Downtown-Memphis-Reflected-in-the-Mississippi-River_Tennessee

 

 

 

 

 

 

 

 

The Downtown Memphis Commission’s recently released “State of Downtown” report underscored the message that downtown is crucial to Memphis and its future and how the CBD today rests on its transformation into a residential center.

The report said downtown’s population grew at a higher rate than any other section of Shelby County, a direct reflection of the continuing boom in apartments and single-family houses.

Downtown Memphis is part of a remarkable era of growth for downtowns across the country.  In fact, the downtowns in 75 of 100 largest U.S. cities recorded population increases.  Among the 100 largest U.S. cities, downtown Memphis ranked #38 in population growth from 2000 to 2010 – +22%.   That is particularly good news for a city in which more people are moving east and south than moving west.

Stating the State of Downtown

The “State of Downtown” report was filled with good news.  It reported that 16.7% of the Memphis workforce is located in only two percent of the city’s land area, that downtown’s apartment occupancy rate is 93%, the household growth rate since 2000 has been 37.7%, and that the number of people earning more than $75,000 a year has increased 179%.

It’s enough to suggest that the city-county agency should consider the end of tax waivers (PILOTs) as incentives for residential developments.

Meanwhile, Downtown Memphis Commission officials point out that downtown has weak demand compared to office space in East Memphis and suburbs, and that it is inarguable.  Meanwhile, trend lines for downtown retail, hotels, and office space are so weak that it’s hard to imagine any time in the near future when PILOTs won’t be needed if downtown is to cling to a semblance of the commercial options found in other cities.

Too Few Jobs

Here’s how desperate the jobs  situation is for downtown.  While population may be increasing at a healthy rate, the number of jobs – crucial to creating a “real” downtown – is drying up at an alarming rate.  In fact, it’s hard to find an MSA’s downtown with a lower percentage of jobs within three miles of the CBD.

Residential population alone has not proven to be enough to create the market demand for businesses other than restaurants.  Downtown still has a paucity of new service businesses, successful, new retailers, and a grocery store continues to be a dream for downtown residents.  As a result, the dwindling jobs have taken their toll with a workday population that no longer swells by the tens of thousands of people who contributed vibrancy and vitality.

While the most successful downtowns don’t necessarily have the most jobs, a downtown known for its vibrancy usually has a healthy mix of jobs and housing that creates an environment for success.

Here’s the tale of the tape: Memphis has 12.4% of the MSA’s jobs within three miles of its CBD, and while Detroit has less – 7.3% – other struggling cities are doing better than downtown Memphis.  Buffalo has 18.1%, Allentown 50.3%, Youngstown 27.3%, Akron 24.9%, and Cleveland 15.4%.  As for other Tennessee cities, 32.6% of the jobs in Chattanooga’s MSA are within three miles of the CBD, Nashville is at 27%, and Knoxville is 18.6%.

The national average for percentage of MSA jobs within three miles of CBD is 22.9%.

Jobs Sprawl

The bad news is punctuated by the fact that Memphis was #9 for the largest increase from 2000-2010 in outer ring jobs (10-35 miles): 6.8%.  Others in the top 10 are Phoenix, San Antonio, Austin, Houston, Dallas, Oklahoma City, Orlando, Indianapolis, and Jacksonville.

Only a few cities – about nine of the 100 largest – had downtowns that increased jobs in the first decade of this century.  Memphis wasn’t one of the fortunate nine, and as a result, its jobs decline, which began before 2000, continued.  Within three miles of the CBD, from 2000-2010, the number of jobs fell 1.2% and they declined 5.6% within three to 10 miles of downtown.

In other words, jobs sprawl in the Memphis MSA continues unabated.  In fact, the Memphis MSA is #1 in the ranking as the most decentralized MSA for smaller employment regions.

In 2010, 12.4% of jobs in the MSA were within three miles of the CBD, 39.2% of total jobs were within three to 10 miles, and 48.4% were 10 to 35 miles from the CBD.  That compares respectively with 13.6%, 44.9%, and 41.5% in 2000.

A New Day

There are two primary lessons in the hollowing out of the downtown jobs: 1) It is an object lesson for what can take place when we take our eyes off the ball, and 2) It is evidence of what happens when the agency charged with fighting for downtown chooses the path of least resistance.

Here’s the thing: Downtown Memphis missed out on the Clinton boom years, a time when downtowns across the country were achieving record reinvestment and were being transformed.  Our CBD has been playing catch up ever since.  Because of it, it needed leaders in City Hall and in the downtown development agency to fight for every law firm, every bank, and every company that moved out of downtown, but unfortunately, that didn’t happen.

While downtown faced some challenging market forces over the past 25 years, the velocity of the exodus of jobs from downtown was propelled by the lack of serious campaigns to keep them in the CBD.  For too many years, the leaders of the Center City Commission, forerunner of the Downtown Memphis Commission, simply gave excuses for each departure, chalking it up to “the way it is” and “we lose some and we win some.”  Ironically, the former head of the Center City Commission became the Chief Administrative Officer for the Administration of Shelby County Mayor Jim Rout, where he was responsible for moving county offices and programs out of downtown.

At the time, only the Belz family raised questions and sounded the alarm, but they were ignored and the speed of the Shelby County relocations accelerated.  With the handwriting on the wall from the political establishment, the next generation of Center City Commission leadership tried to work within the system and was reluctant to push the envelope as marquee businesses moved east as well, and as a result, the downtown strategic plan that called for the CBD to be the center for the region’s government, finance, and entertainment sectors lost significant ground in two of the three.

Fishing for Better Days

There are welcome indications that those days are over, most recently when Raymond James was considering a move to East Memphis.  We understand that the Downtown Memphis Commission mounted a vigorous defense and engaged City Hall elected officials in its defense of an important downtown employer whose name is affixed to one of our most prominent buildings.  In the end, Raymond James renewed their commitment to the CBD.

Memphis’s downtown is hard-pressed to match the vitality and vibrancy found in other cities’ downtowns, and with current trend lines, it would be hard to imagine how it could change its trajectory.  That said, there is the strong possibility that Bass Pro Shops will be the disruptive innovation that downtown has needed, acting as the fulcrum for more retail, particularly with development of the Historic Pinch Retail District, but equally important, with more animation and activity.

The big challenge now is to reinvigorate Main Street between the activity at The Pyramid and the pocket of vibrancy at Beale Street.  It’s a tall order, and it’s clear that although downtown is a major attractor for new residents, organic growth in population will not produce the need for the services, retail, and businesses that once were part of the Main Street scene.  That’s why the new retail and tourist attractions at The Pyramid could be a game changer.

Laying Out The Welcome Mat

According to Bass Pro’s website, its average store attracts 1.7 million visitors a year and 40% of them are from beyond 50 miles.  Projections are for many more visitors than that for the Memphis megastore with its 600,000 gallons of water features, swamp theme, 101-room full-service hotel, and elevator to the apex where a restaurant, bar, and aquariums will be located, but most of all, an outdoor glass balcony like the one at the Grand Canyon, which fulfills the 23-year dream of an attraction at the top of the iconic former arena.

There’s little question by market consultants that Memphis will surpass the numbers for an average Bass Pro store, but if it only achieves that average, it would mean about 700,000 more visitors to downtown Memphis each year.  The trick is for us to figure out ways to keep them here for more than one day, and for agencies like the Downtown Memphis Commission to develop a plan to lay out the welcome mat in new, inventive ways for these new visitors to Memphis in hopes that they come back for more.

There is a lot going right in downtown, and to supercharge that progress, there’s no argument that we have to make the most of this huge opportunity to expand its economy, its vitality, and its brand.