Key Issue # 3: Business Services & Settlements

1. Key Issue # 3:Business Services & Settlements • EVERY settlement in an MDC provides CONSUMER SERVICES to people in the area & the area surrounding • NOT all settlements of a given size has the same # & types of BUSINESS SERVICES • BUSINESS SERVICES disproportionately CLUSTER in a handful of settlements • Individual settlements specialize in particular BUSINESS SERVICES

2. World Cities • Prior to modern times, virtually all settlements were RURAL • Providers of CONSUMER SERVICES met most of the needs of farmers in village • A handful of urban settlements provided BUSINESS & PUBLIC SERVICES as well as some CONSUMER SERVICES with large market areas

3. Ancient World Cities • WHEN: Urban settlements date from the beginning of documented history in the Middle East & Asia (Fertile Crescent) • Oldest documented Ur (Iraq) 3000 BC • COMPACT, surrounded by a WALL, TEMPLE at center (ziggurat), surrounded by residential areas containing a dense ntwk of narrow winding streets & courtyards • Evidence indicates urban settlements were well planned • Houses arranged in a regular pattern (walls/streets laid out first, public buildings (temples, palaces) in the center, cemeteries beyond the wall. House sizes varied but similarly designed, built around a center courtyard with room for extended family • WHERE: Diffused ? To Egypt, China & South Asia (Indus Valley). Or these may be individual hearths. • Then diffused to the rest of the world

4. Ur, in modern day Iraq, was one of the earliest urban settlements. The ziggurat, or stepped temple, was surrounded by a dense network of residences.

5. Athens, Greece The hilltop site of the Acropolis, t 500 BC, still dominates the skyline of modern Athens. Largest city-state in Greece (100,00) Developed from trading ctrs. Into city-states, offering PUBLIC SERVICES, (govt, military, etc)

6. Athens, Greece The hilltop site of the Acropolis, dating to about 500 BC, still dominates the skyline of modern Athens.

7. Medieval World Cities • After Rome fell came a retreat to rural life • Urban Life began to revive in 11th c. • Feudal lords established new urban settlements • Gave residence charters to establish independent cities in exchange for periodic military service • Urban dwellers (freed from serfdom) began expanding trade • Trade was enhanced by new roads & more use of rivers • 14th c. Europe covered by dense ntwk of small market towns serving the needs of particular lords. • Largest Medieval European Urban settlements served as power centers for lords & church leaders, & major market ctrs • Major PUBLIC SERVICESoccupied palaces, churches etc.arranged around a central market square • Usually surrounded by walls • Dense & compact within these walls shops/houses were nestled into the side of the walls & large buildings • Before 19th c. world’s largest cities were in Asia, NOT Europe • 5 most populous cities: Baghdad, Constantinople, Kyoto, Changan & Hangchow

8. Brugge, Belgium Brugge was a major port & wool manufacturing center from the 12th c. It is marked by squares (plazas) surrounded by public buildings.

9. Carcassonne, France Medieval European cities such as Carcassonne, in southwestern France, were often surrounded by walls for protection.

10. Paris Paris was originally surrounded by walls which were expanded to include new neighborhoods as the city grew.

11. Several emerged where a high % of world’s business is transacted & political power is concentrated • MULTIPURPOSE— Centers of BUSINESS SERVICES Stand at the top of Central Place Hierarchy in the provision of CONSUMER SERVICES Many also serve as PUBLIC-SERVICE centers • New form of transportation & communication were expected to reduce the need for CLUSTERING economic activities in large cities (telegraph, telephone, computer, R.R., trucks) • there has been some decentralization, (manufacturing), but modern inventions haveREINFORCED not decreased the primacy of world cities in the global economy Modern world cities

12. Business Services in world cities CLUSTERINGof BUSINESS SERVICES is a product of the Ind. Rev • Factories operated by large corporations formed to minimized the liability to any 1 owner • Board of Dir. (far away) make key decisions RE: what & how much to make, & what to charge • Support staff also far away account for the flow of $ & material to & from the factory (done in offices in cities) • World Cities offer many financial services to these businesses = Centers of Finance • Attract HQ of major banks, insurance co. & specialized financial inst. ---- corporations obtain & store funds for expansion • Shares of corporations are bought & sold on the stock exchanges (located in world cities) • Getting the info fast is essential in order to buy & sell shares • Lawyers, accountants, etc. CLUSTER in world cities, provide advice to major corp. & financial Institutions. • Ad. Agencies, marketing firms, etc. concerned w/ style & fashion locate in world cities to help corp. anticipate changes in taste & to help shape those changes • Transp. serv. converge on world cities. (busy harbors & airports) lie at the junction of rail & hwy ntwks

13. Consumer Services • Due to size world cities = large MARKET AREAS • Larger # of retailers than even the size would indicate • Disproportionately large # of wealthy people live in world cities • Luxury & highly specialized products are especially likely to be sold here • Leisure services of national significance are especially likely to cluster in world cities, in part b/c they require large thresholds & large ranges & they have so many wealthy patrons • Offer cultural services • Plays, night clubs, restaurants, bars, concerts, operas, museums, libraries, concerts, sporting events

14. Public services • World Cities may be centers of national or international political power. • MOSTare capitals: contain mansions/palaces/ national leg./courts/govt. offices/bus./Offices for doing business w/ govt./trade assc./labor unions / prof. org. • EX. NY, Brussels, Paris, London, Tokyo

15. Hierarchy of Business Services • 4 levels of cities that play a major role in the provision of producer & other business services • Atop the HIERARCHY are a HANDFUL of world cities that can be subdivided into 3 groups : Dominant, Major, Secondary • Next major role in global business service economy are REGIONAL COMMAND & CONTROL CENTERS, specialized producer-service centers, & dependent centers • Differences also exist among cities w/in ea. level • Other cities– some with large population– play less important roles in the provision of business services

16. Hierarchy of World Cities London, New York, and Tokyo are the dominant world cities in the global economy. Other major and secondary world cities play lesser roles.

17. World cities (w.c.) Top of the Hierarchy • Most closely integrated into the global economic system b/c they are the CENTER of the flow of info & capital • BUSINESS SERVICES (law, banking, ins., accntng, & adv.) concentrate disproportionately lrg #s in W.C. • LONDON, NEW YORK, TOKYO • Each is the largest of its region & the world’s most important stock exchanges operate in these three cities 2nd tier= Chicago, LA, Wash DC, Brussels, Frankfurt, Paris, Zurich • Only 2 of the 9 are in LDCs Sao Paulo & Singapore • Major corp. & banks may have their HQ in these world cities vs. London, NY, Tokyo 3rd tier= of secondary world cities • 4 in No. Am.: Houston Miami, San Fran., Toronto • 5 in W. Europe: Berlin, Madrid, Milan, Rotterdam, Vienna • 4 in Latin America: Buenos Aires, Caraa, Mexico City, Rio de Janeiro • 1 in Africa: Johannesburg • 1 in So. Pac. : Sydney

18. Business Service Cities in the U.S. Below the world cities in the hierarchy of U.S. cities are command & control centers, specialized producer-service centers, and dependent centers.

19. Command & Control Center (C & C) • 2nd level of cities • Contains HQs of many lg corp., well developed banking facilities, & concentrations of other BUSINESS SERVICES(incl. insurance, accounting, advertising, law, & public relations) • Include Educational, medical & public institutions • 2 levels of C & C centers can be id’d regional centers • Atlanta, Baltimore, Boston, Cincinnati, Cleveland, Columbus, Denver, Indianapolis Kansas City, Minneapolis, New Orleans, Philadelphia, Phoenix, Portland, St. Louis & Seattle sub regional centers • Biloxi, Birmingham, Charlotte, Des Moines, Jackson, Jacksonville, Little Rock, Memphis, Nashville, Oklahoma City, Omaha, Richmond, Salt Lake City, Shreveport, Spokane, & Syracuse

20. Specialized Producer-Service Centers • 3rd Level • Offer a more narrow & highly specialized variety of services • One group of these cities specializes in the management & R & D activities related to specific industries (motor vehicles: Detroit; Steel: Pittsburgh; office equipment: Rochester; Semi conductors: San Jose) • Second group, specialize as centers of govt & education, notably state capitals that also have a major universities (Albany, Lansing, Madison)

21. Dependent Centers • 4th level • Provide relatively unskilled jobs & dependent on decisions made in the world cities, regional command & control centers & specialized producer-service • 4 sub types of dependent ctrs can be id’d in US • Resort, retirement, residential ctrs: Las Vegas, Fort Lauderdale, Orlando, CLUSTERED IN SW • Manufacturing ctrs: Buffalo, Chattanooga, Erie, Rockford, CLUSERD in the old NE manufacturing belt • Industrial & military ctrs: Huntsville, Newport News, &San Diego; CLUSTERED IN S & W • Mining & industrial ctrs: Charleston W Virginia., Duluth, (mining areas)

22. Economic Base of settlements A Settlement’s distinctive economic structure derives from its • BASIC INDUSTRIES; • export primarily to consumers outside the settlement • NON BASIC INDUSTRIES: • enterprises whose customers live in the same settlement, • essentially CONSUMER SERVICES • Community’s unique collection of basic industries defines its ECONOMIC BASE • Important b/c exporting by the basic industries brings $$ to the local economy, thus stimulating the provision of more non basicCONSUMER SERVICES. >>> attracting new workers who bring their families. >>> adding CONSUMER SERVICES to meet the needs. THUS a new basic industry stimulates establishment of new Consumer Services (ex. Stores) BUT… a new nonbasic (supermarket) service will not induce construction of a new basic industry

23. Identifying a settlements basic industry • Compute % of community’s workers working in each type of business • Compare it to the % of all workers in the country in that industry • If % is much higher in the local community, then that type of business is a basic economic activity Classifying a settlements basic industry • Each type of basic activity has a differentspatial distribution • Some = high % of workers working in a particular sector that is higher or lower than the national average (1-mining, 2- manufacturing, 3- service)

24. Specialization of Cities in Different Services • Basic Economic Activity are in business, consumer or public services • Steel- was Cleveland & Pittsburgh now hlth serv • Computing/data processing- San Jose & Boston • Military Activity- Knoxville, Albuquerque, Huntsville • Public services- dispersed around the country b/c areas usually include ST. capital, lg university, or military base. • Consumer service (entertainment/recreation)-Atlantic City, Las Vegas, Reno • Business Services- concentrated in lg metropolitan areas – Chicago, LA, NY, San Francisco • While population of cities in S & W has grown more rapidly recently, cities in the N & E have expanded their BUSINESS SERVICES more rapidly. Once manufacturing ctrs they have moved more aggressively to restructure their economic bases to offset sharp drops in manf. jobs • EX Baltimore was Steel; now medical research center

25. Economic Base of U.S. Cities Cities that have a high proportion of their labor force engaged in the specified economic activity shown.

26. Business Services inLDCs Specialize in 2 distinctive types of BUSINESS SERVICES • Small countries (ex. island/microstates): exploit niches in the circulation of global capital by offering offshore financial services offer 2 important functions in the global circulation of capital 1) low or nonexistent taxes 2) bank secrecy laws Caymans, Br. Virgin Islands, Isle of Man, Monaco, Belize Panama, Liechtenstein, Andorra, Gibraltar, New Zealand, US Virgin Islands, etc 2. Peripheral regions: Back-office function or Business-Process Outsourcing (BPO) Incl. processing ins. claims, payroll, transcription, routine clerical, billing inquiries, shipment & claims, technical inquiries related to installation, repair, operation Select LDC attract these jobs 1) low wages 2) better educated 3) English Fluency. India, Malaysia, Philippines * considered menial labor in MDC attracts educated in LDC

27. Distribution of Talent & Cultural Diversity Talent: measured by combo of: the % of people in the city with college degrees, % employed as scientists or engineers, & % employed as professionals or technicians. Cultural Diversity: 3 measures were employed: 1. # of cultural facilities per capita, 2. % of gay men & 3. a “coolness” index (combo’d % of pop. in 20s, # of bars & nightlife places per capita, & # of art galleries per capita) • Not equally distributed among cities • Talented are attracted to the cities w/ the most job op’s. & financial incentive. >>> Clustering of talent in only SOME cities (PATTERN) • Clustering seems to have a > relationship to cultural rather than economic factors • WHY important for a city, b/c they are responsible for promoting economic innovation, likely to start new business & infuse the local economy with fresh Ideas

28. Cities with High Talent Levels Cities with high levels of talent (measured by % of scientists, professionals, and college-educated).

29. Cities with High Diversity Cities with high levels of diversity (measured by cultural facilities, % gay population, and a coolness index).

30. Key Issue #4: Why do Services Cluster Downtown (CDB)Clustering of Services • In the past, services of ALL types clustered in the center of the city, (downtown) CBD Pattern Change!! • Recently, Services, especially retail, have moved from the CBD to Suburban locations

31. Central Business District (CBD) • Most visibly distinctive area of most cities • Usually old part of town, often original • Compact • (< 1% of the urban land area) containing a lg % of the shops, offices & public institutions)

32. CBD of Charlotte, NC Charlotte’s CBD is dominated by retail & office buildings (service). Public & semipublic buildings are also in the downtown area.

33. Charlotte, North Carolina

34. Retail Services in the CBD 3 Types:Require accessibility to everyone in the region • Shops with HIGH THRESHOLDS • Dept. stores used to cluster w/in the CBD (100% Corner) • NOW, more likely located in a suburban Mall environment (CBD rent is > & range is <) • Shops with LONG RANGE • Very specialized w/ customers who go infrequently. CBD is central & therefore > preferred to wider area • Expensive stuff: jewelry, fur, designer cloths & cars etc. • Many are moving to malls unless the CBD combo’s entertainment w/ shopping(Staple Ctr, the Block, Harbor Place : Baltimore) • Shops that serve people who work in the center • Lunch shoppers: shoe repair, office supplies, computers, clothing, dry cleaning, photocopying, etc. • NOT moving; Growing Outside No. Am. CBDs are > likely to have supermarkets, bakeries, butchers, open limited times

35. Patterns of Change • Shops that appeal to nearby office workers are growing in the CBDs • The # of CBD offices require more services & • the # of actual workers has increased • Patrons of CBD shops, then tend more & more to be CBD employees who shop at lunch • So… the total volume of sales in CBD areas has been stable, but the pattern of demand has changed • less dept. stores & more shops that cater to special needs

36. Redevelopment Revival • Cities attempting to revive the CBD & older neighborhoods try promenade style shopping areas • a “mall” style of shopping • Shopping Streets reserved for peds = very common in Europe

37. Business Services & the CBD • Offices CLUSTER in the center for accessibility. • Despite technological advances many businesses still prefer a face to face transaction -trust building • Proximityof Professional Colleagues is important to: law, finance, journalism, banking & advertising • Temporary employment service are also proximity dependent

38. Faneuil Hall, Boston Faneuil Hall Marketplace was originally built in 1742 and was renovated in the 1970s into a popular retail center.

39. Dublin, Ireland Retail services in Grafton Street, Dublin. European cities have retained consumer services in the CBD.

40. High Land Costs in the CBD • CBD center’s accessibility = extreme competition for the limited sites available >>> Very High Land Value • Tokyo’s CBD = world’s most expensive land. $125,000 per sq. meter due to severe shortage of “build able” land. • REDEVELOPMENT is changing this Conversely, • Populations of most U.S. CBD’s averaged a 10% > thruout the 90s & the pace is increasing • Downtown living = attractive to people w/out kids in school (young professionals or empty nesters) • Attracted by the entertainment, restaurants, museums, nightlife clustered downtown & have no need for quality schools

41. 2 distinctive characteristics follow GREATER land costs • CBD land is used more intensively • Creates 3 dimensional character, pushing UP & DOWN • DOWN: Parking, shopping, transportation, wiring, delivery • UP: (Skyscrapers) Shops at ground level, offices, hotels & residences higher • CBD some activities are excluded • High rents & land shortage discourage 2 principal activities manufacturing & residential often replaced by tourism • Many poor people used to live downtown but Push & Pull factors changed that • Pull to the suburbs- lgr homes/yrds/modern schools • Push from the CBC- higher rents & limited space

42. European CBDs • Less dominated by Commercial consideration • Retail & office function, low rise buildings, narrow streets • Regulations+efforts to preserve historic core limit vertical growth • Most prominent structures (often Churches/palaces) located in public squares / road junction / hilltops • Renovations cost more $$$$$ than new construction • NO PLACE for new construction if the CENTER location is to be maintained • Rents are MUCH more in European cntrs than in US cntrs

43. London, England St. Paul’s Cathedral, designed in 1673, dominates the skyline of central London

44. Suburbanization of Businesses • Businesses have moved to the suburbs WHY? • Manufacturers (2ndary) select peripheral location (land cost is less) • Service (tertiary)providers have moved b/c their customers have moved

45. Suburbanization of retailing • Suburban residential growth >>> CHANGE in traditional retailing patterns • From small neighborhood shops in housing areas & CBD shopping for other product TO suburban shopping (> 5% rate yearly since WWII) • CBD sales stagnated as suburban residence live too far to shop there so, small corner shops have been “zoned” out • Retailing has increasingly concentrated in planned suburban shopping malls (varied sizes) (think Irvine Spectrum/The Block) • Supermarkets replace corner shops • Larger malls contain dept stores & specialty shops • Generous parking (FREE) • Location near key road junction / interchanges for hwys • Some malls are elaborate entertainment centers • Key to a successful large shopping mall is the inclusion of 1 or more ANCHOR stores • Smaller shopping ctrs anchor supermarket or discount stores

46. Retail Centers in Atlanta Most shopping malls in Atlanta and other cities are in the suburbs. The ideal location is near an interchange on an interstate highway beltway circling the city.

47. Suburbanization of factories & offices • Factories & warehouses have migrated to suburbia for MORE space, CHEAPER land & better truck ACCESS • Modern factories & warehouses demand more land for more efficient operations (single level) • Suburban locations facilitate truck shipments with good access to main hwys & no central city traffic • Industries increasingly receive inputs & distribute products by truck • Offices that don’t require face to face contact are moving to suburbs– cheaper rents, closer to workers (who moved to suburbia) • Low wage workers do have more trouble for lack of public transportation

48. “Daily Urban Systems” The Commerce Department divided the US into “daily urban systems” with functional ties, especially commuting to the nearest metropolitan area.