusetts have now learned the issue the hard way, spelled E-V-E-R-G-R-E-E-N. Taxpayers paid for the building to the tune of $58 million in direct subsidies, incentives, and tax breaks. Evergreen created the jobs. And then Evergreen eliminated the jobs. The building is empty. It is not “creating jobs.” It is just a big empty box, which is all that it ever could be. It may once again become an active factor of production if a user chooses to produce a product or service in the box. But until then, the building will not be creating jobs.
Unfortunately, the Governor had already drunk the “buildings create jobs” Kool Aid, and his erstwhile development director, Greg Bialecki, is still handing out cups of the stuff all over the state. And we all keep drinking it. By the way, Mr. Bialecki considers Evergreen as a minor mistake. Makes you wonder what a major mistake would be.
If you want an idea how deeply entrenched this wishful thinking extends, simply visit the Boston Redevelopment Authority website, look up any development project, and read how many jobs the project will create. It’s a complete farce. I know a lot of landlords who wish that their existing half empty office buildings started to suddenly create jobs one day.
Saying a building creates jobs is like saying that making a hammer will create jobs. It leaves out the fact that hammers do not stand up, grab some nails, and start pounding away. A person (let’s call that person Mr. Labor) picks up the hammer first. And someone (let’s call that someone Mr. Producer) informs Mr. Labor what he wants him to do with the hammer. And, if we all hold our breath, maybe Mr. Producer will find his way to Fort Devens and rescue us all from the Evergreen debacle.
I’m a real estate broker. If buildings created jobs, my profession would not exist.
Buildings do not create jobs. Companies create jobs and then, as needed, assemble the factors of production necessary to produce a product or service. One of these factors of production is land, which, for our purposes, can be considered commercial space. The other factor is capital, such as the machinery necessary to manufacture a product or the telecom system necessary in a new office. The third and most important is labor.
To say that one factor of production—land (or commercial space) -- creates another factor of production—labor-- is not only theoretically wrong, it is absurd on the common sense level. A building is a box. If, and the” if” goes to the very core of commercial real estate, the building attracts a user, it will still be a box. It will not create the jobs; it will only house the jobs. And if the company leaves, it will not sprout new jobs. It will still be a box.
Buildings do not create construction jobs either. If the building is constructed by and for a specific user, the user, by creating the building, creates the construction jobs. If the building is constructed on a speculative basis, derived from an investor’s perception of the need for commercial space, then the construction jobs are created by the investor, not by the building. Again, the building is a box, just one factor of production.
One might argue that this is an issue of semantics. I beg to differ, because the “buildings create jobs” battle cry is used as a justification for virtually every new commercial construction project. If a private investor constructs an office building purely on the basis of its judgment of supply and demand and exactly within the zoning and building codes, I have no problem with semantics. Of course, this happens in the Land of Make Believe. Every office building constructed in Boston, even those meeting zoning and building codes, must still receive Boston Redevelopment Authority approval at the design level. And then the sensational claims come gushing out about buildings creating jobs. And then come the requests for public financing or incentives. And then the taxpayers start coughing up money based on an untruth. This is not an issue of semantics when semantics become a weapon of deceit.
The citizens of Massachusetts have now learned the issue the hard way, spelled E-V-E-R-G-R-E-E-N. Taxpayers paid for the building to the tune of $58 million in direct subsidies, incentives, and tax breaks. Evergreen created the jobs. And then Evergreen eliminated the jobs. The building is empty. It is not “creating jobs.” It is just a big empty box, which is all that it ever could be. It may once again become an active factor of production if a user chooses to produce a product or service in the box. But until then, the building will not be creating jobs.
Unfortunately, the Governor had already drunk the “buildings create jobs” Kool Aid, and his erstwhile development director, Greg Bialecki, is still handing out cups of the stuff all over the state. And we all keep drinking it. By the way, Mr. Bialecki considers Evergreen as a minor mistake. Makes you wonder what a major mistake would be.
If you want an idea how deeply entrenched this wishful thinking extends, simply visit the Boston Redevelopment Authority website, look up any development project, and read how many jobs the project will create. It’s a complete farce. I know a lot of landlords who wish that their existing half empty office buildings started to suddenly create jobs one day.
Saying a building creates jobs is like saying that making a hammer will create jobs. It leaves out the fact that hammers do not stand up, grab some nails, and start pounding away. A person (let’s call that person Mr. Labor) picks up the hammer first. And someone (let’s call that someone Mr. Producer) informs Mr. Labor what he wants him to do with the hammer. And, if we all hold our breath, maybe Mr. Producer will find his way to Fort Devens and rescue us all from the Evergreen debacle.
I’m a real estate broker. If buildings created jobs, my profession would not exist.
Wednesday, February 2, 2011
The Geography of Disaster: The LNG tanks of Everett, Massachusetts
While the Commonwealth continues to debate the wisdom of onshore LNG plants in Somerset and Fall River and while the populace cries foul at Cape Wind over price concerns, the Department of Energy recently and quietly painted a frightening picture of the onshore LNG industry. Liquefied natural gas, exposed to air or water, forms a pool of superheated, inextinguishable fire. Its burn rate depends on the amount of the spill, wind, waves, and currents. By its own assessment, the DoE, working in conjunction with the Sandia National Laboratory, estimated that a breach of only 3 of the 10 compartmentalized tanks on a typical LNG tanker would kill anyone within a ½ mile radius in less than 20 seconds. In 8 minutes, a breach would cause 2nd degree burns within a 2.5 mile radius.
Using Census Bureau and City of Boston estimates of workday populations under the 3 tank DoE scenario, over 80,000 people would die within 20 seconds with an additional 540,000 people suffering severe burns, many fatal, within 8 minutes. Within 12 minutes, fire would engulf all of Charlestown, East Boston, South Boston, the South End, the North End, North Station, Beacon Hill, the Back Bay, the West End and the towns of Chelsea, Everett, all of East Cambridge and over one half of Somerville.
Those are the aftermaths of breaches in tankers. The actual tanks at Everett, at equal if not greater risk of a similar breach, contain over 125,000,000 cubic meters of LNG, ten times the amount carried in a single ship.
There are 9 operating LNG plants in the United States. As the table below shows, Everett is the only plant located in a populated area and the only plant served by passage through a narrow, active harbor.
The Geography of Risk: The Relative Location of Existing Liquefied Natural Gas Plants in U.S.A.
Location of LNG Plants Surrounding Area Nearest Major City Distance (miles)
Sabine, LA Island in lake Shreveport 72
Kenai, AK Port on Cook Inlet Anchorage 65
Freeport, TX Isolated bay Houston 61
Cove Point, MD Isolated riverfront Washington DC 46
Cameron, LA Isolated bayou Lake Charles 24
Lake Charles, LA Island in lake Lake Charles 18
Peñuelas, PR Offshore ocean Ponce 7
Elba Island, GA Unpopulated Island in river Savannah 6
Everett, MA Heart of major city port Boston 1/4
Using Census Bureau and City of Boston estimates of workday populations under the 3 tank DoE scenario, over 80,000 people would die within 20 seconds with an additional 540,000 people suffering severe burns, many fatal, within 8 minutes. Within 12 minutes, fire would engulf all of Charlestown, East Boston, South Boston, the South End, the North End, North Station, Beacon Hill, the Back Bay, the West End and the towns of Chelsea, Everett, all of East Cambridge and over one half of Somerville.
Those are the aftermaths of breaches in tankers. The actual tanks at Everett, at equal if not greater risk of a similar breach, contain over 125,000,000 cubic meters of LNG, ten times the amount carried in a single ship.
There are 9 operating LNG plants in the United States. As the table below shows, Everett is the only plant located in a populated area and the only plant served by passage through a narrow, active harbor.
The Geography of Risk: The Relative Location of Existing Liquefied Natural Gas Plants in U.S.A.
Location of LNG Plants Surrounding Area Nearest Major City Distance (miles)
Sabine, LA Island in lake Shreveport 72
Kenai, AK Port on Cook Inlet Anchorage 65
Freeport, TX Isolated bay Houston 61
Cove Point, MD Isolated riverfront Washington DC 46
Cameron, LA Isolated bayou Lake Charles 24
Lake Charles, LA Island in lake Lake Charles 18
Peñuelas, PR Offshore ocean Ponce 7
Elba Island, GA Unpopulated Island in river Savannah 6
Everett, MA Heart of major city port Boston 1/4
Sunday, January 30, 2011
The Unpredictability Factor--The Myth of Telecommuting and the Growth of Central Cities
I never quite understood the appeal of working in my pajamas, although, evidently, the ability to do so makes one the member of an exalted class—the telecommuter. It’s all very George Jetson--like and it’s made folks like Steve Jobs very wealthy men. It’s also the topic of countless and generally boring visions of telecommuter nirvana where we are all in our pajamas looking out at the smog free home of the brave. The problem is it doesn’t work. Yes, jobs that have specific instruction and little deviation from the norm can be done in your home. They can also be done in India or Brazil. But you just can’t do much when the unexpected happens. The value of the American worker will be increasingly based on his or her ability to react to and deal with the unexpected and unpredictable world of global business. That’s tough to do in your jammies.
Let’s start with the latest rather startling evidence. The latest statistics from the Census Bureau indicate that office jobs have been growing at a faster pace in central cities than in their surrounding suburbs. Yes, the cities who our many experts told us 15 years ago would be virtually empty while we all sat and watched the grass grow in squat brick buildings in suburbia are outpacing the dull worlds surrounding them.
Considering that a suburban office worker is one step up the ladder from a telecommuter, things don’t bode well for the pajama party. Nor does it matter how many apps you’re running on your IPhone, because you can’t run an app for something that doesn’t yet exist, such as an unexpected visitor. It’s not difficult to see why suburban office use is on the relative decline. And it’s very easy to see why telecommuting rates have barely changed in 20 years. And it won’t change regardless of how much more of a toy we make our phones. It’s still a phone. Period.
I offer up the “unpredictability factor” as a new determinant in the location of the workforce. In short, the more unpredictable events that may occur in a given business day, the greater the necessity that the worker be located in or in close to a central city. And unpredictability has three components.
The first component is one of unexpected demand for services. Examples of the first would be commercial loan officers. Although one could argue that a loan officer can stay in his pajamas until the day and hour of his meeting, that would imply that every meeting must be a scheduled one. Not being in your office when a successful businessman wants to discuss a loan is not providing your core service. Other examples include real estate brokers, who must be ready for unexpected showings; attorneys who are unexpectedly called to court; and most public workers, who must be available for unexpected public business such as a marriage license. All of these workers possess the same qualities—the ability to deal with and react to new, unexpected business events.
The second component of unpredictability is the unexpected need for supplies or connections to provide the service. Examples from the unexpected supply side can be direct—an architect’s unexpected need for large scale renderings and a premium restaurant table for an out-of-town client unexpectedly in town for the night. They are more frequently indirect –the commercial loan officer’s need to meet with a rating service’s local representative about the creditworthiness of the unexpected seeker of the loan mentioned above.
The third component of unpredictability is the endless series and cycles of the unexpected meeting whether that be during a walk through the city, at a popular lunch spot, or while attending a seminar or lecture. This component is the one most cited by advocates of doing business in the city, and it is entirely one of making one’s presence known simply by being in the midst of your potential clients and vendors. As Woody Allen said, “80% of life is just showing up.”
It’s hard to accommodate the unexpected in your pajamas. And once you strip away the chic and false notion that an IPhone is somehow more than a phone, you can see that a telecommuter is the most replaceable of workers. By design, their work cannot deal with the live unexpected world of business on either the demand or the supply side. You don’t run in to many potential business partners in your kitchen. It’s nice to be able to email me a picture of your cousin’s new baby from your living room couch, but that’s not business.
A worker’s value in America is increasingly tied to his or her ability to deal with and respond vigorously to the unexpected. The closer a worker is to the central location of any geographic area makes that worker more capable of dealing with demand for and supply for unexpected business. It also dramatically increases the chance of the serendipitous meeting. The role of the telecommuter is to operate within dictated boundaries. But, of course, you get to wear your fluffy slippers at the same time.
Let’s start with the latest rather startling evidence. The latest statistics from the Census Bureau indicate that office jobs have been growing at a faster pace in central cities than in their surrounding suburbs. Yes, the cities who our many experts told us 15 years ago would be virtually empty while we all sat and watched the grass grow in squat brick buildings in suburbia are outpacing the dull worlds surrounding them.
Considering that a suburban office worker is one step up the ladder from a telecommuter, things don’t bode well for the pajama party. Nor does it matter how many apps you’re running on your IPhone, because you can’t run an app for something that doesn’t yet exist, such as an unexpected visitor. It’s not difficult to see why suburban office use is on the relative decline. And it’s very easy to see why telecommuting rates have barely changed in 20 years. And it won’t change regardless of how much more of a toy we make our phones. It’s still a phone. Period.
I offer up the “unpredictability factor” as a new determinant in the location of the workforce. In short, the more unpredictable events that may occur in a given business day, the greater the necessity that the worker be located in or in close to a central city. And unpredictability has three components.
The first component is one of unexpected demand for services. Examples of the first would be commercial loan officers. Although one could argue that a loan officer can stay in his pajamas until the day and hour of his meeting, that would imply that every meeting must be a scheduled one. Not being in your office when a successful businessman wants to discuss a loan is not providing your core service. Other examples include real estate brokers, who must be ready for unexpected showings; attorneys who are unexpectedly called to court; and most public workers, who must be available for unexpected public business such as a marriage license. All of these workers possess the same qualities—the ability to deal with and react to new, unexpected business events.
The second component of unpredictability is the unexpected need for supplies or connections to provide the service. Examples from the unexpected supply side can be direct—an architect’s unexpected need for large scale renderings and a premium restaurant table for an out-of-town client unexpectedly in town for the night. They are more frequently indirect –the commercial loan officer’s need to meet with a rating service’s local representative about the creditworthiness of the unexpected seeker of the loan mentioned above.
The third component of unpredictability is the endless series and cycles of the unexpected meeting whether that be during a walk through the city, at a popular lunch spot, or while attending a seminar or lecture. This component is the one most cited by advocates of doing business in the city, and it is entirely one of making one’s presence known simply by being in the midst of your potential clients and vendors. As Woody Allen said, “80% of life is just showing up.”
It’s hard to accommodate the unexpected in your pajamas. And once you strip away the chic and false notion that an IPhone is somehow more than a phone, you can see that a telecommuter is the most replaceable of workers. By design, their work cannot deal with the live unexpected world of business on either the demand or the supply side. You don’t run in to many potential business partners in your kitchen. It’s nice to be able to email me a picture of your cousin’s new baby from your living room couch, but that’s not business.
A worker’s value in America is increasingly tied to his or her ability to deal with and respond vigorously to the unexpected. The closer a worker is to the central location of any geographic area makes that worker more capable of dealing with demand for and supply for unexpected business. It also dramatically increases the chance of the serendipitous meeting. The role of the telecommuter is to operate within dictated boundaries. But, of course, you get to wear your fluffy slippers at the same time.
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