Wednesday, January 28, 2009

Lessons Learned from the Motor City, Part I

Detroit suffers from some of the same issues as St. Louis – namely, widespread abandonment of its urban center by residents and businesses – albeit on a larger scale.

The Motor City, however, has taken some major steps to stem its decline and could serve as a model for St. Louis.

In St. Louis, Ernst & Young gave up on downtown. In 2001, despite aggressive lobbying from the city, the firm abandoned 86,000 sf of space in Gateway One for approximately 100,000 sf in the Plaza in Clayton. The move was a major blow to downtown St. Louis, costing the city 715 jobs.

At the time, Turk Turley of Colliers Turley Martin Tucker commented, “There are opportunities for them (Ernst) downtown," Turley said. "They could take care of their needs in the building they're in.” The Business Journal mentioned that the city was prepared to offer an incentive package that would more than offset the 1% earnings tax and negate any potential cost savings associated with moving to Clayton.

But Ernst & Young chose to move anyway.

In Detroit, however, Ernst & Young played a major role in that city’s nascent revitalization, signing on as a tenant in a new Class A office building – the first new office space constructed in Detroit since the 1970s.

Like St. Louis, Detroit has secondary business districts – such as Southfield – that compete with the CBD. Ernst & Young could have easily taken the same approach in Detroit that they did in St. Louis, leaving for supposedly greener pastures. However, the firm recognized its importance to Detroit’s CBD, and by making a commitment to downtown Detroit, it has done its part to reverse the trends of the past. Detroit is probably the only city I can think of - other than St. Louis - that would have a firm like Ernst & Young in a suburban location, and yet it doesn't.

Why couldn’t that have happened here?

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