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Why No Micro-Apartments in Chicago?

  Several cities have jumped on the bandwagon of building Micro-apartments, a hot trend in apartment development.  San Francisco and Seattle already have them. New York outlawed them, but is testing them on one project, and may legalize them again. Even developers in smaller cities like Denver and Grand Rapids are taking a shot at micro-apartments. At the same time, Chicago is building lots of apartments, and is known for having low barriers to entry for downtown development.  Yet we aren’t hearing of much new construction of micro-apartments here.  Premier studios are fetching as much as $2,000 a month.  Certainly there must be demand for something more approachable to young professionals.  In theory, we should expect to see Chicago leading the way in innovative small spaces. Chicago doesn’t have an outright ban on small apartments like New York, but there are four regulatory obstacles in the Chicago zoning code.  These are outdated remnants from eras where excluding undesirable people were main objectives of zoning, and combined to effectively prohibit small apartments: 1. Minimum Average Size:  Interestingly, there is no explicit prohibition of small units.  This is unlike New York City’s zoning, which prohibits units smaller than 400sf. There is, however, a stipulation that the average gross size of apartments constructed within a development be greater that 500sf.  Assuming 15% of your floor-plate is taken by hallways, lobbies, stairs, etc; this means for every 300sf unit, you need one 550sf unit to balance it out. Source:  17-2-0312 for residential; 17-4-0408 for downtown 2. Limits on “Efficiency Units”: Zoning stipulates a minimum percentage of “efficiency units” within a development. The highest density areas downtown allow as much as 50%, but these are the most expensive areas where land is most expensive. In areas traditionally more affordable, the ratio is as low as 20% to discourage studios, and encourage […]

The Stealth Guide To Nimbyville

Hovering somewhere just beyond all the land use zoning regulations, building codes, finance mechanisms, aspirational comprehensive municipal plans, state mandates, and endless NIMBYism lies… reality. If you happen to want to live in certain parts of coastal California you need to come to grips with a serious supply and demand imbalance. Demand is endless. Supply is highly constrained. And there’s a huge amount of money on the table. Horizontal growth is essentially verboten. A powerful coalition of existing property owners, environmental groups, resource allocation schemes, and multi-tiered government regulations stymie new greenfield development. The personal interests of conservative Republicans and liberal Democrats line up exactly when anyone attempts to build anything near them. “Over my dead body.” It’s understood that if a town accepts endless low density horizontal development the overall quality of the area will decline. You can’t have expansive large scale suburbia without paving over the countryside, creating a great deal of traffic congestion, and inducing strip mall blight. At the same time, no one wants infill development on existing not-so-great property that’s already been paved over and degraded. The neighborhood associations break out the pitch forks and firebrands at the suggestion of multi-story condos or (Heaven forbid) apartment buildings. The population of any older suburb could double or triple without using a single inch of new greenfield land. But that kind of growth is feared and hated. So the aging muffler shops and parking lots linger in the middle of a massive housing crisis. Google Google Google On the other hand there’s radically less regulatory or community push back against expanding and improving existing suburban homes. Google Street View makes it possible to observe how a little post war tract home was transformed into a substantially larger residence. This kind of growth is entirely acceptable. The building […]

Five Ways To Understand Food Trucks

Over the last decade, Austin has exploded with a food truck revolution. They are so popular that temporary food truck installations on empty lots are mourned when the lot becomes ready for development and the trucks move on. But, taste aside, why do they do so well? What can we learn from them? 1 Food trucks as small business schools Restaurants are notoriously risky businesses to start. Many people start this way because food is their passion, but discover that making delicious food is only one of many components to running a successful restaurant. Food trucks are an opportunity to start your own restaurant at a smaller scale, and with lower costs. Budding restaurateurs can refine their menu, learn the ropes, and figure out whether they’re cut out for this industry without blowing their entire life savings. 2 Food trucks as proving grounds Lenders know that restaurants fail often; this makes them hesitant to fund new ones. By giving owners a chance to prove themselves and their ability to successfully manage a business, food trucks provide a way for lenders to separate the wheat from the chaff prior to making a large loan. This means some restaurants can get funding that would never have received it otherwise. Austin has seen dozens of restaurants that started as food trucks, before eventually finding brick-and-mortar premises. 3 Food trucks as regulatory hack Food trucks are regulated in how they prepare their food, where they may locate, and what kind of signage they can use. However, their regulations are both lighter and more directly related to their business than the regulations for brick-and-mortar businesses. If a food truck on a small lot with some picnic benches decided they would rather build a permanent building with indoor seating, they not only must still comply with the health and safety regulations the city requires; they would also have to provide parking. […]

Supply-And-Demand Denial And Climate Change Denial

I have criticized the idea that the law of supply and demand no longer applies to big-city housing (or, as I call it, supply-and-demand denialism, or “SDD” for short). It just occurred to me that there are a few similarities between supply-and-demand denialists and those who deny climate change. To name a few: *Rejection of science. Climate change denialists reject climate science; SDD true believers reject economics. *Paranoid fantasies about foreigners. Some climate change denialists treat worldwide concern over climate change as a conspiracy by Europeans or Chinese to destroy the U.S. economy; SDD believers are obsessed with foreigners purchasing U.S. or Canadian real estate. *Obsessive fear of change. Climate change denialists assume that any possible limit on fossil fuel emissions will destroy the U.S. economy (despite the fact that we already have lots of taxes and regulations and somehow maintain a more-or-less First World standard of living). I suspect (though I realize this is conjecture) that SDD believers are often NIMBYs who fear, without any obvious basis in reality, that new housing will turn their neighborhood into a slum or into a playground for the rich. *Self-interest generating these fears. Climate change denialists get information from politicians funded by the fossil fuel industry (and media outlets that support those politicians), which has a strong interest in limiting regulation of fossil fuel pollution. NIMBYs are sometimes homeowners who have a financial interest in limiting new housing in order to keep prices and rents high, or housing activists who can more effectively argue for government-subsidized housing if housing prices are high.

So Much For The Foreign Oligarchs

One common argument against new housing in high-cost cities is that the rise of global capitalism makes demand for urban housing essentially unlimited: if new apartments in Manhattan or San Francisco are built, they will be taken over by foreign billionaires in quest of American real estate, who will use the apartments as banks rather than actually living in them or renting them out. It seems to me that this argument would be more likely to be true if a huge percentage of New York’s housing was used by foreign billionaires. But a recent article in Politico New York suggests otherwise. The article says that 89,000 New York apartments are owned by absentee owners (many of whom presumably rent them out).  However, most of these apartments are not owned by Russian oligarchs or other global capitalists; for example, the co-op unit I rented a few years ago in Forest Hills (market value around $300K) was owned not by a foreign oligarch, but by the building’s former super. Presumably, the condos and houses likely to be owned by wealthy foreigners are the most expensive ones.   So how many of these units were worth $5 million or more.  Only 1554- a drop in the bucket in a city of 8 million people. And how many of the units were worth over $25 million?  Only 445. So super-rich absentee owners are few and far between, and thus probably do not affect housing supply very much.

Market Urbanism MUsings April 8, 2016

1. This week at Market Urbanism: Tory Gattis has an interesting take on the restaurant scene in Houston Cities like to hype amenities like museums and performing arts, but really, how often do you go to a museum or an arts performance? A few times a year? How often do you eat out? Hopefully more than a few times a year Calib Malik explains why Rent Control Is Bad For Both Landlords And Tenants Void of analysis, rent control sounds utopian. Yet, the effects are unfortunate: tenants face limited housing stocks that are either run-down or unaffordable; landlords lose money, and ultimately stop investing and building altogether. And yet it is a policy now being flirted with in cities like Seattle, San Diego, and Richmond, California. The potential economic effect in those cities could be dire. Johnny Sanphilippo wrote his predictions on the future of driverless cars Here’s a little heads up for those of you who think you know how driver-less cars will play out in the culture and economy. Asher Meyers recently moved to Brussels, and reports how the urban fabric fared after the terror attack. The atrocity raises some interesting questions in regards to urbanism—are there certain urban designs that can prevent or discourage terrorism? Should the threat of terrorism influence the design of our cities? How would it? Dan Keshet explains the 9 Barriers To Building Housing In Central City Austin Austin, like most cities, has rules that prevent new housing from getting centrally built. That makes it easier to buy and build on virgin land in the suburbs. Here are some of those rules. Scott Beyer continues his America’s Progressive Developers series in New Orleans with Sean Cummings and Steve Dumez  In the process of building this expensive waterfront, [the city] avoided any value capture strategy, and in fact downzoned adjacent properties from 75′ to 55′. […]

9 Barriers To Building Housing In Central City Austin

The Austin area has, for the 5th year running, been among America’s two fastest-growing major metro areas by population. Although everybody knows about the new apartments sprouting along transportation corridors like South Lamar and Burnet, much of the growth has been in our suburbs, and in suburban-style areas of the city. Our city is growing out more than up. How come? The desire for living in central Austin has never been higher. But Austin, like most cities, has rules that prevent new housing from getting centrally built. That makes it easier to buy and build on virgin land in the suburbs. Here are some of those rules. 1 MINIMUM LOT SIZE Historically, expensive houses were built on expensive, large lots; cheaper homes were built on smaller, cheaper lots. Austin decided that new houses can’t be built on small lots. Even if you want to build a small, cheap house, you still need a lot with at least 5,750 square feet. In central Austin, that costs a lot of money, even without the house! If somebody owns a 10,000 square foot lot, they aren’t allowed to split it into two 5,000 square foot lots and build two medium-sized houses, let alone three 3,333 square foot lots with three small houses, let alone three 3,333 square foot lots with triplexes! In 1999, Houston reformed its minimum lot size laws. Since then, environmentally-friendly central-city urban townhomes have flourished.         2 MINIMUM SITE AREA For areas that are zoned for apartments and condos, there is a cap on the ratio of number of apartments to lot size known as “minimum site area.” 3 IMPERVIOUS COVER MAXIMUMS Impervious cover is any surface that prevents water from seeping into the ground, including buildings, driveways, and garages. There is a cap on the ratio of impervious cover to lot size. 4 FLOOR-TO-AREA RATIO MAXIMUMS Floor-to-area ratios (aka FAR) maximums are a cap on […]

Urbanism In A Time Of Terror

Brussels, Belgium–I had recently moved from Los Angeles, my home of twenty years, to Brussels. It would be my first time living in a traditional city since becoming interested in urban design. So I was constantly looking for little urban insights and pleasures on the ground. For instance, I immediately noticed that housing prices here are roughly half of what I encountered in Los Angeles. Within a few weeks of my arrival, the bombings of Brussels occurred. The atrocity raises some interesting questions in regards to urbanism—are there certain urban designs that can prevent or discourage terrorism? Should the threat of terrorism influence the design of our cities? How would it? While terrorism may leave us shocked and breathless, it’s worth remembering that traffic deaths greatly outnumber deaths due to terrorism. In sheer numbers of lives lost and saved, cars are the bigger culprit. Terrorism, for its part, exacts a great toll paid in fear as well as loss of life and limb. What makes a city resilient in the face of terrorism? Walking The more ways one can move about the city, the more resilient it will be in the face of crisis. But, these options are not equal; cars are big compared to the space available for them—if everyone were to drive, no one would move. Here, man in his humblest form is king—we are always ready to walk, several miles if need be, without the aid of any special operator or infrastructure. Density and proximity ensure walking home is a reasonable or even routine affair. Walking loses its appeal, however, as travel distances increase, especially for the less physically able among us. And as much as walkability is ideal, many cities are just not suited for it, in their current state. Work is too far to reach via […]

Autonomous Vehicles: Expect the Unexpected

A recent trip to the tax attorney’s office put me in close proximity to a fellow client as we waited. This guy was one of the lead developers of autonomous vehicles so I picked his brain for a while. He said his company is on track to have products on the road in four or five years. Here’s a little heads up for those of you who think you know how driver-less cars will play out in the culture and economy. The first commercial adopters of this technology (other than the military) will be fleets of long haul trucks. The big box retailers have already calculated the savings on labor and fuel efficiency as well as just-in-time delivery optimization with vehicles that aren’t burdened by humans. . Uber and other taxi services have already announced their desire to convert to driverless cars in an attempt to improve service and lower costs. Car sharing services may convert to the on demand driverless taxi model as well. The U-Haul folks will eventually morph with the storage pod pick up and delivery services that are already in operation. Municipal governments hemorrhaging cash for salaries, health insurance, and pension costs will find it irresistible to phase out humans for sanitation vehicles. When I was a kid there were three men (and they were, in fact, always men) on each truck. Today there’s one person with a video camera and a robotic arm collecting the trash. Soon the truck and the robot arm won’t need a human at all. We can expect the same trajectory for mail carriers, utility meter readers, and other such activities. City buses will eventually see the end of human drivers, particularly as dedicated bus lanes and BRT come to dominate the surviving transit systems. In many suburban locations public buses may […]

Rent Control Is Bad For Both Landlords And Tenants

When laypeople hear the phrase “rent control”, they typically conjure up one of a few images. Tenants imagine easy street, a world where housing is ridiculously low cost. Maybe they think of rent control in NYC, where they saw the characters from Friends live in large apartments for far below market value. Landlords think of reduced profits, and tenants who live in a unit for years on end, never paying market value. Economists on both the left and right, meanwhile, simply picture bad policy. A prime example is Thomas Sowell, a world-renowned economist who claims both tenants and landlords suffer from rent control. He discusses the economics of rent control in his book Basic Economics, and his arguments have been summarized here. With Rent Control Comes a Greater Demand for Housing In an uncontrolled market, prices vary with the amount of demand. That is, prices rise because the amount of a product that people want exceeds the amount that is available at current prices. Put simply, more people want an item than there are items to go around, so to get that item you go into an indirect bidding process with other buyers. Imagine a fellow named Jerry and a girl named Elaine. Jerry wants a one-bedroom apartment in San Diego, but he can only afford $850 a month in rent. Elaine also wants to find a one-bedroom apartment, but she can afford $1,500 a month. Because there is currently a free market in San Diego, Jerry can’t find a one-bedroom for $850. There are a limited number of units and there are many more “Elaines” who are also willing to pay $1,500, which means rents hover around that value. As a result, Jerry reluctantly rents a 3-bedroom apartment with two roommates. Elaine finds a one-bedroom one at market price. […]

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