This week’s blog post topic, exploring the implications of California’s latest land use and resource conservation legislation on development and redevelopment in the state, was submitted by California-based EDD member Jerry A. King. EDD’s newest blogger, Alison Bates, a graduate student at the State University of New York-Albany, provides her take on the issue.
California is not going to wait until it is in the midst of a significant drought to begin drafting policies to address the dwindling supply of water in the American west. California has been diligently working on measures to combat sprawl and incentivize redevelopment through land use initiatives such as SB 375, and more recently, the state has crafted Assembly Bill No. 49, which would require Californians to decrease their water consumption by 20% by 2020. “In just over a decade, it proposes to reduce California's urban water use — residential, commercial and industrial — from an average 192 gallons per person per day to 154 gallons. That would be an annual savings of about 1.7 million acre-feet, equivalent to more than a two-year supply for Los Angeles. (The national urban per-capita use is 101 gallons per day, reflecting the higher average rainfall in many states.)". AB 49 calls for the establishment of an incentivizing pricing structure for agricultural suppliers to ensure that those meeting the newly defined conservation demands are financially rewarded. Addition mandates include a standardized reporting structure, and regular data collection on water use. Also, AB 49 mandates planning of water resources. Chapter 3, Article 1. 10820 (b) states that “every supplier that becomes an agricultural water supplier after December 1, 2012, shall prepare and adopt an agricultural water management plan within one year after the date it has become an agricultural water supplier”. This initiative, which calls for collective public and private participation to mitigate water usage, is the first such legislation in the nation. Decreasing access to water is a reality that many U.S states face, and the debate over whether residents in one region are entitled to the water of another region is likely to become an increasingly contentious issue. States that sit poised to face this challenge in the coming years are well advised to look to California’s forward thinking legislation that mandates water use reporting, and planning. Additional measures to promote smart water use could incentivize water suppliers to supply redevelopment projects rather than to supply sprawling new development. By making sprawl more expensive, we conserve our limited resources, which we must collectively now realize, includes water.
Alison Bates
The official blog for the Economic Development Division of the American Planning Association.
Wednesday, October 28, 2009
Friday, October 2, 2009
Fall 2009 News and Views
The Fall 2009 issue of the EDD newsletter, News and Views, will soon be published. Here's a preview of two fascinating articles EDD members can look forward to reading!
EDD members can read these articles in their entirety when the News and Views is published online at:
http://www.planning.org/divisions/economic/newsletter/index.htm
EDD membership is only APA regular members: $25 per division for APA regular members, $10 for APA Student and New Professional members. Non-members of the American Planning Association can purchase an annual economic development division only membership for just $40.
The Legacy of Place and Economic Development
By Christopher Steele and Adam Ploetz, AICP
Once the economic engine of the nation, the Great Lakes region in America’s Midwest has been grappling with successive shifts in the global economy for the past fifty years. Recently, the global recession, particularly the collapse of the US automobile industry, has exposed the naked weaknesses of the Great Lakes’ economy and its relative inability to adapt to the global marketplace. No American region has been as affected by the challenges of globalization; and – perhaps – no region stands to gain as much from structural economic changes. Past economic inertia in the region has been due to continued adherence to the previous era’s economic models, growth patterns and industrial base.
These older legacies of place must be re-cast to support the region’s resurgence. With these new realities in mind, local governments in the region will need to move beyond their past triumphs and find new ways of engaging with and excelling in the new global economy; this article will examine the critical role local governments must play in reinventing the Great Lakes as an economically vibrant location for business and entrepreneurism. We will view the region through the site selection process to help illustrate how communities can proactively attract new activity.
Yikes, There's a Tourist in Town: Guidance for Local Planners
By Michael E. Kelly, MCIP, AICP
Unless directly engaged in making tourism plans or working in a destination community, local planners tend to give little thought to tourism or to tourists in their day-to-day work. However, many communities across the country attract some share of visitors, and planners should be aware of the possible implications and opportunities that may result.
It can be easy to become swept up in the boosterism that surrounds what is often taken for tourism planning, but really is just tourism marketing and promotion. Local governments have a key role to play in tourism planning and development, but it is not attracting tourists to a community. Marketing and promoting tourism are activities best left to political and business leaders.
EDD members can read these articles in their entirety when the News and Views is published online at:
http://www.planning.org/divisions/economic/newsletter/index.htm
EDD membership is only APA regular members: $25 per division for APA regular members, $10 for APA Student and New Professional members. Non-members of the American Planning Association can purchase an annual economic development division only membership for just $40.
Thursday, October 1, 2009
Boston: A Study into the City’s Economic Drivers
Boston mayor Tom Menino said of the Boston economy: “We’re not a world class city, we’re in a class by ourselves. We have 4 economies that drive Boston. Most cities don’t have four economies, they have one. We have health care, we have academia, financial services, tourism. What other city has 4 different economies that drive it? No other city is like Boston“ . The Mayor makes an accurate point; one is hard-pressed to cite another American city that is a leader in four such lucrative industries.
To better understand the Boston economy, here we will use Using County Business Patterns data to calculate the location quotients (LQ) of the Boston MSA as compared to the nation, using the 3-digit North American Industrial Classification System (NAICS) codes. An ‘LQ’ is the measure of relative ‘success’ of an industry, and so an LQ of 1.0 or greater suggests that people from outside of the area are spending dollars in this industry, in Boston. An LQ less than 1.0 suggests that dollars in this industry are leaking out of the Boston area. Our investigation will focus on 5 industries (NAICS codes 523, 611, 622, 541, and 722) that are instrumental to Boston. This analysis will illuminate the unique economic situation of the city of Boston.
523: Securities, commodity contracts, and investments
While this industry lost 16,504 employees, or 20% of its workforce between 2002 and 2007 at the MSA level, this industry is still one of the regions most prominent. In 2007, this industry employed 62,307 people . Wage compensation for this industry had an LQ of 1.66 in 2002, and 1.53 in 2007, meaning that these are very high paying jobs, and thus an attribute to the area. The majority of employees in this industry work in ‘securities brokerage,’ which employs 83.5% of the total employees for industry 523.
Investment banking and securities dealing (NAICS code 523110) accounts for 13% of the industry, and commodity contracts dealing accounts for the remaining 4%. Boston Capital Securities, Kimball and Cross Investment Management, and UBS Financial Services are examples of prominent brokerage firms located within Boston. A 1998 report of the Boston Redevelopment Authority optimistically states that “the securities and brokerage sector of the financial services industry has shown strong and consistent growth over the last three decades, largely due to the growing popularity of mutual funds.
The mutual fund was born in Boston, and today the concentration of securities jobs in Boston is nearly 13 times the national average. Nearly one out of every twelve jobs in the securities industry nationwide is located here”. It is true that the first mutual fund in the United States was issued by the Massachusetts Investment Trust on March, 1924. What is not necessarily accurate however is that this is an enduring industry as it is currently structured. The economic downturn, has greatly affected this industry in Boston, as well as nationally. It will be interesting to track how Boston recovers in this sector as new data becomes available.
611: Education
“Education is a thriving segment of Boston's economy; within the city limits are 10 colleges and universities, 6 technical schools, 4 art and music schools, and 6 junior colleges”. And here we’re not talking about just any universities. The Greater Boston area is home to two Ivy League institutions; Harvard and MIT, as well as the Boston College, Boston University (the largest of these schools), the innovative Northeastern University, Smith, and Tufts. The educational services sector had a 2002 LQ of 2.19 and a 2007 LQ of 1.45. Wages are commensurate with each LQ at 2.13 and 1.43 respectively. Looking at the raw numbers, we see that 337,710 jobs were added within 611 between 2002 and 2007.
High employment in education has benefits beyond providing stable jobs for the local labor force. The Boston MSA, through its many institutions of education, produces a proportionately highly educated population. “Massachusetts has one of the most educated populations in the nation, with about 37% of residents 25 and older holding a Bachelor’s degree or higher”. Just as in industrial areas in our nations recent past, young children grew up with an impression that after the pomp and circumstance quiets that they will go off to work in the factories, in Boston, the expected and encouraged next step is college. However, the focus on private institutions of higher education cause public universities and colleges to suffer. “In part because of an over reliance on the region’s private universities as a source of skilled talent, funding for Massachusetts public higher education system is among the lowest in the nation”.
The concentration of world class educational institutions has been instrumental to Boston becoming a national center for biotechnology, as we will soon see.
622: Hospitals
People will always need healthcare, making hospitals (NAICS code 622), as well as nursing and residential care facilities (NAICS code 623) and ambulatory health care services (NAICS code 621) a reliable asset to the Boston regional economy. “According to the Greater Boston Chamber of Commerce, the combined health care and life sciences industry is one of the metropolitan area’s five leading industries and the only one in which employment levels increased each year from 2001 to 2004”. In 2002, the LQ for hospitals was 1.15, with a wage LQ of .98 and in 2007 the employment LQ was .82 with a wage LQ of .73.
According to Bureau of Labor Statistics data for 2008, Suffolk County has 111,445 employees within NAICS code 62; health care and social assistance. At the three-digit level, we see that hospitals in Suffolk County employ 75,209 people with 83% of these employees working in general medical and surgical hospitals (6221).
Boston’s health sector is commonly thought of as consisting of three components: “the health care delivery system; the public infrastructure, and the broader life sciences industry”. Accounted for in public infrastructure are the city’s 14 teaching hospitals, which include such leading hospitals as Massachusetts General, Beth Israel, Children’s Hospital, Brigham and Women’s “as well as medical schools and public health departments at Harvard, Tufts, and Boston Universities”. These teaching hospitals add substantially to the local economy. “According to the Conference of Boston Teaching Hospitals, these teaching hospitals and affiliated medical schools generate $24.3 billion in economic activity and employ more than 110,000 people”.
It is estimated that “one in six jobs in Boston is related to the health sector”. The hospitals in Boston have become an incredible draw for medical R&D and biotechnology firms. Boston’s competitive healthcare advantage, in tandem with its educational concentration, has given rise to an industry that is often cited as the next leading industry in the region; biotechnology.
541: Professional, Scientific, and Technical Services
Biotechnology is slated to become the next economic driver of Boston. As a city that has re-invented itself countless times it is no wonder that Boston is now looking to biotech. The biotech industry can only exist so long as the financial services, educational, and health care industries precede it. These ‘base’ industries, all agglomerating together in space allow for the characteristically innovative field of biotechnology to emerge.
There is no simple 3-digit NAICS code for biotechnology, and so uncovering numbers for this emerging industry requires some sleuthing. Industry 541; professional, scientific, and technical services is close, but this industry involves such things as payroll services, accounting, and advertising services . Further ‘unpacking’ of 541 reveals 541710; Research and Development in the Physical, Engineering, and Life Sciences, and 541711; research and development in biotechnology. BLS data for 2008 shows that 284,464 people in Massachusetts are employed in 541.
Route 128 in Boston, dubbed ‘the golden semi-circle’ is the hub of biotech location, and thus has been often compared to Silicon Valley for its sprawling dispersion of R&D firms. Although there do exist similarities, as urban economic analyst Anna Lee Saxenian articulates, there exist many differences. The simple reality that Route 128 stretches through many different municipalities makes data collection and thus comparison to the Silicon Valley difficult. Additionally, Route 128 did not arise in the same fashion, as did the Silicon Valley. Route 128 has a long history as an area of trade and production, and so it seems natural that in a changing world this route would adapt accordingly. Silicon Valley seems to have arisen to prominence in the recent past without a preceding function or connection to its immediate surroundings.
Drawing upon Saxenian's explanation of the unique features of Route 128, which surrounds Boston, we turn our focus to the location of Biotechnology firms within the Boston MSA. Within 541, 43% of all employees are in Middlesex County. Suffolk County is home to 20% of total employees. Before investigating further, a likely explanation is that many biotech firms locate in the areas just outside of Boston, including Watertown, and Cambridge (where Cambridge and MIT both reside). Firms are locating around rather than inside Boston due to the high cost of rent within the Boston city limits. Initially, most firms were locating in Cambridge, but many are now moving out of Cambridge into the surrounding suburbs in search of more space at a lower cost . Rents outside of Cambridge average $57 per square foot, while rents outside of Cambridge command $27 per square foot . Also, the lack of available lab space is an issue in Cambridge. “Vacancy rates average 20 percent in the suburbs, compared with 7 percent in Cambridge and 2 percent in Boston”. The 2008 LQ for Middlesex County for 5417 is 3.24, 2.43 for Essex County, and is 1.37 for Suffolk County. For NAICS code 521711, the LQ for Middlesex County is 8.19, is 8.33 for Essex County, and is 4.68 for Suffolk County. These very large LQ’s speak to Boston’s competitive advantage in this industry.
It seems that the biotechnology industry has staying power in the Boston region. This industry is the direct result of the educational and healthcare regional advantages, and it seems highly unlikely that these two parent industries will abandon this new up and coming economic driver. In my recent interview with MIT Business professor Dr. Howard Anderson, I asked him if he thought that the biotech locational advantage of Boston would eventually be undercut by other places in the nation duplicating the research done in Boston. Anderson replied that “unless Harvard, MIT, several of our hospitals, and the Tufts Medical Center pick up and leave, we will always have biotechnology here”. One of the only ways that a high tech industry like biotechnology can succeed is if highly educated people are willing to relocate to biotech centers for employment. Skilled engineers and world class scientists commanding large salaries are not likely to want to live in places themselves, or move their families to places that do not offer a plethora of rich recreational activities. Luckily, Boston is rich in such amenities, which turns our attention to the booming tourism industry of Bean Town.
722: Accommodation
With Boston’s rich history, a thriving tourism economy seems inevitable. People are drawn from all over the nation and the world to walk the Freedom Trail, to bike the Emerald Necklace, to dine in the Italian North End, to shop at Faneuil Hall and Quincy Market. “Boston is one of the country's top 10 tourist attractions, focusing on the city's 62 historic sites, its nearly 2,000 restaurants, and its hundreds of hotels. Tourism is a year-round industry in Boston, which hosted 16.3 million visitors in 2004, spending $7.9 billion” There is no shortage in Boston of unique attractions that represent our collective American history. In 2007, we see that the LQ for NIACS 721 is 1.09.
Almost half of the jobs in this industry are located in Suffolk County. This is not surprising as most tourists are going to visit Boston and not the outlying areas with as much attention. Visitors may be interested in visiting Harvard Square in Cambridge (Middlesex County), or the historic cities of Lexington and Concord, but the lion’s share of these jobs related to tourism exist within Suffolk County. There has however been a recent decrease in employment. This is not a surprising finding. Tourism based industries suffer greater when economic times are tough, and also when people are fearful of travel. The effects of September 11th in general, coupled with the fact that the hijacked planes departed from Boston’s airport may have made many travelers weary of flying into Boston. As traveler confidence grows, and the economy continues to recover, we will likely see an increase in the numbers of employees within 712.
NAICS code 711; performance arts and spectator sports was a larger employer in 2008 than 712. Spectator sports is partially explained by the existence of Boston sports teams including the Red Sox, Bruins, the New England Patriots, and the Celtics. The Performing Arts companies in Boston is partially explained by the existence of the Boston Opera House, the Wang Theatre, and Shubert Theatre which are all owned by Citibank.
New hotels are opening in the city , but current projections that account for the recent economic downturn presage a slow recovery for the areas hotel economy. “Boston-area hotels are not expected to have an increase in quarterly Revenue Per Available Room of “RevPAR” until the first quarter of 2010” . Looking only at data from years past may not give as accurate a picture as possible due to the effects of the recent economic downturn. Thus it is important to look to news articles and additional news sources to learn more about where the hotel industry in Boston is now, and is likely going in the future. ““While this may sound like bad news, it is actually far sooner than the national hotel market overall, which is not expected to achieve quarterly RevPAR gains until 2011,” according to the press release from Boston-based PKF” (PKF is a Hospitality Research firm). Further findings show that “In 2009, hotel performance for Boston hotels is expected to finish the year at a 14 percent decline in RevPAR, the second worst all-time since 2001 when the market saw a 19.4 percent dip in RevPAR, according to PKF”. While the hotel industry seems to be in something of a slump now due to the recession, Boston remains a destination for vacationers, business travelers, visiting parents of the areas 260,000 annual college students, and so it seems likely that this industry will increase in employment and prosper.
The Boston economy is in no sense perfect, but overall Boston seems to be doing very well economically. With several flourishing industries, Boston has a regional and indeed national advantage in many key areas. As cities the nation over are looking to ‘eds’ and ‘meds’ to revitalize their economies, Boston already is a world leader in such institutions. The existence of these advantages give rise to a biotech concentration that many are looking to bolster the local economy. Access to capital is prevalent in the city, and so expensive start-ups can find a plethora of potential funding sources. People travel to Boston from all over, and we will likely see the tourism industry in Boston rebound in sounder economic times. The city is supported by its deep history and landmarks, its world-renowned institutions of health and education, and by its seat of state government. None of which is likely to leave in the future. The city will likely change in evolve in time as it always has, and it seems that whatever the tide may bring, the city of Boston sits ready to grow and to change, not only to survive, but to prosper.
To better understand the Boston economy, here we will use Using County Business Patterns data to calculate the location quotients (LQ) of the Boston MSA as compared to the nation, using the 3-digit North American Industrial Classification System (NAICS) codes. An ‘LQ’ is the measure of relative ‘success’ of an industry, and so an LQ of 1.0 or greater suggests that people from outside of the area are spending dollars in this industry, in Boston. An LQ less than 1.0 suggests that dollars in this industry are leaking out of the Boston area. Our investigation will focus on 5 industries (NAICS codes 523, 611, 622, 541, and 722) that are instrumental to Boston. This analysis will illuminate the unique economic situation of the city of Boston.
523: Securities, commodity contracts, and investments
While this industry lost 16,504 employees, or 20% of its workforce between 2002 and 2007 at the MSA level, this industry is still one of the regions most prominent. In 2007, this industry employed 62,307 people . Wage compensation for this industry had an LQ of 1.66 in 2002, and 1.53 in 2007, meaning that these are very high paying jobs, and thus an attribute to the area. The majority of employees in this industry work in ‘securities brokerage,’ which employs 83.5% of the total employees for industry 523.
Investment banking and securities dealing (NAICS code 523110) accounts for 13% of the industry, and commodity contracts dealing accounts for the remaining 4%. Boston Capital Securities, Kimball and Cross Investment Management, and UBS Financial Services are examples of prominent brokerage firms located within Boston. A 1998 report of the Boston Redevelopment Authority optimistically states that “the securities and brokerage sector of the financial services industry has shown strong and consistent growth over the last three decades, largely due to the growing popularity of mutual funds.
The mutual fund was born in Boston, and today the concentration of securities jobs in Boston is nearly 13 times the national average. Nearly one out of every twelve jobs in the securities industry nationwide is located here”. It is true that the first mutual fund in the United States was issued by the Massachusetts Investment Trust on March, 1924. What is not necessarily accurate however is that this is an enduring industry as it is currently structured. The economic downturn, has greatly affected this industry in Boston, as well as nationally. It will be interesting to track how Boston recovers in this sector as new data becomes available.
611: Education
“Education is a thriving segment of Boston's economy; within the city limits are 10 colleges and universities, 6 technical schools, 4 art and music schools, and 6 junior colleges”. And here we’re not talking about just any universities. The Greater Boston area is home to two Ivy League institutions; Harvard and MIT, as well as the Boston College, Boston University (the largest of these schools), the innovative Northeastern University, Smith, and Tufts. The educational services sector had a 2002 LQ of 2.19 and a 2007 LQ of 1.45. Wages are commensurate with each LQ at 2.13 and 1.43 respectively. Looking at the raw numbers, we see that 337,710 jobs were added within 611 between 2002 and 2007.
High employment in education has benefits beyond providing stable jobs for the local labor force. The Boston MSA, through its many institutions of education, produces a proportionately highly educated population. “Massachusetts has one of the most educated populations in the nation, with about 37% of residents 25 and older holding a Bachelor’s degree or higher”. Just as in industrial areas in our nations recent past, young children grew up with an impression that after the pomp and circumstance quiets that they will go off to work in the factories, in Boston, the expected and encouraged next step is college. However, the focus on private institutions of higher education cause public universities and colleges to suffer. “In part because of an over reliance on the region’s private universities as a source of skilled talent, funding for Massachusetts public higher education system is among the lowest in the nation”.
The concentration of world class educational institutions has been instrumental to Boston becoming a national center for biotechnology, as we will soon see.
622: Hospitals
People will always need healthcare, making hospitals (NAICS code 622), as well as nursing and residential care facilities (NAICS code 623) and ambulatory health care services (NAICS code 621) a reliable asset to the Boston regional economy. “According to the Greater Boston Chamber of Commerce, the combined health care and life sciences industry is one of the metropolitan area’s five leading industries and the only one in which employment levels increased each year from 2001 to 2004”. In 2002, the LQ for hospitals was 1.15, with a wage LQ of .98 and in 2007 the employment LQ was .82 with a wage LQ of .73.
According to Bureau of Labor Statistics data for 2008, Suffolk County has 111,445 employees within NAICS code 62; health care and social assistance. At the three-digit level, we see that hospitals in Suffolk County employ 75,209 people with 83% of these employees working in general medical and surgical hospitals (6221).
Boston’s health sector is commonly thought of as consisting of three components: “the health care delivery system; the public infrastructure, and the broader life sciences industry”. Accounted for in public infrastructure are the city’s 14 teaching hospitals, which include such leading hospitals as Massachusetts General, Beth Israel, Children’s Hospital, Brigham and Women’s “as well as medical schools and public health departments at Harvard, Tufts, and Boston Universities”. These teaching hospitals add substantially to the local economy. “According to the Conference of Boston Teaching Hospitals, these teaching hospitals and affiliated medical schools generate $24.3 billion in economic activity and employ more than 110,000 people”.
It is estimated that “one in six jobs in Boston is related to the health sector”. The hospitals in Boston have become an incredible draw for medical R&D and biotechnology firms. Boston’s competitive healthcare advantage, in tandem with its educational concentration, has given rise to an industry that is often cited as the next leading industry in the region; biotechnology.
541: Professional, Scientific, and Technical Services
Biotechnology is slated to become the next economic driver of Boston. As a city that has re-invented itself countless times it is no wonder that Boston is now looking to biotech. The biotech industry can only exist so long as the financial services, educational, and health care industries precede it. These ‘base’ industries, all agglomerating together in space allow for the characteristically innovative field of biotechnology to emerge.
There is no simple 3-digit NAICS code for biotechnology, and so uncovering numbers for this emerging industry requires some sleuthing. Industry 541; professional, scientific, and technical services is close, but this industry involves such things as payroll services, accounting, and advertising services . Further ‘unpacking’ of 541 reveals 541710; Research and Development in the Physical, Engineering, and Life Sciences, and 541711; research and development in biotechnology. BLS data for 2008 shows that 284,464 people in Massachusetts are employed in 541.
Route 128 in Boston, dubbed ‘the golden semi-circle’ is the hub of biotech location, and thus has been often compared to Silicon Valley for its sprawling dispersion of R&D firms. Although there do exist similarities, as urban economic analyst Anna Lee Saxenian articulates, there exist many differences. The simple reality that Route 128 stretches through many different municipalities makes data collection and thus comparison to the Silicon Valley difficult. Additionally, Route 128 did not arise in the same fashion, as did the Silicon Valley. Route 128 has a long history as an area of trade and production, and so it seems natural that in a changing world this route would adapt accordingly. Silicon Valley seems to have arisen to prominence in the recent past without a preceding function or connection to its immediate surroundings.
Drawing upon Saxenian's explanation of the unique features of Route 128, which surrounds Boston, we turn our focus to the location of Biotechnology firms within the Boston MSA. Within 541, 43% of all employees are in Middlesex County. Suffolk County is home to 20% of total employees. Before investigating further, a likely explanation is that many biotech firms locate in the areas just outside of Boston, including Watertown, and Cambridge (where Cambridge and MIT both reside). Firms are locating around rather than inside Boston due to the high cost of rent within the Boston city limits. Initially, most firms were locating in Cambridge, but many are now moving out of Cambridge into the surrounding suburbs in search of more space at a lower cost . Rents outside of Cambridge average $57 per square foot, while rents outside of Cambridge command $27 per square foot . Also, the lack of available lab space is an issue in Cambridge. “Vacancy rates average 20 percent in the suburbs, compared with 7 percent in Cambridge and 2 percent in Boston”. The 2008 LQ for Middlesex County for 5417 is 3.24, 2.43 for Essex County, and is 1.37 for Suffolk County. For NAICS code 521711, the LQ for Middlesex County is 8.19, is 8.33 for Essex County, and is 4.68 for Suffolk County. These very large LQ’s speak to Boston’s competitive advantage in this industry.
It seems that the biotechnology industry has staying power in the Boston region. This industry is the direct result of the educational and healthcare regional advantages, and it seems highly unlikely that these two parent industries will abandon this new up and coming economic driver. In my recent interview with MIT Business professor Dr. Howard Anderson, I asked him if he thought that the biotech locational advantage of Boston would eventually be undercut by other places in the nation duplicating the research done in Boston. Anderson replied that “unless Harvard, MIT, several of our hospitals, and the Tufts Medical Center pick up and leave, we will always have biotechnology here”. One of the only ways that a high tech industry like biotechnology can succeed is if highly educated people are willing to relocate to biotech centers for employment. Skilled engineers and world class scientists commanding large salaries are not likely to want to live in places themselves, or move their families to places that do not offer a plethora of rich recreational activities. Luckily, Boston is rich in such amenities, which turns our attention to the booming tourism industry of Bean Town.
722: Accommodation
With Boston’s rich history, a thriving tourism economy seems inevitable. People are drawn from all over the nation and the world to walk the Freedom Trail, to bike the Emerald Necklace, to dine in the Italian North End, to shop at Faneuil Hall and Quincy Market. “Boston is one of the country's top 10 tourist attractions, focusing on the city's 62 historic sites, its nearly 2,000 restaurants, and its hundreds of hotels. Tourism is a year-round industry in Boston, which hosted 16.3 million visitors in 2004, spending $7.9 billion” There is no shortage in Boston of unique attractions that represent our collective American history. In 2007, we see that the LQ for NIACS 721 is 1.09.
Almost half of the jobs in this industry are located in Suffolk County. This is not surprising as most tourists are going to visit Boston and not the outlying areas with as much attention. Visitors may be interested in visiting Harvard Square in Cambridge (Middlesex County), or the historic cities of Lexington and Concord, but the lion’s share of these jobs related to tourism exist within Suffolk County. There has however been a recent decrease in employment. This is not a surprising finding. Tourism based industries suffer greater when economic times are tough, and also when people are fearful of travel. The effects of September 11th in general, coupled with the fact that the hijacked planes departed from Boston’s airport may have made many travelers weary of flying into Boston. As traveler confidence grows, and the economy continues to recover, we will likely see an increase in the numbers of employees within 712.
NAICS code 711; performance arts and spectator sports was a larger employer in 2008 than 712. Spectator sports is partially explained by the existence of Boston sports teams including the Red Sox, Bruins, the New England Patriots, and the Celtics. The Performing Arts companies in Boston is partially explained by the existence of the Boston Opera House, the Wang Theatre, and Shubert Theatre which are all owned by Citibank.
New hotels are opening in the city , but current projections that account for the recent economic downturn presage a slow recovery for the areas hotel economy. “Boston-area hotels are not expected to have an increase in quarterly Revenue Per Available Room of “RevPAR” until the first quarter of 2010” . Looking only at data from years past may not give as accurate a picture as possible due to the effects of the recent economic downturn. Thus it is important to look to news articles and additional news sources to learn more about where the hotel industry in Boston is now, and is likely going in the future. ““While this may sound like bad news, it is actually far sooner than the national hotel market overall, which is not expected to achieve quarterly RevPAR gains until 2011,” according to the press release from Boston-based PKF” (PKF is a Hospitality Research firm). Further findings show that “In 2009, hotel performance for Boston hotels is expected to finish the year at a 14 percent decline in RevPAR, the second worst all-time since 2001 when the market saw a 19.4 percent dip in RevPAR, according to PKF”. While the hotel industry seems to be in something of a slump now due to the recession, Boston remains a destination for vacationers, business travelers, visiting parents of the areas 260,000 annual college students, and so it seems likely that this industry will increase in employment and prosper.
The Boston economy is in no sense perfect, but overall Boston seems to be doing very well economically. With several flourishing industries, Boston has a regional and indeed national advantage in many key areas. As cities the nation over are looking to ‘eds’ and ‘meds’ to revitalize their economies, Boston already is a world leader in such institutions. The existence of these advantages give rise to a biotech concentration that many are looking to bolster the local economy. Access to capital is prevalent in the city, and so expensive start-ups can find a plethora of potential funding sources. People travel to Boston from all over, and we will likely see the tourism industry in Boston rebound in sounder economic times. The city is supported by its deep history and landmarks, its world-renowned institutions of health and education, and by its seat of state government. None of which is likely to leave in the future. The city will likely change in evolve in time as it always has, and it seems that whatever the tide may bring, the city of Boston sits ready to grow and to change, not only to survive, but to prosper.
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