HARRISBURG, Pa. (WHTM) — Could losing two of the region’s most important corporate headquarters somehow be a good thing?
That might be a stretch.
But the author of one of the most influential books on luring people who create new ideas and new technology says Philadelphia’s gain is not entirely Harrisburg’s loss.
“Don’t bemoan the loss of Rite Aid and Harsco,” Richard Florida, author of “The Rise of the Creative Class,” said Friday in a wide-ranging interview from his current home city of Toronto, where he is a professor.
Florida first defined and wrote about the “creative class” during his two decades as a professor at Pittsburgh’s Carnegie Mellon University and in 2018 became the first “Philadelphia Fellow.”
Florida noted that Rite Aid, in particular, said it isn’t truly moving thousands of employees from its current headquarters in East Pennsboro Township to Philadelphia. Rather, many will be free to continue living and working — most days, anyway — in Midstate Pennsylvania, and they’ll travel to Philadelphia for in-person brainstorming.
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The announcements by both companies seemed like evidence, perhaps, of a reversal in a pandemic-long trend of people moving from big cities to places like the Midstate. But Florida said it’s neither an either/or proposition nor a zero-sum game.
“As much as it seems painful to lose these two units, in a way it reflects a better news story for central Pennsylvania in that central Pennsylvania is becoming a place of choice for talented people who want an affordable, less rat-race lifestyle,” Florida said. “And I think companies are going to Philadelphia because they can connect and collect people from all those destinations [with good air, rail and road links]. So I think in a way, it could be a win-win.”
So if Midstate municipalities shouldn’t bother asking themselves how to attract and retain corporate headquarters, what questions should they be asking themselves?
“What kind of coffee shops or small restaurants or co-working spaces do they need?” Florida said, to attract remote workers employed by companies based in places like Philadelphia, Washington, New York, Baltimore and Pittsburgh.
“The future of competition isn’t about business headquarters,” Florida said. “It’s about attracting talented people. And you” — Midstate Pennsylvania, that is — “have all the ability to do that.”
Full video of the interview is above. Here’s a transcript:
Seth Kaplan, abc27 News: With the news just days apart of two major companies leaving the Midstate for the big city Philadelphia, we wanted to ask more about how a region prevents something like that. Can it prevent that, and what can it do to attract companies? What might have Philadelphia gotten right that the Midstate got wrong in this case, at least, and what could it maybe do better next time. Or is there anything, in fact, you can do? We’re joined now by Richard Florida, who is author of a book called “The Rise of the Creative Class,” which, for lack of a better way to describe it, is almost sort of a Bible for folks who make these kinds of decisions, who want to know: How do we attract and retain companies like Rite Aid and Harsco — one of several books that kind of everybody in that field, the city planners and so forth, has read and really a generation of people in that field have been depended on for this kind of information. So first, Richard, thank you so much for being with us. I want to read you a quote from Harsco when they listed reasons why they’re leaving actually East Pennsboro Township in Cumberland County for Philadelphia. They talked, among other reasons — infrastructure and so forth — of a “much larger and diverse talent pool.” Richard, can you translate that for us? What are they saying about the Harrisburg area as compared to Philadelphia?
Richard Florida, author, “The Rise of the Creative Class”: Look, I think the pandemic has changed some things, and I think what it’s done is point one trend in the direction of benefiting central Pennsylvania and one trend in the direction of benefiting places like Philadelphia. I think that we’ve always had a demographic divide, which means younger people have tended to go to the big city like New York, or Philadelphia, or Chicago, and people with families have tended to go out of the city in search of affordable housing and better schools, and I think the pandemic just accentuated and accelerated that divide. So it doesn’t surprise me that these companies are saying, “I want to go to Philadelphia,” and in the case of Rite Aid, very interesting: “I don’t want a traditional office with offices for everyone. I want collaboration spaces. I want places where my teams can meet.” And the reason Philadelphia’s attractive is because it’s connected. It has a great airport. It’s connected by transit. It’s connected by trains and big highways. You can get to Philadelphia from [central Pennsylvania] and from Delaware and from New York and lots of other places. I think the trend that benefits the central part of the state is the trend towards remote working, work from home. You want more space, you want a more affordable house. You want to do more things outside. You want a place you can ride your bike and your kids can play, and I think that sent people in the family formation years out of places like Philadelphia. Why Philadelphia? I think because working is less about going to an office and working is more about collaborating. I’ll tell you a story: I was in New York City recently. And New York City still has less than 20 percent of its offices occupied. I would go out to dinner with friends in Midtown, and by about 4:30, there would be lineups in front of every nice restaurant with people dressed in a business suit with an open collar shirt. A young woman dressed business casual. People weren’t going to the office. They were coming into New York from nearby New Jersey and Connecticut and parts of Pennsylvania to reconnect with their colleagues. I think that’s what Philadelphia has to offer. It’s a connection space, not even so much a working space. I do think that … central Pennsylvania, the Harrisburg area, whatever we want to call it, will benefit from the remote working trend and from more people working at home and wanting more affordability. So it’s not just an either/or. It can benefit both parts of the state.
SK: That’s interesting because we’ve talked a lot here at abc27, in fact, about this trend. I mean, just look at real estate prices, for example. Harrisburg is among the hottest markets in not only the state, but in the country, because of the driving distance of places like Philadelphia, Baltimore, Washington and New York to a lesser degree — you can get there if you have to get there a couple of times a month for a meeting. You can do it. So on one hand, we’ve seen that, and on the other hand, we got the news we got this week.
RF: I think we’ve got to think about it differently. It’s not a one-headquarters world anymore or an office-in-one-place world anymore. You think about Amazon when it said it’s going to go after an “HQ2.” “We have a headquarters in Seattle, but we want one in another city,” and they picked a place you mentioned, which is in great commuting distance of central Pennsylvania, the Washington, D.C., area, in this case, northern Virginia. I think you need to think about hubs and satellites, and the big city is going to get the hub, but not everybody’s going to go there every day, and there’s not even going to be a lot of people in offices in cubicles with laptops. People are going to go there to socialize, to connect, to have meetings, to brainstorm, and then people are going to spread out, and I think one of the things central Pennsylvania could do is think about this remote work thing, and what we know is that remote workers don’t just work from home. I mean, there’s a very good study by a guy who lives in central Pennsylvania. A guy named Adam Ozimek who lives out near you in a rural area of central Pennsylvania, a leading expert in remote work. He finds about 20 to 25 percent of people who “work from home” don’t work from home. They work from a coffee shop, a restaurant, a library, a friend’s house. I think, thinking about co-working spaces in places like — what are communities? What are those older, if you will, office centers or older malls that have fallen into a little bit of disrepair — how could we turn them into centers for remote work and remote work ecosystems where people can leave the house and go to work? So I think we shouldn’t think of an either/or, either have the headquarters or you don’t. I think it’s a much more fluid example, where many of the combinatory, connective activities — the get-togethers — are going to happen in the big city center. But a lot of the day-to-day work is going to happen out in places like central Pennsylvania.
SK: You talked about the generational divide, if we want to call it that. When I look at the headquarters of Rite Aid or of Harsco, you can see how a half century ago, that’s what people were thinking in terms of. “Hey, there’s ample parking,” right? What more could you want? Well-connected by highways and that sort of thing. But there’s a generation of people, including ones who are starting to have families, who that’s not what they’re looking at is, “Where can I drive? Where can I park?” They’re looking at: “What can I walk to? Where’s the supermarket that I can walk to? How can I not have a car?” perhaps, and is that part of what drives these decisions now in a way that it didn’t in the past?
RF: I think it’s more the case for young people, and I think that young people in our society want not just to walk to the office. They want to walk to the bar. They want to walk to the restaurant. They want to go on a date. It’s not just about a job market. Let’s call it a “mating market.” They want to meet young people and have friends and have girlfriends and boyfriends, and they’re the ones in the big city. But I think in the big cities, frankly, in America are tough for families. Schools are a problem. You’ve got to look for schools. You’ve got to commute. Sometimes you’ve got to drive to schools. Crime is higher. So I think what these companies want in the city is, they want to be able to get the young folks. But they also want a central location for this collection function, this connection function. They want a place where people can come into the office a day or two a week and see their colleagues and friends. I think what we’re finding, and when we look at New York City, is the suburban office parks actually, where people can drive, have bounced back quicker — that people still, like it or not, are still a little bit scared to get on a bus, to get on a train, to get on transit — and are much more comfortable in a car. I think it’s one of the big challenges of the pandemic: How do we get people back on transit, and how do we reduce the traffic jams? But I think you could imagine co-working spaces, office spaces, even converting some of those headquarters that are no longer headquarters. I think there’s enormous demand for remote working spaces in places like central Pennsylvania, and that’s what I focus on. I wouldn’t bemoan the loss of these HQs. I would say, “How do we make central Pennsylvania a great place to live, a great place to work and a great place to do remote work? How do we build that ecosystem that this new cadre of remote workers, often with kids, need?”
SK: So then, what’s the checklist, when we think a lot of in terms of big cities and smaller cities, and I don’t know if there’s anything the smaller cities here could have done? If Rite Aid and Harsco just didn’t want an old suburban office park, if they wanted something else, is there anything Harrisburg, York or Lancaster could have done? Or is it just, no, they’re gonna go to Philly?
RF: Don’t bemoan the loss of Rite Aid and Harsco. Think about what we talked about — talent — and think about continuing to attract those families, those “boomerangs,” if you will, those people who want more space, that want a better life, that can commute to work a day a week, or even a day a month. Build up the capacity to attract them, and not just by building great affordable housing. But think about those older suburban centers, those suburban malls. Some of them are urban centers. The areas around some of your great college towns in central Pennsylvania. What kind of coffee shops or small restaurants or co-working spaces do they need? I work with Tulsa, Oklahoma. Small city. As the oil and gas industry evaporates, headquarters leave town. Well, they forward to an initiative called “Tulsa Remote,” where they said, “If you’re a remote worker, we’re going to give you a small stipend. But we’re [also] going to plug you into Tulsa. We’re going to find you affordable housing. We’re going to have a co-working space you can work in. We’ve got great coffee shops. We have housing options for you.” I think, thinking about central Pennsylvania not so much as a location for companies, but a location for talented people, and giving those talented people all the things they need to be more productive, including a great house to work in, a great house to live in, great schools to send their kids to — but also a great co-working spaces. So I think it’s less about HQs and office buildings associated with a company and much more about co-working and the kinds of things which to allow talented people who choose to live in central Pennsylvania to be productive.
SK: And then it helps that with Philadelphia in particular — as opposed to even Baltimore, let’s say — there’s a train. Amtrak upgraded the line several years ago, and you can get from Harrisburg to Philadelphia in an hour and a half. You can get from Lancaster to Philadelphia in less than an hour, for those people who have to get there just once in a while. That’s actually good.
RF: We saw that a long time ago in Allentown. Billy Joel sang about Allentown, the factories closing down, and he was right. But Allentown had that train connection that made it in many ways early on, and now even more so, a suburb of New York City. It makes perfect sense to me as somebody who’s older now, who has kids, who’s a cyclist and likes to ride their bike on open roads, that that’s the place you might want to live now in America. By the way I’m the guy who wrote a lot about the urban comeback when I was living in Pittsburgh, the movement of people back to big cities beginning in the year 2000. I think we’re seeing a counter now. Obviously, these companies want to be in cities because it’s close to train lines, and Amtrak is being upgraded and people can get there. Really, people can get to Philadelphia for a meeting from a lot of places — New York, D.C., from central Pennsylvania, Baltimore, and it’s a great city and it’s affordable. But I think the other thing we’re seeing is that people want to live in not only a suburban environment, but almost a quasi-rural environment. Some of the fastest growing places in America are in Hudson Valley towns outside of New York City, on the Hudson River.
SK: Like Nyack, yeah.
RF: I just think there’s a trend in America — members of what I call the creative class. The scientists, the innovators, the artists and musicians, when they get a little older and have kids, they might not want a traditional suburb, but they know they can’t make it in the city with a family. And the rural parts of the country, like central Pennsylvania, which is spectacularly beautiful — they have a lot of appeal. So that’s what I focus on.
SK: It’s perfect that you mentioned Allentown. I want to let you go. But along with closing all the factories down and all the things from the song, Allentown also lost its rail connection back in, I think, the late 70s. And sure enough, part of the infrastructure bill being debated right now would provide a lot of funding to Amtrak, and it said it would use part of that funding to restore the real connection between Allentown and New York City, and that change —
RF: I don’t want to get so political on this, but Joe Biden is a guy from the East Coast corridor — the East Coast, Acela, Amtrak corridor. He took that train — famously took that train from Wilmington to D.C. He knows how much it means, and I think almost these companies can see that coming. They can see the upgrades coming. And they understand that Philadelphia is a good place to be on the Acela corridor. It’s close to New York, close to D.C., in the center — can draw on this wonderful — affordable. You know, it’s not the New York metropolitan area. It’s not the D.C. metropolitan area. It’s much more affordable, and as you said, people from New York and D.C. are moving out of central Pennsylvania. So, I think in the main, as much as this seems painful to lose these two units, in a way, it reflects a better news story for central Pennsylvania, in that central Pennsylvania is becoming a place of choice for talented people who want an affordable, less rat-race style. And I think companies are going to Philadelphia because they can connect and collect people from all those destinations. So I think in a way, it could be a win-win.
SK: And in fact, you’re making me think to myself: I moved here from D.C. a year ago. There’s a woman who lives a couple of doors down from us in Midtown Harrisburg, who also moved from D.C. In her case, she didn’t buy a car — unlike us, we bought one car. She didn’t even do that, and when I look at juxtaposition of that against this unhappy news this past week — maybe a lot more reasons for optimism than we’ve realized here.
RF: Just realize, the future of competition isn’t about business headquarters. It’s about attracting talented people. And you have all the ability to do that.