Cities, Sport Arenas, and Redevelopment:The Case of Milwaukee and the Arena District Redevelopment Plan

Written by Dr. Anthony Pennington-CrossChair, Department of Finance; Professor of Finance and Center for Real EstateMarquette University, College of Business Administration Straz Hall, Milwaukee, WI 53201-1881

May 14, 2015

Cities, Sport Arenas, and Redevelopment: The Case of Milwaukee and the Arena District Redevelopment Plan

IntroductionThe history of cities in the U.S. is a story of transformation, as cities attempt to keep up with technological advancements and the changing needs and interests of U.S. populations. People used to live in cities because they had to. Today, people tend to live in cities because they want to. As a result, cities need to seek ways to attract people to move back. Many cities have turned to redevelopment plans centered around sports arenas.Milwaukee has been presented with the opportunity to redevelop a long-unused tract of land near its downtown area. Much of the land was part of the freeway but is now simply empty and unsightly space. A new arena for the Milwaukee Bucks would be the centerpiece of a large scale redevelopment plan in this tract. The plan proposed by the Bucks would create what might be called the Arena District, which would include approximately 700 apartment units, 255 thousand square feet of office space, 280 thousand square feet of retail, open space, and 2,900 parking spots. The question this paper explores is whether such a redevelopment project would create a positive amenity that makes Milwaukee a more attractive destination city. Understanding the changing role of cities is essential to that exploration.Many of the original cities in the U.S., including Milwaukee, formed around trade routes (the transportation network). They were convenient places to collect commodities such as lumber, fur pelts, and crops to be distributed to other cities in the U.S. and across the globe. Eventually, many cities became hubs for factories and manufacturing industries. In order to obtain a nonagricultural job or a higher paying management job, a worker had to live in the city; it was too expensive to commute from any distance. With the widespread introduction of automobiles and trucks in the 20th century, households and firms were no longer as strongly tethered to downtown and began to spread out, reducing cities' population density and economic activity. The pull of cities has been reduced even further in recent decades by the development of high quality communication and computing technology, which made it possible for workers to complete many tasks without an office. At the same time, the goods and services a city is likely to offer changed from physical commodities to more information- and innovation-based services (finance, consulting or technology, for instance). Some cities have suffered mightily from these shifts. But many larger cities and some of the more quirky mid-sized cities have thrived instead of falling apart. As described in more detail below, these cities attracted high-skill workers, who needed and wanted to share physical space to enhance their productivity. Moreover, younger and highly skilled workers agglomerated in certain cities because these locales had become the place to be and to be seen. Firms have followed these workers back to cities, despite the high cost of land and property. The lesson successful cities have learned is simple but fundamental. First the city must attract the workers; their presence in the city in turn attracts firms. In short, the traditional competition among cities has shifted from providing incentives (subsidies) to firms and employers to relocate to providing incentives (subsidies and amenities) for high skilled workers to relocate. The idea of a major urban redevelopment should be viewed through the lens of this paradigm shift. Workers are looking for nice places to live, with a lot of amenities. Some cities have natural amenities such as good weather year round or mountains with lots of ski resorts nearby. Other cities have created their own amenities based on their local culture. One example is the music industry. An important part of the success of Nashville, Austin, and even Seattle is their vibrant and unique local music scenes. Cities now must provide a wide array of high quality and unique amenities to attract a mobile and educated workforce.Sports related entertainment provides another potentially important amenity to attract a younger workforce. The academic literature has shown that a sports arena as part of a redevelopment plan can help to revitalized underutilized parts of a city. A good example of this process is in Columbus Ohio, where a new arena was opened in 2000 for the National Hockey League (NHL) Columbus Blue Jackets. The arena is also used by an arena football team and for other entertainment. A largely abandoned section of the city has been revitalized as part of what is called the Arena District. Can the Bucks redevelopment plan do for Milwaukee what the Blue Jackets have done for Columbus?

A Brief Look at Arenas and Stadiums Stadiums and arenas have been in existence since people have been competing with each other and a portion of the population cared enough to watch the competition. Perhaps the first known arena was the Roman Coliseum, built in 80 AD so that Romans could watch gladiators fight (http://www.tribunesandtriumphs.org/). In the U.S., the connection between the arena and the team was sometimes so strong that they are forever linked together the Polo Grounds and the Giants, Yankee Stadium and the Yankees, and Madison Square Garden and the New York Knicks. Early sports arenas were really just places for fans to watch their teams compete. There were no concessions, and sightlines were often restricted. These stadiums and arenas were located in downtown areas, next to train stations and within walking distance of homes and public transportation. As the automobile become the predominant form of transportation, stadiums and arenas adjusted by moving into the suburbs. Often an arena would be surrounded by acres of surface parking lots. A good example of this type of arena was the Capital Centre (formerly the USAir Arena) located in the Maryland suburbs of Washington, D.C. While this configuration provided easy access to suburban fans, the parking lots physically separated the facility from the neighborhood around it and the urban core.Figure 1: Capital Centre Aerial View Source: Capital Centre satellite view, Image U.S.GS de Nasa World Wind 1.3.5 http://en.wikipedia.org/wiki/Capital_Centre#/media/File:Capital_Centre_satellite_view.png.The Capital Centre was completed in 1973 and was actively used by local NBA and NHL teams, college sports teams, other sports teams, and for events such as concerts. The Capital Centre was demolished in 2002 and effectively replaced by an arena (the Verizon Center) in downtown Washington DC.

The movement of sports facilities from the city to the suburbs began to reverse course in the 1990s. Camden Yards in Baltimore (baseball) and formerly Jacobs Field (now Progressive Field, baseball) in Cleveland were among the first to show the potential benefits of developing a sporting complex downtown. Many cities and their professional teams have since been following this trend, in all the major sporting leagues. For instance, the Verizon Center (formerly the MCI Center) is located in downtown Washington, D.C. in the Chinatown neighborhood. The arena reflects the cultural heritage of the location and is seamlessly imbedded into the urban landscape.

Figure 2: The Verizon Center Street View

Source: (http://en.wikipedia.org/wiki/Verizon_Center#/media/File:Verizon_Center_wide.jpg). The Verizon Center opened in 1997 and hosts a variety of sporting and cultural events.The move from the city to the suburbs and back to the city partly reflects the same economic path of the cities themselves, but it also reflects a change in the fan base. Traditionally, the fan base was made up of middle or working class households. But by at least the 2000s, the corporate fan base was becoming a critical part of any professional sports team and arena. This fan is not usually located in the suburbs but inside the city, and the luxury suites in modern arenas are used to entertain clients and provide fringe benefits for employees. By 2000, the corporate fan was willing to pay anywhere from $50,000 to $500,000 annually for a suite in an arena (Chapin, 2000). In this same time period, there was a growing perception that downtown stadiums are useful mechanisms to aid redevelopment of challenging locations in the urban core.

Cities and Competition Classic urban economics helped us understand two things about cities 1) why they exist, and 2) why in the middle of downtown the buildings are at their tallest and both rents and values are at their highest (Ling and Archer, 2010). From this point of view, cities exist to sell goods and services to people who do not live in the city. This is because when you sell to outsiders (export), the money used to purchase the goods and services is infused (imported) into the local economy. The more a city can sell goods and services to other locations, the bigger the city can get. It is this export activity that drives the demand for all the local (non-export) economic activity such as grocery shopping, car repair, haircuts, etc. Over time the goods and services that cities export has changed. Many cities in the U.S. started as trading posts for fur and lumber. Over time, many cities shifted to manufacturing and then more recently to services and information related goods. The most successful cities have adapted quickly to the next important mode of exporting goods that are demanded by the world at large. The shape of the city depends on the need or desire to be in certain locations (downtown for instance). If a lot of firms or people want to be in a specific location, they will bid up land and property values. When prices get high enough it will become profitable to start building multiple story buildings. In classic urban economics, this relationship depends critically on transportation costs. Land and property near to the rail station or port is valued the highest because this is where the goods are shipped out. As firms move further way from the point of export (rail or port) there is less money left over to pay for property use. As a result, as a firm moves further away from the export location, the lower prices and rents are. The same process applies for the workers who bid to use property with income left over after paying their transportation costs of getting to work and back. As a result, space gets segmented into different types of uses depending on who is willing to bid more.Technology change has had large impacts on the shape and purpose of cities. The first major challenge for cities in the U.S. came as freeway systems became widely developed. These new transportation avenues made export locations in cities (such as ports and rail yards), far less critical to firms. This allowed firms to move to the suburbs so they could be closer to their workforce and away from expensive urban land. The second major challenge for cities was a substantial reduction in transportation costs for the general population. The widespread use of the car made the cost of traveling to work lower, so more households could live further away from work or the city. Both of these challenges made traditional downtown property less valuable and less desirable. As a result, cities and especially many downtowns struggled to find a reason for existing. In general, cities became more spread out and had multiple nodes of concentrated economic activity. Joel Garreau popularized this idea by examining what he called edge cities (Garreau, 1991).Even though substantial numbers of firms and households were moving to the suburbs, they were still recreating mini-cities (edge cities). These mini-cities had many of the attributes of a traditional city, including higher rents and property values and eventually congestion. This indicated that firms intentionally located near to each other even when there was no key export location and transportation costs were low. Urban economists searched for reasons why this would be. They found that many types of workers are more productive in locations when there are a lot of other workers around. This higher productivity makes it possible for firms to pay higher wages. The benefits of agglomerating workers in a physical location seems to be strongest for educated employees, but the benefits can extend even to supermarkets (for example, Garrate and Pennington-Cross 2014, Rosenthal and Strange 2008). Due to rapid improvements in computing, computers, and communications, throughout the 2000s the role of transportation costs in shaping cities was again radically changed. If everyone could just hold virtual meetings, there would no need to have an office and no need for anyone to live in a city. However, cities did not crumble. Instead, many large cities flourished and creativity (another word for productivity) became the reason of the day for office space and shared office configurations. To enhance creativity, office space is being reorganized. In many firms, individual offices are being replaced with benches and small shared desks. Shared or interactive space is being increased to enhance and internalize the productivity gains associated with workers interacting with each other. See the Economist magazine for a discussion of this topic in an article entitled The office cubicle: Inside the box, How workers ended up in cubesand how they could break free, by Michigan Holland Jan 3 2015. http://www.economist.com/news/international/21637359-how-workers-ended-up-cubesand-how-they-could-break-free-inside-box.The shift in the purpose and shape of a cityfrom the need for physically exporting a good to organizing people and space to maximize productivityhas also affected how cities compete with each other. Traditionally, cities attempted to attract companies with low wage workers and low cost land and buildings because this increases profits. But as firms now focus on productivity and creativity, they need to locate in places where there is a large pool of highly skilled workers. In this sense, firms are following the workers. So, cities must compete less on input costs (wages and land) and more on ways to attract large quantities of high skilled workers. Thus, the primary challenge for a mid-sized city like Milwaukee is to provide an amenity package that can make it an attractive place to live for highly skilled workers. It competes directly in the regional labor pool of recent college and graduate school graduates with Chicago, Illinois. Despite recent challenges in Chicago and Illinois (crime, public leader corruption, and fiscal/budgetary strain), the city continues to attract the types of firms that need a deep and talented workforce that benefits most from the agglomeration-driven productivity gains. See Companies Say Goodbye to the Burbs: Young Talent Wants to Live in Chicago, Not Libertyville; Dilemma for Older Workers, by Lauren Weber Dec 4 2013, published in the Wall Street Journal. http://www.wsj.com/articles/SB10001424052702304281004579222442197428538.Milwaukee has many attributes that make it an attractive place. It has most if not all of the major cultural amenities associated with large cities. It has a wide array of museums and interesting architecture, including the Milwaukee Art Museum, Milwaukee Public Museum, Harley-Davidson Museum, Villa Terrace Decorative Arts Museum, Discovery World, Grohmann Museum, Patrick and Beatrice Haggerty Museum of Art, and Thomas A. Greene Memorial Museum. Imbedded in this list are major icons of Milwaukee located on the waterfront of Lake Michigan. The successful weaving of the lake and the Milwaukee River into the city is unique amenity that other midsized Midwest cities have struggled to create or cannot create. Another unique amenity offered by Milwaukee is Summerfest, which brings a wide array of popular musical talent to the area.High quality professional sports teams provide another potentially important amenity. The Milwaukee Brewers (Major League Baseball) and the Milwaukee Bucks (NBA) are well-known professional sports teams. Both teams have the ability to attract fans from outside the city and the region. For example, Mayborne estimates that approximately 30% of the attendees are from outside of the metropolitan area. (See Economic Impact of the Bradley Center, by Bret Mayborne, March 2012.) http://bradleycenter.s3.amazonaws.com/doc/MMAC_Bradley_Center_Analysis_Mar_2012.pdf).

The Economic Impact of Sport Stadiums and ArenasThe Amenity and Public GoodSporting events and the stadiums they are located in can be viewed as one of the amenities that a city uses to attract a skilled workforce and the firms that want to employ this workforce. You do not have to attend the games to benefit from the existence of the team. The teams games can be watched on TV or online; discussions about the game and team can continue at work the next day and via online discussion forums and social networks. The existence and popularity of these activities indicates that people value their local professional sports teams. The fact that anyone can enjoy the team without directly paying for it (attending games) makes professional sport teams and their arenas a public good. It is almost impossible to measure directly the value of the sports team amenity. However, economists can use rents paid on housing to indirectly measure its value. Carlino and Coulson (2004) do just this using individual household property rents. They examine the impact of having an NFL franchise on rents within central cities and metropolitan areas as a whole. They find that rents are 8 percent higher within the city with a team and 4 percent higher within the metropolitan area. This provides strong evidence that professional teams provide a substantial public amenity to the region, one that is valued by people living in the region.The Story from the 1990sA substantial amount of research was conducted on the economic impact of stadiums and arenas using data through the 1980s and early 1990s. Siegfried and Zambalist (2000) review the literature and find no evidence that a stadium or arena has a positive impact on economic outcomes (income, income share of the region, or employment). The literature indicates that there are several reasons for these findings. First, entertainment expenditures tend to be made on a fixed budget. So, if a household spends money to watch to professional baseball game, it spends less money on other forms of entertainment (going to a movie, Summerfest, museum, eating out, etc.). Second, much of the money that goes into sporting events is not spent locally. The players and owners receive the largest share of the revenues and both tend to spend their money elsewhere. This reduces the ability of expenditures to create jobs and income locally. Third, the players and owners are high income households that are typically taxed at the highest federal income tax rate. Fourth, local municipality budgets are limited, so any subsidy or expenditure for the sports team and its arena is often financed through an increase in taxes on other parts of the economy or a reduction in other types of spending (See for example -- Siegfried and Zimbalist 2000, Siegfried and Zimbalist 2002, Hudson 1999, Miller 2002, Johnson, Groothuis, and Whitehead 2001, and Alexander, Kern, and Neil 2000, Coates and Humphreys 2003).The New, More Nuanced Story from the 21st Century One of the major problems with the story from the 1990s was that many of the empirical findings depended on moves of stadiums and arenas from the city to the suburbs (moves and new stadiums in the 1960s, 70s and 80s) and not the more recent stadiums and arena redevelopments in downtown areas. As mentioned above, the Capital Centre (opened 1973) in the Washington, D.C., metropolitan area was typical for its time. It was surrounded by acres of surface parking lots. This physical isolation made spillover economic activity after a game very unlikely -- viewers simply drove away when the game is done. In contrast, the move to the Verizon Center in downtown D.C. (opened 1997) from the suburbs integrates the arena into the city. This makes it much more likely that fans leaving or arriving at the stadium will also spend some time at area restaurants and other forms of entertainment. It is also safer if patrons have been drinking during the game. More recent literature began to look at new stadiums that were part of a larger redevelopment plan and investigated the differences in outcomes and what might explain those differences. Austrian and Rosentraub (2002) found that the redevelopment of downtowns in Cleveland and Indianapolis performed better than the similar efforts in Columbus and Cincinnati. The authors attributed this to the ability of sports stadiums to create a sense of place and a destination on tracts of land that had been vacant or severely underutilized. This study was completed before the Nationwide Arena was completed in Columbus. Santo (2005) redid some of the prior research using newer stadiums and found that in some locations new stadiums and arenas were associated with economic growth and in others they were not. Case studies tended to show that some key features are required for a stadium or arena to be a successful part of economic redevelopment. The opening of Camden Yards in Baltimore began a new era of baseball stadiums and helped popularize sports facilities as a catalyst for urban redevelopment. Camden Yards converted about 20 blocks of urban industrial property, which was a sort of wasteland abutting downtown Baltimore, into a sports entertainment complex. However, it did not aid all areas around it. It has been a success and helped feed off the redevelopment of the waterfront area (the Inner Harbor) destination. The owners of the Orioles (the MLB team) actively opposed entertainment development directly outside the stadium in an attempt to keep patrons inside the Camden Yards. There was also a proliferation of ground level parking in the lower income neighborhoods. These 2 factors limited the positive spillovers possible from the stadium. Cleveland also redeveloped a large plot of land on the edge of downtown called the Gateway. The Gateway houses an NBA arena and a baseball stadium. In order to drive into downtown Cleveland, a visitor must go right past it. There was an attempt to create a physical connection with the nearby areas using pedestrian walkways. An association funded by local business and corporations spent millions of dollars marketing, designing opportunities and doing feasibility studies. The Gateway has been associated with retail, hotel and office redevelopment around the area and stadium (Chapin, 2004). In Detroit, Michigan, a survey of stakeholders emphasized that sports alone cannot be a successful redevelopment tool but is useful as one part of a strategy to drive the economy and must be one attraction among many (Trendafilova,Waller, Daniell, and McClendon 2012). In summary, the more nuanced view of the 2000s literature is that a sports arena and stadium can be an important part of a redevelopment plan. The redevelopment plan needs to be coordinated with the arena and the arena itself needs to be physically integrated into the community, not separated. Good examples of this approach are in Cleveland and Washington DC (the Verizon Center). Both plans took underutilized land and transformed it into sports entertainment complexes with substantial spillovers.Other midsized cities that have used arenas and stadiums as part of their redevelopment plans include Kansas City, Columbus, Memphis, and Oklahoma City. All of these sports facilities have been part of a coordinated redevelopment plan that has tried to create a destination using entertainment, food and beverage locations, and retail establishments. They have been very successful in driving development to these locations and have transformed underperforming real estate into multi-use locations that can attract visitors from both within the region and nation (typically these are users of convention space who also attend a game at the arena while in town). The key is that the arena is one of many amenities the location can offer in order to create a live, work, play environment. Columbus, Ohio, is a typical example. After the Austrian and Rosentraub (2002) study collected data, Columbus constructed and opened the Nationwide Arena in 2000 primarily for the National Hockey league (NHL) Columbus Blue Jackets. An arena football team also uses the facility. In 2009 a baseball stadium was constructed for a minor league team. The arena construction was coordinated as one part of the Arena District redevelopment plan in Columbus. This area used to be a neglected part of city that included a state prison and other brownfield redevelopment sites. The arena and stadium were part of a large redevelopment plan that has incorporated multiple different types of use including housing, office, and retail. Over the ten years from 1998 to 2008 there have been substantial increases in economic activity across all metrics, including property values and employment. (See report titled Assessment of the Gross Economic Impact of the Arena District on greater Columbus.) http://bluejackets.nhl.com/ext/2008/AssessmentGEIArenaDistrictonGreaterColumbus.pdf.

The Arena District Redevelopment PlanThe proposed arena in Milwaukee is located adjacent to the vacant land where the Park East freeway used to be. The development plan articulated by the Milwaukee Bucks includes redeveloping all of the undeveloped land and more (Arena District). The academic literature indicates that a successful arena needs to be part of a larger redevelopment plan. The new arena should connect with the neighborhood, so that when fans are leaving and arriving at games they have ample opportunities to stop for more recreation. Ideally, the arena is within walking distance of multifamily housing (rental or condo). This should help to increase the value of the amenities the arena provides. The arena should be located at an entry point to the downtown area so on the drive to work in downtown you go right past the arena district. If possible the arena should be linked to other amenities in the areas so that the sporting event is one of many entertainment/enjoyment activities.Figure 3 provides a map of the arena development site. The proposed new arena site is outlined in green. The arena is located on streets that are easily accessible from the Interstate and have one of the highest traffic flows in the city. See traffic count map in the Appendix. It will also be viewed by commuters and tourists coming to downtown McKinley Avenue. The arena is also within walking distance of many existing amenities and areas of concentrated employment. Nearby amenities include the UWM Arena, Milwaukee Theater, the Milwaukee Public Museum, the Marcus Theater for Performing Arts, the river itself and the expanding river walk. This will provide visitors with a wide variety of amenities to enjoy for a wide variety household types art/artistic oriented households, families with young and teenage children, as well as younger and older adults. The location is also within walking distance of existing and developing employment zones, such as the Schlitz Park Business Campus, Pabst Brewery Business Campus, Manpower, and the courthouse. Younger college age students (Marquette University, Milwaukee Area Technical College, and the Milwaukee School of Engineering) are also within walking distance to the arena site. Housing is also within walking distance across the river. For example, Jackson Street and the area around it, where substantial multifamily development has been occurring, is 6 blocks from the arena. Figure 4 shows the restaurants and bars on Old World Third Street that can be gathering places before and after games. Figure 5 shows the location and the estimated number of stalls in each parking lot/structure. In total, there are over 11,000 parking spots available within walking distance for most events. Much of this parking can be efficiently used used by commuters during daytime Monday-Friday and used by event attendees in the evenings and weekends. In summary, Figure 3 shows that the proposed arena location has many of the required features for it to be a successful part of a redevelopment plan.

Figure 3: Proposed Arena Site

Figure 4: Old World Third Street

Figure 5: Existing Parking

A key feature for a successful arena is for it to be part of a larger redevelopment plan. Figure 6 provides a look at the contemplated development plan, as provided by the Milwaukee Bucks, for the district as a whole. The phases will be sequenced over time. Phase I includes Blocks 1, 4, 7 and 8. Block 1 will be the arena itself. Block 4 will be entertainment including retail, restaurants and bars. Block 7 will include a parking structure that is wrapped by office, residential, and retail uses. Block 8 is the Bucks practice facility and an office building. As part of Phase I Blocks 5 and 6 will be used as temporary surface lots. Phase 2 will add office space, and retail on Block 2 with some grade surface level retail along with more parking (housing is also being considered). Block 3 will include additional entertainment-focused retail and a 300 bed hotel. This phase deliberately provides the sense of destination to the Arena District and provides ample opportunity for customers to linger and for residents to use the space for year-round entertainment. 1

Figure 6: Arena District Development Plan

Phase 3 will convert Blocks 5 and 6 from their surface lots to mixed use development including retail, multifamily, office and parking. The retail is planned to be a grocery store.The full Arena District redevelopment plan includes over 320,000 square feet (sf) of outdoor space, over 280,000 entertainment and retail space, over 780,000 sf multifamily apartments, a 300 bed hotel, over 256,000 sf office space, and practice facility and over 2,900 parking spots.In summary, the redevelopment plan includes most, if not all, of the attributes associated with successful arena/sport centered redevelopment efforts. If all phases are actually completed, it will convert over 10.5 acres of unused land where the park east freeway used to be into economic active land that is integrated with the city and with the sports arena and its related entertainment complex. Ample parking is provided without creating any permanent surface level parking, assuming Phase 3 is completed. The arena will be better integrated into the existing amenities, places to work, and places to play, all of which are within walking distance the arena.Estimates of Permanent Direct Employment: The redevelopment plan summarized above includes a lot of new buildings. It is possible to estimate the likely employment associated with the new development as follows: Retail: Typical retail space needs approximately 1 employee for each 425 sf of space (Source: page 15 of http://www.cityoforlando.net/city-planning/wp-content/uploads/sites/27/2014/06/GMP2013-2040Projections.pdf and page 22 of http://www.smgov.net/departments/PCD/agendas/Planning-Commission/2014/20140514/s2014051406aa.pdf ). Grocery space typically needs 1 employee for each 700 sf of space (Source: page 446 of the pdf http://www.uscis.gov/sites/default/files/U.S.CIS/About%20Us/Electronic%20Reading%20Room/EB-5%20Regional%20Centers%20-%20Static%20Files/Home_Paradise_Regional_Center.pdf). In total there is a plan for 280,000 sf of retail. Approximately 70,000 sf of that total is for the grocer, while the remaining 210,000 is for general retail. Therefore, the total expected retail employment is 594 employees (70,000/700 + 210,000/425).Practice Facility: The Bucks practice facility currently has 55 employees (players and support staff) and is planned to be similarly staffed in the future. Apartments: The typical garden apartment has one full time employee per 39 units (Source: page 36 of the pdf http://www.naahq.org/sites/default/files/naa-documents/income-expenses-survey/2014-Income-Expenses-Summary.pdf ). The over 780,000 sf of multifamily housing includes an estimated 710 units. Therefore, the housing will require 18 full time employees. Moreover, these apartments will require a concierge at all times (3 full time employees per building for the 6 buildings). The total anticipated employment for the proposed multifamily apartments is 36 (18 + 18). Office: The amount of space that a typical office worker needs has been declining over time. Estimates range from about 150 sf of space per worker to 180 sf per worker. For this analysis I will use 180 sf per worker, which is likely higher than necessary (Source: http://www.normmiller.net/wp-content/uploads/2014/04/Estimating_Office_Space_Requirements-Feb-17-2014.pdf and http://www.naiop.org/en/E-Library/Perspectives/Changes-in-Average-Square-Feet-per-Worker.aspx). The total anticipated employment for the proposed office space is 1,422 jobs (256,000 sf / 180 sf per worker).The total estimated long-term (non-construction) employment associated with the development is 2,107 employees (594 retail +55 practice + 36 apartments + 1,422 office). This estimate excludes arena specific employment.

ConclusionThe traditional competition between cities has changed dramatically over time. In the 1800s most cities existed as a point of trade where goods were shipped into the city and out again to other cities both inside and outside the U.S. The critical attribute for a successful city was being at a key cog of the transportation network. The most valuable land was located as close as possible to the physical location (rail or water port, typically) where the goods were exported. Over time manufacturing became the economic driver of many cities. The manufactured goods again needed to be transported (exported) to other cities or other countries. The widespread use of automobiles and trucks, along with the interstate highway system, allowed cities to spread out and become less dense as households and firms moved to the suburbs. This change in transportation technology fundamentally changed the optimal shape and density of cities. But even bigger changes were introduced in the 1990s and 2000s as information and telecommunication technology became a viable alternative to being in an office. The goods and services being exported only needed a computer and a quality connection to the internet. Workers were no longer physically tied to downtown. Despite these technological changes it turned out that people are more productive at work when they are physically interacting with each other. So, firms began focusing on innovative and collaborative office space to maximize these productivity gains. Cities now must attract a sufficiently large number of highly educated and collaborative households. If a city fails to do so, it will be at a competitive disadvantage because its workers will be less productive. In fact, many companies are moving their offices from the suburbs into the cities to attract just these types of workers. The jobs are following the people, even if the people live in high cost urban locations. A city can attract these workers with a wide variety and large number of amenities in short, it must be a good place to live.Milwaukee has an opportunity to focus on taking advantage of the amenities that are in place today and adding new ones over time. Seemingly simple things like the change in format of small public radio station, 88.9 WYMS, in 2007 from Jazz and Polka music to an eclectic adult alternative music format can have meaningful impacts on a city. The station has helped spur a renaissance in the local music scene, and raises hopes that Milwaukee might someday rival musical centers such as Austin, Seattle and Nashville. Milwaukee also has cultural and artistic institutions that you would associated with larger cities (Milwaukee Art Museum, major league professional sports in baseball and basketball, Summerfest, etc).The Milwaukee Bucks have proposed to build a new arena and to redevelop the vacant park east freeway land. The Arena District redevelopment plan includes over 320,000 square feet (sf) of outdoor space, over 280,000 sf of entertainment and retail space, over 780,000 sf multifamily apartments, a 300 bed hotel, over 256,000 sf office space, a new sport arena, a practice facility for the Bucks, and over 2,900 new parking spots. I estimate that all of this development will bring with it approximately 2,100 permanent (not- construction related) jobs to the city of Milwaukee. The arena redevelopment plan meets all the basic requirements of successful projects identified by the academic literature 1) the arena is physically integrated with the surrounding area, 2) there are only a limited number of or no new surface parking lots, and 3) the arena needs to close to other amenities, jobs and housing.In conclusion, the Arena District redevelopment plan provides an opportunity to develop underutilized land that has been an eyesore for a decade and to provide an important and valued amenity that helps Milwaukee compete for a creative workforce to attract future companies to the region.

Appendix: Traffic Counts

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