The Internet has changed the nature of technology and affected which areas, urban or suburban, edge city or edgy neighborhood, best promote technological development. Traditionally, high technology has been dominated by its "hard," highly rational side -- the building of hardware and sophisticated enabling software -- and high-tech companies have congregated in suburban locations such as the Santa Clara Valley, Orange County, Route 128, and the sprawling suburbs of places like Dallas or Washington, D.C.
But the emergence of the knowledge-value economy, sparked by the rapid evolution of the Internet and media industries, has spawned the growth of a "soft" side of the technology revolution. That side emphasizes the skills that have long been most common in cities and among urbanites: facility with culture, language, and graphics.
"A high-growth company needs a certain kind of space. You can't put people in cubicles."
--Aaron Cohen, Concrete Media, New York City
One critical sign of change has been the revival of entrepreneurial development in places like New York City, which typically has been death to new ventures. 83% of New York's new-media businesses have annual revenues of less than $1 million a year. In comparison with "hard" high-tech areas like Silicon Valley, pay is poor and companies are undercapitalized, but the rush of people and enterprises to the central core has turned New York into a far more amenable place for entrepreneurs, with a faster rate of job growth than the surrounding suburbs.
That is not merely a New York phenomenon. Cities as diverse as Chicago, Dallas, and Seattle are all experiencing a surge in high-tech jobs. In Boston, where technology companies once headed for the outer suburbs along Routes 128 and 495, there has been a rapid growth of "cyberindustry" in the city's old leather district, with another cluster in neighboring Fort Point Channel. Within a 10-minute walk of Boston's South Station, according to Shayne Gilbert, president of Boston's Cyber District Association, there are more than 75 interactive companies employing nearly 2,500 workers.
Even Silicon Valley, the epicenter of the digital revolution, has seen the steady growth of a high-tech-related rival in San Francisco, which formerly served merely as the Valley's financial, advertising, and entertainment annex. Multimedia Gulch, rising from the largely deserted industrial districts south of San Francisco's Market Street, houses 400 multimedia companies employing some 3,000 people in 4 million square feet of space. That activity has sent a formerly torpid property market soaring, with office rents, according to one study, more than doubling from 1996 to mid-1999.
But economic transformation has been especially marked and widespread in lower Manhattan. From 1993 to 1998, for example, the number of computer-service jobs in New York City more than doubled. The number of computer-related businesses there is now twice what it was earlier in the 1990s. Internet and media-related start-ups decreased the percentage of vacant properties to single digits in areas such as Chelsea and Hudson Square from 1993 to 1998, whereas rents have risen by 50% and have even doubled in some neighborhoods.
Although Hudson Square and other neighborhoods associated with New York's Silicon Alley may be the most hyped examples of knowledge-value transformation, other locales are experiencing it, too. For the first time in decades many central-city populations are growing. They're expected to jump 50% by 2010, pushed by a growing college-age population, singles, gays, childless couples, and empty nesters. San Francisco, Seattle, Philadelphia, and Chicago have all seen large influxes of such people.
New cyberfirms, ad agencies, and other knowledge-value businesses are moving into old abandoned warehouses and industrial buildings along Chicago's busy North Avenue corridor, which just a few years ago was a heavily blue-collar Polish and Latino area going to seed. Now in places like Bucktown it is not unusual to see houses selling for $1 million and condos for $300,000 to $400,000.
"When I first moved in here, you had to be careful -- you had to avoid the needles and condoms," recalls AndrÉ Fleuette, one of the founders of Lowtide Images Ltd., a Bucktown new-media company. "But the more the hookers are gone, the more the yuppies are here."
Perhaps even more surprising has been the transformation of Deep Ellum, an old industrial neighborhood adjacent to downtown Dallas. A decade ago the area was home to a scattered community of artists and a large homeless encampment. But during the past few years it has become a prime location for fashionable restaurants and clubs. In 1986 there were two restaurants and four bars there; today there are more than 30 eateries and an equal number of nightspots. The area's population, estimates local real estate agent Barry Annino, has risen during the past decade from 200 to more than 2,000. Several new projects and conversions are on tap, and 7,000 to 10,000 people may live in the 177-acre area by 2010.
"There's a talent pool in this location. It's a young industry, and this is a young part of town."
--Brett Strauss, Third Stone Productions, Dallas
As in other knowledge-value neighborhoods, the growth of the residential population has been accompanied by the development of new industries, from music and entertainment to a core of Internet-related businesses, anchored by the area's most famous company, Yahoo Broadcast Services (known as Broadcast.com before Yahoo bought it, in 1999). The growing nucleus of Net professionals -- artists, graphic designers, photographers, and programmers -- also has created an ideal environment for small Internet start-up companies.
"This location is very good," says Brett Strauss, whose 11-person enterprise, Third Stone Productions, has been in the area since 1997. "There's a talent pool. It's a young industry, and this is a young part of town."
