When it comes to meeting the challenges of tomorrow, several American cities are a step ahead of their counterparts in Asia and Europe.
Much of their advantage is due to their position at the forefront of technological innovation. The U.S. is home to some of the world’s most dynamic technology hubs; these cities draw talent from around the world and produce innovative goods and services that drive digital progress.
Take San Francisco and Silicon Valley, which appear at the top of JLL’s latest City Momentum Index Future-Proofing rankings. These two cities account for more than a third of all tech unicorns (a start-up company valued at more than a billion dollars) created over the last 15 years. In addition, they boast the largest number of new tech start-ups.
The U.S. has a unique blend of features working in its favor such as a large domestic market, a unified regulatory system and significant levels of venture capital.
Yet while tech and innovation capabilities have a huge role to play in ensuring today’s cities stay relevant tomorrow, there are many other factors at play. These factors must all work in combination to deliver the future-proofing qualities that real estate investors, developers and companies increasingly seek in cities.
The skills of tomorrow
Cities need the best people to stay at the top of their game – and a strong talent pipeline requires a world-class education system. Boston, for example, plays host to some of the world’s leading research institutions and its brightest minds, which make the city one of the most prolific sources of patent applications globally.
Southern California’s prestigious university networks in Los Angeles and San Diego are training the next generation of tech talent. Indeed, their combined metro areas are home to more people working in computing and mathematics-related fields than anywhere else on the West Coast.
With access to talent a key consideration for corporate location strategies, businesses need to understand which cities have the attributes necessary to attract and retain skilled workforces. Factors like quality of life and affordability contribute to the strong appeal of markets like Denver and Austin, where over 40 percent of residents over the age of 25 have a degree.
Cities of tomorrow also need companies and investors to have the confidence to collectively plow billions of dollars into their local economies. It therefore helps that U.S. cities have high levels of market transparency. For investors, there is an imperative to understand which cities will be able to gain from technological transformation for long-term value preservation and growth.
Areas for improvement
Yet U.S. cities aren’t leading the way across all future-proofing factors; in fact, when it comes to sustainability, many of these heavy-hitters have much to learn from their smaller neighbors and European counterparts. Stockholm, for example, is one city leading the way for air quality, after introducing a congestion tax in 2007 on vehicles entering the city center. The congestion tax contributed to a 20 percent reduction in traffic levels despite rapid economic and population growth, and a 5 to 10 percent reduction in pollution levels.
However, progress is being made. U.S. cities are taking steps to improve their environmental credentials, from investing in new public transportation infrastructure to launching new initiatives intended to reduce traffic levels on the roads. Plus, dozens of municipalities have pledged to transition to 100 percent renewable energy in city-run buildings in the coming decades. Furthermore, last year Washington, D.C. was named the world’s first LEED Platinum city in recognition of its commitment to sustainability and human health alongside its economic prosperity.
Controversial federal government policies could also have an impact on U.S. cities’ ability to attract and retain talent. Policies designed to restrict immigration and increased protectionism are likely to have wide-ranging long-term effects both globally and domestically.
Global cities with their eye on the future
In today’s global landscape, competition is never far away – and many cities are well positioned to thrive in the new digital economy. European cities like London, Paris and Amsterdam boast significant strengths in education, innovation, research and technology, while the Asian powerhouses of Tokyo and Seoul are global research leaders with high levels of digital connectivity.
Many of the world’s leading cities are upgrading their infrastructure platforms to prepare for the future, and they are drawing plenty of interest from investors. The ongoing Grand Paris redevelopment is one of the largest infrastructure projects in the world while in Asia, Seoul’s Pangyo Techno Valley and the development of new autonomous public transit systems in Tokyo are laying the groundwork for securing their place at the forefront of tomorrow’s global economy.
For all global cities – U.S. included – staying ahead of the crowd requires a focus on agility, talent and technology. By investing in and leveraging their strengths in technology, physical and digital connectivity, quality of life and sustainability, cities can secure their future position on the global stage in the rapidly evolving competitive landscape.
Jeremy Kelly is a Director in JLL’s Global Research team and is one of the spearheads of JLL’s Cities Research Center. A passionate advocate of the role of real estate in driving city success, Jeremy is the author of several of JLL’s Global Research publications, including the City Momentum Index and the Global Real Estate Transparency Index.