Posted by Leonard Steinberg on December 6th, 2013

The United Nations projected that half of the world’s population would live in urban areas at the end of 2008. By 2050 it is predicted that 64.1% and 85.9% of the developing and developed world will be urbanized. We continue to witness this prediction in action as we see corporations heading to big cities (as reported in the Wall Street Journal this week)….where it seems many younger employees want to live. Most younger New Yorkers also want to live Downtown. The thought of living in the suburbs for most young people is not attractive. Rural Culture is being replaced by Urban Culture (yet so many New Yorkers dream of living on a farm). The isolation of suburbs is a strong factor, yet most urban dwellers are seen isolated behind their i-phone or computer screens most of the day.

In Asia the urban agglomerations of Dhaka, Karachi, Mumbai, Delhi, Manila, Seoul and Beijing are each already home to over 20 million people, while the Pearl River Delta, Shanghai-Suzhou and Tokyo are forecast to approach or exceed 40 million people each within the coming decade. Outside Asia, Mexico City, Sao Paulo, Lagos and Cairo are fast approaching being, or are already, home to over 20 million people. New York City too: the explosion of urbanization in Manhattan is obvious, but what is happening in the boroughs is truly impressive.

That’s the good news: now try to take the L train from your hipster neighborhood in Williamsburg to Manhattan at 8.30am in the morning…..not easy. Many commuters are finding the public transportation infrastructure hopelessly inadequate. Not to mention many of the roads and bridges:  how exactly will Mayor-elect de Blasio address this? He mentioned this several times in his campaign and we hope he delivers on his promises. Part two of those campaign promises is who will pay for these necessary improvements?

Another natural effect of growing urbanization is growing costs: New York has a higher inflation rate than the rest of the country and prices here are notoriously higher than elsewhere: Are those seeking affordability fighting nature? The reality is that real estate prices are only high and climbing higher, because more people with more money can afford to pay those prices: this is the nature of a free market system. And this system here in New york is certainly doing a better job of jobs creation than most others.  As of September 2012, long-term unemployment is the highest it has been since World War II, and in New York City unemployment is still at a high of around 8,6%. Yet many, many jobs are being created here, and just like any large city, New York has to contend with a growing population as not only are suburbanites moving here to follow their dreams, but also a large swath of immigrants. There are sectors that have a shortage of applicants, most notably in the tech industries:

  • Over 500 digital start-ups have been created in New York City in the past six years, and New York has passed Boston as the second-largest growth city for tech jobs.
  • Venture capital deals rose 32 percent in New York between 2007 and 2011, compared to a 10 percent drop in Silicon Valley over the same period.
  • In the past 6 years, information technology jobs in the city have increased from 41,000 to about 54,000.
  • Many start-ups report that they can’t hire engineers and programmers fast enough.

The subject of affordability rages on, and it is a huge problem. Union construction labor costs will certainly not drive housing prices or the prohibitively expensive infrastructure costs down. Governments are notoriously inefficient when it comes to spending on infrastructure. Intelligent, efficient investing in the City now is critical to its future success.