In a lot of cities, you can get a good sense of the character and strength of the urban economy simply by paying attention to what is downtown.
For example, a lot of art galleries and funky shops suggests that an urban revitalization is probably well underway, and that it’s more or less an organic revitalization. Empty storefronts and street ministries suggest that the local urban economy is still lagging. A healthy mix of retail, office space and (economically diverse) residential suggests a mature and thriving economic core.
But what about retirement communities downtown? What do they suggest? Should they even be there?
Are retirement communities – like this one in St. Petersburg, FL – the best use of high-value downtown real estate?
Here in Florida, this is not an uncommon sight, and is probably a relic of the times when downtown real estate was some of the cheapest available. But with the revival of cities that’s been going on for the last decade or so, this dynamic has changed. Downtown property is much more expensive than it used to be, generally speaking – although in some places, it can still be had for bargain basement prices.
It would seem that the people running these retirement homes showed some business savvy by getting in when the getting was cheap – they found an inexpensive place to put their facility and were therefore better able to control costs. Buy low, sell high – that’s how capitalism works, right?
Except …
Except a retirement home doesn’t accrue the same benefits from being a part of a vibrant downtown scene that, say, a luxury hotel or a high-end apartment building would. Obviously, some people living in a retirement home will still be able to go out and participate in urban life (and the urban economy) outside. But many cannot, due to health reasons. Those residents would be equally well-served out in the suburbs, as long as the facilities were comparable inside.
An apartment building or a hotel downtown will generally be filled with people who will go out and spend money in the neighborhood. Senior citizens in a retirement home may do the same from time to time, but that population often faces different economic constraints. Their income is much more fixed than is that of the general population, and since they don’t know how long their life savings have to last them, they have a much greater incentive to be careful how they spend it. There is nothing wrong with that, but neither is there anything wrong with pointing out that more local spending is a good thing for any downtown economy.
The facility pictured above is in downtown St. Petersburg. And yes, this would be a great building for upscale residential or a luxury hotel. But it also doesn’t seem like the Princess Martha and its residents act as a drag on the vibrancy of the urban scene here. I do think that using this building differently could help spur growth along 1st Ave N, but there’s already enough going on downtown to where the Princess Martha doesn’t necessarily have to pull its own weight.
But that’s not always the case. About 40 minutes to the south lies the small city of Bradenton, which has a compact downtown area that just can’t seem to get going. The city leaders in Bradenton have been trying to address this problem for some time, though I couldn’t say how sustained their focus and concern have been. Anyway, there are several retirement facilities located right downtown, within walking distance to the city’s underutilized waterfront. Now, many urban theorists will tell you that a key ingredient in any downtown revitalization is having people living downtown, so that they’d be more likely to go out at night and on the weekends to enjoy the neighborhood amenities. But nobody lived there, except for the people in the retirement homes, who are the least likely people to be involved in any downtown revival.
(True story that I wish I could find documentation for: Over a decade ago, when the Bradenton city council was actively looking for something that would boost downtown’s profile and spur economic growth there, one genius consultant proposed installing speed bumps on the one-way streets going through downtown. His reasoning was that this would force drivers to slow down, and they would then be able to see all the amazing things downtown had to offer. There were two obvious problems with this suggestion: first, downtown had nothing to offer at that point; and second, all speed bumps would do is encourage people to find an alternate route that avoided downtown altogether. To their credit, the council declined the suggestion.)
Of course, even if retirement homes don’t represent the optimal use of high-value real estate, you can’t just force them out. Provided all their tax obligations are met and their rent or mortgage is current, that would be unethical and cold – even if the city really needs the tax revenue and spillover economic activity generated by a new luxury hotel, for example.
Obviously, every community should be able to decide for itself how best to use and allocate its own real estate. Perhaps retirement homes downtown are exactly what they want. But some uses are better, economically speaking, than others. I’ve read that a predominance of surface-level parking lots – not multi-story garages – in a downtown area is a key sign that either the market isn’t getting the values for downtown land “right,” or that there’s no real demand for downtown real estate to begin with. I’m wondering whether that insight could also be applied to uses like retirement castles.
Place is everything.
Posted on May 29, 2012
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