Expectations of commercial real estate have fluctuated dramatically in the last few years. But what has stayed the same is the expectation that people are being taken care of. Of course, as a corporate tenant, safety should always be your number one priority. But how can you ensure the safety of your talent base when your location is plagued by crime?
A recent analysis of crime data by the Council on Criminal Justice (CCJ) revealed that reports of violent crimes have been rising in the country’s major cities. Trends gathered by the group indicated a rising number of homicides in the past few years, with 2021 figures ticking up 5% from 2020 but jumping 44% from 2019.
What's worse is that along with increasing crime comes expensive ramifications. According to Forbes, "70% of Cities in the U.S. reported some increase in the cost of crime.” So not only are dangerous cities unlivable for citizens, but they are also extremely expensive to taxpayers. This is a double-edged sword for businesses looking for safe and affordable neighborhoods for their commercial real estate.
Skyrocketing crime rates are a cross-national issue that is aggravated in certain hotspots. Read on to learn what America's most dangerous cities are and the crime statistics that separate them from the national average.
1. Detroit
Detroit, Michigan, has long been plagued by high levels of crime. Its reputation has been consistently implicated by its violent crime rates, earning it the number one spot on the ranking of dangerous cities.
FBI data indicates that in 2018, Detroit had a violent crime rate of more than 2,000 incidents per 100,000 residents. On a micro level, this is two incidents per 1,000 people. Detroit is the only midsize or large city in the country with a violent crime rate that high. For comparison against a big city, Phoenix has a population that over doubles Detroit's, yet there were still several hundred fewer violent crimes reported. With this information, it's easy to see why it is one of the most dangerous cities in the U.S.
Violent crimes fall under a broad umbrella, from rape, robbery, and aggravated assault to gun violence and nonnegligent manslaughter.
Detroit also has an exceedingly high poverty rate. Based on U.S. Census Bureau data, 41% of Detroit residents live at or below the federal poverty threshold.
2. Memphis
Violent crime is a problem in Memphis, and it's only getting worse. The city has the highest violent crime rate in the South and the second highest rate in the nation at 1,943 violent crimes per 100,000 residents. But what sticks out the most is Memphis' property crime rate at over 6,000 incidents per 100,000 residents, nearly triple the national rate.
There are far more property crimes here than in most other cities, which is a significant problem for businesses. So if you're considering opening a business in Memphis, be sure to take crime into account. It could end up costing you a lot of money in the long run.
The impact of crime in Memphis has brought Tennessee to a breaking point. The state recently formed a new committee to tackle dangerous issues plaguing the city and sentencing. State Representative Antonio Parkison, a member of this council, explained, “The (current) system is entirely broken.”
3. Birmingham
Birmingham, Alabama is next on the list of the most dangerous cities in America. In 2018, the violent crime rate was five times higher than the national rate at 1,911.5 violent crimes per 100,000 residents. In addition, the murder rate was the third highest in the nation, with an average of 42 homicides per 100,000 people. But it gets worse. An overwhelming amount of the crime reports in Birmingham (70%) were aggravated assaults. The remaining criminal activity was mostly robberies.
This goes hand in hand with the limited economic opportunities in Birmingham. The poverty rate is extremely high, with over 28% of its population living below the poverty line.
Charlie Williams, president of the Druid Hills Neighborhood association, a region of Birmingham, explained that the threat of violence is an ever-present danger “Just simply walk out onto their front porch for fear of violence, particularly gun violence whereby being an unintended target is one of the greatest fears individuals feel." If you are considering doing business in Birmingham or even just visiting, be aware of the high crime rate and take appropriate precautions.
4. Baltimore
Baltimore has been struggling with crime for years, and it doesn't seem to be getting any better. The city has had documented poverty and drug trafficking issues for many years, now the fourth most dangerous city in the nation. It has the highest robbery rate in the nation, with 837 incidents per 100,000 residents. Cities with alarmingly high property crime rates are a concern for commercial real estate, especially if you own manufacturing space with inventory and storage. Businesses in Baltimore may want to invest in a good security system- it'll probably be in their best interest. There were nearly 8,000 commercial robberies in 2018 alone.
Baltimore also has the second-highest murder rate in the country, with 51 murders per 100,000 residents. In 2019, 348 people were murdered in Baltimore. To make it worse, violent crime is an ever-present threat, with an average of 1,859 violent crimes per 100,000 residents yearly. This is about five times the national average.
5. St. Louis
St. Louis has a long history of crime, and it continues to be an issue today. According to FBI data, the St. Louis metro area has the highest murder rate in the U.S., with 61 murders per 100,000 residents. According to the Giffords Law Center, “In 2020, homicide rates in the city of 300,000 people reached historic highs. Nearly 90% of the 262 homicides in 2020 were committed with a gun, and the homicide rate in St. Louis was 16 times higher than the national average. In 2019, the City of St. Louis alone accounted for 30% of Missouri’s total homicides, despite having 5% of the state’s total population.”
The city also has high rates of violent crimes and robberies, with an estimated 1,800 violent crimes per 100,000 people.
What's worse for St. Louis is that the crime rate has the highest cost in the nation. Chief of Data Analytics at Money Geek, Doug Milnes, explained, “The population has decreased over time rather than increased like the population of America, and the GDP of the St. Louis metro area has grown slower than the overall country since 2001.”
As a result, the toll of high crime rates disproportionately affects the city's financial growth.
Why Businesses in High-Crime Cities are Relocating
Commercial real estate properties in high-crime cities are feeling the pressure as companies are relocating to safer areas. This is largely due to the increased cost of crime, which harshly impacts a business' bottom line and reputation.
With the changing expectations of the last few years has come a massive corporate exodus. Businesses in crime-ridden neighborhoods have reached a breaking point. As a result, they are fleeing their old regions of high cost of living, taxes, and crime. This is also partly because they are following population migrations since people have more freedom to be mobile with remote work. Employees don't want to put up with dangerous areas and are actively leaving for other jobs that can guarantee safety (which really should be a bare minimum for CRE). It is critical for business owners to be aware of these trends when making decisions about where to locate their businesses.
The list above indicates the most dangerous cities, but America's crime epidemic doesn’t end with these regions. Other cities like NYC, Chicago, and San Francisco are experiencing unprecedented rising crime rates. As a result, businesses need to come to terms with whether city life is worth the high costs and danger.
To read about how crime is implicating NYC commercial real estate, check out: Is Your NYC CRE a Liability?
If you’re ready to relocate your CRE, you need to know where to start. Talk to a true Tenant Rep expert today.
Wondering where to begin?
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