Could Startups Ignite a Rust Belt Revival? 3 Tips for Struggling Cities.
It may have taken a bit longer to rebound than the rest of the country, but the Rust Belt is shaping up for a major comeback. Construction and redevelopment is booming in Buffalo, N.Y., and Cleveland, where there are concerted efforts to revitalize business, and talent from area schools is starting to stick around. Startups are materializing and big companies like IBM are opening offices.
Rust Belt municipalities that are still on the economic mend can bolster their comebacks by borrowing from the three trends below, which are already working in major metropolitan areas.
1. Support innovation.
In order to attract entrepreneurs and businesses, it’s critical to cultivate an environment that welcomes innovation. The best formula for this is a private sector-led initiative that is supplemented with government support.
Companies have to be vocal about their needs, and elected officials must be willing to provide the incentives necessary to attract and retain innovators. Real estate and service-sector businesses have to be prepared to scale to meet the needs of the community as it grows. Word spreads quickly when a city offers incentives and provides the right support system for valuable companies.
The startup momentum has already begun in bigger cities: Young companies are springing up in Detroit and Pittsburgh, where the cost of living is much more reasonable than the sky-high rents of more established startup hubs.
Large pitch competitions, such as 43 North in Buffalo, are offering platforms for companies from all over the world to share their ideas and gain funding in a Rust Belt city. Incubators like YBI in Youngstown, Ohio, and accelerators like Launchhouse in Cleveland offer a means to give a jump-start to following through on good ideas coming out of the region as well.
Government-led initiatives like Startup New York are actively recruiting young businesses to relocate to cities with more attractive tax breaks. The many startup-focused programs and services in the Rust Belt indicate the possibility of a major rebound on the horizon.
2. Location matters.
To some, the typical images we associate with Rust Belt cities may look somber at first glance, but vacant industrial buildings with great bones and interesting architectural histories offer an extraordinary opportunity for restoration and rebuilding. Creating new and unique spaces that reflect the emerging community gives these cities more leverage to retain a skilled workforce, which entices employees to stick around.
City officials can look to partner with local, entrepreneurial real estate companies to work on more outside-the-box projects.
Take Buffalo, for instance: The city recently partnered with my real estate business, Sinatra & Company, to create the Queen City Pop-Up for the holiday season. The initiative offers vacant retail real estate space to businesses free of charge through the season, letting them to connect with potential customers and expose their products to a wider audience. The increased commerce around the area can help to support revitalization efforts, which is a positive for neighboring businesses as well.
Business corridors are particularly critical to maintain, as one or two flagship companies and surrounding services can help to attract younger startups. Keeping up vacant commercial real estate may seem like a tall order in the face of serious economic woes, but it’s doable if when players become creative and find synergies between government, nonprofits and businesses.
One only needs to look to Milwaukee for inspiration, where local nonprofit Northwest Side Community Development Corporation has teamed up with the city of Milwaukee and other partners to completely renovate the 30th Street Corridor. The plan is to include office space, a business accelerator, educational resources and nearby residential quarters. By retrofitting an area with useful existing infrastructure, cities can construct an ideal ecosystem to fit the needs of most any high-growth business.
3. Find a new niche.
Rust Belt cities were built during the earlier years of the industrial revolution. While it’s true that the United States is experiencing a manufacturing renaissance, globalization means that the industry will never rebound back to the way it once was and that’s OK. Cities need to embrace this new normal and find a different niche to become known for.
Clean energy, health care and consumer Internet services are just three sectors that cities can explore, but remember that pivoting is not a simple process. Elected officials must capitalize on their city’s unique existing strengths and make conscious legislative decisions to attract the industry that they're looking to build. Universities should reinforce this emphasis on a particular sector by offering relevant degrees and coursework. Publicity is also key, so that outsiders are aware of progress being made.
Detroit is an excellent example. A symbol of the recession, Detroit is capitalizing on its role as the designated underdog to appeal to artists and creatives. Younger people are rethinking the city just as they did for now-chic areas of Manhattan in the 1980s, attracted by ridiculously cheap real estate and the prospect of creating something -- a company, an art gallery, a coffee shop -- from the ground up.
Buffalo, too, is taking significant steps to position itself for niche industries. The new goal is to become known as the go-to city for clean energy manufacturing and medical genomics. Capitalizing on its existing strengths, Gov. Andrew Cuomo’s Buffalo Billion initiative is investing large sums into advanced technology manufacturing and biomedical research facilities and has forged partnerships with area universities and real estate developers.
The initiative will take years to pan out but is off to a running start. Tesla’s Elon Musk has inked a deal to open the largest solar panel factory in the United States for SolarCity. The project broke ground in September and is expected to create an estimated 3,000 to 5,000 jobs, many in the field of engineering. High-profile projects like Musk’s SolarCity commitment speed momentum for a city’s rebranding.
Rust Belt cities are capable of a comeback. They just need the right tools and a certain degree of resourcefulness and creativity to do so. By looking at what is working in Midwestern cities, those that continue to struggle can construct a new identity with the comfort of knowing that the model has worked elsewhere.
It’s time to call on that trademark blue-collar work ethic in the cities surrounding places like Cleveland, Detroit, Buffalo and Milwaukee, so that the Rust Belt can become fully rejuvenated. It won’t be overnight, but it probably won’t be long.