Ed Glaeser has a sprawling feature story in The Atlantic about skyscrapers that’s full of urbanist history and themes that I’ve been meaning to blog about for a few days now. It’s a great article, with a lot of New York history in it, but I wanted to highlight a few bits.

The part I liked most was where Glaeser talks about what I’ve called development as preservation and others have called adaptive reuse – the idea that making use of existing developed land is the best way to preserve historic buildings, although Glaeser also points out that it’s useful for preserving open land like parks, too:

Yes, you can have your cake and eat it too!

In 2006, the developer Aby Rosen proposed putting a glass tower of more than 20 stories atop the old Sotheby Parke-Bernet building at 980 Madison Avenue, in the Upper East Side Historic District. Rosen and his Pritzker Prize–winning architect, Lord Norman Foster, wanted to erect the tower above the original building, much as the MetLife Building (formerly the Pan Am Building) rises above Grand Central Terminal. The building was not itself landmarked, but well-connected neighbors didn’t like the idea of more height, and they complained to the commission. Tom Wolfe, who has written brilliantly about the caprices of both New York City and the real-estate industry, wrote a 3,500-word op-ed in The New York Times warning the landmarks commission against approving the project. Wolfe & Company won. In response to his critics in the 980 Madison Avenue case, of whom I was one, Wolfe was quoted in The Village Voice as saying:

To take [Glaeser’s] theory to its logical conclusion would be to develop Central Park … When you consider the thousands and thousands of people who could be housed in Central Park if they would only allow them to build it up, boy, the problem is on the way to being solved!

But one of the advantages of building up in already dense neighborhoods is that you don’t have to build in green areas, whether in Central Park or somewhere far from an urban center. From the preservationist perspective, building up in one area reduces the pressure to take down other, older buildings. One could quite plausibly argue that if members of the landmarks commission have decided that a building can be razed, then they should demand that its replacement be as tall as possible.

There’re also some great parts where he talks about the economics of skyscrapers. Apparently the marginal cost per square foot of space between about the 10th and 50th floor is less than $400 (!), meaning that average construction costs can be dramatically lowered by adding stories. He also has nice things to say about building in Chicago (which I know have been echoed by Adam). He pays due respect to Jane Jacob, but takes issue with her ideas about skyscrapers, and I agree with him. The end of the article is dedicated to India’s urbanism woes, which are apparently pretty bad. In 1991, Mumbai fixed an FAR of 1.33 throughout most of the city, which means that the average density of non-street space in these areas is, at most, 1.33 stories – a shockingly low number for a poor city of 20 million. He mentions Singapore favorably, and notes that when it implemented its congestion charge in 1975, it was not a wealthy country.

One thing that I couldn’t get on board with, though, is the part where he sounds like he almost wishes that the anti-density restrictions were reversed. In the last sentence of the blockquote it looks like he’s just using it for rhetorical effect, but here he sounds like he actually believes it:

If Mumbai wants to promote affordability and ease congestion, it should make developers use their land area to the fullest, requiring any new downtown building to have at least 40 stories. By requiring developers to create more, not less, floor space, the government would encourage more housing, less sprawl, and lower prices.

If density is really regulated out of existence and pent-up demand is as huge as Glaeser says it is, then why would we need to require people to build skyscrapers? Ed Glaeser is very much a libertarian-leaning economist, so I doubt that he really means that we should do this, but the language he’s using is giving ammo to the war-on-cars crowd who hang on every sprawl-forbidding regulation as evidence that they are the norm, when I obviously do not believe this to be the case. I understand that The Atlantic is not putting this story out there to convince libertarians, but this is the kind of thing they like to jump on as evidence of a vast liberal conspiracy to herd freedom-loving suburbanites into 800 sq. ft. apartments and force them to ride bikes to the light rail station in the freezing cold.

Another part that I wasn’t so sure of was this one, where he gives his third recommendation for land use policy going forward:

Finally, individual neighborhoods should have more power to protect their special character. Some blocks might want to exclude bars. Others might want to encourage them. Rather than regulate neighborhoods entirely from the top down, let individual neighborhoods enforce their own, limited rules that are adopted only with the approval of a large share of residents. In this way, ordinary citizens, rather than the planners in City Hall, would get a say over what happens around them.

I know that Glaeser probably really meant the “limited” part of “limited rules,” but I fear that people will instead focus on the “individually neighborhoods should have more power” part. While a lot of libertarians support governing at the lowest level possible, I think experience has shown that giving localities more zoning power often results in more restrictive anti-density zoning. As much as libertarians deride regional planning efforts, such efforts seem to result in more complete property rights those wishing to do high-density development.

But beyond those two things, it was a great piece, and I’m glad The Atlantic is giving urbanism the space it deserves.

The post Ed Glaeser on New York City, development as preservation, and more appeared first on Market Urbanism.

The last two factors, legal costs associated with eminent domain and opportunity costs of land, are in fact often included in typical project cost estimates for both public and private projects. The former is fairly straightforward, as it is a project-related cost. The latter, opportunity cost of land, is simply the purchase price of land.

In the case of this example, where land acquisition costs are assumed as part of the project cost, OldUrbanism is exactly correct. I’m truly embarrassed for being sloppy in that statement and will correct it.

Of course, I still stand by my exposure of the ignorance of land opportunity cost by those who assert that existing highways “pay for themselves.” I invite you to check out the discussion of that matter (and other items) with OldUrbanism in the comments of the post.
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The other day, Reason Foundation’s Samuel Staley had some very generous things to say about Market Urbanism:

I just ran across the Market Urbanism web site, and it has a lot of really good analysis and resources available for anyone following urban policy issues. The sub-title of the web site is “Urbanism for Capitalists/Capitalism for Urbanists”. The blog includes lots of references to F.A. Hayek, free markets, and even takes the Cato Institute to task for advocating “socialism for roads.”

and

This site is well organized and designed. I think it’s a great addition to the debate and discussion, and its refreshing to see a new voice enter into the fray.

Thanks Samuel!! I share Reason’s objective of “Free Minds and Free Markets.”

I just have to admit I found it a little ironic that he had such nice things to say after I blasted reason.org on twitter for their recent pro-government infrastructure pieces (here, here and here).
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Ed Glaeser wrote a book review for the New Republic discussing his mixed opinions towards Jane Jacobs and Robert Moses. Of course, my opinions of Glaeser’s piece are also mixed: wrong on infrastructure, right on NIMBYism.

Tyler Cowen and Matt Yglesias also chime in.

The post Correction, Reason.org’s Plug, and Glaeser on Jacobs appeared first on Market Urbanism.

Ryan Avent at The Bellows agreed with Yglesias’ post and added:

Anyway, I saw in Google reader that libertarian intellectual Will Wilkinson had shared Matt’s post, presumably because he agreed with it. And indeed, this is one of those times when libertarians and liberals can find common cause. On the other hand, most of Cato’s planner types vigorously defend suburban sprawl and highway construction, and vigorously oppose smart growth and transit construction, despite the obvious point that it takes an immense web of regulations and subsidies to support rapid suburban and exurban growth.

Over here! Ryan, Will! We’re over here!…

Definitely check out The Bellows post. Will Wilkinson stopped in to comment, too.

I think the “common cause” concept was conveyed well in Ed Glaeser’s recent NY Times piece, called The Case for Small-Government Egalitarianism. Harvard’s Glaeser reaches out for “common cause” between libertarians and progressives – kinda like the links between Free-Markets and Urbanism:

Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Was the Interstate Highway System such a boon for the urban poor? Has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America.

and

Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous checks to the poor hurt by the storm than to spend billions rebuilding the city, because those rebuilding efforts would inevitably help connected contractors more than ordinary people.

Urbanism is an area where free-market folks and progressive city dwellers can work together and share knowledge on so many concepts – I think we’ll find we have more in common than what’s on the surface.  As Noah Millman puts it:

But forgive me if I question the proposition that any political group is actually purely rational, and actually acting entirely out of concern for the common good. People who are, fundamentally, more distrustful of big government because they are convinced it will inevitably become the tool of special interests against the common good will be more alive to the kinds of things that can go wrong with big-government solutions than will other kinds of liberals who lack that basic distrust. By the same token, libertarians might be more likely to be won over to liberal perspectives if liberals can articulate arguments that libertarians would respect about how their policy proposals will actually limit government capture by special interests.

The post Redistribution (a follow up) appeared first on Market Urbanism.

There is a superficial attractiveness to policies that seem to promise an end to falling housing prices, but there are three reasons why these proposals don’t make much sense to me.

First, the government has no business trying to make housing less affordable to ordinary Americans.

There is no reason to hope that middle-class Americans should pay more for any basic commodity, whether that commodity is coffee or oil or housing. Government should be fighting to reduce supply-side barriers and make housing cheaper, not trying to inflate prices artificially.

Second, most of these proposals seem likely to be expensive failures. The government just doesn’t have the tools to rewrite the laws of supply and demand. If the cost of building a home in Las Vegas is $150,000, and there are no restrictions on building, then all the credit policies or bailouts in the world aren’t going to permanently keep prices above $150,000.

Finally, these policies all have the common feature of getting the government further entrenched in the operation of the housing market, and this creates all sorts of long-term market problems. I would have thought that recent events at Fannie Mae and Freddie Mac, for example, would have made Americans recognize the costs of having government-sponsored enterprises play mortgage lender to the nation. I would have hoped that the history of public housing would have made us wary about spending huge amounts of tax dollars to get into the business of public property management. The current crisis may imply a need for more federal regulation of lending, but it does not suggest that the federal government should be subsidizing more borrowing.

We do need action to fix our banking system, but we don’t need quixotic policies aimed at pushing up housing prices. I suspect these policies have some appeal because they seem to help homeowners (like myself) as well as financiers. Still, the government can’t repeal the laws of supply and demand in the housing market. The price decline should remind homeowners, and home buyers, that housing should never be seen as a short-term speculation, but rather as a place to live, and hopefully to enjoy, for the long run.

Many politicians love high housing prices because it allows them a chance to offer “solutions” to the high prices. Unfortunately, those “solutions”, have brought us rent control, public housing, and a whole affordable housing bureaucracy, which have done little to systemically solve the problem. Nonetheless, we don’t hear any of the politicians who champion affordability cheering because of the lower housing prices.

Let’s give a little credit to the housing market for correcting itself, enabling new people to afford homes they couldn’t afford three years ago, and let’s avoid creating more problems (and “solutions”) by artificially re-inflating housing prices. And hey, what about the renters?

The post Glaeser: Let Housing Prices Fall appeared first on Market Urbanism.

Ed Glaeser has begun to write articles for the NY Times’ Economix blog. Hopefully, Culture of Congestion will rise again soon.  I’ll keep you posted.

Also, check out: Batesline – Sun sets

The post Sun Sets on Culture of Congestion appeared first on Market Urbanism.

I found this paragraph to be particularly startling, and I would bet that the vacancy rate for stabilized apartments is well below the overall vacancy rate:

New York has a city-wide vacancy rate of just 3% — and when good rent-stabilized apartments come on the market, you have to either know someone or pay someone (a broker, for example) to get it.

The result is that many renters who pay below-market rents are reluctant to move — because it’s too difficult to get as good a deal elsewhere in the city. Thus, economists Ed Glaeser and Erzo Luttmer estimate that 21% of the city’s renters live in apartments that are bigger or smaller than they would otherwise occupy. The controlled rents certainly don’t increase the number of affordable apartments.

This demonstrates the hoarding effect, which we can see hampers mobility and the ability of a location to adapt to market shifts.

Norcross agrees, ending the rent control regime will be a step towards solving New York’s housing shortages:

There is a better way to address the lack of reasonably priced housing in the city. If Rep. Rangel, Gov. Paterson and all the other well-to-do New Yorkers lost their rent-controlled or rent-stabilized apartments, there would be a loud public outcry to loosen regulation and allow more new construction.

The post WSJ: Rent Control Is the Real New York Scandal appeared first on Market Urbanism.

Jane Jacobs is one of those intellectuals who seem ever on the periphery of the libertarian movement. Her book, The Death and Life of Great American Cities, can be found on the shelves of many a libertarian, though often unread. Perhaps this is because her name tends to be associated with leftish intellectuals who decry the rise of the suburbs and the decline of the downtowns, even though Jacobs strongly resists being labeled by any ideological movement, left, right, or other.

What is not commonly known, however, is that her works are full of arguments and insights on the economic nature of communities, on central planning, and on ethics that libertarians would find original and enlightening.

In the works of Jacobs, the order present in a well-functioning urban area emerges as the result of human action but not human design. It arises from a myriad of individuals each pursuing their own interest and carrying out their own plans, within a framework of rules that encourages peaceful cooperation over violent aggression.

I have added Jacobs’ The Death and Life of Great American Cities
to my list of books to read. In fact, I bumped it to next in line. Hopefully her ideas will inspire a series of fresh blog posts.
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Mathew Kahn tipped us off to proceedings from a conference on The Economics of Agglomeration edited by Harvard Urban Economist Ed Glaeser.
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Economist – An Arable Parable: Is Farmland Undervalued?

With many financial assets in the doldrums and markets spooked by the twin spectres of economic weakness and rising inflation, is it time to head for the hills? Barton Biggs, an investment guru, famously suggested that those wishing to preserve their wealth in times of turmoil should consider buying an “unostentatious farm”. And rural land has long been seen as a good inflation hedge.

But now may not be the most opportune time for investors to swap their wingtips for wellies. After more than two decades in the mire, the value of farmland has soared over the past few years on the back of strong prices for agricultural commodities, low interest rates and urban sprawl. It has become so fashionable that some wonder if it is a bubble waiting to burst.

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Brian J. Phillips – NIMBY Songs

The real issue is how to resolve such issues. More and more often, the home owners run to government and seek some law that will prohibit the proposed project. They reject the concept of property rights and seek to impose their values upon the rightful property owner. They reject voluntary, consensual interactions between individuals and seek to substitute the coercive power of government.

The post Weekend Reading: Jane Jacobs, Agglomeration, Farms, NIMBY Songs appeared first on Market Urbanism.

THE WALL STREET JOURNAL: What effect will higher gasoline prices have on urban planning in the U.S.?

MR. GLAESER: I would be very surprised to see a wholesale change in the nature of American urban development. We should certainly see changes in the short run, [such as] a slight decrease in demand for housing that’s particularly far away from city centers and dependent on long drives. That [type of housing] won’t be abandoned entirely, but it will certainly be cheaper.

WSJ: What about the idea of having the government purchase foreclosed homes and convert them into affordable housing? Would that be good for the economy?

MR. GLAESER: The government’s track record as a property owner is not so great. I am less enthusiastic about the government getting into this business. If we want strong policies towards taking care of the least well-off in our society, we should make sure supply is unfettered and continue working on the Section 8 [low-income housing] voucher program — that’s the right strategy.

Glaeser discusses Chicago’s success:

MR. GLAESER: I think Chicago has been remarkably successful in lots of ways. The city has managed to stay pretty affordable and Mayor [Richard] Daley has been extremely pro-growth.

Chicago, for many years, has had a relatively pro-growth environment, at least relative to California and New York — especially [before current Mayor Michael Bloomberg]. The climate in Chicago is, of course, far less pleasant than San Francisco and wages are lower than New York.

Still, it is somewhat remarkable that condo prices in Chicago [a median $232,000 in 2007] are less than those in Trenton, N.J. [$248,000], and not that far above Philadelphia [$197,000].

Over the past two years, Chicago has permitted around 14,000 units per year. Los Angeles permitted less than 10,000 units in 2007 and 14,500 units in 2006. Yet Los Angeles has almost twice the land area and over 50% more population. It is substantially less dense than Chicago, and there is substantially more demand for Los Angeles, yet Chicago is building more.

Bringing more units to market — think of all those cranes along the lake — explains in some part of why Chicago is more affordable. The absence of land-use controls [means] prices for condos will tend towards construction costs. After all, you can always build taller buildings.

Unfortunately, some local politicians have begun pandering more to NIMBYs. It hasn’t gotten out of control like coastal big cities, but I wouldn’t be surprised if the development climate changes once Daley retires.

New York City is a great place to be really rich and not a terrible place to be really poor, but it’s a pretty hard place to live on $60,000 a year. You don’t experience anywhere near the basic standard of living you would in Houston on the same income.

After living in NYC vs Chicago, I concur…

The post Glaeser: State of the City appeared first on Market Urbanism.