Friday, October 26, 2007

Downtown Dayton: Bottoming out?

Revisiting the County Buisness Patterns again, this time for a smaller geography..the zip code area. CBP has data by zip code, too, but it doesn't have all the detail as the county-level, due to confidentiality concerns.

Yet some basic numbers are available, showing aggregate numbers of employed, payroll, and number of private sector buisiness establishments. The number of establishments per NAICS sector and subsector are also provided.

The geography in question is "downtown"..really the central area, covering downtown, Oregon, Webster Station, and some light industrial areas stretching along the rivers east to Findlay and south to Stewart. How has it fared over the years?

The first basic measure is how many private (and non profit) buisness or organizations are in the area, up or down. Pretty clearly the trend is downward, on either side of a big drop between 2002 and 2003.

Then, in aggregate private sector employment and payroll. Employment is key as it shows a pretty stable situation (fluctuation within a range) until the numbers drop out of range, then another projected decline for 2006 and 2007 to account for NewPage, Woolpert, and others leaving downtown (and an uptick in 2008 when CareSource opens).
Comparing the above to Montgomery County, one sees how economically insignifigant downtown is to the economic life of the metro area. If downtown was to disappear it would not be missed by most people in this area.

Getting into some detail, we only have numbers of establishments as payroll and employment data is supressed. In terms of numbers nearly every NAICS sector is declining, with growth in just a few.

Taking a look at some of the smaller growth sectors.

One can see the best trendline is in "information". Other sectors are education services and the arts. I inserted a trendline in the arts category just for grins as this is one of those creative class areas that are becoming of interest.
Opening up that information subsector. We are looking at very small numbers here. It seems the best upward trend is in info tech. In fact a lot of this is in ISPs. One can see a downtown with lots of empty and cheap office space might be appealing to this type of business.

Two categorys that one usually associates with the street level in a central business district: can see it is very stable (very slight decline) in food and drink establishments: restaurants, short order places, bars, nighclubs, etc. Since there is a gauranteed stable office worker base coming from government in this area, one can see this sector will not really drop anymore. This is the bottom, the baseline from which to grow.

Retail trade was pretty stable, too, but has dropped and has some ups and downs in recent years. Not sure where that is going, but one can infer that retail in the central area is pretty close to bottoming out as well.

Professional, Scientific, and Technical Establishments in the Central Area.

The sector with by far the most establishments in Professional, Scientific, and Technical (PS&T), showing a real roller coaster, but general upward trend.
And the breakout by subsector. Wow. Look at Legal Sevices!
Before we look at legal, some of the lesser subsectors. Starting the period with Engineering and Architecture (and it is mostly Archictecture as there are very few engineering establishments downtown) at the top, then the ascendancy of Accounting and Consulting, and the rise and then decline of computer programming and systems design (which displaced Architecture as the number two PS&T subsector in 2001)

Unfortunate to see computer servics drop like that as this is one of the growing areas in the county. The central areas share of this buisness is just very weak.
Then that big legal sector. An overall decline of establishments, but a remarkable concentration of them downtown. Even with a three decline in downtowns share, this remains the dominant location for law offices, no-doubt due to wanting to be near the courts.

As the dominant PS&T subsector (and probably dominant over all other sectors) the location of law offices downtown would be important to the economic viability of downtown office space. The decline in the number of these establishments should be of concern.

In some respects the central area is bottoming out. Interesting to note that some of the growth areas, though in small numbers, are in information and the arts, and the concentration of law offices and architectural practices in this area. This would seem to indicate that the central area might be a good creative class buisiness location. Yet, there was that hopefull growth and then decline in computer services.

I think, just from ones experience of the area's nightlife, that this is one of the only places where there is a concentration of bars that host live muisc, and especially original music of various types. This might be a base from which to grow additional venues.

That's one type of bar. Another type is the homosexual bar or disco. Of the 7 gay/lez bars in Dayton, 5 are in the central area, so clearly a downtown concentration.

Which seems to indicate downtown would be a good central location for "one-of-a-kind" things that cater to very narrow or specialized customer or client basis spread out over the metro area..things like foundations, specialty retail, social services, performing arts, etc.

And a possible role as creative class playground.


D. Greene said...

The boundary for the 45402 zipcode closely matches the SID boundary for the Downtown Dayton Partnership.

Do you think there is a correlation between these downward trends and the additional tax that the SID presents for businesses in the area? I find this especially interesting given the fact that the SID tax has not demonstrably shown a return on investment or any benefit for the majority of companies within the Downtown Dayton Partnership SID.

Greg Hunter said...

Great Analysis again. I think it shows the decline of Dayton and it appears on purpose. I really do not get it. Maybe the Buildings are owned by out of town interests and the local suburban land owners are driving the prices of space in the central district down. I wonder what impact absentee ownership plays in the area.

Jeffrey said...

"Do you think there is a correlation between these downward trends and the additional tax that the SID presents for businesses in the area?"

Just speculating: it might affect decisions to locate start-ups downtown as this tax would be an additional avoidable buisiness expense. I don't own a business but from what I've read start-ups usually are short on cash, or need to manage expenses close, so maybe an issue?

Another issue is that the SID tax is an added expense to business operating on a narrow profit margin.

To be frank, I am not familiar enough with the SID, SID tax, how the tax is structured, or its use to say if there is or isn't a benefit or dis-incentive associated with it.


"Maybe the Buildings are owned by out of town interests and the local suburban land owners are driving the prices of space in the central district down. I wonder what impact absentee ownership plays in the area."

I don't think who owns is an issue, as one would expect any property owner to want to lease out a propety to at least cover operating expenses and taxes and pay the mortgage or other debt, if not to turn a profit. There may be some arcane tax advantage to have a property have negative cash flow and go bankrupt, but hard to see what this would be.


The overall downward trend in number of establishments seem to show downtown & vicinity is not a preferred location to do business (with some exceptions).

The reason why might be as simple as lack of free and convenient parking during the business day. Others are high taxes and rents, perceptions of safety, economic stagnation in the metro area, lack of desirable office space and poor location vis a vis local markets.

I think the space and location issue are probably pretty important, and I will post more on that later.