Urban high-rises under construction, Los Angeles edition

In cities across the United States, the development and construction of downtown high-rises is ongoing. This was one of my views of Los Angeles this weekend:

Who is funding such development? Who will purchase the spaces in these new buildings? How does it all fit within a metropolitan landscape marked by uneven development and residential segregation? Located near L.A. Live, Crypto.com Arena, and downtown Los Angeles, this is desirable property.

Tax breaks and suburban and Sunbelt growth

Wells Fargo is seeking a tax break to construct a regional office in suburban Irving, Texas:

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The Irving City Council will vote Thursday on millions of dollars in economic incentives to support the huge campus that’s expected to house 4,000 workers…

The agreement with Irving calls for Wells Fargo to “occupy at least 800,000 square feet of office space in the newly constructed buildings by December 2026. The proposed new office development would serve as a regional hub for Wells Fargo.”…

Irving proposes in its economic incentive agreement to give Wells Fargo up to $19 million in tax increment finance district funds to build a 4,000-space parking garage and “to reclaim a portion of the lake between the two adjacent parcels on the south side of Promenade Parkway.”

A separate economic incentive of up to $12 million would support construction of the Wells Fargo offices.

The project will increase the city’s tax “property value by a minimum of $200,000,000,” according to the City Council filings.

I can imagine the argument from Irving and similar communities about why the tax breaks are worth it:

  1. Such a move helps entice national and international brands to your community.
  2. Such a move brings jobs to the community.
  3. The tax breaks will be outweighed by the tax and physical improvements to the property in question.

All of this helps boost the status of the suburb and the economic prospects in the community.

On the other hand, tax breaks have downsides:

  1. Lots of communities offer tax breaks. The company may be less interested in this specific community and more interested in how much money they can get from a community.
  2. Less money will come into the community than if no tax breaks were offered.
  3. At some point, the tax breaks run out and then what happens to the company and the newly developed property?

As the title of this post asks, how much development in suburban areas like Irving involves tax breaks? Would Wells Fargo locate in Irving or in the region without tax breaks?

Multifamily units construction highest since 1973 – but not for the part of the market that needs it most

More multifamily units are under construction than in any year since 1973 but more units are for a particular segment of the market:

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Nearly 836,000 multifamily units are under construction, the most since 1973, according to Jay Parsons, chief economist at RealPage. But most new construction targets higher-income tenants and not the lower end, where supply shortages are most extreme, he said.

I have written about the dearth of starter homes and I would suspect a similar dynamic is at play here. Builders and developers can make more money on multifamily units with higher prices. If someone is going to go to all the effort for development and construction – and this can be quite a bit of effort in certain places – they would prefer to gain more financially in the end. The number of places that require the construction of affordable housing alongside market rate housing or seriously pursue cheaper housing are limited.

If these higher-income units come on line, it will add to a bifurcated housing market where those with enough resources have plenty of choices and those with fewer resources have limited and possibly unpleasant options.

Alphabet’s proposed Toronto “smart city” project vs. a new development more about nature and people

A new Toronto development is in the works where Alphabet once had plans for a “smart city” project:

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In every way, Quayside 2.0 promotes the notion that an urban neighborhood can be a hybrid of the natural and the manmade. The project boldly suggests that we now want our cities to be green, both metaphorically and literally—the renderings are so loaded with trees that they suggest foliage is a new form of architectural ornament. In the promotional video for the project, Adjaye, known for his design of the Smithsonian Museum of African American History, cites the “importance of human life, plant life, and the natural world.” The pendulum has swung back toward Howard’s garden city: Quayside 2022 is a conspicuous disavowal not only of the 2017 proposal but of the smart city concept itself.

To some extent, this retreat to nature reflects the changing times, as society has gone from a place of techno-optimism (think: Steve Jobs introducing the iPhone) to a place of skepticism, scarred by data collection scandals, misinformation, online harassment, and outright techno-fraud. Sure, the tech industry has made life more productive over the past two decades, but has it made it better? Sidewalk never had an answer to this…

Indeed, the philosophical shift signaled by the new plan, with its emphasis on wind and rain and birds and bees rather than data and more data, seems like a pragmatic response to the demands of the present moment and the near future. The question is whether this new urban Eden truly offers a scenario that will rein in global warming or whether it’s “green” the way a smart city is “smart.” How many pocket forests and neighborhood farms will it take to cool the planet?

Whatever its practical impact, renderings of the new version of Quayside suggest a more livable place. The development promises something incredibly obvious that the purveyors of the smart city missed: a potential for daily life to be pleasurable. As MaRS Discovery District CEO and tech entrepreneur Yung Wu puts it: “What is the vision that inspires people to want to live here, to work here, to raise their families and children and grandchildren here? What is it that inspires that?”

“It’s not a smart city,” he concludes. “It’s a city that’s smart.”

I wrote about the earlier project here and it is interesting to see this update. I would guess the “smart city” will still come but perhaps through different forms including more incremental changes, smaller and less high-profile projects that test the concepts first, and perhaps through examples in other countries where guidelines and regulations are different.

Additionally, does this mean Alphabet and similar companies will no longer pursue such projects or will they seek more favorable conditions? Or, what happens if tech companies provide a more convincing argument that tech and nature can go together in urban forms?

At this point, it is hard to imagine tech retreating much but how exactly it continues to develop and merge with urban and built spaces remains to be seen. It is one thing to push technology through individuals or private actors but it is another level to build it in into the infrastructure from the beginning.

A shopping mall with protected wetlands

I recently shopped at a mall with protected wetlands:

The first thought I had upon seeing this was of “nature band-aids” that can often be found in suburbia as described by James Howard Kunstler. Shopping malls are known for many things but nature is not one of them.

Or, perhaps these are real wetlands that make contributions to the local ecosystem? This outlet mall has a location similar to many other malls: in the suburbs along a major roadway. I could imagine a need for land for animals and water amid development in the recent decades.

It would be interesting to know how these areas came about. Was part of the development of the land contingent on setting land aside for wetlands? Was a discovery made later about local nature? Is there some precedent among shopping malls for this?

More warehouses coming to the Chicago region

Chicagoland will be adding a lot more warehouse space in the near term:

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Molto plans to break ground this month on a 1.1-million-square-foot distribution facility, the first phase of its 110-acre Minooka Ridge Business Park in Minooka, a village near I-80 and southwest of Joliet. The company is also developing Weber55 Logistics Park, a two-building complex on 60 acres at the northeast corner of Weber and Taylor roads in Romeoville, another Joliet suburb. That site will include distribution facilities of 627,840 square feet and 270,000 square feet…

Other developers are just as active. At the end of March, 44 buildings of more than 200,000 square feet, a record-breaking 23.7 million square feet in total, were underway across the Chicago metropolitan area, according to Colliers International.

And tenants are plentiful. In the second quarter alone, Amazon leased a 1-million-square-foot warehouse in Joliet, and another in Kenosha, while other companies, including NFI, SC Johnson and RJW Logistics, signed deals for more than 500,000 square feet.

The amount of big-box industrial space that is vacant in the Chicago area tanked during the first quarter of 2022 because so much space was leased or occupied. The industrial vacancy rate fell ”by more than a full percentage point to 2.61%, a record low by a wide margin,” Colliers reported.

As shopping malls and downtown brick and mortar sales struggle, warehouse space is booming. This helps service online shopping as well as big box stores.

Elsewhere in the article, the increase in warehouse space is tied to jobs and possibly cheaper prices for consumers. But, adding such space may not always work out so well in comparison to how else land could be used. And the locations cited in the article suggest Will County is a warehouse center as are other locations more on the edges of the Chicago region.

“Hysteria” marks responses from neighbors to proposed nearby developments?

One man who has “monitored and live-tweeted dozens and dozens—and dozens and dozens—of community meetings” regarding development in San Francisco describes the tenor of the public comments this way:

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The meetings tend to be formal. But people’s participation tends to be, well, a little unmeasured, Fruchtman told me. “Hysteria,” he said. “There’s often a sense of hysteria at these meetings that is not reflected in what you read in the press.” He recalled the time that a person described his fight to prevent the construction of a navigation center for homeless services as a kind of personal “Little Bighorn.” Or the time another person objected to the conversion of a parking lot on the grounds that it would increase traffic. Such rhetoric is “intellectual malpractice,” Fruchtman added. And the intemperate rants of the people who show up matter, as city officials hear such impassioned claims mostly from a privileged class trying to keep things as they are.

Having studied my share of public meetings, this description rings true. This does not mean every public comment rises to this level but residents and neighbors can regularly attempt to make their point strongly.

As this article notes, public commenters have little incentive not to state their case forcefully. They are living in the area. They think their property is at risk. Local officials serve at their behest (whether elected directly by residents or not). Who is going to call them out on their strong emotions or statements?

Now this would make for an interesting record: cataloging the ways that residents oppose development proposals. Based on what I have seen, I could imagine these themes would come up regularly: traffic, light, noise, too much density, a difference in character with the existing neighborhood would come up regularly, and a threat to property values. Additionally, how do residents present these concerns, with what tone, and with what public displays?

The legislative act that helped Disney build Disney World in Florida

Corporations, sports teams, and developers ask for or make use of tax breaks or monies or land opportunities provided by governments. Walt Disney benefited from a 1967 act by the Florida legislature:

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The Reedy Creek Development Act can be traced back to 1967.

It was a pivotal negotiating factor in convincing Disney to locate his company in Florida and allows the company to do just about whatever it wants on its land.

“The ability, the power to build a nuclear power plant, an airport manufacturer, distill and distribute alcoholic beverages and lots of other things,” said Dr. Richard Foglesong, author of “Married to the Mouse” in an interview with WFTV in 2021.

Many would love to have this kind of freedom to do what they want with a large property. In contrast to what was possible through this act, many property owners would have to apply to local governments for uses of the property beyond what is allowed through the local zoning.

If leaders in Florida follow through with revoking this act and Disney wants to go elsewhere, does this shape up to be a second Amazon HQ #2 situation? Or, does Disney have a lot fewer possible locations to go to given its need for a lot of land and good weather?

Argument regarding the three freedoms humans gave up for agriculture, cities, and “civilization”

I recently finished reading The Dawn of Everything: A New History of Humanity by anthropologists David Graeber and David Wengrow. I highly recommend the book for its argument about how evidence from recent decades disrupts the common idea that people moved from hunter-gatherers to agriculture and cities and “civilization.” The reason I put civilization in quotes has to do with the argument they make regarding the freedoms humans used to have:

If we do not have these freedoms today what went wrong? The argument and the evidence is worth considering.

The factors affecting housing in the Chicago region in 2022

Several experts suggest housing prices will continue to rise in the Chicago area in 2022 but not at the same rate as they did in 2021:

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Rather, changes in home price growth, the supply of homes for sale and upticks in rock-bottom interest rates are more likely to stabilize the market after an unpredictable 2021, they said. That likely won’t mean an end to competition or high prices — and it doesn’t bode well for first-time homebuyers — but the market could ease up compared with 2021…

In the nine-county Chicago metro area, the median home sale price from January to November was $300,000, up nearly 12% over the same months in 2020, according to the Illinois Association of Realtors…

Prices are likely to rise next year, but won’t continue the exponential growth of 2021, said Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago. Without an influx of new residents to the area or big increases in incomes, that growth will become unsustainable, he said…

Homebuyers are continuing to look for amenities like home offices and workout areas, Melbourne said. Kitchens are a priority. Condo-buyers are looking for bigger units, rather than one-bedrooms.

The pressure from COVID-19 moves will hopefully subside. Then, the more regular patterns in Chicago area real estate might take over again. There are at least several interrelated factors:

  1. Limited population increases in the Chicago region. This reduces demand.
  2. Uneven development within the region where some neighborhoods and suburbs will be popular and others not. Prices will go up in desirable places.
  3. Construction of new residences has been down. What kind of units will be built? If recent trends hold, it will be housing aimed more at wealthier residents. Additionally, these units will be constructed in some locations and not others.
  4. If there is a long-term shift in what homebuyers and renters want from units, does this significantly shift demand? Continued or more working from home has the potential to affect the individual and collective experience of places.
  5. The particulars of certain communities. Communities understand themselves as having certain characters and prioritize particular goals. Local regulations could incentivize or discourage certain kinds of development.

There are numerous factors affecting housing to pay attention to amid changing conditions.