Planning historically has ignored what happens after dark...But every city is 24 hours! Do you know how the nighttime economy impacts your community?
While assisting the Downtown Development Board of Orlando in 2022 with their initiative to develop a Downtown Action Plan, Alejandro saw firsthand the impacts of this economic sector on a downtown. The objective was to transform a downtown governed by its negatively-perceived nightlife scene into a vibrant, 24/7 live-work-play area. As with every city, Orlando has its unique complexities and challenges, and there are no one-size-fits-all solutions for these issues, so these efforts are a long, ongoing process. Additionally, the impact of post-pandemic trends and behaviors on the future of downtowns remains uncertain. However, it also presents a unique and significant opportunity to rethink and reshape our downtowns.
In 2014, Maya became the first Nighttime Economy Manager for the City of Pittsburgh after promoting responsible hospitality efforts in the neighborhood of Lawrenceville, where she worked with small businesses and the community. Working with the Responsible Hospitality Institute, Pittsburgh developed a Sociable City Plan organized around public safety, hospitality, development, transportation, and personal accountability.
These experiences led to our continued interest in this topic, and we were curious about how cities have been thinking about this sector in recent years as downtown uses shifted following the COVID-19 pandemic. Read further as we delve into the importance of proactive planning to create harmonious spaces for residents, businesses, and visitors alike to promote economic growth.
What is the nighttime economy?
There is no consistent definition of the nighttime economy. Sometimes it refers primarily to the time of day, such as economic activity between 6pm to 6am. Other times it refers to certain industry sectors, for which a large portion of their operations typically occur at night.
Measuring the impacts of the nighttime economy often looks at business sales, consumer spending, employment, and other related economic activities. However, the nighttime economy extends beyond the business sector and involves workers, customers, local residents, supply chain businesses, and the city services that support these industries.
Why this Topic Now?
The nighttime economy has always been an important aspect to consider but becomes even more of a consideration as we see the rapid conversion of uses shift after the COVID-19 pandemic impacts on downtowns. Underutilized office space is being repurposed into housing, and as housing options increase downtown, there will be increased opportunities for nightlife and other leisure businesses with extended hours as well as increased tensions as these neighbors co-exist.
As tens of thousands of square feet of office space become available for conversion to residential use, an influx of residents to downtown is tantalizing, but there is a need for proactive planning to ensure this shift is responsibly managed. Downtowns have historically been areas where these businesses are located, and there are opportunities for this sector to increase even more as there are more residents to cater to and more commercial square footage on the market in downtowns.
Planning for and maintaining a healthy mix of residents and businesses will allow downtowns to thrive during this transition, but without taking steps to mitigate impacts, downtowns will face major challenges.
Making a Case for the Nighttime Economy
The best way to make the case for planning and investing in the nighttime economy is for cities to understand the economic impact of the hospitality industry and ancillary industries on a city’s bottom line. The overall economic impact of the nighttime economy can be broken down into five components.
Direct impact: This encompasses the employment opportunities and economic output generated by nightlife establishments, including restaurants, bars, nightclubs, and performance venues.
Indirect impact: This involves the economic contributions from local businesses that supply goods and services to the nighttime establishments. For example, businesses such as food suppliers, cleaning services, event production companies, and transportation providers benefit from the demand created by the nightlife industry.
Induced impact: This refers to the economic growth resulting from nightlife employees spending their wages within the city.
Ancillary impact: This accounts for the additional spending associated with nightlife activities, such as transportation, and the expenditures of tourists specifically drawn to a city for its nightlife offerings.
Fiscal impact: This encompasses the tax revenues generated by the nighttime economy, including income, sales, and business taxes, which benefit both the city and the state.
Numerous cities have recognized the substantial economic benefits that a thriving nighttime economy can bring. For instance, in New York City, with over 25,000 nightlife establishments, the sector supports 299,000 jobs and generates $13.1 billion in employee compensation and $35.1 billion in total economic output. Moreover, the city benefits from approximately $697 million in tax revenue annually.
Similarly, in San Francisco, the nightlife industry contributed over $80 million in tax revenue to the city's general fund in 2015. Additionally, in Washington D.C., the 2,437 nightlife establishments, including restaurants, bars, nightclubs, and performance venues, contributed $562 million in annual tax revenue to the district.
These examples vividly illustrate the immense economic potential of investing in a well-balanced nighttime economy. By recognizing and harnessing this potential, cities can plan for 24/7 cities, stimulating economic growth and job creation, attracting and retaining talent, enticing companies to the region, and providing residents and visitors with a safe and vibrant environment.
Attention party people (mayors, city planners, nighttime economy managers, and urban enthusiasts)! Let's unlock the potential of balanced and vibrant 24/7 cities. Are you ready to shape dynamic places that cater to all? Join us in exploring zoning innovations, regulatory strategies, and governance models that foster a thriving nighttime economy while ensuring harmony with daytime activities. Let's engage in meaningful dialogue and exchange insights. What challenges do you face with the nighttime economy? How can we collaborate to overcome them? Together, we can create vibrant places for everyone to enjoy.