Monday, December 9, 2013

Whither the suburbs?

Too often there is an antagonistic relationship between the core city and its suburbs.  Cities who waste their resources poaching jobs from their surrounding suburbs - and vice versa - work to create a toxic relationship when a harmonious relationship would help further all parties.

There has been a trend lately for companies to relocate from the suburbs to the core city.

After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, sometimes aided by tax breaks and a recession that tempered downtown rents. And upstart companies are following suit, according to urban planners. The bottom line: companies are under pressure to establish an urban presence that projects an image of dynamism and innovation. 

I believe this trend correlates with the decline in driving and car ownership among young adults.  As such, cities and the surrounding suburbs should work to create a harmonious relationship.  It is in their benefit, because now poverty in the suburbs is rising.

Suburban poverty across the country grew 53 percent between 2000 and 2010, more than twice the rate of urban poverty, according to a recent report by the Brookings Institution. For the first time, more poor people live in the suburbs than in cities.

Remember that suburbs and cities ideally are to the mutual benefit of each other.  When that relationship becomes toxic, like Detroit, the results are bad for both the city and the suburbs.  The bankruptcy in the city of Detroit was preceeded by suburban Detroit bankruptcies in Pontiac and Hamtramck.

This is an opportunity to for cities and their suburbs to coordinate on issues like regional transit and economic development.  Whether a commuter rail line or a highway expansion should be built is something that cities and their suburbs should explore with the question "what will benefit the region best"?

Monday, November 11, 2013

Chicago's Plan of Action

Not too long ago the Chicago Tribune published a solicitation for plans for the city in the mold of Daniel Burnham's famous master plan.  Rather than come up with a grid with proposed development, I suggest that the city create a philosophy to tackle the core problems.  With declining population and poor key city services in blighted neighborhoods, the city needs to direct its scarce resources as wisely as possible.

With that in mind, I proposed that the city of Chicago designate certain areas of the city as redevelopment zone and invite developers to submit proposals for development through a fast track construction program.  The city has a fast track abatement program which works well at tearing down buildings.  But the city is lacking in a program to build up on the abundant vacant lots that litter the city.  Reduce the barriers to redevelopment in blighted neighborhoods by streamlining the process.

It makes sense:  the city has high cost of living.  You pay a premium to live in Chicago but typically receive less wages.  The city needs to address this problem with increased construction.  By increasing the supply of housing, rents will sink and consumers will have more surplus.  Additionally, more construction job will reduce the oversupply in the labor pool and allow workers to command better wages.  And the best way to attract more construction is to lower barriers to entry.

As a counterpart to this, the city of Evanston created a planning commission in 1989 to redevelop.  Their urban renewal proposal consisted of 

a rebuilt Davis CTA station, public library, streetscape, and water and sewage systems, all centered around a densely populated, pedestrian-oriented transportation hub. A 1993 zoning ordinance opened the way for high-rises, which led to a unique discovery. “If you position a tall building at just the right angle, you can grant almost every one of your units a lake view,”

This concatenates nicely with my own view, which is that many of Chicago's troubled neighborhoods have huge potential.

As Perman explains. “Those projects sent a message to the private investment community that we were serious.”

Likewise Chicago could replicate this strategy in many locations.  If you are interested in more details on my plan for Chicago to turn the corner and revitalize itself, please let me know I have pages of details.

Friday, August 9, 2013

Chicago's construction crisis

Well, perhaps the word crisis is too strong?  But still, Chicago isn't building enough new buildings fast enough.  Oh sure, there are new buildings going up.  But not enough.  Just check out this graph of construction [via Matt Yglesias]:

As you can see, Chicago is lagging behind other big cities.  And Chicago has no lack of available space.  I can't imagine seeing several acres of empty lots in downtown New York like you see in Chicago, and yet New York is in another league of construction compared to Chicago.  And it isn't like demand isn't there.  Startups in Chicago are causing a crunch:

Growth in Chicago’s startup community has led to a very tight market for appropriate office space, particularly in the River North neighborhood, according to a new report by CBRE.

Many of these companies seemed to be alums of 1871, the collaborative hub for digital startups that opened last year in the Merchandise Mart. Built In Chicago, an online community for the tech sector, counts nearly 200 digital startups that launched locally in 2011 and 2012.

Indeed, there is a boom in the West Loop already:

For the past few years the West Loop has seen a massive surge in development, as it rebounds from the recession. Apartment buildings, corporate offices, restaurants, bars, grocery stores and countless other forms of construction have taken places in the area. On Thursday, the city approved plans for the development of the Old Chicago Main Post Office. Meanwhile, scores of new residents have moved in to the new high-rises that make up a drastically changed skyline.

Since January of 2012, there have been 17 demolition permits filed in the West Loop area. Of those, 13 were the demolition of one or two-story buildings. As real estate practitioner Caplan notes, “older buildings [are] being knocked down for new development.”

While the news is encouraging, it is apparently not enough.  Or not fast enough.  Or both.  The question is why can't Chicago get approvals or financing for development?  Onerous regulations?  Too high construction costs?  Why aren't these projects rolling along at the pace of Atlanta or Dallas?

Monday, May 13, 2013

Transit Oriented Development

Recently the Center for Neighborhood Technology evaluated cities with big transit systems and found that population growth near passenger rail stations in Chicago is lagging behind its peers:

"New York, Philadelphia, Boston and San Francisco achieved stronger growth in their transit zones — the land area within a half mile of a rail station — than in their overall metropolitan areas, the study found.

Only the Chicago region experienced the reverse, in which residential development around rail stations was overshadowed by growth in the broader region."

Not a surprising situation.  One need only take a ride on the CTA's Green Line to see this in action.  Many neighborhoods near rail stations are experiencing decline in Chicago.  In the much publicized Englewood neighborhood where the Green Line rolls, housing is being demolished continually as residents flee.  Compare too the western leg of the Blue Line, the southern leg of the Red Line, and large portions of the Green Line through the west side with the violent crime map of Chicago.

Therefore it is no surprise that Chicago's rail lines aren't seeing development as a whole.  The development is asymmetric.  Despite this indemic problem, Chicago has a large potential for development.  There is a lot of undeveloped real estate near transit within the Loop itself and even in low crime north side neighborhoods.

Indeed a quick tour through Curbed Chicago's development watch shows just how far Chicago has to go with infill in downtown areas with moderate to low violent crime and well served by transit.  Getting these projects to fruition is in part a political problem for Chicago, and one that is contributing to the reduced purchasing power of its citizens.

Monday, April 15, 2013

The changing tides of real estate

Interesting article on the changing tastes of real estate.  It predicts that baby boomers will sell off their homes for smaller sized residences.  But it also touches on the changing tastes of the younger demographics.

Many current households with children will want to move up to these houses, but demographics and preferences have changed — about a quarter of those who would be considered in their prime buying years now want something else, like condos or town houses. And that's a significant change, because that kind of preference (from that buying group) used to be nonexistent.

This of course poses interesting challenges for cities.  Can cities accommodate a flood of seniors looking for quality rental units?

Wednesday, March 20, 2013

Annexation Realpolitik

Recently the city of Toronto surpassed Chicago in population.  This was done the usual way, through annexation.

So what happened? Did two million people move to Toronto? No. Toronto moved to them. In 1998, the old city, which occupied the lakefront and the business district, amalgamated with five suburbs to form a super-metropolis.

Chicago's prospects for annexation, contra this article, are dim.  The two most promising candidates are Oak Park and Evanston.  Both cities are on the border of Chicago and have lines of the L running through the center of town.  Their infrastructure and economies are tied into the core city so intrinsically that they might as well already be part of Chicago.

But they won't be annexed.  I mean why would they?  Annexation means losing political autonomy to a corrupt political core, diluting the local vote into the big city, and diminishing municipal services.  Oak Park and Evanston have far superior schools, police, and roads compared to Chicago.  Why should they ever consent to annexation?  It won't reduce their taxes or increase their city services.  Until Chicago can offer their suburbs something better the city borders will be ossified and the city will not grow.

Most cities grow through annexation.  Even Manhattan is not as dense as it was about a century ago.  Core cities over the last century reduced density.  Even the core of Paris is less dense than it was a century ago.  This trend shows no sign of reversal.  So in order to prevent a long term decline, Chicago needs to get its core city services in order.  That means using its economy of scale to provide superior police, fire, schools, and roads at a cheaper price than the surrounding suburbs.  But until the city makes real reforms in crushing the high labor costs and cronyism the city will continue to atrophy.

Thursday, February 28, 2013

Detroit's downsized vision

Recently Detroit unveiled a new plan to deal realistically with the problems inherent in a city that lost a million people.  While I applaud the plan for dealing head on with one of the city's core problems, I can't help but think that it is missing the point.  What do I mean?

The Detroit Works Project has a terribly formatted PDF you can download.  Therein it glazes over the biggest structural problem facing Detroit, and it isn't population loss (surprisingly).

From page 55.  Is the problem really a lack of high density residential areas in the city?

Comparing Detroit to Portland reveals that they are on comparable plains.  Indeed, the population density of Portland is 4,375.2 people per square mile, while Detroit has 5,144.3 people per square mile.

Is the problem really too much built up infrastructure due to population loss? <via James Griffioen>

Rather, the problem is structural.  In Detroit, people pay too much and receive too little in the way of services.  The city of Detroit cannot compete with its own suburbs, let alone other cities.  The city of Detroit costs a premium to businesses and residents in the way of higher taxes.  The city has an income tax and high millages.  In exchange for higher taxes the city provides fewer services like police and fire protection, good roads and schools, and overall public utilities.  Things people expect from their municipalities.  Leafing through the plan, I saw little mention of this.  Ironically the city of Detroit mirrors the Detroit automobile industry in that it is crippled by high labor costs.

Instead the plan takes the approach that Detroit can attract residents through form.

Detroit has room to offer many neighborhood types and lifestyle choices for residents who want to stay in the city, while welcoming new residents looking to make Detroit their home. - page 56

While I want to applaud the city for admitting that a big comeback is not in the cards anytime soon, it still seems rather myopic.  There is still chatter about a return of manufacturing.  From page 27:

Across the country, many have come to realize the critical role of manufacturing activity in promoting and sustaining innovation, especially in clusters where product and process are tightly linked, such as high-end apparel and biotech. Detroit has a unique combination of educational and medical institutions, information technology companies, low-cost industrial land, and an “industrial commons” that support manufacturing and industrial activity of all kinds. Detroit also has a skilled workforce, managers with operations experience, and broad design and engineering expertise among its residents. With proactive and coordinated investment, Detroit can remain an innovative hub for production. - Detroit Works Project pg 27

Sadly the idea of Detroit manufacturing the next generation of surgical tools and medical devices seems unlikely.  David Hume spelled it out over 200 years ago:

Manufactures, therefore gradually shift their places, leaving those countries and provinces which they have already enriched, and flying to others, whither they are allured by the cheapness of provisions and labour; till they have enriched these also, and are again banished by the same causes. And, in general, we may observe, that the dearness° of every thing, from plenty of money, is a disadvantage, which attends an established commerce, and sets bounds to it in every country, by enabling the poorer states to undersel the richer in all foreign markets.  - On Money

We see this happening today with the decline of US manufacturing and the rise of manufacturing overseas, notably in China.  Some cities were able to let go of their manufacturing past.  The sooner the better, really, as trying to hold onto manufacturing is not a sign of economic success.  Indeed, Detroit's halcyon fondness for the glory days of industrial manufacturing seems a mirage.

Having a plan that fosters a vision of how to shed manufacturing for an information economy seems like a better idea, but that too might be perilous.  How would Detroit compete for IT talent against Silicon Valley, Silicon Alley, and possibly a resurgent Silicon Prairie?  Can Detroit really be a hub for biotechnology when it competes with Madison Wisconsin and Minneapolis Minnesota?  And is Ann Arbor really a benefit to Detroit's ambitions for biotech?  Ann Arbor is about 40 miles away.  Would a biotech firm really move 40 miles from the University of Michigan's Life Sciences Institute?

Realistically it is hard to imagine Detroit successfully turning itself around without taking a hard look in the mirror and waging a battle with itself and its city services.  A more promising plan for Detroit would be a detailed reorchestration of the city's bureaucracies, especially in dealing with labor costs.  Cutting pay and firing employees is delicate business that should be handled thoughtfully in order to ensure that the services that residents pay for don't suffer.  I hate to sound cliché but the city needs to be leaner and meaner in providing services.  In a city where the unemployment rate stayed over ten percent for the last decade, labor costs should be low.  A Detroit with more to offer its citizens is a Detroit that has a realistic plan of avoiding becoming a ghost town.

So again while I applaud the Detroit Works project for at least taking a critical eye towards Detroit; it still falls short of the mark.

Hopefully within a week I will have a similar animadversion regarding Chicago and its failures.

Monday, January 14, 2013

Crumbling infrastructure

Pardon the low quality of this picture, but it is a utility pole slumped over, soon to fall down.  Such disgraceful state of disrepair.  It is located in Chicago's Southside.

If the picture doesn't illustrate this, it is leaning at an almost 45 degree angle.

Friday, January 11, 2013

Revisiting the master plan

Recently, Detroit unveiled a new master plan.  Unlike other plans, this one has a concrete vision for Detroit's future.  It imagines a Detroit scaled back from its current size by turning some neighborhoods into parks of a sort.

"Among the report's suggestions are targeting vacant land and empty buildings for employment districts to stimulate job growth in neighborhoods. It also recommends encouraging residents living in sparsely populated neighborhoods to move out, then converting the land into open space or community gardens."

Long has the city mulled the idea of scaling back city services from sparsely populated areas.  The city has finally decided which areas should be scaled back.  I hope to visit some of these areas this summer to see for myself what a sparsely populated neighborhood designed open space looks like.

You can download a copy of the 16 page summary from the city's website.  I would like to find a copy online of the full 349 page full copy.  If you find a link please send it my way.  I haven't yet digested the finer details but I hope the city has a viable plan that produces tangible net benefits to the city and its residents.