Idle speculation: downtown Brunswick, Pierce School

Some people watch “House Hunters” for hours on end, and others peruse Curbed to imagine themselves inside huge mansions. Personally, I’m partial to idly imagining what could happen with those quirky old buildings that show up on the commercial listings.

brunswick

Rough outline of the two Brunswick properties. (Pictometry, via Bing Maps)

1. The property: Two business-zoned buildings on the main street of Brunswick, Maryland, a commuter-rail town that’s 15 miles to Frederick or 18 miles to Leesburg. The train trip to Washington Union Station is about 90 minutes, or it’s a a good bike trip — 55 miles up the C&O towpath from Georgetown, or via the W&OD and pretty country roads from Arlington. Brunswick has an almost-intact core of historic houses and shops, perched above the Potomac River, with great views of hills and woods and a railyard (yay). Because the downtown is on the National Register, renovations qualify for HTCs. It’s a railroad town that was incorporated only in 1890, so its detached frame houses have an unusually Midwestern feel. There’s free weekend parking at the MARC station, at lower left in the photo.

  • 3-story (plus walk-out basement) main street commercial building at 102 W. Potomac St., $699,000. 14,000 square feet in a 1908 Romanesque Revival building. Includes mid-block gravel parking lot, which is beside this building and behind church.
  • Former New Hope United Methodist Church, 7 S. Maryland Ave., $450,000. 15,000 square feet in a 1851 building facing a side street, including a 200-seat chapel (on left, gabled roof) and a 1,300 sq ft fellowship hall (I’m guessing that’s on the right, under the flat roof).

The problem: Brunswick is cheap, but it’s just a bit too far from the metro area to draw commuters (45 minute drive to either Dulles or Rock Spring), and on its own, it’s not exciting enough to be a day-trip destination. Old churches are expensive to reconfigure and maintain, and churches can be picky sellers. The commercial building is priced well above its assessed value of $571,800. The buildings’ configuration puts 3/4 of the space at ground or basement level, which is problematic given the limited market for retail.

Suggested buyer: An inn-restaurant catering to food/wine tourism, using the McMenamin’s model. Brunswick is accessible by commuter rail and highway, and sits between the renowned and thriving wine/beer/cider industries of Frederick County and Loudoun County — which have surprisingly few non-auto-oriented lodging options for weekend tourists. (Besides some B&Bs, Leesburg has one inn.) Downtown Brunswick is sleepy, but has signs of life: there’s already a brewery a block over, a coffeeshop in an adjacent old church, a B&B two doors down the side street, and a railroad museum. The building has event spaces, a catering kitchen, enough space for about 15 rooms upstairs, and on-site space for deliveries, tour buses, etc.

An alternate plan: the Potomac Street building might pencil out as loft apartments upstairs and a production-on-premises retailer (e.g., these neighbors) in the lower floors.

2. The property: Former Pierce School, 1375 Maryland Ave NE, Washington, D.C., $7,250,000. This decommissioned public school, just a block from the Atlas Theater and H Street, achieved some notoriety when it was last on the market in 2014 [WSJ, UrbanTurf]. A multifamily developer bought the old school and converted it to 10 units — seven normal-sized loft apartments, two flats in an adjacent house, and one absurdly tricked-out, 9,500-square-foot penthouse with ceilings up to 32′ high, five bedrooms, an office, a screening room, and a roof deck.

The problem: The (correct) thinking in 2014 was that the property fell through the gap between two kinds of buyers: landlords and upper-bracket homebuyers. As the seller told UrbanTurf, “the penthouse unit, being so large, does not appeal to a traditional multi-family buyer, and the many folks that wanted the penthouse did not want to be bothered by rental units.” (As the real estate saying goes, “fall in love with your pro forma [spreadsheet], not your project.” Oops.) The asking price has gone back up, after having fallen to $6.5M, and even at the lower price DC’s rent control limits the upside.

Suggested buyer: A boarding-house, perhaps run by a national cultural institute that wants to foster international artistic ties, or a particularly wealthy commune (er, co-living arrangement). As hinted above, the RF-1 zoning doesn’t permit subdividing the penthouse into smaller units by-right; it would have to be rezoned (a contentious process) and then major construction would ensue. But since the building was a school, there are unusual uses permitted under its zoning (PDF):

  • Art center, incubator, or school; local serving community service use (sec 252)
  • Boarding house, maximum 8 residents, minimum 3 month stay (sec 301)
  • Nonprofit or government uses (by special exception)

The penthouse could be reconfigured as an arts incubator with six resident artists (on 3+ month rotations), with its ample entertaining rooms reconfigured as shared studio/teaching/event spaces. If the penthouse truly requires $12,500 a month (the asking rate when it was put on the market in 2015) to pencil out, it’s a much easier sell as creative office space for $16/sq ft.

Or, with modest reconfiguration, the building could make a luxe university branch campus with offices and classrooms upstairs, and dorm rooms carved from the apartments.

How housing supply/demand imbalance remained for an entire generation

Chuck Marohn puzzled a bit over housing costs over at Strong Towns last week, writing that “You can’t sustain increasing demand while also sustaining increasing prices and increasing supply.”

Wiltberger St NW

Would you pay $700/sq. ft. for this 2-bedroom alley house? Somebody did, paying 170% above its 2006 tax value. Sure, valuation growth like that isn’t sustainable, but what about our cities is?

You can if (1) demand grows just a bit faster than supply, or if (2) incomes are growing, or if (3) slightly more income can go towards housing — and certainly so if all three occur. Indeed, all three of these dynamics have sustained housing price inflation in gateway cities over the past generation.

This inflation has been politically possible because many existing residents (and thus voters) are sheltered from the resulting affordability crisis. Only a minority of people are exposed to housing affordability; most current residents are sheltered from price increases, having purchased or rented their housing at yesterday’s market prices. It’s pretty much only in-migrants who have to pay today’s housing prices, and since they’re migrants, they don’t vote. In-migrants are also a surprisingly small share of Americans: in any given year, fewer than 3% of Americans move across state or national borders.

1. Between job growth, smaller households, and natural growth, housing demand is increasing faster than population (and construction) in many metro areas. This has been the case in California for decades; the LAO’s 2015 paper estimates that since 1980 (my entire lifetime!), California has built 100,000 fewer units every year than it should, and yet (a) demand to live in California continues, although definitely abated; (b) prices have skyrocketed; (c) construction has added some new supply.

2. Median incomes nationally have been flat for the past generation, but macroeconomic shifts have led incomes in the richest gateway cities to soar (also see this Economist briefing). This is especially true at the top of the distribution, due to rising overall inequality. The minority of households that are exposed to high prices may very well be able to afford those prices in these cities, explain Gyourko, Mayer, and Sinai in their paper on ‘superstar cities’: “Recent movers into superstar cities are more likely to have high incomes and less likely to be poor, than recent movers into other cities… In short, residence in superstar cities and towns has become a luxury good. The cities’ increases in housing price appear to outstrip known productivity increases and the value of any additional amenities.”

Since only a small proportion of housing units trade hands each year (only 1-2% of households move into brand-new housing in any given year), “superstar cities” with rising incomes at the top and relatively few houses available see “new money” outbidding others for those few units, pulling prices up. Because house prices are based on comps, prices for other houses also rise. As Matlack and Vigdor write, “In tight housing markets, the poor do worse when the rich get richer.”

I know this seems insane, but income inequality has gotten so far out of hand that in many cities super-luxury housing is under-supplied, with tremendous consequences all the way down the housing ladder. There are over a thousand Bay Area households with million-dollar bank accounts for every single house that came on the market last year in Atherton, the choicest of Bay Area towns. Hence, house prices in Atherton have doubled in four years.*

3. Metro economies have evolved in lots of small ways to cope with higher housing prices at the margin. At first glance, “the poor will always be with us,” but in reality metro areas differ very substantially in terms of their economic makeup. Having moved from low-cost Chicago to high-cost DC, I’ve noticed that this slowly-accumulating, giant gift to high-cost-regions’ landlords has been cobbled together by squeezing a few dollars here and there from other sectors:
– Higher labor costs: the minimum wage here is about 15% higher, and high-labor-input services (like haircuts) cost substantially more here, because the staff earn more.
– A shift towards higher-wage work and reduced labor inputs (see #2 above). There are, of course, lots of well-paid jobs in DC; nearly half of households here earn over $100K. Many dual-income “power couples” who have no problem with the local cost of living. But there are surprisingly few on-site support staff for them, and instead there’s often off-site help. Even in labor-intensive industries like restaurants, on-site prep work can be minimized by relying on commissaries and distributors based in cheaper cities. (You can forget about Jacobsean “import substitution.”) Anecdotally, I’ve heard that employers are willing to make do with thinner staffing here than elsewhere.
– People work more; DC’s female labor force participation rate is 15% higher than Chicago’s.
– Housing itself can’t be substituted (everyone needs somewhere to live), but houses can be. People downgrade their locations or living standards, living in smaller or lower-quality housing units in less desirable neighborhoods than they otherwise would. They also “pay” for housing with long commutes, often from what are technically other metro areas.
– People borrow more. DC has more mortgages and higher student-loan bills than any other metro.
– People spend more on housing, and less on other goods and services. Brookings’ Natalie Holmes notes that the 20th-percentile unit in DC costs 48% of a 20th-percentile income, vs. 38% for a 20th-percentile individual in Denver.

That these coping mechanisms exist by no means implies that high prices are benign. From a local economic development standpoint, high housing prices don’t just deter potential employers, but also vacuum up dollars that could be more useful elsewhere in the local economy. Rent checks, unlike haircuts or restaurant meals, don’t have big job multipliers. As a Global Cities Business Alliance report puts it:

Citizens are spending money on accommodation that they would readily divert to goods and services if their housing costs were lower… the money ‘trapped’ in the housing market runs to billions… Unleashing this spending would in turn boost business revenues and create more jobs. Assuming that businesses were to channel all additional revenue into employment, we estimate that Beijing could generate more than 400,000 new jobs, Mexico City more than 200,000, São Paulo more than 143,000, and Hong Kong nearly 148,000.

* Chuck’s follow-up post posits that property owners are speculating on upzoning. This line of reasoning is beloved by so-called “SF progressives,” who relish pinning the blame for everything upon evil, greedy developers and the obnoxious “kids these days” who inevitably fill their apartments. Yet this densification/speculation theory cannot explain the skyrocketing housing prices that are at the very epicenter of America’s metro affordable housing crisis — in places that have zero multifamily growth and zero transit investment, but LOTS of high-wage jobs, like Atherton, Menlo Park, and Palo Alto in Silicon Valley, or Chevy Chase in Maryland, or the Hamptons. Atherton is the most extreme example: the town banned all multifamily housing and sued to stop transit, and yet house prices have doubled in four years.

Perhaps, instead of transit-oriented speculation, exclusionary, single-family-only snob zoning has left supply and demand imbalanced. Believe it or not, the demand for $3M houses in Atherton vastly exceeds the supply of $3M houses, so the $3M houses have been bid up to become $6M houses. I know this seems insane, but there are over a thousand Bay Area households with million-dollar bank accounts for every single Atherton house that came on the market last year.

There are also many fashionable urban neighborhoods where housing prices have spiraled even while housing unit density is declining: the demand for mansions is so high that humble apartment buildings get demolished for glamorous single-family houses. (Once again, life imitates the Onion.) This was even the case in my onetime home of Bucktown in Chicago, where the ward boss infamously handed out spot rezonings upon “request”; in theory, these could have been used to add units, but in practice the McMansions just got fatter.

Some guesses as to implications of autonomous vehicles

Autonomous vehicles, driverless cars: ask two people what they think, and it seems like you’ll get three opinions. Here are my reactions to four recent publications on the topic — keeping in mind that previous reports of distance’s death were an exaggeration. (As CBRE’s Revathi Greenwood notes, vehicle speeds won’t change, and so Marchetti’s Wall still remains. Even if the drudgework of driving is taken away, travel time still has a cost, and we’d rather be at our destinations already — e.g., “are we there yet?”)

WSJ (columnist Christopher Mims):

  • AVs will be limited to small areas for the foreseeable future. “We’re likely to see vehicles that don’t require drivers but can only operate on a fixed, well-mapped route in cities with fair weather… the consensus of those I interviewed is that it will be many years before we get cars that can truly go anywhere.”
  • Existing trials (Singapore, Pittsburgh, Babcock Ranch), which are limited to relatively small, intensively researched areas that are frequently remapped. Level 2/3 autonomy will remain limited to expressways, which have a protected ROW.
  • Echoes some of Recode’s timeline (perhaps similar sources were interviewed).
  • Takeaway: Autonomous shuttles will appear within campuses, urban districts, and planned communities, initially as “walk extenders.” “Robot valets” will enable more remote parking and reduced parking footprints. Freeway driving may shift to autonomy, but uptake is limited by consumer acceptance (see next).

Kelley Blue Book consumer survey:

  • Americans are still broadly uncomfortable with the idea of Level 5 autonomy.
  • Level 4 autonomy is most popular with current US consumers, who still want to be able to take the wheel. Level 3 seems less comfortable than Level 2.
  • However, key early-adopter groups feel more comfortable with complete autonomy: luxury car buyers, consumers with experience with Level 2 AVs, and people used to the backseat: ride-hailing customers and teenagers.
  • Takeaway: The transition to AVs is dependent upon social acceptance, and currently many Americans want to maintain the status quo. The transition might take a while (more Americans will have to try AVs), but may be steep once it happens.

Rocky Mountain Institute forecast:

  • Mobility services in major US metros are a potential $120 billion annual market by 2025, including $60 billion just in large Sunbelt metros.
  • Because AV and EV technologies reduce operating costs and increase capital costs, they will find broad acceptance in high-utilization fleets first, where their low costs will subvert the individual-car-ownership paradigm. (2017’s EVs will be cheaper for fleets than gas cars.)
  • AVs will cut the cost of rides by 60% to be cost-competitive with car ownership by 2018, with another 60% decline in costs as economies of scale are realized. The switch from personal cars to AV fleets will occur between 2020-2025, with long-term demand for cars falling to ~6 million.
  • Lower mobility costs will result in a $1 trillion annual consumer surplus to be spent on other sectors. (Keep in mind that spending on autos has a low multiplier effect.)
  • Even if VMT doubles and more power plants are built, these two technologies will result in sharply lower CO2 emissions (nearly -1 GT CO2E by 2040 = ~13% cut in today’s emissions).
  • Takeaway: Parking demand may sharply decline, but what parking is left will need significant EV infrastructure. Loading/valet zones will quickly need to be implemented. Consumer spending on cars could be pivoted to other spending, like higher-quality real estate.

City Observatory (Joe Cortright) [part 1] [part 2]:

  • RMI’s cost estimates of <$0.50/mile are roughly in line with other published estimates, with lower costs associated with smaller/lighter vehicles. This is lower than the per-mile cost of not just driving, but even short transit trips.
  • However, $0.50/mile is much higher than the perceived $0.15-$0.20/mile marginal cost that most Americans assume for private-auto trips. (Most Americans only consider the cost of gas when driving; costs such as depreciation/wear, insurance, repairs, monthly parking, and wasted time are all considered sunk.)
  • “Pay by the slice” mobility, like car-sharing, tends to encourage shorter trips. Pricing will probably be more, not less complex, with various “surge” surcharges that use information to optimize the balance between travel demand and supply.
  • Rush-hour capacity will still be an issue, especially in high-density downtowns. Rail transit, walking, and cycling will still move more people in less space.
  • Takeaway: Mobility won’t be “too cheap to meter,” as optimists once said of nuclear electricity. As such, central locations will still matter, even if price differentials flatten somewhat. (TNCs are already “filling in the lines” between transit corridors and increasing the value of secondary urban locations.) Whether dense downtowns built around rail/walking remain useful is an open question.

What everyone agrees upon is that this is the first huge shift in metropolitan mobility since the 1940s-1980s shift towards mass car ownership. It’s important to remember that American suburbia is a political and social construct, not a fact of life, and that policies put into place immense structural supports for American suburbs.

Long-timers vs. newcomers: Census-reported rents are meaningless in some places

Earlier, I wrote about how the CNT/HUD Housing + Transportation Affordability index (HTA), while a very worthy addition to discussions around whether households can affordably live in suburban vs. urban areas, has a denominator problem at metropolitan boundaries, or even within metros which have severe income inequality. Yet LocationAffordability also has a numerator problem: For housing costs, it relies upon another Census data point which has One Weird Quirk.

Daniel Kay Hertz wrote an excellent “Definitive Field Guide to Median Rent Statistics” for City Observatory recently, noting that ACS-reported rents “Can’t answer: What is the median rental price facing people on the rental market today?”

 

DeKalb Market, Long Island University

The tract on the left (in downtown Brooklyn) is public housing, with a reported median monthly rent of $768; the tract on the right $2,467. But for someone just moving to town, the only vacancies are in that fancy new building. 

 

The rents that people report paying to the Census ACS are probably true, but in a few cities they have very little relationship to what vacant apartments are renting for. In particular, as Michael Lewyn flagged (and as we wrote up in Streetsblog a while ago) cities with rent control can look amazingly cheap:

[B]y looking at average rents, which in some cities include many rent-stabilized units, the calculation doesn’t necessarily capture what someone searching for shelter is likely to pay. If you’re trying to find an apartment in New York now, getting a place for the average rent would probably be extremely difficult.

Unlike the denominator problem, which shows up at a macro level, this discrepancy only really shows up at the micro level. I just noticed it in the recent “WalkUP equity ranking” from GW’s CREUA, which (based on HTA) found suspiciously low rents reported in some very upscale neighborhoods. I suspect the typical rents found are those paid by a small number of long-term residents in subsidized or rent-controlled units (set years ago), rather than those paid by the residents of the new luxury apartments.

HUD’s new Small Area Fair Market Rents are reported down to the ZIP code level (and have the big problem of not being available everywhere), which is a much larger level of analysis than Census tract, but they’re an attempt at figuring out a systematic answer to this problem.

McMillan isn’t next to Metro, which is less of a problem than you think

McMillan Reservoir

You can see the Capitol Dome from here. Photo by Eric Fidler, via Flickr

Yes, the McMillan Sand Filtration Site is one mile (from either end of the site) to the Red Line. It’s even 0.6 miles to the nearest express bus route (Georgia Avenue’s 79), and key network improvements are still in the planning stages. Yet from the point of view of someone who wants to reduce auto dependence (and the concomitant pollution, injury, and sprawl), what matters most is that MSFS is close to downtown, rather than close to Metro.

Transportation planning research has consistently shown that location relative to downtown and to other land uses is far more closely associated with the amount of driving than location relative to transit. Ewing and Cervero’s definitive 2010 meta-analysis (cited by 679 other scholarly articles) examined over 200 other studies, then combined the correlations found by 62 different studies:

Yes, it turns out that the number of miles that people drive is four-and-a-half times as closely correlated with the distance to downtown than with the distance to a transit stop. This strong relationship between driving and distance to downtown is borne out in local survey research by MWCOG/TPB. Note that whether an area has Metro access (like Largo or White Flint, vs. the Purple Line corridor) doesn’t actually seem to impact the number of drive-alone (SOV) trips.

Some suggest that development proposed for this site should instead go elsewhere. If the development is denied, those residents and employees and shoppers won’t just disappear, they’ll just go somewhere else. They won’t go to superior locations even closer to downtown and Metro (because those are so very plentiful!), but rather to far inferior locations. For instance, the life-sciences employers might choose an alternative location within our region that has already approved a similar mix of uses — such as Viva White Oak, Inova Fairfax, Great Seneca Science Corridor, and University Center in Ashburn, all of which are much further from both downtown and Metro.

This isn’t just the suburbs’ fault. Within the District, even more intensive development than what’s proposed at MSFS has already been given the go-ahead at locations such as the Armed Forces Retirement Home, Hecht Warehouse, and Buzzard Point. All of those sites are also inferior to MSFS from the standpoint of not just transit accessibility and distance to Metro Center, but also on all of the other factors shown to reduce VMT.

If the “Reasonable Development” types truly do care about reducing driving, I must have missed their years of caterwauling over the approval of all these other sites — not to mention the countless suburban developments that together pave over 100 acres of open space every single day in the Chesapeake Bay watershed. That’s why I give more credence to the people who do actually care about paving over the region, like the Piedmont Environmental Council — a/k/a the Coalition for Smarter Growth.

Brand-new timber loft offices, now for lease

N. Vancouver Ave. frontage of One North

Last week, I published a ULI Case Study about One North in Portland, an architecturally inventive response to my previous speculation that “new-build loft offices could be popular in similar downtown-adjacent submarkets, and transformative for Sunbelt cities where sparse ‘warehouse districts’ have little competing product.”

Indeed, the anchor tenant at One North is a mid-sized tech company that had outgrown its space in Portland’s Central Eastside. As in many other growing cities, there just wasn’t a cool old loft big enough, so instead they found a cool new loft.

T3 Minneapolis under construction

Southwest corner of T3 Minneapolis, showing CLT column stacked above concrete podium

I also had a chance last week to check in on T3, Hines’ new cross-laminated timber office building in Minneapolis. Less than a year after groundbreaking, the structure is complete and the facade is almost completely hung — almost a year faster than a comparably sized concrete building takes to build. The superstructure took less than 10 weeks to build.

The model is so successful that Hines is now replicating the T3 building at another location that’s even hungrier for lofts: Atlantic Station in Midtown Atlanta.

Here in DC, one great location could be the PDR-2 zoned land (90′ height permitted with setback, no residential) on the west side of the Met Branch Trail along Eckington and Edgewood, one of the hottest corridors in town. Another could be around Union Market/Gallaudet, where JBG’s Andrew VanHorn says “we see the tenant base there evolving. The pre-lease opportunities we’re talking to for our office building are all private market, very young companies, as far as their employee demographics.” Or maybe this is what his firm has in mind for the “creative loft office” at RTC West.

An aside: this is another strike against “Investment Ready Places.” It sounds counter-intuitive, but it’s easier to move buildings to people than to move people to buildings. The “good bones” that economically unviable places have can have “good enough” replicas in New Urbanist settings like Atlantic Station and Reston Town Center. Not to mention that building all of the new infrastructure to overcome IRPs’ deficient locations, and then rehabilitating their buildings to code, would be much more expensive than just building anew in prime locations. It’s cheaper and easier to build new lofts in Reston than to rehab lofts in West Baltimore, and to build the new rail connection that would make West Baltimore feasible for NoVA’s growing companies.

Cities are built around people, not the other way around.

2017 update: Construction has started on an 800,000 sq ft HT building on the Brooklyn waterfront.

One year’s progress at the Wharf

I’ve been taking a time series of photos of construction at the Wharf from two vantage points for several months now: from the Case Bridge (under the sign for D St.) and from Banneker Overlook (by the trash can).

By complete coincidence, I seem to have snapped photos on 22 July 2015 and 22 July 2016. In July 2015, excavation was wrapping up and the tower cranes were just arriving to start building back out of the hole. In July 2016, the hotel towers appear to be almost topped-off.

Cranes at the Wharf, 22 July

Banneker Overlook, July 2015. There are still pile drivers on the site to drill the foundation, but the first tower cranes had just arrived.

 

Cranes at the Wharf, 2016-07-22

Banneker Overlook, July 2016. 950 Maine Avenue is front and center; below the trusses in the middle of the block will be a 6,000-seat venue, wrapped with two apartment towers.

 

Cranes at the Wharf, 22 July

Case Bridge, July 2015. Water-side construction of the piers was still taking place, and the excavation roads were still in use.

 

Cranes at the Wharf, 2016-07-22

Case Bridge, July 2016

(This isn’t really a Friday photo post, but it’s Thursday and I’ll be on vacation tomorrow.)

Friday photo: A balcony to nowhere

Twinbrook Hilton, faux John Portman

Twinbrook Hilton, Rockville, Md.

Architect John Portman was fond of putting “balconies” around the edges of his hotels’ massive atria. Perhaps this was part of the concurrent “conversation pit” trend that afflicted malls of that era, maybe people really did just pause and gawk at the tremendous volumes while walking to/fro the elevators, or maybe he liked the “columns around the Forum” look that they lend to the interior. Yet… nobody quite knows what to do with them today.

Who, after all, has need to stop and gather in a hotel hallway, the very definition of a neither-public-nor-private space? Why not go to the lobby, if it’s a public conversation, or into a room?

At the faux-Portman Twinbrook Hilton in Rockville,* the management was sick of complaints from atrium-facing rooms (one-third of the total) about nighttime noise. One option was to replace the atrium-facing windows with airport-style noise-insulating glass, but ultimately it proved cheaper to just wall off the entire atrium with a curtain-wall system – including putting these silly aluminum doors to wall off the balconies. Maybe someday they’ll put furniture out there, which surely will just gather dust. Or maybe there really are people who use these spaces, like maybe gossipy 8th graders on school trips who don’t want to keep their roommates/chaperones awake. (Isn’t that what Snapchat is for?)

Of course, that particular solution is still better than the temporary option I once spotted at the true-Portman Bonaventure, apparently aimed at LA’s exhibitionist-fitness-enthusiast crowd:

Pod people

Westin Bonaventure, Los Angeles, Calif.

* I remember once staying here as a child and getting evacuated from the building by an overnight fire alarm, in my first (but definitely not last) high-rise fire alarm experience.

Friday photo: ENOUGH!

ENOUGH

A college friend stole this sign off a neighbor’s lawn and gave it to me in 1999 (good thing MoCo isn’t the DPRK). Of all the political lawn signs I’ve had, including a few from early Obama campaigns, it’s my obvious favorite.

Apparently, the sign was made to protest the 1998 Friendship Heights Sector Plan, which set the stage for the Wisconsin Place and Chevy Chase Collection “over-development”s.

All this “over-development” has done the local homeowners a whole lot of good: since 2000, their housing values have more than tripled.

It turns out that this very same group is involved in the recent Westbard protests (of course), wailing about how Westbard is part of a war against Western civilization. Given their history, I suggest taking their hyperventilated claims with a healthy dose of salt.

Friday photos: Jane Jacobs in Georgetown

 

Farewell Georgetown, C&O Canal

Grace Street, between Chaia and Dog Tag Bakery

There’s one passage in Death and Life where Jane Jacobs singles out the District for praise. Not surprisingly, it’s for the back streets of Georgetown, which (of course) house some of my favorite little eateries.

In city districts that become successful or magnetic, streets are virtually never made to disappear. Quite the contrary. Where it is possible, they multiply. Thus in the Rittenhouse Square district of Philadelphia and in Georgetown in the District of Columbia, what were once back alleys down the centers of blocks have become streets with buildings fronting on them, and users using them like streets. In Philadelphia, they often include commerce.

Cady's Alley shared street

Cady’s Alley, a shared street, with Leopold’s Kafe

Georgetown passages

C&O Towpath at 31st St., with Sushi to Go. Baked & Wired, Il Canale, and Snap Cafe are around the corner.

Georgetown passages

The newly opened Sovereign lies just behind the 100% corner at Wisconsin & M, at the end of an unnamed alley. More retail is planned for the interior of this block, between M, Wisconsin, Prospect, and Potomac.

What Would Jane Jacobs Do about zoning?

Tomorrow would have been Jane Jacobs’ 100th birthday, and so it’s a fine time to reflect upon her magnificent legacy of (empirically correct) ideas. Unbeknownst to many of her fans, she has a significant built legacy. 20 years ago, Toronto asked no less than Jane Jacobs about how to rezone two renewal areas on either side of downtown.

Distillery District

Toronto’s Distillery District, within the King-Parliament area that Jane Jacobs had a hand in rezoning.

The Kings Regeneration Initiative” targeted 400 acres of land along King Street, an east-west arterial with a streetcar. King-Spadina on the west side of downtown and King-Parliament on the east side were both declining CBD-adjacent industrial areas. Then-mayor Barbara Hall invited Jacobs to an advisory group on the regeneration project. “Paul Bedford, Toronto’s chief planner during Mayor Hall’s term, said that Jane kept encouraging him to take risks and to experiment,” writes Barry Wellman. The resulting code was a tremendous departure from how Toronto, and most other North American cities, regulated development:

Jacobs described the process in remarks given at Boston College’ law school:

Yet if the zoning were to be changed to permit dwellings, the developers would be blocked by rules applying to apartments, most especially parking requirements. Land coverage was high and parking couldn’t feasibly go underneath these sturdy but old buildings. Under the guidance of our very intelligent mayor at the time, these and almost all other regulatory controls were removed, except for fire and building safety codes. One rule was added: a ban against destruction of buildings, to prevent aesthetic and environmental waste. You would be amazed at how rapidly those dying districts have come back to life and blossomed. The principle at work here has been the addition of what the previous mixture lacked…

In the case of Toronto’s dying districts of downtown that were revitalized by radically overhauling the regulations, the mayor’s hardest job was goading and re-educating her own planning department, including the youngish man who then headed it.

The results have been breathtaking — and might surprise those for whom Jane is a hero for stopping bulldozers. Not only have the “Two Kings” not lost jobs, as many industrial lands taken out of production have, but the number of jobs has increased by 58%. Even more impressively, 46,000 dwelling units have been permitted in the Two Kings, many of them in very large new high-rises.

Of course, this approach would be much more difficult — if not impossible — to enact in America. It’s not that America over-regulates development per se, it’s that we regulate entirely the wrong things about development. As Jay Wickersham writes in the Boston College Environmental Affairs Law Review, the result is “an extraordinary situation. There is no other area in environmental law where the goals of the regulatory program are not just indifferent, but actively hostile, to the best thinking in the field.” From his introduction:

To paraphrase F. Scott Fitzgerald, Jacobs shows us that Euclidean zoning has been hard where it should be soft and soft where it should be hard. Zoning has been hard, or overly rigid, in dividing our cities and towns into uniform, low-density districts, each dedicated to a single primary use. And zoning has been soft, or overly permissive, in its failure to set design standards for streets, and for how buildings front upon those streets, that would reinforce the fundamental character of streets as public spaces…

Supreme Court rulings restrict municipalities to just two regulatory tools* that can shape development: Euclidean zoning (regulating density and land use) and historic designation (regulating appearance, but only meant for very limited circumstances). Euclidean zoning’s fixation on limiting density and land uses enforces conformity; even when it permits change, it’s only towards a distant, built-out end-state set forth in a comp plan. Jacobs writes:

[T]he greatest flaw in city zoning is that it permits monotony… Perhaps the next greatest flaw is that it ignores scale of use, where this is an important consideration, or confuses it with kind of use, and this leads, on the one hand, to visual (and sometimes functional) disintegration of streets, or on the other hand to indiscriminate attempts to sort out and segregate kinds of uses no matter what their size or empiric effect. Diversity itself is thus unnecessarily suppressed. (D&L, 237-238)…

Instead, Death and Life‘s chapter 13 argues for “zoning for diversity”:

The purpose of zoning for deliberate diversity should not be to freeze conditions and uses as they stand. That would be death. Rather, the point is to insure that changes or replacements, as they do occur, cannot be overwhelmingly of one kind. (D&L, 253, emphasis added)

Jacobs was not against regulation, but as an empiricist she held tremendous regard for the way cities had evolved as complex systems over the centuries — and fought the woefully simplistic (and completely ideological, perhaps even “faith-based”) Modern-era planning regulations and programs then in place. Alas, those regulations remain at the foundation of American planning today. Wickersham again:

According to Jacobs, “[a]ll zoning is suppressive,” an interference with the unfettered movements of the real estate market. But Jacobs is not attacking regulation, per se, or even the notion of government planning… she is attacking the functionalist presumptions shared by many city planners. In this view, a city is a functional, repetitive machine, rather than an ever-evolving organism… Her goal is to strike a middle course: to preserve and enhance diversity by avoiding large-scale, cataclysmic physical and social changes (which can be caused by rapid influxes of private investments, as well as by publicly sponsored urban renewal projects), without permanently freezing a community’s character.

Density-and-use zoning is the metaphorical hammer of urban land use: every potential problem ends up looking like a nail, and gets hammered to smithereens. It doesn’t matter if the problem has nothing to do with density or land use, and it doesn’t matter that density and land use are (as the Kings show) pretty darn incidental to the grand scheme of things. The only tool that we have is the wrong one, but we’re going to use it anyways. Wickersham notes that even the modest attempts to circumvent Euclidean zoning through discretionary approvals, or worse yet to somehow require diversity, are doomed to failure from Jacobs’ perspective:

Because these reforms are project-specific, and not comprehensive, the counter-productive, as-of-right requirements of Euclidean zoning have been sidestepped, not removed. To tempt developers into the project review process, regulatory systems will offer a density or height bonus to offset the increased time and costs that are involved. Such incentives can cause all parties to undervalue small-scale, incremental renovation and infill projects—the incremental reinvestments that Jacobs showed us were so important for the stability of an urban district. Thus, favoring large private investments can cause the same kinds of cataclysmic change that Jacobs decried in the public urban renewal projects of the 1950s.

Update: Shawn Micallef has a fantastic summary of Jane Jacobs’ Toronto legacy on Curbed today. The headline of this post spoofs Spacing Store’s #WWJJD t-shirt.

* Non-regulatory tools, like redevelopment, are also legal but are so difficult and fraught with such complexity that they’re unlikely to have a substantial impact on regional-scale land use challenges. Form-based codes are the most promising alternative to Euclidean zoning in the US, but in practice require such a radical overhaul of the planning-and-zoning process that they have yet to achieve wide adoption; Miami is the notable exception that rewrote its plan and zoning code all at once.

DC has “parking craters,” just not downtown. Here’s why.

Most American downtowns are surrounded by “parking craters,” as Streetsblog has termed them. Here in DC, downtown’s successful redevelopment has almost eliminated downtown parking craters, with one key exception. This success hasn’t completely eliminated parking craters from DC, though — it’s just moved them outside downtown.

parking crater at CityCenterDC

DC’s last privately-owned parking crater has a very unusual backstory. Gould Property owns the site free and clear, but only due to a land swap to get the Marriott Marquis built two blocks north. Gould had purchased part of the Marriott site back in the 1990s, when prices really were cheap enough to justify parking craters. The land basis and opportunity cost on this site is unusually low, especially since the former building on the site could not have remained.

Most surface parking lots are built as what zoning calls “an accessory use,” which means they’re an “accessory” to something else on the same lot. The parking lot at Sam’s Park & Shop in Cleveland Park or the Capitol’s parking lots, are “accessory” parking lots.

Parking craters, on the other hand, are usually not accessory parking directly tied to another land use; they’re paid parking lots whose owners are holding onto land that they speculate could be a future development opportunity. A parking lot requires minimal maintenance, but pays out some income in the interim. Most importantly, a parking lot is “shovel ready” — unlike a building with tenants in place, whose leases might or might not expire at the same time, a parking lot can be emptied and demolished on short notice when opportunities arise.

High rents and short buildings limit speculation

The opportunity that many “parking crater” developers are waiting for is the chance to build a big office tower. Offices pay higher rents to landlords than apartments (although in the best locations, retail or hotels can be even more valuable). However, the banks who make construction loans to developers rarely allow new office buildings to be built before a large, well-established company has signed a long-term “anchor tenant” lease for much of the new building’s space. If the building isn’t pre-leased, the result can be a bank’s worst nightmare: a “see-through tower” that cost millions of dollars to build, but which isn’t paying any rent.

Within downtown DC, robust demand and high rents mean that landowners face a very high opportunity cost if they leave downtown land or buildings empty for a long time. Instead of demolishing buildings years before construction starts, developers can make room for new buildings by carefully lining up departing and arriving tenants, as Carr Properties did when swapping out Fannie Mae for the Washington Post.

Less often, a developer will build new offices “on spec,” or without lease commitments in place. A spec developer usually bets on smaller companies signing leases once they see the building under construction. Downtown DC has a constant churn of smaller tenants (particularly law firms and associations) that collectively fill a lot of offices, but few are individually big enough to count as anchor tenants.

Because office buildings in DC are so short, they’re relatively small, and therefore the risk of not renting out the office space is not that high. In a city like Chicago, by contrast, few developers would bother building a 250,000 square foot, 12-story office building to rent out to smaller tenants. Instead, they could wait a few more years and build a 36-story building, lease 500,000 square feet to a large corporation, and still have 250,000 square feet of offices for smaller tenants.

While height limits certainly constrain the size of offices in DC, other cities with much less stringent height limits have also managed to eradicate most of their parking craters. Boston and Portland are similarly almost bereft of parking craters within their cores, not because of Congress but because other planning actions have maximized predictability and minimized speculation. In both cities, small blocks and zoning-imposed height limits of ~40 stories (!) encourage construction of smaller office buildings

Another factor common to these cities are policies also encourage non-car commutes — Boston even banned new non-accessory parking downtown — and rail transit that distributes commuters through downtown, rather than focusing access along a freeway or a vast commuter rail terminal. Metro’s three downtown tunnels, and DC’s largely freeway-free downtown, help to equalize access (and property values) across a wide swath of land. In retrospect, it’s impossible to identify which one factor had the greatest effect.

This customer is always right

There is one big anchor tenant in DC’s office market: the federal government. The government has some peculiar parameters around its office locations, which also help to explain where DC does have parking craters.

Private companies often don’t mind paying more rent for offices closer to the center of downtown, which puts them closer to clients, vendors, and amenities like restaurants, shops, or particular transit hubs. The government, on the other hand, has different priorities: it would rather save money on rent than be close-in. The General Services Administration, which handles the government’s office space, defines a “Central Employment Area” for each city, and considers every location within the CEA to be equal when it’s leasing offices. It also usually stipulates that it wants offices near Metro, but never specifies a particular line or station.

As rents in prime parts of downtown rose, the government began shifting leased offices from the most expensive parts of downtown to then-emerging areas. Large federal offices filled new office buildings in the “East End,” helping to rejuvenate the area around Gallery Place and eliminate many parking craters.

This one rule scattered “parking craters” all around DC, but they’re steadily disappearing

Over the years, DC noticed the success it found in broadening the federal government’s definition of the Central Employment Area, thereby spreading federal offices to new areas. It successfully lobbied GSA to widen the CEA further, encompassing not just downtown but also NoMa, much of the Anacostia riverfront, and the former St. Elizabeth’s campus. Because the latter areas have much cheaper land than downtown DC, and lots of land to build huge new office buildings, federal offices are now drifting away from the downtown core.

A developer with a small site downtown usually won’t bother to wait for a big federal lease: the government wants bigger spaces at cheaper rents. It’s easier to just rent to private-sector tenants. However, a developer with a large site within the CEA and next to Metro, but outside downtown, has a good chance of landing a big federal lease that could jump-start development on their land — exactly the formula that can result in a parking crater.

One recent deal on the market illustrates the point: the GSA recently sought proposals for a new Department of Labor headquarters. GSA wants the new headquarters to be within the District’s CEA, within 1/2 mile walking distance to a Metro station, and hold 850,000 to 1,400,000 square feet of office space.

The kicker is the timeline: GSA wants to own the site by April 2018, and prefers if DC has already granted zoning approval for offices on the site. It would be difficult for a developer to buy, clear, and rezone several acres of land meeting those requirements within the next two years, so chances are that the DOL headquarters will be built on a “parking crater” somewhere in DC. Somewhere outside downtown, but within the CEA, like:

Parking crater at Spooky Park, Yards

Parcel A at the Yards.

  • “Spooky Park,” or Parcel A at The Yards, formerly the National Geospatial-Intelligence Agency offices across from the Navy Yard Metro. It’s zoned for 1.8 million square feet of offices, and is probably the largest single parking crater in DC.
  • Behind the Big Chair in Anacostia are several parking lots that could house a million square feet of offices.
  • The Portals, next to the Mandarin Oriental Hotel at 14th and D streets SW, has two empty lots left. A residential tower will soon sprout on one, but the other is being reserved for another office building, across from to another building that was built for the FCC, but which will soon be vacant.
  • The two blocks just west of the Wendy’s at “Dave Thomas Circle,” in the northwest corner of NoMa, are owned by Douglas Development and Brookfield Asset Management. Brookfield’s site could house 965,000 square feet of development, and Douglas’ site could have a million square feet.

High-rise residential seems like it would be an obvious use for land like the Yards, which is outside downtown but atop a heavy-rail station. Yet even there, where one-bedroom apartments rent for $2,500 a month, it’s still more valuable to land-bank the site (as parking, a small green area, and a trapeze school) in the hopes of eventually landing federal offices.

Many federal leases are also signed for Metro-accessible buildings outside the District, which helps to explain why prominent parking craters exist outside of Metro stations like Eisenhower Avenue, New Carrollton, and White Flint. (For its part, Metro generally applauds locating offices at its stations outside downtown, since that better balances the rush-hour commuter flows.)

One reform could fix the problem

One esoteric reform that could help minimize the creation of future parking craters around DC is to fully fund the GSA. Doing so would permit it to more effectively shepherd the federal government’s ample existing inventory of buildings and land, and to coordinate its short-term space needs with the National Capital Planning Commission’s long-term plans.

Indeed, GSA shouldn’t need very many brand-new office buildings in the foreseeable future. Federal agencies are heeding its call to “reduce the footprint” and cut their space needs, even when headcount is increasing. Meanwhile, GSA controls plenty of land at St. Elizabeth’s West, Federal Triangle South (an area NCPC has extensively investigated as the future Southwest EcoDistrict), Suitland Federal Center, and other sites.

However, ongoing underfunding of GSA has left it trying to fund its needs by selling its assets, notably the real estate it now owns in now-valuable downtown DC. GSA does this through complicated land-swap transactions, like proposing to pay for DOL’s new headquarters by trading away DOL’s existing three-block headquarters building at Constitution and 3rd St. NW.

In theory, it should be cheaper and easier for GSA to just build new office buildings itself. In practice, though, they’ve been trying to do so for the Department of Homeland Security at St. Elizabeth’s West — a process that Congressional underfunding has turned into a fiasco.

Parking craters will slowly go away on their own

In the long run, new parking craters will probably rarely emerge in the DC area. Real estate markets have shifted in recent years: offices and parking are less valuable, and residential has become much more valuable. This has helped to fill many smaller parking craters, since developers have dropped plans for future offices and built apartments instead.

Goodnight, parking crater

A parking crater in NoMa that’s soon to be no more, thanks to apartment development.

Even when developers do have vacant sites awaiting development, the city’s growing residential population means that there are other revenue-generating options besides parking. “Previtalizing” a site can involve bringing festivals, markets, or temporary retail to a vacant lot, like The Fairgrounds, NoMa Junction @ Storey Park, and the nearby Wunder Garten. This is especially useful if the developer wants to eventually make the site into a retail destination.

Broader trends in the office market will also diminish the demand for parking craters, by reducing the premium that big offices command over other property types. Demand for offices in general is sliding. Some large organizations are moving away from having consolidated headquarters, and are shifting towards more but smaller workplaces with denser and more flexible work arrangements.

Unlike the boom years of office construction, there’s now plenty of existing office space to go around. Since 1980, 295 million square feet of office buildings were built within metro DC, enough to move every single office in metro Boston and Philadelphia here. While some excess office space can be redeveloped into other uses, other old office buildings — and their accessory parking lots — could be renovated into the offices of the future.

A version of this appeared in Greater Greater Washington.