Data centers as public utilities

As one company looks for approval to build a data center in an Illinois town, they made this argument:

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“When you use your phone to order an Uber or make a doctor’s appointment, it’s likely going through one of our data centers,” Baumann told a Minooka Village Board meeting in January.

“We consider ourselves a utility, like water or sewer or electricity. It has that kind of importance to everyday life,” he said.

But Equinix is not a regulated utility like ComEd or Peoples Gas. Equinix is a publicly traded company whose top shareholders are Wall Street titans such as BlackRock, State Street and Vanguard. 

It’s a supplier that’s kept on a tight leash by the big dogs of artificial intelligence, namely, its partners, including Microsoft and Google.

Contrasting opinions here from the corporation’s real estate director and the Chicago Tribune. On one hand, it is hard to imagine life today without the Internet, social media, and smartphones. All that data transmitted through the air requires infrastructure including cables, towers, and data centers.

On the other hand, all of this is not considered a utility in the same way by the federal and state government. Gas, electricity, and water have all sorts of regulations so that everyone can access them. They are considered essential to housing. The right to the Internet does not exist yet. And the nod above to the private market may or may make sense; other utility companies are publicly traded and seek profits.

Is this a convincing argument in the long run? Would local officials and residents be more inclined to approve a data center if they think of like a utility or more like a company?

Who the nice new apartments in Chicago’s northwest suburbs are for

Multiple suburbs northwest of Chicago have constructed apartments in their downtowns and/or along transportation options. Who lives in these new residences? A VP for a real estate development firm answers:

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Suburbs such as Niles, Des Plaines, Buffalo Grove, Palatine, Wheeling, Elk Grove Village and Rolling Meadows no longer are flying under the radar. And based on strong supply-demand fundamentals as well as greater municipality support, the future looks even brighter for new rental options in the Northwest suburbs…

While those starting their careers continue to make up the bulk of renters, Gen Xers and baby boomers also are drawn to the maintenance-free and resort-like lifestyle renting offers them at a time when they are looking to downsize and enjoy retirement.

And with high interest rates and low for-sale housing inventory, even 30- and 40-year-olds who are in the thick of raising children and typically gravitate to single-family homes have turned toward renting in recent years — both out of necessity and choice.

The city of Chicago’s uncertain political environment and higher taxes also have increased the suburbs’ draw for some people, with rental communities near Metra stops or major expressways providing an appealing alternative for professionals who prefer the slower pace of the suburbs while still enjoying an easy commute.

And while there are suburbs hesitant to embrace rental housing, a growing number of municipalities understand the many economic benefits of new, high-quality rental options — such as increased foot traffic in their downtowns and activating underutilized sites.

If there is demand for housing, developers will want to build but suburbs often want housing that fits their particular goals and character. How will apartments fit into communities often full of single-family homes? What might apartments do to daily life in downtowns and around transportation corridors? Who will live in these apartments?

In my research on suburban development, I have seen discussion and debate involving all three of these questions. Focusing on the last one, the description above highlights the ideal apartment dwellers in suburbs. The first group is young professionals. These residents might be coming off finishing their education and are looking to establish themselves. They may have smaller households. They may not have the financial resources yet to purchase a home or they like the idea of living in a more vibrant location. Then there are those looking to downsize. They want an easier life. They may have owned homes in the past but do not need all that space or the trouble of maintaining a home and property. And “even” those who families may want to rent.

And these are not necessarily cheap or affordable rentals. These are places that are “high-quality” and “resort-like.” Their location near walkable amenities and transportation likely drives up demand and cost.

If the goals were to provide more units at prices accessible to more residents and prospective resident, the apartments might meet with more concern from local residents and leaders who could view them as threats to a particular quality of life and to their property values.

Building a community around a new semiconductor plant

A semiconductor plant under construction in Phoenix, Arizona may eventually be surrounded by a new community:

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“Halo Vista,” as it is now known, will surround a manufacturing complex developed by Taiwan Semiconductor Manufacturing Company (TSMC)—which is already under construction and is being developed by New York-based Mack Real Estate Group in collaboration with McCourt Partners…

“It’s not just a science park, and not just a manufacturing district: It’s a community. It’s a city within a city.”

The project will include 2,300 acres with more than 28 million square feet of mixed-use development capacity, with will include up to 8,960 residential units as well as industrial, retail, and office spaces.

“Our vision is for chip designers and engineering students, not just suppliers and manufacturers, to co-locate here, to create a value added ecosystem beyond just what it takes to build chips, and that’s how we’re going to create more value in the Phoenix economy,” Mack said.

Build the facility for the hot industry and let the development grow around it.

While it sounds like the community would be independent from the company and manufacturing facility, is this a new version of a company town? There is a long history in the United States of communities developing around industry, whether it is the Pullman district in Chicago or development around auto plants in and near Detroit to Silicon Valley growth. This can all “work” if the industry is humming along.

At the same time, it may not be so great for those not involved with good jobs in that industry. It may not necessarily be good for the community as a whole. And if the industry itself stops growing or declines, there can be trouble for these communities.

Examining gentrification in the suburbs

While gentrification is often associated with neighborhoods in cities, scholar Willow Lung-Amam describes what gentrification can look like in Maryland suburbs:

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Just as there was nothing natural about the processes that prompted suburban decline, there was nothing natural about the vast funds poured into these communities to make redevelopment happen. County and state governments led the way through planning, policies, and public investments meant to entice private investment. As Silver Spring and Wheaton vividly revealed, their efforts were layered and robust: enterprise zones, urban and art districts, eminent domain, tax breaks, parcel assemblage, parking regulations, new transit investments and infrastructure. Public agencies created new market pressures that directed and enabled profitable private development. They served as the promotional arm of private corporations, advertising new suburban downtowns as safe for middle-class consumers and residents. They were critical actors in creating displacement pressures and were, as many activists argued, responsible for their redress.

But for the millions of dollars in tax breaks, incentives and assistance that developers were given, what was asked in return for those who lost their homes, businesses and sense of community? What was gained for those who had lived with broken sidewalks and run-down playgrounds for decades? Were they the beneficiaries of this progress – or was the development, as many suspected, for someone else?

As visions for new suburban downtowns emerged, long-standing communities could scarcely see themselves in the sketches of shiny new plazas and pedestrian streets. As in downtown Silver Spring, these images projected futures that allowed for the comfortable return of the white middle classes, catering to their tastes and preferences for what an authentic and safe urban experience looked and felt like. They did not honor marginalized groups’ deep histories, struggles or valued places. If suburban boosters dared to look back at all, their visions sugarcoated the past in ways that did not trouble their present plans.

Even diversity became a selling point. In Wheaton, multicultural festivals crowded the downtown plaza and colorful art displays featured faces from across the world. Yet many wondered whether its fragile diversity was simply a transition to a future in which they no longer existed.

This is gentrification — and it is suburban. While the language of retrofitting or renaissance may be much more genteel, their processes are no less brutal nor disruptive. They affect the lives and livelihoods of countless neighborhoods and threaten the sense of place that people of color and new immigrants have fought to establish and protect, sometimes with, but largely in the absence of, white neighbors and public support.

This sounds similar to what studies of urban gentrification find: the promises of new development and growth can have negative consequences for residents already there.

I wonder if resisting gentrification in the suburbs might be harder for two reasons:

  1. Growth is good in the United States. This is true across numerous American communities but might even be more baked into the idea of suburbia. Suburbs are meant to grow. To resist growth is to resist a higher status. (An exception might be that communities that are already well-off and exclusive can resist growth.)
  2. It can be hard at times to find local suburban narratives that highlight the difficulties some face in the suburbs or the ways that exclusion shaped suburban communities. The argument above appears to highlight that gentrification limits opportunities; this goes against local and broader narratives that suburbs are about opportunity and securing a portion of the American Dream.

I look forward to reading this book and considering further gentrification in suburbia.

Many years can pass – at least 17 for one suburban development – between proposing and completing a project

Some development projects take a long time from beginning to end. Here is a recent example from the Chicago suburbs:

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The Glen, a large residential development that was to be built in Elgin 17 years ago, has come back to life with the help of a new builder.

Moda Homes is partnering with Lennar Homes to build the first phase of a project that calls for 83 single-family homes, 54 age-restricted homes, a 150-unit senior assisted living facility and a neighborhood park on 73 acres off Nolan Road, according to plans presented to the Elgin Planning and Zoning Commission.

The unincorporated property was zoned in the early 2000s for a subdivision. Moda Homes is requesting the site be annexed into the city and a preliminary plat for the project be approved, both of which are now headed to the Elgin City Council for approval…

Elgin council members must approve the annexation agreement and the preliminary plans before construction can begin. A meeting date at which the project will reviewed has not been set.

If this is approved, this development may take about 20 years to complete.

This may seem like a long time. But lots of factors can slow down the process. This story does not say but I wonder if the 2007 proposal was shelved by the housing bubble of that era. Developers can face money issues or there can be a decrease in demand. With the current proposal, local officials might have concerns about annexation and the plans. Questions about or changes to the plan might slow or stop the process. And numerous other issues could pop up.

Perhaps a different question to ask is how long a development proposal “normally” takes. Then could such a prediction factor in local conditions (municipalities can vary), economic conditions, and particular developers or builders? If twenty years seems long, is 4-5 years “normal” from start to finish?

Of course, some developments are proposed – some seriously, some not so much – and never get built. In the Chicago area, think of the Burnham Plan or Frank Lloyd Wright’s idea for a one mile high skyscraper. For any development to be completed, lots of things have to go right.

Government-developed skyscrapers, World Trade Center edition

Skyscrapers do not emerge only from private sector. The former World Trade Center in lower Manhattan is one example (with quotes below from pages 198-199 of Cities in the Sky by economist James Barr):

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Despite the destruction on September 11, 2001, the legacy of the Twin Towers remains strong. it was the first time that an American government agency – or likely any government agency the world over – directly developed and managed supertall skyscrapers meant to compete with the private sector. Historically, governments built tall buildings for their own needs. City halls competed with houses of worship to be the tallest in each city. But here was a regional governmental entity producing building space to earn a profit.

More importantly, it showed, over time, that placemaking via record-breaking skyscrapers was a viable option for cities, as the Twin Towers became instant icons of the Manhattan skyline. Just as important was their economic success, which created a new model: Build a record breaker with state support. If need be, fill it up with government agencies (or state-owned businesses outside the United States), give it time for neighborhood growth to kick in, and reap the returns.

This model later spread:

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That it took till 1998 for this strategy to surface in Asia – starting with the Petronas Towers in Kuala Lumpur – was due to the time Asia needed to catch up with its economic development and infrastructure. That it wasn’t replicated in the United States after that was because by the end of the 1970s America’s era of big government-funded urban renewal projects was over, while in Asia government-funded projects were just beginning.

Might this happen again in the future in the United States? Leaders seem quite open to public-private partnerships when it is deemed necessary to boost development and growth.

Combining a new Costco and affordable housing in LA

Costco plus affordable housing is set to arrive in Los Angeles in a few years:

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An approved upcoming Costco location in South Los Angeles (the Baldwin Village/Crenshaw area specifically) is slated to open in the coming years, and it combines the company’s more-is-more brand with a novel new approach to residential construction. The project, to be built by developer Thrive Living and architects AO, was first announced early last year in a press release that revealed renderings of a mixed-use model with multiple floors, open courtyard spaces and other amenities. All told, the build would encompass not only the Costco store (and necessary parking) but a whopping 800 residential units, including 184 set aside specifically for low-income tenants…

According to real estate analysts CoStar, this entirely new mixed-use model isn’t just something novel for Los Angeles, it “may have national retail implications for Costco.” That could mean smaller footprints, more transit-oriented openings, or Costco itself getting even further into the housing market…

So yes, 800 small apartments can fit on top of a Costco in the middle of Los Angeles, with 23% of those units reserved for low-income residents and all units eligible for Section 8 vouchers. And if done right and embraced by locals, developers, big box retailers and public officials, the project could be a novel model for future build-outs statewide.

It sounds like Costco and the housing units will coexist. Are there ways that they might be more intertwined? I could imagine some deeper partnerships:

  1. Special deals for those living in the development.
  2. Jobs for those living in the development.
  3. Costco block parties for neighbors.

While this development will help provide affordable housing units, it is also interesting how it weaves a big box store into a denser environment. Developers and planners have tried a variety of ways to incorporate big box stores into cities. Is putting the big box store in with housing a new formula for success for both?

Build a Samsung semiconductor plant in a small town 29 miles from Austin and what could change?

One town on the edges of the Austin, Texas metropolitan region could be in for change:

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The tech giant is opening ‘the largest semiconductor manufacturing complex in America’ in Taylor, near Austin, bringing thousands of jobs and billions in investment to the area. 

Taylor is currently a small, quiet city with just 16,000 residents, but that is set to change.

Mayor Brandt Rydell told KVUE: ‘From 2020 to 2030, Taylor will be one of the most rapidly growing cities in Texas, if not the nation.’ 

The average house price is just $298,000, but with the plant expected to open later this year, house prices could rise as more luxury properties are built. 

The main focus in this article is the expected rise in housing values with some discussion of jobs and economic development. What else might change?

  1. Higher status. Not all suburbs have a major Samsung plant.
  2. More traffic. This includes employees traveling to and from the plant as well as supplies and products moving in and out.
  3. New civic service and local revenue issues to confront. How will the community spend new tax monies that come in? What services will the plant and its operations require?
  4. A larger population. Do some long-time residents dislike the changes? Does new development alter the character of the community?
  5. Will the arrival of Samsung lead to other businesses moving to town? Or support businesses (where will all those plant employees spend their money)?

In other words, come back to Taylor in ten years and it might look and feel different.

What exactly is “strong opposition” to a proposed nearby development?

This is a familiar situation in American communities: a landowner proposes a change to their land. The potential change goes to the local government for approval. Neighbors and community members have an opportunity to weigh in. Some people voice opposition. How might we know whether the community opposition is “strong” or not? It could be measured in multiple ways:

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-The number of people clearly opposed to the change. This could be the difference between two opponents speaking at public meetings versus 60. Or there may be an online petition with hundreds or thousands of signatures against the proposal.

-The loudness of the opposition. Are those opposed speaking out regularly? Are their concerns expressed clearly and often online and in the media? Is the opposition clearly identifiable and known within the community? What kind of rhetoric is being used by all sides?

-The connections and resources of the opposition. Do they have the ear of leaders and politicians? Who can support the opposition? Will an unfavorable decision lead to a lawsuit?

-Is “strong” opposition that which leads to the proposal being voted or turned down?

All of this is context dependent as well. Certain proposals will generate more attention based on their location and the proposed change.

I would guess most opponents of proposed developments are spirited and believe in their cause. Whether this adds up to “strong” opposition might be much harder to judge.

(This thinking was inspired by a headline regarding a local land use proposal that some residents opposed.)

More sprawl = more storm damage

With more sprawling development in the United States comes more damage from storms:

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But a more significant influence on the rising storm damage trend has little to do with the weather: Growth and development patterns mean there are many more homes and businesses in the way of tornadoes, hail and damaging winds than there were decades ago…

The trend is a product of growing populations in regions where severe storm impacts are also increasing, said Adam Smith, a NOAA economist and scientist who tracks the events.

Researchers call it the expanding bull’s eye effect — a larger target for storms and tornadoes makes it easier for them to inflict damage.

For example, in outlying parts of a city like Wichita, a tornado that might have affected 20 homes several decades ago could now damage 2,000 homes in the same footprint, said Walker Ashley, an atmospheric scientist at Northern Illinois University.

The United States has pursued sprawl for decades now. Metropolitan regions have expanded as Americans, for multiple reasons, have loved suburban growth plus the status and profits they can bring.

A hypothetical using a notorious Chicago area storm could illustrate this. In August 1990, an F5 tornado touched down in Plainfield, Illinois. The tornado killed 29, injured hundreds, and destroyed numerous buildings. At the time, Plainfield was a small community of 4,557 residents on the edge of the Chicago region. How much damage might a similar storm following a similar course cause today? The suburb had nearly 45,000 residents in the 2020 Census and development in the region has moved further out past Plainfield. Some local residents said the 1990 tornado helped show the community’s spirit and contributed to later growth.

Given the propensity toward sprawl in the United States, would any developer or local leader or potential suburban resident say no to more sprawl to avoid storm damage?