In urban cores and cities across the U.S., planning departments have been attempting to address the housing crisis. Increased density is one tool they have been using. Some of this planning is conducted on a regional basis through collective action by cities and counties, and where there are transportation and infrastructure projects are usually the hubs for new housing starts.
This is on top of developers attempting to take advantage of the very same density gains in order to profit. After all, there are only so many sweet spots to build on. On the one hand, cities need affordable housing. On the other, developers naturally want to build for profit. So what do we do to meet both sets of goals?
I live in Los Angeles, and I believe I have seen most everything that can impact a dwelling, from fires to earthquakes to riots. What I am now witnessing in Los Angeles is shocking (or it should be) to any real estate veteran: You cannot move around. I know everyone in real estate loves to see the cranes that signal progress, but is there a breaking point? As I see it, there are three key issues converging all at once that are making a mess of urban cores.
Construction
First, think about the traffic construction sites bring. If you have had the good fortune to see the workers in the street with directional flags, you get the idea. There they are, waving the caution flag or the stop sign — traffic now stops cold, and people start looking for an escape route. Where there is density, there is a need to move building materials to the upper floors. This happens from ground level, thus the person with the flag. In Los Angeles, the slightest hiccup in traffic reverberates throughout the arterial traffic corridors.
To make this less of an imposition on the public, the construction schedule should be considered to ease the process for everybody. Cities may be able to help by providing existing up-to-date traffic data so development movements can be scheduled with the public and projects in mind. If you want smart cities, I say start here.
Ride-Sharing
Then there is the fact that people find ride-sharing services so convenient. Why drive ourselves? We can infer from the success of ride-hailing companies that the model is here to stay. The ride-sharing companies will say they are helping to alleviate congestion, but recent research doesn’t agree. Convenience has a price. In this case, the price is increased traffic. The concept of traffic may be nothing new in Los Angeles, but what I’m seeing lately is different. When people earn their living by driving around all day, we see an endless circulation of cars that never park.
Gentrification
Gentrification also plays a part in the traffic equation. People are tired of long commutes from the suburbs and are rediscovering the origin points of great cities. The old and new join together for a reimagined future.
Real estate developers should consider investigating what surplus land cities may be able to allocate to the goal of ending some of their housing crunches. Developers might also try to partner with existing owners who have enormous equity positions in their properties but lack the expertise to extract the gains that lay present. This could also mute a great deal of constituent angst about displacement.
A Total Solution
I don’t believe that the planning functions took the effects of ride-hailing companies, gentrification and enormous construction projects all happening at once into consideration. If they did, how could this have happened?
I believe we need to have a true public-private partnership wherein the government entities contribute non-performing government-owned land into a pool. From here, developers can choose locations and apply to build on that public land. This land should be allocated in a reasonably dispersed way so as to still take advantage of rail and other associated public transportation.
The sweet spot must be expanded to relieve and distribute the traffic burden equitably. The public return on unused land is 0% — no taxes, no income, zilch. So there is no reason not to maximize it. The land is a major part of developers’ cost. This cost is borne upfront, with the soft cost following. If the land cost is reduced to a number that facilitates a reasonable return for the developer and true streamlining of entitlements and permitting occur, we will all win. Developers can look to build where they may not have in the past. This could also foster improved neighborhood retail and other uses.
Furthermore, as a true partnership, the process should move along much faster. Homelessness, affordability and other housing issues can be addressed by this simple input. If the load on the city centers can be distributed to other areas of the cities by placing the usable government surplus land in service, this would foster development in a balanced way. Builders love to build. Local governments should utilize people’s land for obvious needs. Contribute that land, and the builders will come.