What Does “Rise of the Creative Class” Mean for Bay Area Real Estate?

by cindy ~ October 18th, 2010 ~ Atherton, Los Altos, Los Altos Hills, Menlo Park, Palo Alto, Portola Valley, The Peninsula in the bay area, Woodside Comments (87)
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Rick Turley, local President of Coldwell Banker shares his insight on a new perspective to consider.  What will the future hold for real estate in Atherton, Menlo Park, Palo Alto and further north and south?

The rise of the “Creative Class” and what it means for Bay Area real estate

 By: Rick Turley, President, San Francisco Bay Area, Coldwell Banker Residential Brokerage

 

 I recently picked up a fascinating book by Richard Florida, the best-selling author and world-renowned expert on urban studies. In his book, The Rise of the Creative Class, Professor Florida argues that a region’s economic health and vibrancy will increasingly depend on how well it attracts and retains what he calls “the creative class” – a fast-growing, highly educated and well-paid segment of the workforce.

 Florida describes the creative class as “a profound new force in the economy and life of America.” Members of the creative class do a wide variety of work in a wide variety of industries, from technology to entertainment, journalism to finance, high-end manufacturing to the arts. “They do not consciously think of themselves as a class. Yet they share a common ethos that values creativity, individuality, difference, and merit,” he writes.

 What attracts the creative class to an area? In an article for The Washington Monthly, Florida writes that “creative centers provide a solid mix of high-tech industry, plentiful outdoor amenities, and an older urban center whose rebirth has been fueled in part by a combination of creativity and innovative technology, as well as lifestyle amenities.

 “More and more businesses understand that ethos and are making the adaptations necessary to attract and retain creative class employees –everything from relaxed dress codes, flexible schedules, and new work rules in the office to hiring recruiters who throw Frisbees. Most civic leaders, however, have failed to understand that what is true for corporations is also true for cities and regions: Places that succeed in attracting and retaining creative class people prosper; those that fail don’t.”

 How do you build a truly creative community – one that can survive and prosper in this emerging age? “The key can no longer be found in the usual strategies,” Florida writes. “Recruiting more companies won’t do it; neither will trying to become the next Silicon Valley. While it certainly remains important to have a solid business climate, having an effective people climate is even more essential. By this I mean a general strategy aimed at attracting and retaining people – especially, but not limited to, creative people. This entails remaining open to diversity and actively working to cultivate it, and investing in the lifestyle amenities that people really want and use often, as opposed to using financial incentives to attract companies, build professional sports stadiums, or develop retail complexes.”

It struck me as I was reading The Rise of the Creative Class that where the creative class decides to migrate can go a long way to determining the long-term health of a region’s housing market every bit as much as it determines the health of the economy. So how does the San Francisco Bay Area fare? Extremely well. In fact, when Florida decided to rank large urban areas in the U.S., the Bay Area came out as No. 1. (see the chart below from The Washington Monthly). In his article, Florida says that “the San Francisco Bay Area has everything from posh inner-city neighborhoods to ultra-hip districts like SoMa (South of Market) and lifestyle enclaves like Marin County as well as the Silicon Valley.”

 Those of us who live here know that we pay a price to do so. Our housing market is certainly one of the more expensive ones in the country. But we’re willing to pay a premium because this region has so much to offer, from a vibrant and growing economy to world-class restaurants, arts and entertainment, from wonderful weather and beautiful scenery to seemingly endless outdoor activities. Just as important, I believe, is the Bay Area’s overall quality of life, our rich culture of diversity and creativity. It’s why we will continue to be a premier destination for the “creative class” – the entrepreneurs and leaders of tomorrow.  It’s also why our housing market should remain strong and growing for years to come. 

Large Cities Creativity RankingsRankings of 49 metro areas reporting populations over 1 million in the 2000 CensusTop Ten Cities

City Creativity Index %Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank 1. San Francisco 1057 34.8 5 1 2 1 2. Austin 1028 36.4 4 11 3 16 3. San Diego 1015 32.1 15 12 7 3 3. Boston 1015 38.0 3 2 6 22 5. Seattle 1008 32.7 9 3 12 8 6. Chapel Hill 996 38.2 2 14 4 28 7. Houston 980 32.5 10 16 16 10 8. Washington 964 38.4 1 5 30 12 9. New York 962 32.3 12 13 24 14 10. Dallas 960 30.2 23 6 17 9 10. Minneapolis 960 33.9 7 21 5 29