Public-Private Cooperation Spurs Economic Development
1/13/2014 12:18 PM
Much has been written, both pro and con, about the appropriateness of governmental/municipal participation in real estate development projects; the so called public-private partnerships. Some opponents of such projects decry the need for public assistance to induce developers to invest in projects that are deemed relatively risk free. I must admit that on more than one occasion, I have found myself in agreement with those who shake their heads in disbelief at the necessity of these “handouts.” However, when it comes to center-city, urban redevelopment projects, public- private cooperation is not only appropriate but absolutely necessary to the reinvigoration of downtown life.
As urban populations slowly migrated to the greener pastures of suburbia, so too did the retailers and office developers. Within a few decades, many center cities were hollowed out and essentially devoid of a downtown population base and retailers. It didn’t take long for the downtown commercial office market to find itself with an oversupply of older, Class B or worse space with little demand. So, for many, many years the vacancies remained vacant and the supply of this category of office space actually increased. Aside from projecting an extremely poor image of a city’s core to visitors, many of these long vacant buildings became a public hazard and through default had become the property of the municipality. The situation begged for aggressive action but what exactly could or should government do to foster interest in the reuse of center-city properties?
The answer that has proven itself to be most effective is a cooperative effort between governments and developers—Public-Private Partnerships. Respected private developers and economic development agencies put their heads together and identified center-city properties that could be repositioned to meet a demonstrated demand. A number of critical financial inducements were developed by governments that increased the availability of funding for these projects and therefore the viability of these projects. Slowly, often at what appeared to be a glacial pace, redevelopment came to center-cities. Older, hard to lease office properties have become trendy loft apartments. Vacant warehouse buildings have been converted into artist workshops and galleries. Old, once proud commercial buildings have been given new life via their redevelopment into modern, efficient work spaces.
None of this activity would have occurred had it not been for initiatives spawned by Public-Private Partnerships. Cooperative efforts between government and the private sector with respect to center-city development are an appropriate and highly effective use of governmental resources. One need only drive down any main street where this effort has been employed to witness the validation of the strategy.