One conventional way to think about cities is that people migrate to urban areas in order to make more money. This remains true today and the data is pretty clear that, if you live in an urban area, you're likely to make more money than if you didn't -- even if you're just as educated. You're also likely to make even more money if the city is really big (there's a correlation between income and city size). And you probably also walk a little faster given that, you know, time equals money.

But there are other reasons for wanting to live in a city. And probably the biggest is that they can bring us pleasure. Back in 2001, Edward Glaeser, Jed Kook, and Albert Saiz published this paper called, "Consumer City", where they showed that high amenity cities have tended to grow faster than low amenity cities. They also went on to demonstrate that, in high amenity cities, urban rents have tended to increase faster than urban wages, suggesting that there are other reasons for wanting to live in a city beyond simply wage growth.

Fast forward to today and Ed Glaeser has a new opinion piece in the New York Times arguing the following:

New York is undergoing a metamorphosis from a city dedicated to productivity to one built around pleasure. . . The economic future of the city that never sleeps depends on embracing this shift from vocation to recreation and ensuring that New Yorkers with a wide range of talents want to spend their nights downtown, even if they are spending their days on Zoom. We are witnessing the dawn of a new kind of urban area: the Playground City.

I saw City Observatory comment that they thought it was odd Glaeser didn't mention his previous work on the Consumer City. But I wonder if this is him not wanting to suggest that this was a trend decades in the making. Maybe instead, he wanted to position it as a dramatic and profound shift brought about by a pandemic. But how can you not ask this question: Is the Playground City truly something novel, or are we just following a trend line?

In my view, they're not all that different. The basic idea is that people like cities that are cool and fun, and so they will pay a premium to be in those kinds of places. This was true in 2001 and it's still true in 2023. The only difference today is that we now believe we have too much office space in some markets, and so we're trying to recalibrate around work vs. pleasure. But even with this, the work component of our cities isn't going to zero.

Photo by Jan Folwarczny on Unsplash

I’ve never been to Australia, so take everything I’m about to say in this post for what it’s worth. I also don’t know much about Sydney and Melbourne, other than the fact that I’ve studied the latter’s laneways and the tremendous impact they’ve had on revitalizing the CBD.

However, recently I’ve had a few close friends visit these cities for the first time and, since then, I have started noticing a trend. All of them come back and tell me the same thing, that they prefer Melbourne to Sydney. They say: “Yeah, Sydney is nice and beautiful and all, but it’s not all that exciting. Melbourne feels way more dynamic. Oh, and have you seen their laneways? You would love them.” That’s what they tell me.

So that’s what I have in my head when I read that Melbourne is now the fastest growing city in Australia; that it’s one of the most liveable cities in the world; and that by as early as 2031 it could take Sydney’s place as the biggest city in the country. Below is a chart from The Australian. If you can’t see it, click here.

#Melbourne could be bigger than #Sydney as early as 2031. What pulls population towards Melbourne? Cheaper housing!? https://t.co/rUg9rlXMP1 pic.twitter.com/iDFeJ737SB

— Simon Kuestenmacher (@simongerman600) May 26, 2017

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Some argue that this is happening because housing is cheaper in Melbourne (median dwelling price of ~$700,000 versus ~$1 million). And some argue it’s because the jobs are there and the city has become a cultural and sporting destination. Whatever the case may be, net migration is estimated to be somewhere around 100,000 people per year.

My own view – and I’ve made this argument before on the blog – is that we shouldn’t underestimate the importance of cool shit when it comes to cities. People vote with their feet more than ever today. And for a growing segment of the population, cities are a consumer good.

Indeed, in 2001, Edward Glaeser, Jed Kolko, and Albert Saiz penned a research paper called the Consumer city, where they argued precisely that. The premise was that historically we have tended to think of cities as being centers of production, but we should also be thinking about them as places of consumption.

Here’s an excerpt:

“But we believe that too little attention has been paid to the role of cities as centers of consumption. In the next century, as human beings continue to get richer, quality of life will become increasingly critical in determining the attractiveness of particular areas. After all, choosing a pleasant place to live is among the most natural ways to spend one’s money.”

This is why those coffee shops and cool laneways matter. Some cities have unfair natural advantages. Los Angeles has weather. Vancouver has mountains. Montreal has poutine. But for the rest of us, the amenities typically form part of the built environment. They are a product of our choices.

I’ve spoken about global cities, such as New York and London, many times before on Architect This City. I’ve also talked about the rise of consumer cities. That is, cities with a high “urban amenity premium”, which could be great outdoor amenities or great restaurants, theatre and so on. These are places of consumption.

Sometimes global cities and consumer cities are one and the same. But there are also cities–such as Vancouver–where I view the urban amenity premium as outweighing their status as a global city. Vancouver, quite simply, is an awesome place to live and enjoy life. I almost went to UBC for grad school because of Whistler Blackcomb and the city itself.

Today, I’d like to introduce another type of city into the discussion mix: the necessary city. I heard about it here and, although it seems somewhat intuitive, I think it’s an important reminder that, even though a city may not be an alpha global city, it may be fulfilling a specific function for a particular industry or aspect of the global economy. It may still be a necessary city for your corporate headquarters.

For example, Houston is the city for energy companies. If that’s your business, you likely need a presence there. For fashion and luxury, it’s Paris. And if you’re in the auto industry:

The major global equipment manufacturers are widely dispersed, but when you look at leading global parts suppliers, they virtually all have their North American headquarters in Detroit – including the German, Japanese and Korean ones. Among them are companies like Robert Bosch, Denso, Yazaki and Hyundai Mobis. If you’re in the auto industry in America, you have to deal with Detroit. Unsurprisingly, Detroit boasts several nonstop flights to key Asian destinations.

In essence, we’re talking about cities making themselves necessary by becoming niche experts. And what I think is interesting about this concept is that it’s likely much more attainable for a lot of cities. Most cities will never become New York. And most cities will never be able to transform themselves into the next Silicon Valley.

But maybe those are the wrong economic development goals. It’s not about becoming the next, whatever; it’s about finding and owning a particular niche and making yourself absolutely necessary to the global economy.