by Jeff Pinkerton
It’s not often (at least not often enough!) that Kansas City has a team vying for a championship. But on Saturday, we will have just that as Sporting KC takes to the pitch against Real Salt Lake for the MLS Cup. When you consider Sporting’s humble beginnings back in 1996, when they played at Arrowhead Stadium as the Kansas City Wizards, their current position on the Kansas City landscape is remarkable. Sporting’s 2011 move to Sporting Park has vaulted average attendance to nearly 20,000. In the 2013 regular season, Sporting averaged 19,709 attendees per game or 107 percent of the stadium’s capacity.
The new stadium has certainly helped create an atmosphere that attracts fans, but Sporting’s winning ways have helped keep the stadium full. The team has been a playoff staple in recent years, and Kansas City sports fans, hungry for a winning team, have responded by regularly selling out games.
Sporting hosted the 2013 MLS All-Star game back in July, bringing in an estimated economic impact of $20 million to the region. This Saturday’s championship game will no doubt bring even more of an economic kick, not to mention the good press Kansas City will receive as a national television audience watches 20,000 chilled fans cheering Sporting on for one more win.
Sporting has turned into a financial success as well. According to Forbes Magazine, Sporting KC is valued at $108 million (the seventh most valuable franchise in the league). Not bad considering the 10 original teams in the league cost just $5 million in 1996.
Sporting’s success in recent years mirrors the league’s. Overall average attendance at MLS games exceeds both the NBA and NHL. New television money and plans for adding teams will bring the MLS to an even broader audience.
When the Sprint Center opened in 2007, Kansas City sports fans were hopeful we would be awarded a third major sports franchise (either an NBA or NHL team). Although the Sprint Center has been a successful concert venue, that third franchise hasn’t transpired, at least not there. But, Kansas City did get its third franchise. They just happen to play at Sporting Park.
Kansas City’s Mining-Logging and Construction industry (the vast majority of which is construction employment) increased 8.1 percent (3,300 jobs) between October 2012 and October 2013. As we have mentioned before, construction employment took a big hit during the recession and has been slow to recover, so this is certainly welcome news.
Most local industries saw employment increases. The only exceptions are retail and federal and state government employment. Federal government employment fell to 23,900 marking its lowest point since at least 1990.
Click on the graphic for a larger pdf.
by Jeff Pinkerton
Gentrification is an urban occurrence where neighborhoods undergo a significant shift in income levels by attracting wealthier residents. We are all familiar with dramatic turnarounds in the urban areas of many large East Coast cities like New York or Washington, D.C. Typically, wealthier residents move into lower-income neighborhoods because they are located in areas that are close to employment or cultural amenities. Over time, the entire socio-economic picture of these neighborhoods can change from low-income or even poverty to hip and trendy urban neighborhoods.
Many would say that a city that is experiencing a good deal of gentrification is doing some things right. It has desirable amenities that are attracting people who have the income to choose where they want to live. However, gentrification is not without controversy. When neighborhoods become more and more desirable, and therefore more expensive, long-term residents can in effect be priced out of their homes, especially if they are renting. A recent study from the Federal Reserve Bank of Cleveland suggests that residents living in a gentrified neighborhood are actually better off (as measured by credit scores) than those living in non-gentrifying neighborhoods.
For our analysis of gentrification in Kansas City, we looked at the median home value for owner-occupied housing units by census tract in 2000 and in 2011. Specifically, we took each tract’s median home value and divided it by the metro’s median home value to get a measure of relative home value. In 2000, the metro median home value was $104,700. In 2010, the median value was $159,600. A tract with a median home value below the metro’s median will have a value less than 100 percent. A tract with a median value greater than the metro median will have a value greater than 100 percent.
One note: the 2000 data comes from the 2000 Census. The 2011 data comes from the Census Bureau’s American Community Survey 2011, which, for small areas like census tracts, is actually a survey conducted over a five-year period ending in 2011.
The first set of maps shows the heart of the Kansas City metro in 2000 and 2011. Areas shaded in blue have median home values above the metro median; the darker the blue the greater the value. The tracts shaded in yellow have median home values below the metro median; the darker the shade of yellow, the lower the value. Tracts with no shading have no data because they have no (or very few) owner-occupied housing units.
Tract Median Home Value as a Percent of MSA Median Home Value 2000
Tract Median Home Value as a Percent of MSA Median Home Value 2011
A quick glance at both maps shows that gentrification has not had a dramatic impact on the region as a whole. For the most part, tracts that had median home values below the metro median in 2000 still had lower home values in 2011. Overall, 41 percent of all tracts in 2000 had median home values above the metro median. In 2011, this figure increased to 42 percent.
Also, the stark contrast between home values in most urban core areas versus the suburban areas is a constant in both the 2000 and 2011 map. Closer examination shows some interesting trends, however. Much of Wyandotte County shows increases in median home value between 2000 and 2011. In Western Wyandotte, there appears to be more — and darker — blue in 2011 than in 2000. In Eastern Wyandotte, the area of darker yellow appears to shrink and be replaced by lighter yellows. This indicates tracts that still have median home values below the metro median, but not as far below as they were in 2000.
There also appear to be lower relative home values in many first suburb areas along the I-35 corridor in Johnson County and in the Northland.
There is also a great deal of change in the Downtown to Plaza corridor, which shows up better in the two detailed maps below.
Tract Median Home Value as a Percent of MSA Median Home Value 2000 — Detail
Tract Median Home Value as a Percent of MSA Median Home Value 2011-Detail
The resurgence in downtown housing is evident in these maps. In 2000, Downtown had few owner-occupied units, and those tended to be well below the metro median. By 2011, the Downtown Loop, River Market and Crossroads areas have median home values above the metro median.
Further south, the Brookside to Waldo area is made up of tracts that were already very high value (150 percent or greater) or saw increases since 2000.
Likewise, the Northeast Johnson County area, already a high home value area, largely maintained its values relative to the metro.
One unmistakable and unfortunate trend is that gentrification has not been able to cross the chasm that is Troost Avenue. The increases experienced in the Downtown-Crossroads area and the Brookside-Waldo area come to an abrupt halt when they hit Troost.
As mentioned earlier, there can be a downside to gentrification if it prices out and displaces existing lower-income residents. Such a scenario is important and should not be overlooked. Still, some level of gentrification in areas that have long been lower income could help stabilize neighborhoods and bring more opportunity. Hopefully, the gentrification process that has started in Kansas City’s Downtown-Waldo corridor will eventually spread east of Troost and begin to do just that.
by Jeff Pinkerton
According to urban economist Joel Kotkin, Kansas City is among the top metros in the country in technology industry growth and STEM (science, technology, engineering and math) jobs over the last 12 years. In the analysis, KC ranks 13th in overall in Tech-STEM growth rankings between 2001 and 2013. Kansas City appears to have done particularly well in recent years, with tech industry jobs (software, engineering and computer programming) growing by 18.5 percent between 2010 and 2013. This ranks eighth out of the 51 largest metros in the country and ahead of tech centers like Denver and San Jose.
The upshot of Kotkin’s article is that while West Coast, high-tech centers like San Jose, San Francisco and Seattle remain giants, other metros are starting to gain ground. In fact, the top four metros for tech and STEM growth are away from the coasts (Austin, Raleigh, Houston and Nashville).
This is just more evidence that the tech boom we are seeing here locally is showing up on the national radar as well.
In case you missed any of these stories, here are some economic news highlights from last week.
Week of Nov. 11
- A report from Pew Charitable Trusts says revenues in two-thirds of large central cities (including Kansas City) are still below pre-recession levels.
- After breaking ground in 2005, the Plaza Vista office/retail tower opened.
- The first of the Kansas City streetcar rails were set in new Main Street bridge under construction over I-670.
- The Kansas City Area Convention and Visitors Association formed a task force to support efforts to bring the 2016 Republican National Convention to Kansas City.
- The Home Builders Association of Greater Kansas City released construction permit numbers. In October, 371 permits for new single-family homes were issued, making 2013 the area’s best year for permits since 2007.
by Jeff Pinkerton
A new Wall Street Journal post highlights the growth in millennials (those aged 25-34) in Washington, D.C. In total, our capitol city added more than 12,000 millennials between 2010 and 2012. The article also lists changes in this population segment in other metros. Here in Kansas City, we’re well behind D.C. in population growth among millennials, but we rank favorably among all metros. The Kansas City metro added 2,188 millennials between 2010 and 2012. Even though this was good enough for 14th on the list, it was still down from the 2007-2009 period when we added nearly 3,000.
This is more than just an interesting tidbit of data. Migration patterns give us some insight into our overall regional economic health. The highest-ranking cities shown on the chart above are a virtual “who’s who” of high-growth, high-tech metro economies (Washington, Denver, Austin, Portland, Seattle, etc.). Millennials are more likely to move where there is economic opportunity — many in this age group are not yet tied to a particular location by a mortgage or family. So if a city attracts this demographic, it must be providing good opportunities for our most opportunistic generation.
Many cities would like to emulate the successes of places like Austin or Seattle by attracting young talent to grow their economies. Judging by the company we are keeping in this one particular measure, our efforts are showing results.
by Jeff Pinkerton
The Pew Charitable Trusts recently released a report on the finances of the country’s largest central cities, including Kansas City, Mo. The overall findings show that revenues in most large central cities (Kansas City included) are still below the peak seen prior to the recession. In 2011, Kansas City revenues reached $980 million. This is up from $970 million in 2010, but well below the $1.07 billion reached in 2008. Kansas City’s performance falls in the middle of the 30 cities examined. Nine of the cities in the study saw 2011 revenues exceed their 2007 levels, while revenues in another nine cities are continuing to decline.
There is no one key cause to Kansas City’s revenue decline. Sales and income taxes revenues were lower here during the recession, as in most cities. The study also pointed to the problem of unfunded pensions and revenue shortfalls from the Power and Light District as additional drags on city finances.