Here Comes the Neighborhood

Start-ups are reenergizing urban neighborhoods across the country.

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If it's all about the talent you have access to and how that talent interacts, then there may be nothing more important than where your company lives

In an old industrial building in lower Manhattan, Jon Kamen and the artists working with him are re-creating the urban economy. Kamen and his company, @radical.media, which produces television ads, graphic art, and films, epitomize a remarkable reversal: one in which a generation of entrepreneurs' drifting away from city cores has given way to start-ups' reenergizing dozens of once-decrepit urban neighborhoods across the country. That shift says much about the dynamics of the new economy in general and digitally driven industries such as the Internet and media in particular. When choosing where to locate, companies in those emerging industries are ignoring traditional factors, such as taxes, the cost of doing business, and convenience, that tend to be favorable in the suburbs. Instead, they are considering where creative workers want to work and environments that foster collaboration.

"You go where the creative talent is," says Kamen, whose office is spacious but cluttered with advertising awards and other honors won by his company. "In a creative community, social existence is very much part of the exchange of ideas."

Kamen did not come to that conclusion easily -- nor to the subsequent decision to locate his headquarters in a 27,000-square-foot space in New York City's Hudson Square neighborhood. In fact, after spending much of his early career in Manhattan, in 1975 he and his partners launched @radical.media's predecessor, Sandbank, Kamen and Partners, and in 1982 they moved to suburban Hawthorne, N.Y., not far from Kamen's home in bucolic Bedford. "We were fed up with Needle Park and all that," he recalls.

"How people feel about the neighborhood has an amazing impact on how they work together."

Yet as the business grew, Kamen found himself going into the city more and more often, partly to see clients and hire artists but particularly to drink in the New York culture. Increasingly, he found operating out of Hawthorne, less than an hour from Manhattan, isolating and insulating. He needed to be back in "the media center." Finally, in 1990, Kamen and his partners shifted their main operation to an office on 61st Street.

Three years later, after buying out his partners, Kamen went looking for bigger digs -- and a different atmosphere from that of midtown Manhattan. Even though midtown is close to the hubbub of traditional media, Kamen wanted a neighborhood less corporate and conformist. He yearned for an open, airy space that would be able to accommodate the large cadre of freelancers who worked for his company on a project-by-project, ad hoc basis.

So Kamen headed south toward neighborhoods such as Tribeca and SoHo, which were emerging from long-term squalor and becoming fashionable. He found his present office -- in a former printing building that had been abandoned for six years -- toward the end of 1993. It not only was relatively cheap at $13 a square foot but also was airy and well lit and had high ceilings and sweeping views of the Manhattan skyline.

The company grew its New York staff to more than 100 people and in 1994 changed its name to @radical.media. The neighborhood also changed. Internet companies, graphics and media firms, fashion-design houses, and advertising agencies enlivened a forlorn collection of fading industrial buildings. New retail stores, new restaurants, new clubs -- a whole new feel -- transformed the once-lifeless streets.

In Kamen's estimation cool spaces, cool neighborhoods, places to lounge and get a coffee and feel the creative sense of the city -- ingredients that some would call peripheral -- are essential to many of the businesses that define the new economy. "How people feel about the neighborhood has an amazing impact on how they work together," Kamen says, looking beyond his glass doors at his staff. "A high-rise goes against community, and you can't negate community. I think that's what matters."

For the first time in decades many central-city populations are growing. They're expected to jump 50% by 2010.

The transformation of Hudson Square and much of lower Manhattan reflects a broader economic and cultural shift that is reenergizing urban neighborhoods, whether they're in old cities such as New York and Boston or in definitively 20th-century towns such as Dallas. In many of those communities the shift from forlorn to fashionable has taken place within the past decade or even more rapidly.

Yet the change is far more than the gentrification that was evident as recently as the 1980s. In those times, as urban economies rose along with the stock exchange and financial-services industries, large pools of workers -- brokers, advertising directors, accountants, secretaries -- poured into the traditional downtown business districts, many of which experienced rapid building booms. Some workers, particularly the young, single, and educated, preferred to settle in the city; in the process they gentrified formerly ungenteel districts by rehabbing cheap houses and attracting amenities such as new bars, restaurants, and shops.

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