Explaining Gentrification: Geography of Knowledge Hubs

Of course a growing population indicates a growing demand for housing. But around knowledge hubs, which act as agents of gentrification, population can actually decrease while demand for quality changes.
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Of course a growing population indicates a growing demand for housing. But around knowledge hubs, which act as agents of gentrification, population can actually decrease while demand for quality changes.
University of Pennsylvania. (Photo: Bryan Y.W. Shin/Wikimedia Commons)

University of Pennsylvania. (Photo: Bryan Y.W. Shin/Wikimedia Commons)

Before covering the impact of real estate bubbles on gentrification, I want to expand on the relationship between global jobs and pushing out tenured neighborhood residents. I'm currently reading Hub Cities in the Knowledge Economy: Seaports, Airports, Brainports. The stated aim of the editors is to analyze "how infrastructural accessibility is related to locational patterns of knowledge-intensive industries in city-regions." Knowledge-intensive industries house global jobs. Infrastructural accessibility refers to places such as airports, hence the subtitle. The relationship between the two suggests that infrastructural accessibility could spark gentrification. A bit more about airports and knowledge hubs from the book's introduction (PDF):

The first part addresses the debate on the conceptual and empirical interrelationships between (air)port infrastructures, the flows generated through these infrastructures, and the creation of knowledge within city-regions. Derudder et al. explore the related geographies of producer services and air passenger markets in the global economy to unveil the complex and multifaceted relations between the development of a so-called ‘knowledge-intensive service economy’ in and the ‘physical connectivity’ of large-scale metropolitan areas. The overall conclusion is that these relations are indeed sizable, giving further credence to the approach taken in this volume. For instance, given major geographical differences in economic development across the globe, the level of knowledge-intensive services seems to be a much better predictor of airline connectivity than mere population size, which contrasts with the dominant impact of the latter variable at the national scale. ...

... Conventz and Thierstein also focus on airports, but their chapter zooms in on how these locales have evolved from pure infrastructure facilities into proper and much sought-after business sites. To this end, the authors scrutinize spatial patterns and process of specialization in and around two major European airports: Amsterdam’s Schiphol Airport and Frankfurt’s Rhine-Main Airport. They conclude that airports have indeed grown out of their niche as pure infrastructure facilities and morphed into attractive real estate sites.

Emphasis added. A growing population indicates a growing demand for housing. That's old school demographics, old school economy (i.e. manufacturing). The demand stemming from knowledge-intensive industries acts like population growth. Hence the oxymoron-like phrase "growth without growth." Not only can per capita income increase while population decreases, total income can increase as well. Demand for goods and services goes up while population goes down because there is more money circulating in the regional economy. In such a situation, increasing the supply of housing to address high rental costs seems absurd. The quality of demand for housing is changing while the quantity of demand literally trends downwards.

The second important observation in the above quoted passage concerns the transformation of the airport as a point of infrastructural accessibility into knowledge-intensive industrial real estate. Neither airport nor seaport, universities act in a similar capacity as a "brainport." Universities are regional points of infrastructural accessibility for knowledge-intensive industries. Universities, such as Penn in Philadelphia, are agents of gentrification:

The chains have headed west to conquer a new frontier: University City. And the natives aren’t exactly cheering.

It’s common sense that “chain stores hurt local businesses,” says John Shahidi, owner of Avril 50, a local shop selling international newspapers, magazines and tobacco. According to Shahidi, chains “go for the whole area,” altering neighborhoods in their pursuit of profits.

Gentrification—or “Penntrification” as it’s mockingly called, in a jab at the nearby University of Pennsylvania— spells bad news for small businesses, such as the ethnic restaurants and quirky shops for which University City is known.

As a reminder, I distinguish between active gentrification and passive gentrification. The above is of the passive variety. Penn also has a history of engaging in the active kind:

The Black Bottom, named for its largely African-American population and for its socioeconomic location at the “bottom” of West Philly, stretched from 32nd Street to 40th Street, and from University Avenue to Lancaster Avenue—encompassing most of the present-day campuses of Penn and Drexel. As Penn grew, the university bought up and leveled entire blocks, often through shady legislation and business deals, displacing an estimated 5,000 residents.

“They started buying up properties and not doing anything with them,” says Walter Palmer, a Penn professor who teaches about the destruction of the Black Bottom. “They just let those properties sit there deteriorating, creating an eyesore, and then people were pressured to sell. They had the use of eminent domain to hang over the homeowners' heads, so they could drive the prices down to where they wanted them.”

“We came across very clear documentation of practices including land banking, redlining, coercion to move under false pretenses, unscrupulous real estate practices,” says Yalowitz, “all the mechanisms of urban renewal practiced all over the country, and especially targeting poor communities of color.”

I think the differences between the two types of gentrification are stark in this case. I wouldn't equate the displacement of mom and pop stores with "land banking, redlining, coercion to move under false pretenses, unscrupulous real estate practices." But I can understand why local residents would be wary of the current round of neighborhood change. Regardless, the macroeconomic circumstances driving gentrification are completely different. As a world renowned university, Penn has become a conduit of globalization. It is a major knowledge-hub with a variety of global jobs that are geographically dependent. That talent base will want to live and play near the university, passively (sometimes actively) pushing locals out. It's not the sheer number of Penn employees causing gentrification. It's those damn salaries and cosmopolitan tastes. The conflict of interest is more socioeconomic than political.