City lights beckon to business - providing goods and services for people who live in the cities; includes related article on What We Love and Hate About Cities

American Demographics, Oct, 1997 by Christy Fisher

Central cities are often dismissed by retailers, developers, and marketers as being too costly, too crime-ridden, and too poor to do business in. Though these challenges are real, businesses can find success in central cities by catering to the needs of a diverse and often underserved population.

Pam Galasso is a small-business owner who lives in a luxury apartment building in downtown Washington, D.C., because she places a premium on her time and wants everything she needs for work and life within a few blocks of her front door. Nick Keenan bought an 1895 brick Victorian row house in the historic, but economically depressed, Shaw area of D.C., because he wanted to be close to work and he wanted "a house with character" and "more house for the money" than he could find in the suburbs. Bara Vaida bought a condominium in the busy Dupont Circle area of the city for its convenience to her job. She also likes the vibrancy of the area, which is one of the city's more popular neighborhoods and shopping-restaurant-entertainment districts.

Galasso, Keenan, and Vaida are among the estimated 79 million people who live in the nation's larger central cities, home to three in ten Americans, according to the Census Bureau's 1996 Current Population Survey. In all, about 58 million adults and 21 million children live in such cities. But this large and geographically concentrated population is often ignored by retailers, developers, and marketers who dismiss central cities as being too costly, too crime-ridden, and too poor to do business in. Though these challenges are real, many businesses have found success in central cities by catering to the needs of an often underserved population that is as diverse as the suburbs are homogeneous.

"People live downtown and people live in the near suburbs. They need everything everybody else does," says Jeffrey A. Finkle, executive director of the National Council for Urban Economic Development, a Washington, D.C. nonprofit organization dedicated to economic revitalization of America's cities. "They need groceries, drugstores, laundry services, and dry cleaners. They need movie theaters and restaurants. They purchase goods and services just like everybody else. Higher-income areas demand higher-quality additional services, while lower-income areas don't require value-added. Also, not only do a lot of people live in [central cities], a lot of people work downtown and come through these communities."

WHO LIVES IN CITIES

American Demographics did an exclusive analysis of data from the Census Bureau's 1996 Current Population Survey to profile the people who live in the central cities of the nation's metropolitan areas. It should be noted that this analysis excludes about 17 percent of the nation's total central-city population, primarily those in smaller cities and cities whose surrounding suburban territories don't have enough people to meet data-disclosure requirements.

Three-fourths of the 48 million central-city adults covered in the analysis live in cities of large metropolitan areas with 1 million or more people. This includes all the largest cities such as Atlanta, Baltimore, Boston, Chicago, Houston, Los Angeles, Minneapolis-St. Paul, New York, St. Louis, and Washington, D.C. The remaining one-fourth of central-city adults reside in central cities of metropolitan areas with fewer than 1 million people, such as Honolulu; Jacksonville, Florida; Louisville, Kentucky; Omaha, Nebraska; Richmond-Petersburg, Virginia; Providence, Rhode Island; and Tacoma, Washington.

Anyone who lives within the municipal limits of a central city is a city resident. The population encompasses an enormous range of neighborhoods, from the toniest to the most rundown. Central cities are home to many ,of the richest and poorest Americans. This diversity is reflected in the age, income, ethnic background, and household makeup of central-city residents.

Diversity is one reason why Nick Keenan bought his home in the Shaw area of Washington, D.C. "The neighborhood is very tight. We all know each other," says Keenan, a 31-year-old computer-product-development specialist. "Every conceivable type of person lives here. There are lots of kids and people without kids. There are older people, gay couples, heterosexual couples, and single people. We have people who work at the World Bank and people who are on welfare. There are blacks, whites, Latinos, and Asians--all within four houses of each other. The suburbs were never a consideration for me. The suburbs tend to be less socially diverse."

Central-city residents tend to be slightly younger than the population that lives outside of central cities. They're also less likely to live in married-couple households and are more likely to belong to a minority ethnic group. These tendencies help explain the lower-than-average household income of central-city adults.

"The group that has fled the central city are the middle-income people with children, primarily because of the [poor] schools," says Keith Ihlanfeldt, an urban economist, professor, and senior associate of the Policy Research Center at Georgia State University in Atlanta. "This tends to bifurcate the income structure. You have very low-income people who can't escape the central city due to lack of affordable housing in the suburbs or racial discrimination. But you also have very high-income people who do not have school-age children or can afford to send them to private schools. What you often find is a big increase in the number of households, but a slight decline in the number of people. What is left in the central city are single-person households."