I get tired of the articles that ascribe Houston's economic success to its lack of zoning
That being said, I admire the palpable energy in Houston and its humidity being even worse than DC has strengthened my ability to deal with Washington summers as Houston's are far worse.
And there is no question that when it is easier to develop, development happens faster and costs less in administration and overhead. On the other hand the ability to sprawl reduces property values and deconcentration fosters blight and increases the cost of transportation.
The difference between city and suburbs in other areas vs. Houston is that liberal annexation practices have allowed Houston to absorb adjacent lands that in other places would be suburbs, although this helps stabilize the local government's revenues as well.
For example, the City of Houston itself is about 1/3 the size of Wayne, Oakland, and Macomb Counties in Metropolitan Detroit.
As long as oil continues to be the primary energy source in the world as well as a feedstock for chemical production, the Houston metropolitan region is well placed economically.
Interestingly, a Houston court recently ruled that adjacent property owners may be entitled to financial compensation and other mitigation measures when properties are developed in ways "out of character" with the neighborhood or district ("Court Case Could Challenge Houston's Hands-Off Approach," Governing Magazine).
But the fact that many pieces of land can be developed without restrictions (many properties come with deed restrictions which do limit development regardless of the lack of zoning) is not the driving force in the local economy.
It's oil. Pure and simple.
Houston's economy ("Occidental Petroleum splintering and moving its headquarters to Houston," Houston Business Journal; "Chevron says it will move 400 jobs from San Ramon to Houston," San Jose Mercury News), like Alberta's ("Alberta's Economy Sizzles. The Rest of Canada's Fizzles," Businessweek) in Canada or the recent rise of North Dakota is driven first and foremost by oil production, processing, and distribution.
Houston's success makes it the poster child for the sprawl development paradigm and is the result of its place as the center for all things oil industry--management ("Houston energy companies spending millions on corporate campuses," Houaton Business Journal), service firms, refineries, chemical manufacturing, and shipping of chemicals and oil.
In a droll way, it's an illustration that oil is even more important to enabling sprawl than automobiles, hence how Houston has superceded Detroit in terms of overall economic success.
Simpler processes for development approvals there are merely a sweetener, but not a substantive factor in the economic success of the region.
Wikipedia photo of the Houston Ship Channel, which is bordered by manufacturing plants and tank farms.
Labels: economic development, economic development planning, urban revitalization, zoning
posted by Richard Layman @ 7:01 AM&Permanent Link
12 Comments:
Well, maybe if you'd agree that zoning changes and the height act are not limiting DC real estate. In both cases, it is larger macro forces (in DC, sequester + drawdown from Iraq/Afghanistan).
Or as Glaeser blindly points about today in the NYT that supply is killing coastal cities, while DC in in fact having an oversupply of building.
Zoning matters on the margin and on the form of the city. Those are things we like here, btw.
all of the NE- asterner snobs from NYC & Boston who complain like stuck hogs about DC ought to try living in Houston. Then they would realize how much of a real part of the NE that DC really is- and how miserable a swamp Houston is- it is a disgusting and very unhealthy climate enabled only because of air conditioning and the prior use of DDT to clear out the mosquito infestations all around that region. As soon as new invasive mosquito species gain a foothold on Houston and other nasty areas like this- they will become untenable and probably too expensive to or dangerous to live in.
http://news.discovery.com/autos/future-of-transportation/bullet-trains-to-zip-between-dallas-and-houston-140804.htm
Just to be clear, I liked Houston when I spent time there from 1991-1994, even though it was significantly sprawled.
And despite the heat, it is surprisingly green, which shocked me the first time I flew in to the airport.
2. Yes, charlie, you're right about zoning and development review processes being important on the margins especially.
wrt DC, it's tricky because while I think we can and should accommodate more intensity, I think that can happen without losing the "charm". Obviously, many others disagree.
DC has an oversupply of building, charlie? If you want to drop this nugget as a 'fact,' then you'll have to provide a bit more evidence than just this assertion.
Perhaps you're referring to office vacancy rates, but that alone isn't very compelling evidence.
Alex, you're quite right, I should have posted a link to the article:
http://www.nytimes.com/2014/08/04/business/affordable-housing-drives-middle-class-to-cities-inland.html?_r=0
and the quote in question:
"During the bubble, people coming from the most expensive places viewed even moderately expensive housing in places like Phoenix as a bargain, especially if they expected the value of such housing to rise, says Edward Glaeser, a Harvard economist who studies cities.
But, Mr. Glaeser says, there is also a historical trend driven by severe restrictions on building new housing in highly regulated cities like San Francisco, Washington and New York. Whereas high housing prices were once a sign of growth because they indicated strong demand, now they are more a function of limited supply. Midlevel prices (as opposed to rock-bottom values in places like Detroit) have become a better predictor of growth."
And I know enough about reporters to understand that Glaaser just got a throwaway quote.
So, no, I'm not talking about the DC office buildng maket, which has both high rents and high vacancy (and even more office space being withdrawn from the market). I'm talking residental.
And it is abundantly clear that for the last 10 year there hasn't been much of a zoning or regulatory restriction on new housing in DC. You could argue that there needs to be more, but I'd say the pricing is pretty much in line with the target market. What you do have is a huge mismatch in the past ten years for what the market wants now -- single family houses.
We can argue whether it is posible to build more townhouses or SFH in DC proper, or whether the constant conversion of rowhouses into 1BR condos and that 1/4 of the city is fallow (EOTR) is the problem. But yes, buying a house in DC is now a very expensive proposition. Buying a condo -- well, no if you are a single white person making the average income.
What most people forget is the supply/demand this isn't an end state -- it is a signaling mechanism. And really when you look at the newly renovated townhouses in the city, they aren't moving very well. I'd say the reason why parents with young childern are moving away from DC isn't based entirely on housing prices.
yep, I may be writing something on that NYT article.
wrt charlie's comment about rowhouses, there are two different things going on probably, as it relates to "families."
First the prices are high, and so some people probably aren't buying, but may be buying elsewhere in the city for a number of reasons including
2. detached housing
3. yards
4. bigger houses
5. "better" schools (at least in W3 and "west" of the park especially, but also along Rock Creek Park but east +
6. charter school access
7. and how rowhouses tend to be but not exlusively in the core (places like Petworth and Friendship Heights are an exception, I count W1--Mt. Pleasant and Columbia Heights as being in the core).
Most of the housing turnover in my neighborhood involves older people selling off, and young couples, with or without children, but planning to have children coming in.
WRT the point about "newly renovated houses" and flipping, I do wonder about what's going on.
We do go to open houses in our neighborhood to get a sense of pricing and what's going on.
We went to one last week that shocked the crap out of me. The house is smaller than ours, the lot is half the size and exposed on the back. It does have A/C and fully renovated basement and attic, which ours doesn't and was newly renovated.
But the price they are asking, $645K seems to be really really high.
then again, Suzanne and I are on the Menkiti e-letter list and there was a house in Brookland fully renovated and de-historicized with an asking price of $845K.
This kind of repricing seems unsupportable, then again, I should just re-read stuff I've written about this to convince myself it might be supportable. But I think we're on the edge.
As far as producing SFH housing, for the most part we just don't have the available land for it, except in odd situations like EYA's Chancellor Row in Brookland, McMillan, or the Comstock dev. on New Hampshire Ave. almost on the DC-MD line (can't remember the name of the development).
Off topic, but this is on interest:
http://www.theguardian.com/cities/2014/aug/05/dallas-addiction-cars-texas-city-walk
I forgot the exact name you used, basically the concept is buy one neighborhood over. You get in bubble terrority when you buy 2 or 3 neighborhoods over -- and that is how I view most of w4 and w5. And given the interest rates, who can blame them.
Again, in the DC area we don't have an affordability crisis in the way SF, Vancouver or NYC do. Or a bubble like San Diego. We do have bubbly-like tendencies, but the problem here is ultra-low income being squeezed out.
Amazing that Oklahoma City is now larger than Cleveland or the District, but then again they don't have that problem of ultra-low income, and so they can capture a larger part of the metro area.
... umm, I am behind on writing a piece on a parking garage in Oklahoma City, and they benefit from their position within the oil economy too.
2. The term isn't mine, it's Live Baltimore's and it's "one over neighborhood."
The thing is wrt your point about w4 and w5 is that it's all relative, so that I don't agree with you that the neighborhoods are three over. They are in terms of downtown, but they are chosen, often on different criteria (the stuff I listed) from what attracts people to the core. It's a corollary of the aging out phenomenon in places like the Warehouse District in Cleveland.
Basically there are sub-districts of the city and they move on slightly different sets of criteria based on how these characteristics satisfy different slices of the market.
I used to think that was a great element of the city, the various "urban villages" around the city can satisfy different market segments while still being able to be in the city.
now the inner vs. outer city is more of an issue for me, and how the outer city wishes to impose its ways on the core...
Well, I am not trying to bash people who make the decision to live there. Or their choices.
And yes, OK city is benefitting from oil+gas boom. Maybe more gas than oil. But they are investing in their city.
The point is related to your views on price and that parts of w4 and w5 are getting bubbly. More than one over bubbly.
And you've got a lot of people invested in the idea that they are not going to live in a suburb, even a suburb as urban as Arlington or Alexandria.
Unless DC gets serious about transit investing, the outer city is going to continue on the same path you have identified. We can argue whether the H st streetcar is serious (I don't think it is) but more important are the plans going forward.
re: OK City, it's unfortunate that when I was doing the Balt. County bike and ped plan that I didn't know about their "Metropolitan Area Projects" (MAPS) program, a massive public investment program, bond funded (but not much on transit) until later stages.
- http://www.okc.gov/maps/
- http://www.okc.gov/maps3/projects.html
The funding element of my Signature Streets model for creating, branding, marketing and funding a high quality foundational integrated transportation infrastructure system for a county or city was modeled after Seattle's Bridging the Gap program. MAPS is another great model.
Speaking of investment in OKC, and yes, u r right it's gas, not oil, driving things there, what Chesapeake Energy has done on their corporate campus (that's what I am writing about) is pretty amazing. Even though Aubrey McClendon is out now from the company, he has a new company and he is doing similar investments in on site fitness and child care centers for employees.
2. wrt the outer city and transit investment, yes I am there with you.
I was a big proponent of streetcars for a long time. I am still in favor, but it's important to recognize what streetcars are good at, intra district transportation (and district is multi-neighborhood, not full intracity), and the city's need, especially in the outer city is for more heavy rail (faster) transportation, which also supports density and better helps to interdict car trips.
I hate to admit I haven't read the master transportation plan draft yet, but I do think on the heavy rail end it deferred to WMATA, and didn't go "our own way."
"$100 oil unleashed a commercial real estate boom in Houston a decade ago. What's different now?"
https://www.houstonchronicle.com/business/real-estate/article/100-oil-unleashed-a-commercial-real-estate-boom-16998099.php
3/14/2022
The last time oil prices hit $100 a barrel nearly a decade ago, Houston’s commercial real estate market flourished.
Real estate investors poured money into Houston. Developers raced to build new office space. Oil and gas companies, flush with cash from the fracking boom, planned lavish new campuses and snapped up long-term office leases, often taking on more space than needed as they looked confidently to future growth.
This time around, $100-a-barrel oil is not stoking the same fervent optimism.
Even with oil prices expected to climb higher, energy companies — burned by two wrenching oil busts in five years — aren’t clamoring for more real estate. Under pressure from Wall Street to control costs, they’ve figured out how to do more with less - including fewer employees and fewer desks — while incorporating remote and flexible working arrangements that became popular with employees during the pandemic.
Throughout the pandemic many oil and gas companies delayed leasing decisions, opted out of big expansions or consolidated real estate holdings. It’s too soon to say if high oil prices will change that behavior, experts say, but no one is expecting a repeat of the shale-induced real estate boom of a decade ago.
All this could signal long-term changes in employment patterns and the role of oil and gas as the engine of Houston’s economy. Energy companies occupy about 20 percent of all office space in the Houston market, and absent a robust rebound in hiring and office leasing, the commercial real estate sector faces a long, difficult recovery from some of the highest vacancy rates in the country. Areas where oil and related companies have traditionally clustered, such as The Woodlands, the Energy Corridor and downtown, could be saddled with partially empty office buildings for years to come.
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