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Tuesday, April 21, 2020

Revisiting the entry: (The opportunity cost of) "Defining density down" | building for today's demand, not future demand

The piece "(The opportunity cost of) "Defining density down," is from February.

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Also see:

-- "Yes the neighborhood will change, but it will take 10-25 years," 2020
-- "Why gentrification is visible now," 2018
-- "The nature of high value, strong residential real estate markets," 2017

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It discusses once again the matter of "the opportunity cost" of not taking every opportunity to build more housing units where you have the opportunity to do so (aesthetically sensitively of course), and how this results in (1) a reduction in available housing units, (2) a continuing situation where demand is greater than supply, (3) forgone income, property, and sales taxes and (4) a smaller population less capable of supporting a wider array of community amenities and public goods.

The other day, a colleague asked me a question about whether or not adding density to cities was a good thing, and while writing my response, it occurred to me that answering the question has to do with the fact that what we build today also has to satisfy future demand, which is only going to grow, because the country continuously adds population.

Frequently I make that point that most of DC's single family residential building stock was constructed before 1930 when the US population was 40% of what it is today, and when--unlike industrial cities of the time such as Baltimore, Brooklyn, Chicago, Philadelphia, Pittsburgh, St. Louis, etc.--the city wasn't densely populated, so rowhouses and apartment buildings constructed in DC were small by comparison to those cities.

5 story tenements in Manhattan ("A NYC Tenement Legacy Persists, Despite Gentrification," American Conservative).
Lower East Side

DC rowhouses.  Note that 3 story rowhouses are somewhat rare.  Most are two stories ("Building Styles in the Capitol Hill Historic District," Capitol Hill Restoration Society).
Grouping of three story rowhouses on Capitol Hill, Washington, DC

Montreal plexes have 5-6 units in the space of about 1.5 DC rowhouses ("Triplexes help keep city vibrant," Toronto Globe and Mail).
Rue St. Denis

Boston triple decker 3 unit house ("The anatomy of a three-decker," Boston Magazine).
Boston, Massachusetts NSP - Cameron St. Dorchester

Even DC's traditional commercial districts tend to have buildings no more than 2 stories.  This is East Ohio Street in Pittsburgh.
East Ohio Street, Pittsburgh

H Street NE, DC
S&S Shoe Repairing is still open, 1126 H Street NE

In normal circumstances, older housing is cheaper than new housing.  But when supply is constrained and may be especially desirable aesthetically ("historic preservation"), instead older housing is as expensive as new housing.

I look at current projects in cities like DC or Salt Lake City or South Salt Lake ("South Salt Lake's housing boom driven by its transit lines," Salt Lake Tribune) and say to myself, "why don't they build that at least two stories higher?"
Small three story apartment building in the 9th and 9th district (on 900 South), Salt Lake City
This building is in one of Salt Lake's most popular neighborhoods.  Single family housing predominates but there are apartment buildings, but most are older and aren't much taller than two stories.  Elsewhere in the core, most multiunit buildings are being constructed of 3-5 stories.  I'd say 3 story buildings ought to be at least 5 stories, 5 story buildings should be taller still, etc.
Fort Totten Square
Fort Totten Square is a walk to the Fort Totten Metrorail Station.  It's a four story apartment building on top of retail.  Within the catchment area of the transit station, I'd say it should be at least two stories higher, with a hundred more units, as a way to build a more transit oriented district within an area that is otherwise dependent on the automobile.

And that's wrt current demand.

If we were to take into account the fact that the population of these cities is growing and will grow in the future, then the projects should be bigger still to better meet future demand at a more affordable cost.

For example, according to projections, DC is supposed to have over 842,000 residents in 2030 ("DC Still on Track for Nearly 1 Million Residents in 2045," DC Urban Turf) and one million by 2045.

If you underbuild today, the opportunity cost of underbuilding will only increase as the population increases.

Why is it that taller buildings were constructed more than 100 years ago, compared to today, when land, labor, and materials cost more now?

The Iowa Condominium Apartment Building, 13th Street NW, Logan Circle, Washington, DC., was constructed in 1901 and is 7 stories tall + the basement which has some units as well.

I guess too the issue is that as secondary markets experience the addition of multiunit housing, of course the height won't be the same as in Downtown and other high rise districts.

That being said, given 21st century conditions, the buildings newly constructed likely "should be" taller than similar legacy buildings, because of demand and supply conditions.

3 comments:

  1. charlie3:49 PM

    I'd say those DC projections need to be revised.

    One problem in DC we've touched on before that there are a lot fo incentives to just turn existing building into condos (logan circle) and for a variety of reasons (developer capacity, financing, lot sizes and acquisition) it doesn't make sense.

    We need to align to incentives to make it worthwhile for developers to do so if you want that level of density.

    In terms of DC, with lower projections, good time to reduce the pipeline and increase the size of existing projects to include more family size apartments.

    Was watching "money pit" and the opening shots make you realize how little commercial RE was built from 1930 to 1985. Likewise in DC a huge dearth from 1968 to about 1985.

    I suspect we're going to see that again.


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  2. hmm. You're definitely right about projections, even without what's going on right now.

    1. Absolutely about incentives. But it's very complicated in the market economy we have. In cities like Helsinki or Vienna, where the housing production planning system is run much more directly by planning systems it's different. We are so far away from that here.

    But yes, yes, yes, it's about incentives.

    Years ago Ben Ross made a really good point, that zoning is about the minimum required, not the maximum. To get something different when the market and other incentives don't work is impossible.

    http://urbanplacesandspaces.blogspot.com/2011/01/new-years-post-6-crazy-thing-about-us.html

    Plus the amazingly beautifully written book Downtown America, which is about the impact on commercial property and appraisal systems by the Depression, discusses this too, historically.

    https://www.press.uchicago.edu/ucp/books/book/chicago/D/bo3640481.html

    2. The first new building on H Street after the riots was a small infill credit union building in something like 1974.

    Most of the development after was HUD financed, starting in the 1980s.

    I think it was Kunstler who made a similar point to yours, that between the Depression and WW2, you had 15 years of no new construction and serious under investment in cities.

    No wonder people couldn't wait to leave the cities after the war ended.

    (It was probably like how parts of Pittsburgh, St. Louis, and Detroit are today.)

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