There's an enormous surge in housing in the heart of big cities. In Boston, Brooklyn, Philadelphia, Baltimore and Washington, among others, people are coming back to the city, buying old houses and restoring them. But while inner-city housing is booming, another essential function has proved more resistant to major revival: retailing.

As people left the city for the suburbs, the department stores watched. Finally, in the 1960s, they joined the rush out along the expressways and built regional shopping centers.

The decline of effective retailing at the heart of the city was a dreadful loss. It must be re-established. In my own work, we have found bright hope for new retail life in the heart of the city, beginning with Faneuil Hall-Quincy Market in Boston and following with the Gallery at Market East in Philadelphia. In both cities, there was a pervasive belief that our proposals couldn't work. This negative state of mind about new life for central cities is a real problem.

In Boston, though, city officials had faith. We worked with them to transform three old buildings at the heart of the city.

At first, money was the major problem. We had commitments for half the construction cost -- $21 million from a long-term lender and $10.5 million from Chase Manhattan Bank -- but we couldn't get the rest from Boston financial institutions. This shouldn't be seen as a criticism of them; it was simply an expression of the state of mind about cities in 1975, when we began. Any bank that would have put its money into the project would have to be crazy.

It took 12 Boston financial institutions to produce the other half of that money, and then only after we had broken the project into stages. The first stage was to cost $7.5 million, so the 12 institutions had to put up only $3.75 million. The last $350,000 came from the state's industrial commission. This whole financing process took 15 months.

Then, after we started construction, it was impossible to lease. There were too few merchants who believed. Two months before the August 1976, opening, only half the space was leased. We combed New England to find artists and craftsmen, inviting them to come.

We filled the space with colorful baskets and boxes. We opened with 43 pushcarts, so nobody could quite see all the vacant space.

That first day, 100,000 people came. In its first year, this little market of 70,000 square feet drew 10 million -- more people than Disneyland. Now the second and third stages are complete, and last year it drew 13 million.

This seems to be a clear expression of the yearning and hope that good things can occur in older cities. People go to Boston's Faneuil Hall-Quincy Market now for the experience, to be delighted; then, maybe, they buy something to eat or to use. Both the city treasury and the retailers are profiting.

There is a danger that the wrong message will be delivered by this project, that you can have a retail success simply by restoring an old railroad station or worn out warehouse. That assumption is dangerous. You have to find the right location, and the city has to prepare for it by assuming the initiative, doing whatever is necessary to make the site available.

In Philadelphia, the city acquired the old buildings that we developed into the Gallery, a multilevel complex of 150 shops. Both Boston and Philadelphia made tremendous investments to help the projects thrive.

In Milwaukee, we've organized a downtown retail project with investments by the city, the federal government (with an Urban Development Action Grant) and local businesses. The increased tax revenues to the city will more than offset the public cost of the investment. And this is as it should be.

Baltimore is an extraordinary example among American cities because it's effectively responding to the essential condition that cities must face: the need to plan the center city on a large enough scale to marshal its values, to bring into focus those resources that ought to be restored and that land that ought to be cleared. With its major plan for Charles Center and the new inner-harbor market we're developing, Baltimore will have the most sparkling center of any city in the United States.

Cities all over the country are saying to us, "Come in. We've got an old building. Develop it." But that isn't the game. No center city will work simply because buildings are fixed up and new stores replace the old ones. We need to discover what went wrong with the downtown in the first place before we can provide effectively for new life.