October 24, 2001 Commentary Cities Must Change to Survive By Joel Kotkin. Mr. Kotkin is a senior fellow at the Davenport Institute for Public Policy at Pepperdine University and at the Milken Institute. He is author of "The New Geography: How the Digital Revolution is Reshaping the American Landscape" (Random House, 2001). The catastrophe that befell lower Manhattan last month, and the continuing concerns over security in Gotham, could foreshadow a broader reversal of fortune for America's first-tier cities. After nearly a decade of remarkable resurgence, New York and other major urban centers face a new era of uncertainty and intensified competition from smaller cities and towns . It would be dense for business leaders in New York and other key cities to believe that the assault on the World Trade Center, and the heightened security around all high-profile locations, will not profoundly impact the future of major urban areas. What is needed now is a new vision of urbanity that responds, and overcomes, our altered reality. The giddy period of urban resurgence -- nurtured by mayors like Rudolph Giuliani, plummeting crime rates and the stock boom of the late 1990s -- has come to an end. A new organizing principle for cities needs to be developed, and fast. It should rely not on handouts and tax breaks to developers and companies, as has been the case in the past, but on an unleashing of the entrepreneurial instincts and assets of our urban population. Unfortunately, to date, much of the brave rhetoric coming from Mayor Giuliani and Gov. George Pataki has been oriented more toward restoring the old order. Their proposals for a multi-billion dollar bailout -- including plans to replace the twin towers with similarly gargantuan office complexes -- are out of whack not only with post-Sept. 11 realities, but with patterns of business dispersal that have been emerging for decades. Indeed, after Sept. 11, many firms are already signing long-term leases for new locations in the suburban hinterland. With the loss of 15% of downtown Manhattan's office space, according to a recent report from Reis.Com, it is inevitable that at least some of these firms will find homes outside New York City. And once employees acclimate to the relative ease of suburban locations, particularly given the long-term security concerns, they are unlikely to return to Manhattan without massive subsidies and tax breaks that the city can ill afford. Let us remember that since the mid-1960s, most major cities have either lost population or stagnated, while mid-sized, horizontal cities -- better adapted to the automobile and better able to offer a suburban-style quality of life -- have grown rapidly. Indeed, even in the midst of the recent economic expansion, little in the way of high-rise office space was built anywhere in the U.S. With the possible exception of Charlotte, N.C., virtually no major American city added significantly to its skyline in the '90s.