Los Angeles, Miami, Chicago, Boston. All world class cities, all frequently represented in the National Basketball Association Finals. Indeed these four cities have been in the NBA Finals 34 times out of the 72 possible appearances since 1980. Fans of the San Antonio Spurs would argue correctly that they belong on the list, but do the Spurs have fans? (New York Knicks fans, please be quiet.)
Is there a correlation between success in professional basketball and the economic performance and cultural dominance of particular cities? And, if there is, what does it say about America in the 21st Century when this year's finals feature the Golden State Warriors and the Cleveland Cavaliers?
Golden State plays in Oakland, Calif., and Cleveland plays in, you guessed it, Cleveland. The two teams each feature superstars for the ages (Stephen Curry for the Warriors and LeBron James for the Cavs) and unusually cerebral rookie coaches, but perhaps Oakland and Cleveland, places with unique histories, economies and personalities, represent something for the future different from the arcs of the established cities of past NBA Finals. Something different not just for sports championships, but also for the direction of America's future.
Located just across the Bay from San Francisco, Oakland has been an overlooked and underserved city for decades. Jerry Brown, while mayor of Oakland in between his stints as governor of California, tried mightily to bring attention and investment to the city; however, the private sector had its heart set on San Francisco. Wedged between San Francisco to the west and Berkeley to the north, Oakland suffered. Nevertheless, a visitor to Oakland today may almost feel nostalgic for the Oakland of yesteryear. (For a great read on the “good old days” of down and dirty Oakland in transition check out Michael Chabon's wonderful novel Telegraph Avenue.) Today, some of Oakland's office buildings sport tech logos and millennials renting apartments. Some commercial and residential tenants are in Oakland because San Francisco is prohibitively expensive, but some are embracing the ethos of a more economically and ethnically diverse urban community.
The Mistake on the Lake, a/k/a Cleveland, was a symbol of urban decay and white flight in the 1970s and '80s. Having the Cuyahoga River catch on fire in 1969 didn't help; even though it only happened once, the fire served for decades as a symbol of everything that can go wrong in a place that has been neglected and abused. Cleveland's neighborhoods were hit hard by the predatory lending scams of years past and many are still a long way from recovery. Despite its rocky past, green shoots are now visible in many parts of Cleveland and Fortune magazine listed it as a potential “next Brooklyn.”
GLIDE PATH TO RENAISSANCE
While Oakland's glide path to renaissance may seem more assured, both Oakland and Cleveland share renewal characteristics that are occurring in multiple formerly “second-tier” cities across the country. The trends are already influencing businesses and affecting stock valuations. Should they continue, the effect on society will be profound. Government officials, planners, developers and foundations all search for the secret sauce of 21st century urban revitalization, but these ingredients are clear:
• Public and private investment in vibrant, multi-use downtown districts. Suburban office parks are out; converted lofts and repurposed industrial spaces are in.
• A vibrant local food and restaurant scene. Young chefs are the keys to future development the way young art gallery owners used to be. Oakland and Cleveland each have new restaurants and happening food scenes.
• Public transportation, somehow, somewhere is a must. However neglected their urban cores may have been in years past, Oakland always had the BART and Cleveland the RTA.
• The private automobile is no longer the most important item in planning considerations for the private or public sector. Millennials are getting fewer drivers licenses or cars than their parents did. The phenomenally rapid rise and deep penetration of ride-sharing services means ever-increasing possibilities for living in an urban area without need for a car, a garage or as many parking spaces.
• Renting an apartment instead of buying a house is now a lifestyle and values choice not just a result of financial options and resources.
• Treating living and working as distinct spheres that never intersect seems more anachronistic every day. A generation ago, Starbucks pioneered the notion of a “third place” that wasn't home and wasn't the office. Now that the office is a smartphone or laptop, yesterday's work/life divisions may be over. Shared workspace leader WeWork (currently operating in L.A., Chicago, Boston and Miami but not Cleveland or Oakland) is building an experimental shared live/work apartment/office facility. Imagine.
Oddsmakers have the Warriors as favorites over the Cavaliers, but über-millennial LeBron James (who moved from Miami back to Cleveland) may have something else in mind. Either way, both cities seem like winners in seasons ahead.
David F. Sand is chief investment strategist at Community Capital Management Inc.