There is a growing awareness in urban social science of the importance of commercial real estate as a medium by which large cities are embedded within global capital networks. This trend is most pronounced in the office markets of international financial centres and has become more marked with increasing globalization of commercial real estate. Nuances of market processes can be lost in over-simplistic categorizations such as ‘international financial capital’ or ‘property developers’. Diversity in the nature of office investors leads to substantial differences in the motivations for building international portfolios and in impacts for the cities concerned. This chapter provides a detailed examination of the City of London office market, drawing on a unique database tracing office ownership over some 40 years. The changing tides of ownership, from predominantly local domestic to over 60 per cent non-UK owned in 2014, are linked to transformations of the City of London economy.
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Colin Lizieri and Daniel Mekic
One key hypothesis I arrived at early on in my research was that intermediation was an increasingly strategic and systemically necessary function for the global economy that took off in the 1980s (Sassen, 1991/2001, 2012; Sassen-Koob, 1982). This in turn led me to generate the hypothesis about a need for specific types of spaces: spaces for the making of intermediate instruments and capabilities. One such strategic space concerned the instruments needed for outsourcing jobs, something I examined in my first book. But what began to emerge in the 1980s was on a completely different scale of complexity and diversity of economic sectors: It brought with it the making of a new type of city formation. I called it the global city – an extreme space for the production and/or implementation of very diverse and very complex intermediate capabilities. This did not refer to the whole city. I posited that the global city was a production function inserted in complex existing cities, albeit a function with a vast shadow effect over a city’s larger space. In that earlier period of the 1980s, the most famous cases illustrating the ascendance of intermediate functions were the big mergers and acquisitions. What stood out to the careful observer was how rarely the intermediaries lost. The financiers, lawyers, accountants, credit rating agencies, and more, made their money even when the new mega-firm they helped make eventually failed. Finance became the mother of all intermediate sectors, with firms such as Goldman Sachs and JP Morgan making enormous profits, followed at a distance by the specialized lawyers and accountants. From the early phase dominated by mergers and acquisitions, intermediation has spread to a growing number of sectors. This also included modest or straightforward sectors: For instance, most flower sellers or coffee shops are now parts of chains, they only do the selling of the flowers or the coffee, and it is headquarters that do the accounting, lawyering, acquisition of basic inputs, etc. Once, those smaller shops took care of the whole range of items; they were a modest knowledge space. Intermediation can now be thought of as a variable that at one end facilitates the globalizing of firms and markets and at the other end brings into its envelope very modest consumer oriented firms. It also contributes to explaining the expansion in the number of global cities and their enormous diversity in terms of specialized knowledges.
This chapter departs from an understanding of the global city model as an economic geography concept to comprehend the function and position of specific economic actors in certain cities in the management and, in particular, in the ‘command and control’ of the world economy. Because the global city literature has not advanced satisfactorily in deepening our understanding of the role of global cities in the world economy and, in particular, in the organization of globalization, the chapter suggests an operationalization of research on global city makers and their practices through the conceptualization of global cities as critical nodes in global commodity chains. To deepen this notion, the chapter discusses global city formation in two non-prime global cities, namely Mexico City and Hamburg.
Transnational urban space-making has been discussed either in the context of corporate impacts on global cities or of transnational urbanism in the migration literature. This chapter brings together these two research strands and discusses the dual role of transnational professionals in global city making as both decision-making business practitioners in transnational corporations and also individuals with transnational social-spatial practices as specific transmigrants themselves. It is based on data deriving from 45 semi-structured interviews with transnational financial professionals accompanied partly by mental maps drawn by them, and complemented by expert interviews with real estate agencies as well as a group interview with Tokyoite peers. The chapter sheds new light on a so far neglected aspect of global city making by presenting empirical evidence on transnational professionals and their dual space-making process as micro-level actors embedded in the global cities network.
Bart Lambregts, Jana Kleibert and Niels Beerepoot
This chapter investigates how the offshore services industry contributes to processes of global city making in India’s financial capital, Mumbai. It looks for synergies between the city’s offshore services sector and its onshore financial services sector, nursing the idea that the latter should be regarded as Mumbai’s main ‘global city maker’, and exploring the hypothesis that the offshore services sector contributes to global city making mainly by supporting the functioning of the city’s onshore finance sector. The chapter shows that while operational interactions between Mumbai’s offshore and onshore financial services sectors are limited and while the offshore services activities themselves do not accumulate commanding powers in global production networks, it is through human capital formation, auxiliary services upgrading, financial services demand creation, and reputation-building that the offshore services industry fosters the city’s onshore finance sector and thus indirectly, yet meaningfully, contributes to the making of Mumbai as a global city.
In the commercial real estate markets of New York and London, transaction costs are high due to the private nature of the markets, the heterogeneity of real assets, and the time it takes to acquire and dispose of property. Broker intermediaries provide knowledge of the asset, the market and the counterparty to the transaction and by doing so can increase trust between parties and improve market efficiency. However, the unique practice of intermediation observed in London wherein both seller and buyer typically retain broker representation can create significantly higher transaction costs compared to New York. Moreover, when two broker intermediaries ‘work a deal’, a ‘tri-dyad’ network structure forms in which those who work between become privy to all aspects of the investment, which creates a significant informational advantage for the intermediaries. The system of double brokerage creates a ‘tertius gaudens’ effect.
Maritime industries are very important enablers of global trade: ports have already been coined ‘frontline soldiers of globalisation’ (Ducruet and Lee, 2006), and global cities are often port cities. Likewise, port institutions can be viewed as ideal global city makers, in the way they are targeting global flows for serving local interests. In this context, this chapter explores the city and the port of Hamburg, Germany. As a paradigmatic case of local–global governance, the Albert Ballin Konsortium is discussed, which was founded in 2008 in order to ensure local stakes in the Hapag-Lloyd shipping line and to avoid its takeover by a global competitor. The chapter discusses the conflict between the increasing de-coupling of maritime services from the traditional mainport and local political strategies. The research reveals the not so common case of a somehow reluctant global (port) city, due to the city makers’ strong concern for local interests.
As the chapters in this book clearly demonstrate, global cities do not come into the world economy pre-formed. Rather a considerable amount of work is undertaken by a range of actors, from individual economic agents, through advanced producer services (APS) firms to institutional actors in order to (re)produce the power of global cities within the contemporary world economy. Indeed, the sheer diversity of such actors and their concomitant spheres of influence is extremely well teased out in the chapters within this collection. This ranges from the individual financiers working in Tokyo’s financial district in Yamamura’s (2018) chapter to Hesse’s (2018) exposition of the shipping companies shaping Hamburg’s port development. Indeed, one of the many strengths of the chapters in this book is their breadth in terms of substantive area of economic activity (from finance, through management consultancy to real estate and infrastructure) to geographical location. In this respect, a much needed diversity of research sites beyond Western Europe is provided through work on elites in both Tokyo and Mumbai. This diversity of research approach is continued through the choice of methods that range from comparative quantitative work on London and New York to in-depth qualitative research with key informants whose daily working lives are vital in shaping the economic fabric of global cities. However, for me, the most significant intervention made by the work contained in this book lies in its focus on agency and agents within global cities. In this respect, the diverse forms of analysis, methodological choices and geographical location all share a commitment to demonstrating how it is the interplay between actors and the institutional and regulatory landscapes within which they operate that are critical in shaping the trajectory of global city development. Indeed, a range of literatures are used to shed light on this intersection, from global production networks in the case of Jacobs (2018), to literature on financialization and the role of APS firms in the case of van Meeteren and Bassens (2018). In so doing, the chapters begin to signal how we must attend to questions of power and politics in the making of global cities and it is this area that I focus on in this short commentary. This area is important, because whilst practice and relational orientated approaches have done much to reveal the range of activities that go on in making global cities, particularly at the micro level, there remains a need to use this approach to address meso- and macro-level questions about the operation of global cities within the wider economy (Hall, 2011).
This chapter is about understanding the role that commodity traders play in the world city network. Commodity trade is crucial in shaping economic globalization, both in the form of physical exchange of goods and in the form of financial transactions. Some older geographical thoughts on the role of traders and trade in shaping urban fortunes, most notably the work of James Vance (1970), are presented. These insights are confronted with a detailed overview of the contemporary practices of commodity traders in coordinating global supply chains and transactions, effectively linking various markets and places across time and space. The main hypothesis we induce is that in order for commodity traders to act as global agents they prefer the concentrated agglomeration benefits offered by (world) cities.
Michiel van Meeteren and David Bassens
This chapter examines the effects of advanced producer services on ABN AMRO’s corporate strategy leading up to the bank’s failure in 2007. Our historical reconstruction reveals how consultancy-inspired narratives about globalization, consolidation and shareholder value structured the bank’s geographies of risk and opportunity. Located in Amsterdam, a second-tier global city, ABN AMRO acted upon interpretations of a worldwide merger and acquisition craze that was framed as ‘the global endgame’. This narrative legitimized shareholder-value-inspired reorganizations and valuation metrics that contributed to the bank’s eventual demise. The chapter shows how multinational corporations, facing shareholder pressure, utilize strategic management consultancy narratives to legitimize their decisions to stakeholders. Yet, the bank’s eventual failure also illustrates the limits to the agency of global city makers such as bankers and consultants as this agency is constrained by credibility in financial markets and wider positionality in a system of financial centres.