Why Cities Choose Not to Have Industrial

 

If a city decides to have an industrial base, it's because it offers good jobs, a tax base and the opportunity for people to work in their community, says Toby Madden, a Federal Reserve Bank of Minneapolis regional economist. "However, a city may decide not to have industrial in their particular city. People can vote with their feet. Some communities would rather be a bedroom community and have citizens travel to another city to work." This, he says, can benefit the city with the industrial base, because people traveling to work in their park will support their retail/services. Also, he says nearby cities can view it as an advantage. If a community has a strategy not to have industrial, the adjacent city has more of an incentive because of the pent-up demand.

 

"I don't think we should second-guess cities," Madden says. "Industrial is not for every community. Do we want a steel plant near Lake Minnetonka with all of the high-end housing? Should St. Anthony -- a small geographic area -- be equally split between residential, retail and industrial? It might not make sense, since it's a bedroom community. However, they can supply labor in other cities."

 

The effects of supply and demand, Madden says, will hopefully push the right allocation of residential and commercial/industrial areas where they are needed most. If one community doesn't want warehousing, for example, but the area needs warehousing due to a large number of retailers -- that puts a premium on warehouse space. "So if I'm a nearby city with available land, I can benefit," he explains.

 

However, Madden admits there will always be conflict because people have different opinions on the topic. "It's more political than economic," he concludes.

 

 

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