Hot Spots: A Field Guide to Your Local Economy

Some signs to look for suggesting a community's vitality and opportunity, and those signaling economic collapse.

You don't need sophisticated research to tell how entrepreneurial your community is. just walk the streets

Wig shops are the kiss of death.

If you savor strange cities and enjoy looking for signs of vitality or opportunity, you doubtless have your own ways of telling a promising place from one whose biggest brag is a two-tenths-of-a-penny tax cut.

You may look for intriguing, idiosyncratic bookstores or cobbler shops with old men in them who really understand how to take apart and fix good boots. With experience in reading the landscape, you may have become sophisticated enough to spot such ominous economic indicators as the aforementioned wig shops. An abundance of those is the classic sign that a shopping district is about to collapse.

You have no business, however, considering yourself a savvy city cruiser if all you can do is tell the difference between Trenton, N.J., and San Francisco. After all, those are old industrial-age downtowns. They are familiar. We've been building those for 150 years or more. Those are settled -- if not ossified -- environs, not raw new frontiers.

That's why you won't find the bulk of small-business start-ups in old downtowns. We are now going through the biggest revolution in seven generations in how we are building the cities that are the cornerstones, the capstones, and, sometimes, the millstones of our civilization.

Every growing urban area, worldwide, is growing like Los Angeles, with multiple urban cores that I call edge cities. Edge cities, like King of Prussia, in the Philadelphia area, or Silicon Valley, south of San Francisco, now greatly outnumber the old downtowns. Edge cities are not suburbs. They are huge, and they are their own new "urbs." At 9 o'clock in the morning, far more people are heading into edge cities to go to work than are leaving them to go to work elsewhere.

Edge cities represent the third wave of moving our lives into information-age environs. The first wave was suburbanization, especially after World War II, when we moved our homes out past the 19th-century definition of "city." The second wave, in the 1960s and 1970s, was the "malling of America," when we moved the provisioning of our worldly goods out to where we lived.

Now we've moved what has been the central purpose of cities for 8,000 years -- the creation of wealth -- out to a new frontier. By that all-important measure -- jobs -- there are 181 edge cities in the United States -- each of them bigger than Nashville or Memphis. Because edge cities are so new -- 30 years ago they were only cow pastures or traditional bedroom suburbs -- we're still figuring out what distinguishes good ones from bad ones. This article, therefore, is Inc.'s guide to recognizing the winners and losers in edge cities in the 1990s -- expressed both as rules of thumb and statistical analyses from the Edge City Database, the first database specifically designed to analyze where people work, developed by the Edge City Group.

Edge cities are nothing if not dedicated attempts to clear away obstacles to growth. Thus, the easiest measures of success are dollar-denominated ones recognized by the market. They include affordability, accessibility, mobility, and "nice."

Affordability means that cops and teachers have a place to live reasonably nearby. That's a problem for edge cities like Silicon Valley, the South Coast Metroplex of Orange County, Calif., and many in the Washington, D.C., New York City, and Boston areas. Some of the earliest edge cities -- like Greenwich and Stamford, Conn. -- were built by people who thought an economy revolved solely around chief executive officers. Such places are loaded with lavish executive housing and impressive country clubs.

Don't let the fancy homes and clubs beguile you, however, into thinking that those edge cities are healthy. Every one of the CEO positions is supported by 20 or more people in lesser but no less important positions: they fix the Xerox machines, mind the kids, serve the meals, park the cars, sell the fax machines. There is no way to grow a business -- much less bring in a new business from outside -- if such workers can't find a place to live.

When you compare all 226 major urban cores in the United States -- the 181 edge cities and the 45 downtowns -- as our database does, you discover that some stellar locations are tough places to grow a business that needs grunts. In the Hauppauge area of Long Island, N.Y., for example, more than 70% of home rentals are at least $750 a month. That's tough on a working person's pay.

There are other very desirable edge cities with a larger range of housing options. The leafy and attractive Overlake- area edge city near Seattle, for example, has median home values below $200,000, as does the Reston/Herndon, Va., area of Washington, D.C. The typical home in the edge city of Plano, Tex., is below $150,000. In the Schaumburg, Ill., area, the figure is below $140,000. That's why those places are thriving.

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