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Rubbing Shoulders: Maybe

A study by Maxim Massenkoff and Nathan Wilmers argues that “low-price full-service restaurants,” like Olive Garden or the Cheesecake Factory, are the third places in which rich and poor are most likely to rub shoulders. Using location data, they found that these low-price chain restaurants had more class integration than churches, schools, and independent bars and restaurants. Although Massenkoff and Wilmers steer clear of making forceful policy recommendations, they do seem to caution policymakers in cities like San Francisco and New York City that have passed regulations to curb an overabundance of chains: Our results demonstrate that the places that contribute most to mixing by economic class are not civic spaces like churches or schools, but large, affordable chain restaurants and stores. Insofar as policy makers seek to increase exposure between different classes, they should pay attention to the role of firms in shaping class mixing. It is not necessarily surprising that chain restaurants tend to be places where people of all classes mix. The very design of these restaurants is meant to appeal to the widest audience possible. Behold your local Cheesecake Factory. It is usually found in suburban shopping centers where land is cheap, such that the Factories are large and capable of holding all large numbers of customers. And of course, The Factory’s famously tome-like menu, which has everything from hamburgers to orange chicken to shrimp scampi, betrays the chain’s intention to serve as many different walks of life as possible. But it is also worth considering that chains, even if they are designed to appeal to the largest audience possible, might be playing an outsized role in class integration. Research from City Observatory argues that chains tend to proliferate in more car-dependent cities. It is not entirely obvious why this is the case, but some theories […]

Is there really a building boom? Not as much as you might think

I’ve noticed numerous stories and tweets about a building boom: for example, a recent CNBC story asserts that the number of new apartments is “at a 50-year high.” Various twitterati have used this claim to support their own points of view: some claim that rents are stabilizing because of this new surge in supply, while others argue that the failure of rents to decline shows that new supply doesn’t reduce rents. But is supply really increasing that rapidly? Federal statistics on housing construction are at a Census housing data webpage. I looked at the “New Housing Units Completed” table and found that about 216,000 housing units in structures with over five units were completed in the first half of 2023. On the positive side, this is definitely an improvement over the 2010s, when the economy was still recovering from the 2008 recession. For example, in the first half of 2019, just over 169,000 such units were built, and 2018 was pretty similar. But is construction still up to Reagan-era levels? Not really. In the first half of 1986, almost 258,000 relevant units were completed. And in the first half of 1973, just over 378,000(!) such units were built. And these levels of construction were in a less populous country. Today the U.S. population is about 335 million, up from about 240 million in 1986 and 212 million in 1973. So if construction had kept up with population, our new unit count would be about 1/3 higher than in 1986, and almost 60 percent higher than in 1973. Instead, construction went down. To put the facts another way: our half-year multifamily construction rate is about 644 per one million Americans for 2023, down from 1075 per million in 1986 and 1783 per million in 1973. That’s not my idea of a […]

Pedestrianized streets usually fail – and that’s OK

Urbanists love to celebrate, and replicate great urban spaces – and sometimes can’t understand why governments don’t: But what’s important to recall – especially for those of us under, uh, 41 – is that pedestrianized streets aren’t a new concept coming into style, they’re an old one that’s been in a three-decade decline. Samantha Matuke, Stephan Schmidt, and Wenzheng Li tracked the rise and decline of the pedestrian mall up to the onset of the pandemic. Even in the urbanizing 2000s and 2010s, 14 pedestrian malls were “demalled” against 4 streets that were pedestrianized: In a 1977 handbook promoting pedestrianization, Roberto Brambilla and Gianni Longo admit that some of the earliest “successes” had already failed: In Pomona, California, the first year [1962] the mall received nationwide press coverage as a successful model of urban revitalization; there was a 40 percent increase in sales. But the mall was slowly abandoned by its patrons, and now, after fifteen years of operation, it is almost totally deserted. A Handbook for Pedestrian Action, Roberto Brambilla and Gianni Longo, p. 25 One obvious reason for the failure of many other pedestrianized streets is that they were too little, too late. The pedestrian mall was one of several strategies against the overwhelming ebb tide of retail from downtowns in the postwar era. They weren’t seen as alternatives to driving, but destinations for drivers, who could park in the new, convenient downtown lots that replaced dangerous, defunct factories. A minority of the postwar-era malls survived. The predictors of survival are sort of obvious in hindsight: tourism, sunny weather, and lots of college students, among other things. Some of the streets which were “malled” and “demalled” have rebounded nicely in the 2000s. The slideshow below shows Sioux Falls’ Phillips Avenue in 1905, 1934, c. 1975, and 2015. The […]

Solano County Dreamin’: Is there a market urbanist way to build a new city?

Conor Dougherty and Erin Griffith revealed the identities behind a Silicon Valley investor group, Flannery Associates, that had gradually purchased 55,000 acres of ranchland near Travis Air Force Base in Solano County, California. Scale check: that’s a lot of land. San Francisco is 30,000 acres; San Jose is 116,000. Earlier WSJ reporting includes a map of Flannery’s holdings, which are predictably a bit scattered. To zoom out and give a scale comparison, I outlined a 55,000 acre contiguous blob around the core of the Flannery holdings. At the density of nearby Vacaville, this much land would be home to nearly 300,000 people. If it matched Oakland, it would be more than twice that. Many, especially at the Charter Cities Institute, have written about new cities. But can a new city ever be truly “market urbanist”? Or is the intent to create a city necessarily an exercise in centralized planning? Monopoly Bizarrely, the one actor who could most purely create a market-driven city is the government: It could use eminent domain to assemble only the land needed for new infrastructure, tax all landowners fairly, and allow competition among landowners to compete via development and land use. At the opposite extreme, when a profit-maximizing private actor owns all the land, it faces a unique form of the monopolist’s tradeoff: The longer it holds onto land, the higher price it can charge on sale, but the less that land contributes to urban growth. One way to sidestep this tradeoff is for the monopolist to develop land itself. But of course that concentrates risk, and the cost of development is at least a hundred times more than the land cost (which appears to have averaged about $16,000 per acre in Solano County). Zero to one So what’s a mega-landowner to do? I’d start by […]

Are Republicans or Democrats more pro-housing? Yes.

Some weeks ago, I was participating in a Zoom discussion on NIMBYism, and someone asked: are Republicans and conservatives more pro-housing than Democrats and liberals, or less so? After examining some poll data, I discovered that the answer depends on how the question is asked. A 2023 Yougov poll asked respondents to choose between two alternative views: “People should be free to buy land and develop real estate where they please” and “The government should limit where people are allowed to build things.” 64 percent of Republicans favored the free-market option, as opposed to only 47 percent of Democrats. Similarly, a 2023 California poll asked Californians whether state government should “ease current land use and environmental restrictions to increase the supply of housing.” 64 percent of Republicans favored less regulation, as opposed to only 48 percent of Democrats. Similarly, 62 percent of conservatives and only 49 percent of liberals favored less regulation. Thus, it seems that where development issues are framed as a choice between government regulation and freedom, Democrats are more pro-regulation and Republicans more pro-freedom. Where questions about regulation exclude the magic word “government”, partisan differences become a bit narrower. A July 2022 Yougov poll asked about removing “Regulations and codes that prevent developers from constructing more housing”. Republicans favored the free-market answer by a 43-40% margin, while Democrats disagreed by a 45-38% margin. Polls that don’t directly reference regulation sometimes show that Democrats are more pro-housing. For example, a June 2022 Yougov poll asked respondents whether more apartments should be built: 83 percent of Democrats said yes, as opposed to 68 percent of Republicans. When asked whether more apartments should be built in respondents’ “local area”, the Democratic percentage dropped to 74 percent, and the Republican percentage to 50 percent. When a poll asks generally about “density” […]

Gentrification: An LVT Would Do That

In many cities, poor people occupy valuable urban land close to downtown jobs, amenities, and transit. They can afford to live there because the housing stock in inner areas is usually older. If it hasn’t been completely renovated, the result can be quite cheap, even if the land is pretty valuable. In areas where there’s already some gentrification pressure, landlords face a timing problem: they can renovate (or sell to a developer) now, and cash out. Or they can hoard the property and wait until prices rise, supplying low-cost housing in the meantime. Land value taxes are specifically designed to penalize the hoard-and-wait approach by raising the annual tax cost of sitting on valuable land. It is specifically designed to accelerate neighborhood change. That’s the point. That’s what it says on the tin. Gentrification isn’t the only urban problem, and maybe it’s a small enough urban problem that a land value tax is a good idea anyway. But I think most of the benefits of Georgism can be unlocked with George-ish schemes (like renovation abatements or vacant land taxes) that are more narrowly designed.

Will congestion pricing hurt cities?

In a series of recent posts, Tyler Cowen has taken the view that congestion prices in major downtowns are a bad idea. This is what one might expect of a typical New Jerseyan, but not a typical economist. The writing in these posts is a bit squirrelly (or is it Straussian?), but as best I can make out, Tyler is deviating from the mainline economic views of externalities and prices by arguing a few points: Urban serendipity and growth are high-value externalities quite distinct from the usual efficiencies of combining large amounts of capital and labor in downtown office towers. Occasional visitors to the city find very high value there (presumably via a long-right-tail distribution) including by creating demand for new goods Congestion pricing will (a) decrease the number of people in the city, (b) particularly high-value visitors. He also makes some specific critiques of the mechanism design of the proposed NYC congestion charge. It’s worth getting that right, but let’s leave the technicalities aside here. Tyler’s points – as I’ve summarized (or mangled) them – seem like a mix of reasonable and wrong, although in several cases difficult if not impossible falsify. I’ll tackle these points in a completely irresponsible order. 2. Distinguished visitors On the second point: Diminishing marginal returns is enough to give Tyler’s argument the benefit of the doubt. The first visit to a symphony or subway likely has a bigger inspirational impact than the seventh or seven-hundredth. And outsiders may bring insights to the city in an Eli-Whitney-and-the-cotton-gin way. But for consuming new goods? Perhaps visitors’ demand is enough to sustain new imitations of low-end consumer goods (like a McDonalds in Chennai, if there is one). But for narratives of urban creativity, I prefer Malcolm Gladwell’s account of Airwalk shoes or Peter Thiel’s identification of […]

New Report on Massachusetts’s Building Code Confirms: It’s Harder to Build Energy-Efficient Housing When You Don’t Let People Build Anything

The state of Massachusetts lets municipal governments choose how strictly they regulate energy efficiency in buildings. Fifty-two of the state’s municipalities use the base building code, whereas 299, including Boston, have opted into the stricter “stretch” energy code. In addition to these two, the state recently rolled out an even stricter “specialized” stretch code in the interest of getting to net-zero carbon emissions faster. Cities could opt in to the specialized code as of last December; several municipalities have already opted in, and Boston may do so soon. The new code is technically the Municipal Opt-In Specialized Stretch Energy Code, and I considered referring to it hereinafter as MOISSEC, which is cute because it sounds like a wine, but I ended up deciding that the least confusing option is to follow official documents in referring to the new option as the specialized code, and refer to what is existing law in most of the state as the stretch code. Given that Massachusetts has some of the most expensive housing in the country, it’s reasonable to worry about the impact of any housing regulations on affordability, even when they serve an important objective. Massachusetts had the third highest cost of new housing of all states in 2021, and has unusually low housing supply, even among expensive coastal states. Research from the Boston Foundation details the extent of the problem: Greater Boston has lower vacancy rates than even Los Angeles or New York, homes spend less time on the market in Boston, and Boston is not on track to meet its housing production goals, though construction has increased somewhat in recent years. A new report released Tuesday by the MIT Center for Real Estate, the Home Builders and Remodelers Association of Massachusetts (HBRAMA), and Wentworth Institute of Technology (WIT) projects the impact […]

Rhode Island’s housing process package

“Renting in Providence puts city councilors in precarious situations.” That was the Providence Journal’s leading headline a few days ago, as the legislature waited for Governor Daniel McKee to sign a pile of housing-related bills (Update: He signed them all). Rhode Island doesn’t have a superstar city to garner headlines, but it’s housing costs have mounted as growth has crawled to a standstill. But unlike in Montana and Washington, Rhode Island’s were largely procedural, aiming to lubricate the the gears of its existing institutions rather than directly preempting local regulations. House Speaker Joseph Shekarchi (D-Warwick), who championed the reforms, clearly drew on his professional expertise as a zoning attorney to identify areas for procedural streamlining. Specific and objective Six bills transmitted to the governor cover the general rules affecting most Rhode Island zoning procedures: S 1032 makes it easier to acquire discretionary development permission.  Municipalities cannot enforce regulations that make it near-impossible to build on legacy lots that do not meet current regulatory standards. Municipalities can more quickly issue variances and modifications. (Rhode Island draws a unique distinction between minor and substantial variances, labeling the former “modifications” and subjecting them to a simpler process. A substantial variance must go before a board for approval; a modification can be approved administratively unless a neighbor objects. Municipalities must issue “specific and objective” criteria for “special use permits”, otherwise those use are automatically allowed as of right. That phrase – specific and objective – shows up again and again in Speaker Shekarchi’s bills. S 1033 requires that zoning be updated to match a municipality’s own Comprehensive Plan within 18 months of a new plan’s adoption. It also requires an annually updated “strategic plan” for each municipality, although the content and legal force of the strategic plans are unclear to me. S 1034 broadly […]

Why lawyer salaries matter

Today’s Wall Street Journal includes a front-page article about sky-high lawyer incomes. The article points out that top lawyers can earn $15 million per year or more. Why is this relevant to urbanism or markets? Because one common argument against new condos (at least in NYC) is that they will be bought by foreign investors instead of by local residents. In turn, this argument rests on the assumption that new housing is so expensive that the local rich can’t afford it. But someone who earns $15 million per year can afford almost all new condos, even in Manhattan. When I bought a condo in Atlanta many years ago, the sticker price was about 2.6 times my salary. Even if you assume no one will pay more than that, this means that a $15 million household can pay for a $39 million condo. Almost every new condo in Manhattan costs less than $39 million. My latest zillow.com search reveals that 541 units in condos and co-ops were built in 2020 or later. Only seven of those units cost over $39 million. In fact, only 34 cost over $15 million, and the majority (376 of the 541) cost under $5 million- certainly far more than I could ever afford, but affordable even for an attorney earning $1 or 2 million per year.

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