A recent study by Jason Barr and Troy Tassier in Journal of Regional Science proposes a different explanation: Midtown attracted a specific cluster of businesses and occupations that saw promise in its growth as a high-end shopping district. Based on a detailed analysis of business directories, the study examines the specific types of economic activity that relocated from downtown to Midtown during the mid-19th and early-20th centuries.1 

THE DYNAMICS OF SUBCENTER FORMATION: MIDTOWN MANHATTAN, 1861–19062

Jason Barr, Troy Tassier

First published: 8 July 2016

DOI: 10.1111/jors.12288

Midtown Manhattan is the largest business district in the country. Yet only a few miles to the south is another district centered at Wall Street. This paper aims to investigate when and why midtown emerged as a separate business district. We have created a new data set from historical New York City directories that provide the employment location, residence, and job type for several thousand residents in the late-19th and early-20th centuries. We supplement this data with additional records from historical business directories. The evidence suggests that early midtown firms appeared there in order to be closer to local residential customers who had been moving north on the island throughout the 19th century. Once several industries appeared in midtown, it triggered a spatial equilibrium readjustment in the 1880s, which then promoted the rise of skyscrapers in midtown around the turn of the 20th century. This process occurred several years before the opening of Grand Central Station in 1913.

 
  • 1. The study tracks the location of Manhattan skyscrapers greater than 100 meters in height built from 1890 to 2010. The gap between the two distinct clusters in Wall Street and Midtown invites theories, but the economics of skyscrapers explains a clearer reason for the two sub-centers: the clustering of talent.

    What spurred the construction of skyscrapers was actually the evolving locations of the places white-collar business and professional workers lived and worked during the late-19th and early-20th centuries. As white collar workers moved uptown, some businesses moved closer to them, in Midtown, while specific industries, such as finance, stayed downtown.

    Midtown’s growth significantly lagged the uptown shift in talent, suggesting that working closer to home was not the sole factor for office placement. And the financial industry particularly remained firmly anchored downtown, even as large numbers of its employees moved farther uptown.

    It wasn’t about bedrock either. That theory suggests that the deeper bedrock in areas just north of the existing financial district made it more expensive to build skyscrapers there. But the study finds that any additional costs related to drilling would have been offset by the much cheaper land prices in this area of the city. Instead, these areas were filled with factories and working-class tenement districts, which made them less attractive as a business location.

    Nor can Midtown’s growth be pinned entirely to the opening of Grand Central Station. Businesses started moving to Midtown years before the station opened, and the new cluster had developed its own dynamic well before Grand Central became a commuting hub in the early 20th century. The fastest pattern of residency shifts and subsequent workplace moves occurred from 1861 to 1892, well before the station’s construction in 1903.

    Instead, Midtown’s growth was spurred by the relocation of specific types of businesses and economic activity. The first businesses to move to Midtown were architectural firms, who followed the construction boom uptown. The entertainment industry then consolidated around Broadway theaters and Times Square. Newspapers followed thereafter. Midtown grew from these initial moves. Once a number of firms broke off from the downtown office clusters, the new Midtown area developed a dynamic of its own. Finance remained downtown because of the intensity and power of its existing cluster.

  • 2. Earlier versions of this research were presented at New York University, Binghamton University, and the 2012 Eastern Economics Association Meetings. We thank participants for their comments. Everet Rummel, Sher Singh, Foozan Makhdoom and Steven Selde provided valuable help with data collection. We appreciate discussions on the topic with Alex Marshall. We thank Ed Coulson and two anonymous referees for their helpful comments. Partial funding for this project was provided by a Rutgers University Research Council Grant. Any errors belong to the authors.
A photo of New York City shot from a balloon by P.F. Collier & Son in 1906.
A photo of New York City shot from a balloon by P.F. Collier & Son in 1906. © Library of Congress