When bricks and mortar stores can’t make it even in Manhattan

Heart of one of the world’s leading global cities, Manhattan has its own struggles with keeping brick and mortar retailers in operation:

That’s right: On a nine-block stretch of what’s arguably the world’s most famous avenue, steps south of the bustling Time Warner Center and the planned new Nordstrom department store, lies a shopping wasteland.

Yes, there are bank branches, restaurants, fast-food outlets, theaters, Duane Reades, a vitamin shop and a few tourist-targeted “discount” stores. But mainly there are oodles of empty spaces covered with signs touting SUPERB CORNER RETAIL OPPORTUNITY.

The same crisis blights the rest of Manhattan. The people invested in storefront retailing — real-estate developers, landlords and retail companies themselves — tell us not to worry. It’s a “transitional” situation that will right itself over time. Authoritative-sounding surveys by real-estate and retail companies claim that Manhattan’s overall vacancy is only just 10 percent.

But they are all wrong. Bricks-and-mortar retail is shrinking so swiftly and on such a wide scale, it’s going to require big changes in how we plan our new buildings and our cities — although nobody wants to admit it.

This is an interesting argument to make: even with all of the tourists, wealth, and attention bestowed upon the borough, retail is disappearing from Manhattan. And if shopping disappears, with shopping being one of the favorite leisure activities of Americans, might this negatively affect the business and social life of a Manhattan used to ultra-busy sidewalks?

On the other hand, Manhattan may not be the best example. The median household income in Manhattan is not as high as one might expect, there is not much of a middle class, and the cost of living is high. Add in that Manhattan does have a lot of tourists, workers that arrive for the day and leave at night, and concentrations of residents in different parts of the island. The sheer density of people might suggest that retailers should be able to make it in Manhattan but it is a complicated place.

More broadly, what will tourist locations of the future look like if even more shopping is done online? For decades, the international tourist destination includes significant amounts of shopping. What would fill that space?

What could kill the McMansion, SUV, and suburban way of life: $10 a gallon gas

One of the ways that the American suburban way of life of single-family homes and driving could come to an end is really expensive oil. Here is one prediction of the fallout:

For decades, we’ve lived — and driven — in denial, somehow assuming we have the “right” to cheap gasoline, and therefore, low-cost transportation. Now it’s time to face reality and consider what will happen when — not if — gas hits $10 a gallon, not because of taxes, but because we will use up the planet’s petroleum…

Highways

Rush-hour on Interstate 95 is a breeze as half of all motorists can no longer afford to drive. But the highways are riddled with potholes as the price of asphalt — made from petroleum — quintuples, making it impossible to maintain the roads because gas tax revenues have dropped with decreased sales. With more people working from home or on flex-time, traffic congestion is a thing of the past.

Homes/offices

With home heating oil at $12 a gallon, people close off rooms in their “McMansions” and huddle in the few remaining spaces they can afford to heat, usually with wood stoves, which are also in short supply. Office buildings, by law, will be allowed to heat to no more than 60 degrees in colder months. Sweaters become a fashion rage…

Around town

Local traffic drops as people consolidate their few truly necessary shopping trips. Because farmers are so dependent on oil (for fertilizers, packaging and transport), food prices skyrocket. Food imported out of season becomes an occasional treat. Few can afford to eat out at now-chilly restaurants dealing with the same food shortages. Wagons and carts, bikes with racks, mopeds and scooters replace SUVs. Kids take the school bus daily instead of being chauffeured by mom. Suburban housing prices continue to fall as people flock to the walkable cities with good mass transit. Small town taxes rise, encouraging further migration. Schools can’t afford good teachers who must still commute from far away due to lack of local affordable housing.

If gasoline was indeed $10 or more a gallon, I imagine a lot would change. Perhaps even more so if there was a sudden spike to that price range instead of a gradual increase that would provide time for people and communities to adjust. Even with significantly higher gas prices, some would be very reluctant to give up the American lifestyle organized around driving.

One question to ask in this scenario is how quickly society could adjust. The American suburbs have been decades in the making. How quickly could they be dismantled? It is common now to hear social scientists, policymakers, and others discussing resilient cities and communities. Could the country adjust if the suburbs became unsustainable due to high gas prices? (According to this one prediction, we should all have bicycles on hand and hope we live close enough to mass transit lines.)

A second question: if the American government has spent many resources in support of the suburban way of life (such as socialized mortgages), would the various government actors try to sustain suburbia in the face of such a threat? Just because living in suburbia might be tougher does not necessarily mean Americans will stop wanting to live there.

Comparing the costs of tearing down versus renovating a home

Could it cost less money to buy and teardown a home than to renovate it? Here is one data point from a 2015 story about teardowns in the Chicago area:

The teardown candidates aren’t just tiny bungalows this time. Developers are targeting larger houses as well, particularly if they sit on coveted property. Antiquated plumbing, the absence of upscale amenities such as media rooms, and the high cost of gut rehabbing (roughly $300 a square foot, versus $200 for new construction) are pushing homes on North Shore lots near the lake into early retirement. Two properties that sold for around $4 million each in 2014—one in Wilmette and one in Winnetka—are on their way to the scrap yard, says Berkshire Hathaway HomeServices KoenigRubloff agent Joseph Nash. Both were on three-quarter-acre lots with private beaches, and the Winnetka house had seven bedrooms—big and nice, but apparently not nice enough.

At various points, I’ve thought about what might happen to much of the aging suburban housing stock in the United States. Many of those homes, small or large, will be slowly renovated over time. Depending on the neighborhood as well as the desirability of the individual homes, renovation could take place at faster or slower rates. Yet, will there be a point when many of the older suburban homes will be demolished? How long can they be maintained or renovated? If they need to be demolished, who has the money to replace them and if they are replaced, will the residents be able to stay?

From an economic perspective, presumably the money spent renovating the older homes will at some point surpass the cost of building new ones (that may also be of better quality and more up to code) and living in those. Yet, this ignores a lot of features of homes and their construction:

  1. They are part of neighborhoods and communities. People often enjoy having a certain character when they purchase in a particular place. This character is often related to the homes present as well as to a unified character on streets.
  2. Some will want to keep renovating them. (Clearly, however, others will not – hence, we have teardowns.)
  3. They may be able to last a lot longer than critics gave them credit for. (One of the common complaints about mass produced suburban homes is that they are of poor quality. While this may be true, it does not necessarily mean that they are uninhabitable or cannot be improved over the decades.)
  4. Replacing large swaths of suburban housing requires both foresight and funds. Who is willing to look that far into the future? Who has the resources to undertake large projects in this domain rather than working with the occasional house here and there?

For now, most of the news we hear about replacing suburban homes tends to be in wealthier communities where teardowns are desirable. This may change in the near future.

Finding the price and usage at which to not own a car

Two researchers crunched the numbers and have some thoughts about when you should not own a car:

The decision for owning a vehicle or using mobility services is unique to every individual. If you purchase a highly efficient vehicle for less than $25,000 and drive it more than 15,000 miles per year until it falls apart, then you should definitely own a car if your goal is to save money.

But, if you drive less than 10,000 miles per year, face long waits in traffic, or place a high value on your time that would otherwise be spent driving, our calculations show that mobility services might be the cheaper option. Geography can also play a role—it’s not a coincidence that there have historically been so many taxi cabs in New York City, where the high cost of parking and slow pace of traffic consume time and money.

As noted before on this blog, owning a car can be a substantial part of middle-class expenses. With their physical layout, the sprawling suburbs probably then do not make much sense for not having a car. Yet, those denser suburbs for the older millennials and companies hip to them may be the true spots where suburbanites can ditch their cars. A combination of walkability, some mass transit, and car sharing in these denser suburbs could be enough to push people toward limiting car ownership.

On the other hand, perhaps driverless cars will render this all moot within a short amount of time. Within ten or twenty years, few of us will even need to own a vehicle if we just buy into a car sharing option.

Rhode Island signs give cost, time under construction data

For over a year, Rhode Island has posted interesting signs in roadway construction areas:

Along with the name of the project, the signs note its estimated cost, the expected completion time, and a stoplight-style red, yellow and green dot system to show whether the project is “on-time and on-budget.”

“RIDOT believes the signs provide accountability and transparency by keeping the public aware of the status of the projects and helps keep the Department’s [project management] staff responsible for delivering them on time and on budget,” wrote DOT spokesman Charles St. Martin in an email…

Projects scheduled to finish on or before their expected completion date get green dots on their RhodeWorks signs. Projects that are behind schedule by six months or less get yellow dots on their signs and projects more than six months late get red dots.

There are no yellow dots on the budget side. Projects are either on budget and green or over budget and red.

Given how easy it is for infrastructure projects to go over time and over budget, this is an interesting approach. At the least, it provides the driver – the taxpayer – some idea of whether the project is meeting several key goals. However, as the article notes, it is less clear how this public information than translates into change in completing projects. Perhaps future signs should include additional information:

-The cost to everyone for the extra time and money involved (if the project is indeed over budget and past its intended completion date). Think of the business lost and the time wasted in traffic.

-Changes to the infrastructure process as a result of what was learned in this particular project.

-The punishment meted out to contractors and/or government officials for not meeting the goals.

I wonder if one incentive of making this data public is to overinflate cost and completion estimates so as to avoid public scrutiny through the signs.

Another danger of at-grade RR crossings: bike crashes

One at-grade railroad crossing in Knoxville, Tennessee illustrates the danger such crossings can present to bicyclists:

As many riders know from painful experience, crossing rails embedded in the street is a treacherous undertaking on a bike. There are at least 100,000 at-grade rail crossings in the U.S., not counting city trams and streetcars (which are also notorious for taking down cyclists). But it’s tough to gather data on how many crashes they cause because so few are communicated to the authorities. “The work I looked at, we saw people getting hauled off on ambulances and other things, but very, very few police crash reports,” says Cherry. “There’s a lot of rail infrastructure throughout Tennessee, and I can only imagine how many unreported crashes are occurring statewide or even nationwide.”

That’s part of what motivated Cherry and company to conduct what they call the nation’s first “empirical analysis of rail-grade crossings and single-bicycle crashes.” To them, the problem wasn’t with the cyclists. It was with the roadway design and the fact nobody knows, scientifically speaking, the best way to bike over railroad tracks….

Most experienced riders know the ideal way to do it: As the folks at Bicycling say, cross at a 90-degree angle. That’s the “gold standard” many infrastructure designers strive for. But in cases when the crossing has gaps running in different directions, it might be best to pedal through at 45 degrees. Of course, all this is more complicated when metal tracks are wet, a situation that can turn even a savvy cyclist into a hollering missile directed fast into the pavement…

After pondering a 90-degree crossing that would cost $200,000, partly due to the route being near a river and needing retaining walls, the city and the railroad company settled on a cheaper, roughly 60-degree “jughandle” detour on the side of the street where people were tumbling into traffic. “The total cost was $5,000 for all of that, which is unbelievable, really,” Cherry says. “This has been years in the making, with probably hundreds of crashes there, and it took $5,000 worth of in-house crew time and materials.” (The city later made the path on the other side, located on a greenway, angled to about 60 degrees.)

In addition to bicycles, at-grade crossings are notoriously dangerous for cars and pedestrians. All would do well to pay extra attention when crossing these, even if they are familiar or rarely involve trains. For example, there are several crossings I can think of within a ten mile radius that involve either extra bumpiness, steep approaches, or multiple train lines crossed at once.

While the solution above for bicyclists seems pretty simple, the long-term goal of reducing the number of such crossings is an expensive proposition. It is costly to build bridges and underpasses since in addition to the typical costs of building a bridge or underpass, a solution requires using more land (I recall a proposal to build an overpass in downtown Wheaton that would have obliterated a good portion of the downtown just to provide the necessary ramps) and it can be expensive to construct something while still allowing traffic through (even if roads are closed, trains have a much harder time finding alternative routes).

The methodology of quantifying the cost of sprawl

A new analysis says sprawl costs over $107 billion each year – and here is how they arrived at that figure:

To get to those rather staggering numbers, Hertz developed a unique methodology: He took the average commute length, in miles, for America’s 50 largest metros (as determined by the Brookings Institution), and looked at how much shorter those commutes would be if each metro were more compact. He did this by setting different commute benchmarks for clusters of comparably populated metros: six miles for areas with populations of 2.5 million or below, and 7.5 miles for those with more than 2.5 million people. These benchmarks were just below the commute length of the metro with the shortest average commute length in each category, but still 0.5 miles within the real average of the overall category.

He multiplied the difference between the benchmark and each metro’s average commute length by an estimated cost-per-mile for a mid-sized sedan, then doubled that number to represent a daily roundtrip “sprawl tax” per worker, and then multiplied that by the number of workers within a metro region to get the area’s daily “sprawl tax.” After multiplying that by the annual number of workdays, and adding up each metro, he had a rough estimate of how much sprawl costs American commuters every year.

Then Hertz calculated the time lost by all this excessive commuting, “applying average travel speed for each metropolitan area to its benchmark commute distance, as opposed to its actual commute distance,” he explains in a blog post…

Hertz’s methodology may not be perfect. It might have served his analysis to have grouped these metros into narrower buckets, or by average commute distance rather than population. While it’s true that large cities tend to have longer commutes, there are exceptions. New Orleans and Louisville are non-dense, fairly sprawling cities, but their highways are built up enough that commute distances are fairly short. To really accurately assess the “sprawl tax” in cities like those, you’d have to include the other costs of spread-out development mentioned previously—the health impacts, the pollution, the car crashes, and so on. Hertz only addresses commute lengths and time.

In other words, a number of important conceptual decisions had to be made in order to arrive at this final figure. What might be more important in this situation is to know how different the final figure would be if certain calculations along the way were changed. Is it a relatively small shift or does this new methodology lead to figures much different than other studies? If they are really different, that doesn’t necessarily mean they are wrong but it might suggest more scrutiny for the methodology.

Another thought: it is difficult to put the $107 trillion into context. It is hard to understand really big numbers. Also, how does it compare to other activities? How much do Americans lose by watching TV? Or by using their smartphones? Or by eating meals? The number sounds impressive and is likely geared toward reducing sprawl but the figure doesn’t interpret itself.