New Geography

Category: Urban Issues

  • Dulles Metrorail Silver Line Vs Bus Rapid Transit

    Long overdue rapid transit service from Washington DC to Dulles airport is now under construction. The Dulles Corridor Metrorail Project, known as the Silver Line, may seem like it was an obvious choice as a way to improve the region’s public transportation. Construction began in March 2009, and service is expected to begin by 2013. As those who have used bus service from the DC area to the airport can attest, the current system — a regular city bus equipped with luggage racks — is inadequate. The buses are low capacity, and are not designed for highway driving.

    While rail might seem like the most obvious solution, it is also by far the most expensive and slowest option. The price tag is staggering, and the rail extension will take years to construct. The better option would have been to make use of the existing roadways, and implement an expansive bus rapid transit system (BRT).

    The 23 mile extension of the Washington Metro rapid transit system is forecast to cost $6.8 billion dollars; roughly $296 million per mile. The constant scramble to finance the over-budget project has resulted in more than one construction setback.

    In contrast, consider how a BRT system could have worked, and what it would have cost. One lane in each direction on the Dulles Toll Road could have been designated as a high occupancy vehicle (HOV) lane, to ensure that buses could move relatively quickly. The average cost of implementing a BRT system running on an HOV lane is $8.97 million per mile (in 1999 dollars), which would have brought the cost to roughly $230 million. It should be noted that this average is heavily skewed by one costly project; two million to five million dollars per mile is more typical, which would make the final cost in DC between $52 million and $130 million.

    The buses themselves would have had to be fully articulating — the kind that bend in the middle, also known as accordion buses — with overhead luggage compartments, and a capacity of roughly 87 passengers. They would likely cost somewhere between $750,000 and $1.68 million.

    The overwhelming likelihood is that busses to Dulles would cost near the low end of the price range. The high end is based on the cost of buses used in Boston for their Silver Line BRT system to Logan Airport, where dual fuel electric/natural gas buses are used; these buses run underground, where they cannot burn gas, as well as on surface streets where there aren’t any overhead electric lines.

    The cost per passenger trip is likely to be lower for rail than for BRT, because of rail’s higher capacity per vehicle; the train will transport about 175 passengers per car. Despite this, the lower per passenger operating cost doesn’t come anywhere near making up for the massive capital cost. The interest alone on the $6.8 million dollar loan would equal $1,067,317 per day (amortized over 30 years at a 4% interest rate). This doesn’t factor in the cost of the principle, or the operating cost.

    Even after spending $6.8 billion, only about 10% of travelers to Dulles are likely to arrive by public transportation, according to projections by the Airport Authority. Compare that to 16% for Reagan , which is right in the city (Dulles is more than 25 miles outside of DC’s central business district. This highlights another advantage of BRT: modularity. Instead of all or nothing, BRT can be gradually introduced, and levels of service can be adjusted to meet demand.

    While access to Dulles isn’t the full justification for the Silver Line, it’s hard to imagine the rail extension ever paying for itself. At the end of the day, cost is the number one issue, and BRT wins hands down.

    Steve Lafleur is a Policy Analyst with the Frontier Centre for Public Policy.

    Photo: Metrorail Construction; truss erecting span at I-459 and Rte 123

  • Urban Violence Abroad: An Arab Spring and a British Autumn?

    Treating urbanisation as some sort of homogeneous movement, a driver of an increasingly interdependent world of shared values, behaviour, and prosperity is to oversimplify.  There may be some common drivers, but urbanisation in the 21st century is likely to be quite different from urbanisation in the 20th century.  Suggesting a universal approaches to governing, managing and planning cities is providing answers without knowing the questions. 

    The role of the city has to be considered in recent outbreaks of localised or national violence.  In this post I raise the issue of urban violence with reference to urbanisation in North Africa and the Middle East, and explore possible parallels with recent riots in Britain.

    Violence and language

    Language, like planning, can be employed to make order out of chaos.  The American invasion of Iraq in 2005 was widely seen as the beginning of an Arab Spring, a label suggesting that people in other Arab nations might rise up in some universal quest for democratic deliverance from oppressive regimes following the expulsion of Saddam Hussein. 

    In keeping with this representation, today’s images of protest and violence in the streets of Egypt, Libya, and Syria are presented as signs of culture change leading inevitably to western-style democracy.  But it would be premature to assume that out of the current movements will come the end of autocracy, a displacement of authoritarian regimes with multi-party democracy, or a cessation of sectarian conflict. 

    Despite deep cultural difference that mean western expectations for Arab outcomes are likely to be flawed, there are parallels between what is happening in North Africa and urban violence in Britain.  Only there, the language is quite different.  The politicians and press are not lauding the people on the streets of London or Birmingham, and the reporting is a lot less optimistic. 

    Cities and revolution

    Have you noticed how the images of North African protests against autocratic governments are male-dominated, and urban? This is hardly new: think Paris at the end of the 18th century or in 1848.

    But today’s turmoil does raise a couple of thoughts.  First, let’s remember there is an enduring tradition of inter-tribal struggle for power and long-standing feuds among sects in the Middle East.  Internecine violence predates the colonial borders and post-colonial regimes that seem to be unraveling now.  Despite the increased trappings of modernisation, little may have changed by way of physical struggles for power in a traditionally male domain.

    But what is interesting is the way uprisings are playing out today as predominantly urban movements.  Urbanisation appears to play an important part in focusing discontent and making disenfranchisement visible.  Growing cities provide gathering places for growing protest.  They are the terrain for harassment, the platform for violence, and the stage for claim and counterclaim.  The march from city to city, whether in defiance or defence, tracks the progress of civil unrest, suppression, and revolution. 

    Social media – uniting or dividing?

    Much has been made of the role of social media in mobilising civilians to a common cause, but it can only really give form to popular protest in an urban setting.  Urbanisation may encourage unity among diverse groups opposing a common tyranny. But such unity is likely be transitory, lasting only to the fall of the first tyrant.

    Within fast growing cities of the Arab world sectarian divisions still run deep and social media may simply reinforce them, calling brothers to arms to settle old enmities once new protests have finished.

    The demographics of growing cities

    It might pay to look more closely at urbanisation to better understand the character of today’s protests.  Look at the underlying demographics of countries at the heart of unrest and regime change in North Africa, and compare them with, say, the US and the UK.  They:

    (1)    Are urbanising rapidly – Syria and Iraq stand out;
    (2)    Have large shares of their populations aged under 30 years – 67% in Iraq and 65% in Syria;
    (3)    Have higher unemployment – quite possibly much higher given the difficulty of measuring this figure in a consistent way.  Libya appears to lead the way, although some of the unemployment figures are little better than informed guesses.

    Syria

    Iraq

    Libya

    Tunisia

    Egypt

    US

    UK

    % Urban

    55.7%

    66.2%

    77.9%

    67.3%

    43.4%

    82.3%

    79.6%

    Urban Growth

    101.5%

    65.2%

    54.3%

    46.6%

    45.9%

    36.2%

    10.2%

    % Aged<30

    65.2%

    66.7%

    60.2%

    49.2%

    59.9%

    39.3%

    36.2%

    % Aged <30 Male

    51.0%

    50.7%

    51.1%

    50.1%

    50.9%

    49.8%

    50.1%

    Unemployment

    12.6%

    15.3%

    30.0%

    13.0%

    11.9%

    9.1%

    7.7%

    Sources: US Census Bureau; TradingEconomics.com; CIA World Fact Book, national statistical offices

     

    How far, it might be asked, is the Arab spring founded on the frustrations of Arab youth?  And can we really expect revolution in the streets to resolve issues of deprivation, dispossession, and boredom, without the revolutionaries first finding fulfilment and making real material (or spiritual) progress even if the short term ends of overthrowing incumbent rulers are met?

    The road to this Damascus is likely to be long and divided

    The mix of rapid urbanisation, youthful populations, and high unemployment is a volatile one.  Add strong religious, cultural or ethnic divisions and inequality within increasingly urbanised societies and the prospect is for prolonged unrest and sporadic violence. 

    While globalising communications and the accessibility of social media may feed visions of liberal democratic regimes and the illusion of increasingly connected societies, the result in North Africa and the Middle East may be quite different from any western ideal.  Revolution here may lead to ways of sharing and exercising power other than those associated with orderly, liberal democracies; or it may simply reinforce the fractured nature of these societies.

    The road ahead is not clear, nor it is likely to be smooth.

    Lessons for the west?

    Are the industrialised – and post-industrial – cities of the west insulated from the frustrations of youth?  Recent British experience suggests not.  The numbers are smaller, and the middle aged and middle class more likely to resist, but urban conditions of alienation and relative deprivation are significant, particularly among young people in large urban areas. 

    Deprivation is most conspicuous in cities, especially when economic growth is less assured and the fruits less dispersed.  Almost inevitably, the costs of stagnation are distributed disproportionately along ethnic and generational lines when the economy slows and business and governments consolidate. 

    Who’s rioting in Britain?

    In February 2011 it was reported that youth (16-24 years) unemployment in Britain hit a record 20.5%, compared with a general rate of 7.9%.  The majority of young unemployed are concentrated in urban areas: according to a 2009 Centre for Cities publication, the 63 largest British cities and towns contain 59% the country’s youth population, but 64% of the young who are on benefits.  Not only that, but a 2010 publication by the Institute for Public Policy Research suggests that half of Britain’s unemployed youth are black.

    The television images of British urban riots show a high proportion of youth, and a disproportionate representation of black youth.   While the riots were characterised by the level of damage to property and theft, attributing them simply to criminality (or moral weakness) misses the role of divisions within large cities.  When distinctive groups of people within cities sit outside prevailing economic and political structures, their collective lack of respect for property – or lives – should not be so surprising.

    There are obvious differences between the urban domain in Britain and that of North Africa, though.  For a start, dispossessed youth are a minority in Britain, where a strong middle-aged middle class will rally to support government efforts — or even to advance their own — to quell disorder.

    So, in urban settings that are figuratively a world apart a common contributor to street violence is an alienated youth.  But perhaps that’s as far as commonality goes.  In the Arab world, youth is a near or even absolute majority; in the western world it is minority.  In the Arab world it appears to be seeking a share of the power in rapidly urbanising communities; in the western world it is seeking its share of the good life in a long-urbanised society. 

    Phil McDermott is a Director of CityScope Consultants in Auckland, New Zealand, and Adjunct Professor of Regional and Urban Development at Auckland University of Technology.  He works in urban, economic and transport development throughout New Zealand and in Australia, Asia, and the Pacific.  He was formerly Head of the School of Resource and Environmental Planning at Massey University and General Manager of the Centre for Asia Pacific Aviation in Sydney. This piece originally appeared at is blog: Cities Matter.

    Photo by Syria-Frames-of-Freedom

  • The U.K. Riots And The Coming Global Class War

    The riots that hit London and other English cities last week have the potential to spread beyond the British Isles. Class rage isn’t unique to England; in fact, it represents part of a growing global class chasm that threatens to undermine capitalism itself.

    The hardening of class divisions    has been building for a generation, first in the West but increasingly in fast-developing countries such as China. The growing chasm between the classes has its roots in globalization, which has taken jobs from blue-collar and now even white-collar employees; technology, which has allowed the fleetest and richest companies and individuals to shift operations at rapid speed to any locale; and the secularization of society, which has undermined the traditional values about work and family that have underpinned grassroots capitalism from its very origins.

    All these factors can be seen in the British riots. Race and police relations played a role, but the rioters included far more than minorities or gangsters. As British historian James Heartfield has suggested, the rioters reflected a broader breakdown in “the British social system,” particularly in “the system of work and reward.”

    In the earlier decades of the 20th century working class youths could look forward to jobs in Britain’s vibrant industrial economy and, later, in the growing public sector largely financed by both the earnings of the City of London and credit. Today the industrial sector has shrunk beyond recognition. The global financial crisis has undermined credit and the government’s ability to pay for the welfare state.

    With meaningful and worthwhile work harder to come by — particularly in the private sector — the prospects for success among Britain working classes have been reduced to largely fantastical careers in entertainment, sport or all too often crime. Meanwhile, Prime Minister David Cameron’s supporters in the City of London may have benefited from financial bailouts arranged by the Bank of England, but opportunities for even modest social uplift for most other people have faded.

    The great British notion of idea of working hard and succeeding through sheer pluck — an idea also embedded in the U.K.’s former colonies, such as the U.S. — has been largely devalued.  Dick Hobbs, a scholar at the London School of Economics, says this demoralization  has particularly affected white Londoners. Many immigrants have thrived doing engineering and construction work as well as in trades providing service to the capital’s affluent elites.

    A native of east London himself, Hobbs  maintains that the industrial ethos, despite its failings, had great advantages. It centered first on production and rewarded both the accumulation of skills. In contrast, by some estimates, the pub and club industry has been post-industrial London’s largest source of private-sector employment growth, a phenomena even more marked in less prosperous regions. “There are parts of London where the pubs are the only economy,” he notes.

    Hobbs claims that the current “pub and club,” with its “violent potential and instrumental physicality,” simply celebrates consumption often to the point of excess. Perhaps it’s no surprise that looting drove the unrest.

    What’s the lesson to be drawn?  The ideologues don’t seem to have the answers. A crackdown on criminals — the favored response of the British right — is necessary but does not address the fundamental problems of joblessness and devalued work. Similarly the left’s favorite panacea, a revival of the welfare state, fails to address the central problem of shrinking opportunities for social advancement.  There are now at least 1 million unemployed young people in the U.K., more than at any time in a generation, while child poverty in inner London, even during the regime of former Mayor “red Ken” Livingstone last decade, stood at 50% and may well be worse now.

    This fundamental class issue is not only present in Britain. There have been numerous outbreaks of street violence across Europe, including in France and Greece. One can expect more in countries like Italy, Spain and Portugal, which will now have to impose the same sort of austerity measures applied by the Cameron government in London.

    And how about the United States? Many of the same forces are at play here. Teen unemployment currently exceeds 20%; in the nation’s capital it stands at over 50%. Particularly vulnerable are expensive cities such as Los Angeles and New York, which have become increasingly bifurcated between rich and poor. Cutbacks in social programs, however necessary, could make things worse, both for the middle class minorities who run such efforts as well as their poor charges.

    A possible harbinger of this dislocation, observes author Walter Russell Mead, may be the recent rise of  random criminality, often racially tinged, taking place in American cities such as Chicago, Milwaukee and Philadelphia.

    Still, with over 14 million unemployed nationwide, prospects are not necessarily great for white working- and middle-class Americans. This pain is broadly felt, particularly by younger workers. According to a Pew Research survey,  almost 2 in 5 Americans aged 18 to 19 are unemployed or out the workforce, the highest percentage in three decades.

    Diminished prospects — what many pundits praise as the “new normal” — now confront a vast proportion of the population. One indication: The expectation of earning more money next year has fallen to the lowest level in 25 years. Wages have been falling not only for non-college graduates but  for those with four-year degree as well.   Over 43% of non-college-educated whites complain they are downwardly mobile.

    Given this, it’s hard to see how class resentment in this country can do anything but grow in the years. Federal Reserve Chairman Ben Bernanke claimed as early as 2007 that he was worried about growing inequality in this country, but his Wall Street and corporate-friendly policies have failed to improve the grassroots economy.

    The prospects for a widening class conflict are clear even in China, where social inequality is now among the world’s worse . Not surprisingly, one survey conducted  the Zhejiang Academy of Social Sciences   found that 96% of respondents “resent the rich.”  While Tea Partiers and leftists in the U.S. decry the colluding capitalism of the Bush-Obama-Bernanke regime, Chinese working and middle classes confront a hegemonic ruling class consisting of public officials and wealthy capitalists. That this takes place under the aegis of a supposedly “Marxist-Leninist regime” is both ironic and obscene.

    This expanding class war creates more intense political conflicts. On the right the Tea Party — as well as rising grassroots European protest parties in such unlikely locales as Finland, Sweden and the Netherlands — grows in large part out of the conviction that the power structure, corporate and government, work together to screw the broad middle class. Left-wing militancy also has a class twist, with progressives increasingly alienated by the gentry politics of the Obama Administration.

    Many conservatives here, as well as abroad, reject the huge role of class.  To them, wealth and poverty still reflect levels of virtue — and societal barriers to upward mobility, just a mild inhibitor. But modern society cannot run according to the individualist credo of Ayn Rand; economic systems, to be credible and socially sustainable, must deliver results to the vast majority of citizens. If capitalism cannot do that expect more outbreaks of violence and greater levels of political alienation — not only in Britain but across most of the world’s leading countries, including the U.S.

    This piece originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by Beacon Radio.

  • Who Lost the Middle Class?

    Forty years from now, politicians, writers, and historians may struggle to understand how America, once the quintessential middle-class society, became as socially stratified as Europe or even Brazil. Should that dark scenario come to pass, they would do well to turn their attention first to New York City and New York State, which have been in the vanguard of middle-class decline.

    It was in mid-1960s New York—under the leadership of a Barack Obama precursor, Hollywood-handsome John Lindsay—that the country’s first top-bottom political coalition emerged. In 1965, Gotham had more manufacturing jobs than any other city in the country.programs failed. New York City responded by inflating its unionized public-sector workforce to incorporate minority workers.

    Higher taxes to pay for bigger government joined higher crime to produce a massive exodus of manufacturing and middle-class jobs. Over the last 45 years, New York has led the country in outmigration. A recent study by E. J. McMahon and Robert Scardamalia of the Empire Center for New York State Policy notes that since 1960, New York has lost 7.3 million residents to the rest of the country. For the last 20 years, “New York’s net population loss due to domestic migration has been the highest of any state as a percentage of population.”

    New York City, meanwhile, solidified its standing as the most unequal city in America. Twenty-five percent of New York was middle-class in 1970, according to a Brookings Institution study. By 2008, that figure had dropped to 16 percent, and the numbers have only plunged further since the financial crisis, with virtually all the new jobs in the city’s hourglass economy coming at either the high end or the low. Only high-end businesses can succeed in a local economy that has the nation’s highest taxes and highest cost of living—and even those businesses, in many cases, weathered the downturn only by living off the Fed’s policy of subsidizing banks. Despite the federal largesse, more of the city’s new jobs are in the low-wage hospitality and food-services industries than in the financial sector. The middle has lost its political voice in a city dominated by the politically wired wealthy and the public-sector unions that service the poor.

    New York is the picture of what the Tea Party fears for the country at large. In the 1970s, liberal mandarins seized the high ground of American institutions in the name of managing social, racial, gender, and environmental justice on behalf of the disadvantaged. Their job, as they saw it, was to protect minorities from the depredations of middle-class mores. In the wake of the Aquarian age, the U.S. developed the first mass upper-middle class in the history of the world. These well-to-do, often politically connected professionals—including the increasingly intertwined wealthy of Wall Street, Hollywood, and Silicon Valley—espoused what might be called gentry liberalism, a creed according to which the middle classes had to be punished for their racism, sexism, and excess consumption.

    And they have been punished—with job losses. These losses are the inevitable result of the costs of an ever-expanding, European-style public sector; environmental restrictions on manufacturing, mining, and forestry, which push high-paying jobs offshore; and illegal immigration, which reduces overall wage levels. At the same time, the decline in the quality of K–12 schools has undermined what was once a ladder of economic ascent. After completing high school today, students are likely to require a raft of remedial courses in college. Then, after college, many middle-class students graduate not with an education but with a credential—and a bag of enormous college loans that paid for the intermittent attention of a highly paid, tenured faculty.

    The private-sector middle class’s plight has been exacerbated by international competition and technological innovation, which have undermined job security, including for unionized manufacturing workers, who had enjoyed an unprecedented prosperity for about a quarter-century. Median household incomes have grown only marginally since the early 1970s, despite the mass movement of women into the workplace. Many dual-earner families have been caught in the two-income tax trap: on the one hand, they pay for services once performed by the homemaker; on the other, notes economist Todd Zywicki, they’re pushed into a higher tax bracket when the wife’s salary is added to the husband’s.

    Adding to the woes of the middle and lower classes is that their families are far less stable than they were a generation ago. The decline of marriage has been driven not only by changing mores but also by a decline in male employment. In 1970, only one of 14 working-age men was out of the workforce. Today, notes Nina Easton, one in five is either “collecting unemployment, in prison, on disability, operating in the underground economy, or getting by on the paychecks of wives or girlfriends or parents.” Whites who don’t attend college have out-of-wedlock birthrates approaching those that triggered Daniel Patrick Moynihan’s concerns about the black family in 1965. Today, four in ten American babies are born out of wedlock.

    During the current downturn, the black and Hispanic middle class has been particularly hard hit. From 2005 to 2009, according to a recent Pew survey, inflation-adjusted wealth fell by 66 percent among Hispanic households and by 53 percent among black households, compared with 16 percent among white households. These families worry with good reason that in the face of continuing high unemployment, they may fall out of the middle class. For the Obama administration and the public-sector unions, the solution to this slide is to force the nearly one in four employers that have contracts with the federal government to pay above-market wages. Here again, New York has been a pacesetter. Recently, public-sector unions and their allies tried to force a developer rebuilding a decayed Bronx armory to follow their wage and hiring guidelines; the deal collapsed, leaving one of the poorest sections of Gotham in the lurch.

    There’s a major difference, though, between New York and the country as a whole. The New York option—move somewhere else—doesn’t apply to private-sector middle-class workers fighting adverse conditions that exist throughout America. So they’ve exercised the classic democratic right of political action, organizing themselves to compete in elections. The Tea Party is the national voice of the private-sector middle class—despite the demonizations heaped upon it by public-policy elites whose own judgment and competence leave much to be desired.

    Middle-class decline should be front and center in 2012, which is shaping up as a firestorm of an election. It’s likely to be a bitter contest, in which the polarized class interests of those who identify with the growth of government and those who are being undermined by its expansion face off without the buffer of mutual goodwill. Liberals, unless they change their tune, will blame Tea Party “terrorists” for the tragedy of a fading middle class. They will continue to delude themselves into thinking, as Al Gore said in 2000, that their rivals represent “the powerful” and that they themselves act on behalf of “the people,” even though President Obama’s policies have poured money into Wall Street and the politically connected “green” businesses that form the upper half of his top-bottom electoral coalition. The question is whether the country will buy this line and, more broadly, whether it will follow the New York model. Should it do so, those future historians will no doubt look at the election of 2012 as the contest in which the middle class staggered past the point of no return.

    This piece originally appeared in The City Journal.

    Fred Siegel is a contributing editor of City Journal, a senior fellow at the Manhattan Institute, and a scholar in residence at St. Francis College in Brooklyn.

    Photo by SEIU International.

  • Biggest Boomer Towns

    The boomer generation, spawned (literally) in the aftermath of the Second World War, will continue to shape the American landscape well into the 21st Century. They may be getting older, but these folks are still maintaining their power. Those born in the first ten years of the boomer generation  — between 1945 and 1955 — number 36 million, and they will continue to influence communities and real estate markets across the country, especially as they contemplate life after kids and retirement.

    Much has been written about where “empty nesters” might move as their children move off on their own. One longstanding favorite is the notion that, having jettisoned their children, the boomers will also desert their suburban communities for the bright city lights.

    Unfortunately for developers — some of whom have invested heavily in high-end housing for urbanizing “empty nesters” — the actual data do not support this thesis. Indeed, our analysis of migration by this cohort in the past 10 years shows a 10.3% decline among core city dwellers, a loss of some 1.3 million people over the past decade. For this analysis, Forbes, with the help of demographer Wendell Cox, looked at population numbers from the Census for boomers aged 45 to 54 in 2000 and compared them with the numbers for those ages 55 to 64 in 2010.

    These population changes include reductions due principally to deaths. Census data do not include mortality information. This cohort lost 3.2% of its population over the 10 years. This would only marginally reduce the changes between 2000 and 2010, while the scale of differences between the metropolitan areas would be identical.

    So where are these surviving boomers settling as they enter their likely extended golden years?  The results may surprise urban boosters who have confidently expected them to flock downtown.

    To be sure, a few of the highly affluent — the ones mentioned in the mainstream media — may purchase homes, or pied-à-terres, in places like Manhattan, Chicago’s Gold Coast or San Francisco. But these areas actually have suffered an exodus of boomers over the past decade. In our ranking of the 51 largest metros in the U.S., the urban cores of San Jose, San Francisco, Los Angeles and Chicago scored near the bottom, suffering double-digit percentage losses of boomers. According to the last Census, New York’s urban core, which the Daily News suggested is packed with aspiring seniors, lost 12% of boomers in their mid-50s to mid-60s  — or about 274,000 people.

    Over the past three years  you could blame this loss on the economy, which has postponed retirements brought home many of the boomers’ young, largely unemployed or underemployed children back to the suburban homestead. Or you can credit it to more active lifestyles among boomers who appear to working later than ever. According to a Careerbuilder.com survey, over 60% of workers over 60 indicated they are postponing retirement.

    Yet perhaps something more profound is at work here. An analysis of those who were 55 to 65 in 2000 and 65 to 75 in 2010 reveals an even stronger anti-urban bias, with an over 12% drop in city dwellers. Since these folks are far less likely to have kids at home and more properly retired, this cohort’s behavior suggests that aging boomers are if anything less likely to move to the cities in the next decade.

    Indeed, if boomers do move, notes Sandi Rosenbloom, a noted expert on retirement trends and professor of Planning and Civil Engineering at the University of Arizona, they tend to move to less dense and more affordable regions. The top cities for aging boomers largely parallel those that appealed to the “young and restless” in our earlier survey. The top ten on our list are all affordable, generally low-density Sun Belt metros:

    1. Las Vegas, Nev.
    2. Phoenix, Ariz.
    3. Tampa-St. Petersburg, Fla.
    4. Orlando, Fla.
    5. Riverside-San Bernardino, Calif.
    6. Raleigh, N.C.
    7. Austin, Texas
    8. San Antonio, Texas
    9. Jacksonville, Fla.
    10. Charlotte, N.C.-S.C.

    But according Sandi Rosenbloom, a noted expert on retirement trends and a professor of planning and civil engineering at the University of Arizona, most boomers are staying put, largely in the suburbs they settled in decades ago.  The propensity to move, she points out, starts to drop precipitously as people leave their early 30s. Roughly 1 in 3 people in their 20s move in a given year; by the time they enter their 40s, that figure slides to about 1 in 10. As people age into their 50s and beyond, the percentage drops to roughly 5%, or 1 in 20.

    “The boomers are staying put more than anyone thought,” Rosenbloom says. “People of that generation tend to own their own homes and stay there. The idea that they are moving to the city really comes from the wishful thinking school of planning.”

    The recession has exacerbated this stay-at-home trend. The number of people moving is at its lowest level since the early 1960s. When boomers do decide to move, Rosenbloom notes, they do so largely for prosaic reasons, such as being closer to children or, more important, grandchildren.

    Others succumb to the temptation to cash out expensive housing in metros like New York, Los Angeles, the Bay Area or Boston for less costly residences in Sun Belt locales. Housing in and around these core cities, particularly in attractive neighborhoods, Rosenbloom adds, are simply too expensive for the vast majority of budget-conscious seniors.

    Much of this also has to do with the lifestyle preferences of both boomers and seniors, which appear far different than those put forth by urban pundits. People over 55 that Rosenbloom has interviewed usually express a preference to stay or relocate in places that are less crowded and congested. Furthermore, most are reluctant to give up their cars, and many are less able to walk than drive. This may explain why most retirement communities end up on the urban fringe or farther.

    This trend — which Rosenbloom has also encountered in the U.K., Australia, Canada and New Zealand — is also reflected by the growing shift to smaller towns and cities among both aging boomers and seniors. The “young and restless” may head to suburbs, particularly in the lower-cost Sun Belt cities, but some older Americans appear headed to even less densely populated regions. Over the past decade over 1 million aging boomers and seniors moved to more smaller cities and rural locations from suburban or urban locations.

    What do these trends suggest for the future of our communities and real estate? For one, the big opportunities for selling to aging boomers will remain primarily in the suburbs and some select more rural locations. We also can expect the new senior citizens to move to more affordable places close to their children.

    These findings do provide some long-term hope for the housing market, particularly in suburbs. Leading demographers have been busy predicting a massive drop-off in single-family homes as boomers retire and their children leave. Yet our analysis on the Census reveals that most boomers — as well as those older than them — are staying in the suburbs a lot longer than expected. Many will likely to stay in their homes and old neighborhoods well into their 70s or even 80s, leaving either their home either in an ambulance or to an assisted living facility.

    Developers and planners anxious to service aging boomers should, instead of building downtown towers, address the needs of this generation precisely where they now live and are likely to stay. This could include adding to new residential options in the suburbs to enlivening local shopping districts while boosting senior services in everything from recreation and public safety to health care. As the rock and roll generation heads toward its dotage, both business and communities need to adjust their strategies based not on fantasies but on the realities so clearly evidenced by the Census.

    This piece originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

  • Commercial Real Estate: Shrinking to Fit

    We are going to need less commercial real estate in the future, at least on a per-unit-of-population basis. Advances in communications technology are causing profound and sometimes unanticipated changes in our lives.

    Retail Markets
    The coming change is most obvious in retail markets. Americans are increasingly shopping online. However, we’ve really just started to scratch the surface. According to the U.S. Census Bureau’s 2009 E-Stats report issued in May, 2011, E-commerce only accounted for 3.99 percent of U.S. retail sales in 2009.

    I was surprised at how small that number was. Certainly it is higher now, and the 2009 number was almost double 2004’s 2.13 percent, but there is huge room for increased internet retail sales. This is a growth business with a capital G.

    Originally, I believed that traditional brick-and-mortar retailers would have the advantages of customer service and product knowledge, and internet purchasers would be product-savvy shoppers looking for products that they already knew about. That has turned out not be the case at all.

    It is true that the initial internet retail sales successes have been in products where technical knowledge is not critical, and tastes are well established; products such as music, movies, and books. However, online retailers have made impressive gains in providing customer assistance to shoppers looking for more technical products.

    Ratings of products and retailers were an initial step, along with detailed technical data. More recently, internet retailers have added chat windows, some with pictures of the salesperson. It won’t be long until voice or live video are offered, if it isn’t already.

    It is now the case that you are more likely to find more informed assistance on the internet than you will from a brick-and-mortar retailer. This is not to say you can’t find good assistance at a traditional retailer. But your online experience is likely to be better than what you will receive if you walk into a store and deal with the first person you bump into.

    As internet sales increase, expect to see fewer traditional retailers and less demand for retail space. Already, shopping centers anchored by a music store, a video store, or a book store have felt the impacts. This is only the beginning.

    Commercial rents will be softer and vacancies higher in large regional centers and in neighborhood strip malls. This will tend to drive retailers to ever larger centers with more traffic. Smaller centers will likely slowly deteriorate and die. In the end, we’ll have fewer retail centers, but the average center will be larger than it is today.

    Office Markets
    While the number of workers telecommuting is still small, it is growing; someday, it will be very large. Initially, the growth in telecommuting was driven by workers’ desires to physically commute on fewer days. Today, the initiative is changing to employers.

    Companies that adapted to telecommuting employees began to learn how to supervise these workers. Some companies have gone further. My son works for a company that has closed many physical offices, but kept most employees. Everyone was told to telecommute.

    For companies that have made the strategic decision to reduce office space, the advantages must be large. Certainly rent goes down, but other expenses go down too. Heating and cooling costs go away. The company no longer needs to support a local network, with the local network’s support costs.

    I haven’t seen research on telecommuters’ productivity, but it is easy to imagine it increases. Think “happy employees are productive employees.” It is also easy to imagine that productivity decreases. Think “unsupervised employees are unproductive employees.” Clearly, telecommuter productivity is the key to profitably running an office-free operation. As someone once said “any job performed on a computer can be performed anywhere.”

    The lower demand will result in lower office space rental prices and higher vacancies. Again, this should lead to office-dependent operations migrating to the better addresses. In the end, the less-desirable buildings will be empty.

    Industrial Markets
    We’ve seen the huge increase in overseas manufacturing, and we’ve seen the steady decline of U.S. manufacturing jobs. That is just the first stage of a profound transformation in the way things are produced. As the song goes., “You ain’t seen nothing yet.”

    Manufacturing’s future is nicely exemplified by three-dimensional printing. Today, you can Google “three dimensional printing” to find links to videos of three-dimensional printers producing amazingly complicated products, or find companies that have three-dimensional printers. Or you can use a three-dimensional printer to produce something.

    I expect the growth of three-dimensional printers to be something like what we saw with copy machines. The first copy machine I used was in a drug store, and it was coin operated. Then, the banks made them available to customers. Today, we all have at least one in our home and one at the office.

    The day will come when three-dimensional printers will be ubiquitous. You will download instructions for products from some company like Amazon. Then you will produce your good, without the need for an industrial building or a brick and mortar retailer. Producers of products that can’t be printed will print parts, reducing the demand for other producers, inventories, and shipping.

    Any Growth Areas?
    Buildings associated with providing healthcare may be the major exception to declining commercial real estate demand. The aging population, new technology, and long-term wealth trends are likely to continue to drive growth in the economy’s only sector that has grown consistently throughout the recession. At least so far, technological advances in medical care have increased demand for space instead of decreasing it.

    Specialized R&D space may also buck the trend. Many of these facilities can be specialized, however, to the point of being profitably used by only one company. That implies that these buildings are risky investments.

    Policy Implications
    The decline in commercial real estate demand will pose serious challenges to governments. We’re already seeing states and local governments struggle with loss in retail taxes from internet sales . Declining revenues are just the beginning, though. Expenses will increase.

    Empty buildings generate crime. In the case of retail centers, the crime will be very public. Nearby residential property values could decrease, with additional lost revenue to governments. Residents will not stand idly by. They will demand effective action — action that could be very expensive.

    To minimize the fiscal damage, local governments will need to be nimble, a characteristic that few governments possess. They will need to be willing to change zoning codes to adapt to the decline in commercial real estate. They need to allow owners of existing space to redevelop or change their product mix. They may need special tax districts to deal with the blight created by vacant properties.

    Growing population and an eventual real recovery will eventually fix the residential real estate problem. Commercial real estate’s challenges will not be so easily addressed. The impacts are not only on owners, developers, and contractors . All of us will be affected. The time to plan for those changes is now.

    Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org

    Photo by Mark Lyon — Full Floor For Rent.

  • Queensland’s Future: Diverse and Dispersed

    I was recently asked to outline my thoughts on how the Queensland urban landscape might look 40 to 50 years from now.  Go on, you can laugh.  I did too.  It’s hard enough to forecast the next 12 months, let alone two generations away, but I’ve given it a go, of sorts, so here it is:

    First though, it might be best to outline my methodology.  In short, this forecast will be based on underlying trends, some understanding of human nature, and importantly, the Australian mindset.  My outlook is supported by evidence – what people actually do rather than say – and importantly, not by urban myths or fallacies, despite the frequency with which they have been aired of late.  Unfortunately, we don’t have the space or the time here to support every claim or go into massive detail; so this discussion is confined to broad shapes – not nitty gritty.

    Queensland’s urban future (and that of Australia) can best be summed up in two words – Diverse and Dispersed.

    Let’s deal with the second D – dispersion – first.  Our regional centres are likely to become a whole lot bigger and at the expense of the already crowded south-east corner of the state.  The move away from the world’s bigger cities is already underway, as evidenced in the recent census in the United States, but also throughout much of Europe.  Several Asian and Middle-eastern countries are now also following suite  As a Mckinsey Institute study recently found, smaller cities, particularly in the developing world, are growing considerably faster than the much discussed megacities.

    The annual ABS small-area population data suggests this trend is also very true in Australia and particularly in Queensland, which, over the past decade, been the fastest growing state on the continent, appears to be following the same trend, something likely to be borne out by 2011 Census, due later this year .

    Within our capital cities themselves, the much ballyhooed move downtown will slow – again, it already is doing so – as the cost to live within close proximity to the CBD is just too high compared to the real benefits. 

    The irrational assertions about the trend towards denser living rest on urban myths that promote inner city density over other housing forms. These include the notion that suburban growth worsens carbon emissions and traffic congestion; people are being forced to live far from jobs concentrated in our CBDs and denser development will make it cheaper for them to get to work. These notions are all largely exaggerated or incorrect. More to the point, they stand in opposition to the basic preferences of the market.  

    Instead of having a single high-density city core, with lower development density radiating outwards, the most likely urban shape in the future will be one of more even distribution of housing density throughout the city; concentrated more, no doubt, around middle-ring transport hubs and new master planned town-centres.  Our middle-ring and outer suburbs will have much more compact urban settings but will remain primarily dominated by relatively low density housing.

    Diversity relates to the housing stock itself.  The current push towards smaller dwellings has little to do with demographics and the market’s wants, but reflects basic reaction to diminished housing affordability.   There is a demand for tightly-sized product, but it is nowhere as near as high, nor is the long-term trend towards such as strong, as the urban boosters advocate.

    Taking a wider view, Australia (and America too) is still in its frontier or "barbaric" stage of its cultural evolution.  We walk with wide gaits, worship most things large from roadside bananas to women’s appendages, and don’t really like crowded spaces or queues Most of us like our space; aren’t really ready to give it up, and are not likely to do so for many decades to come.

    Rather than remaining focused on density and concentration, it could well serve the community to focus on what appeals to the vast majority of the population, particularly the middle and working class families.  A more practical approach might be to foster the development of smaller, more efficient cities, as well as expansive suburbs and revived small towns rather than engage in a manic drive towards persistent centralization. 

    Rather a forced density agenda on a largely unwilling population, it makes sense to consider how to make a more dispersed (and diverse) urban future more workable and sustainable. Innovations in work environments, notably increased use of telecommuting and dispersed workplaces, and more fuel efficient cars hold more promise than plans that force Aussies to live a way the vast majority do not prefer.

    This article originally appeared in the June/July 2011 edition of the UDIA Queensland’s Urban Developer Magazine.

    Michael Matusik is a qualified town planner and director of independent residential development advisory firm, Matusik Property Insights.

    Photo by Michael Zimmer.

  • The Evolving Urban Form: Los Angeles

    Los Angeles has grown more than any major metropolitan region in the high income world except for Tokyo since the beginning of the twentieth century, and also since 1950.  In 1900, the city (municipality, see Note) of Los Angeles had little over 100,000 people and ranked 36th in population in the nation behind Allegheny, Pennsylvania (which has since merged with Pittsburgh) and St. Joseph Missouri (which has since lost more than one quarter of its population).

    As people moved West in the intervening decades and especially after World War II, the Los Angeles area exploded in population. By 1960, the Los Angeles metropolitan area, which was then and is now composed of Los Angeles and Orange counties, had passed Chicago to become second in population only to the New York metropolitan area. It was to take considerably longer for the city of Los Angeles to pass the city of Chicago as the nation’s second largest municipality, though this occurred by the 1990 census.

    The Los Angeles combined statistical area (analogous to the former consolidated metropolitan statistical area) is made up of three metropolitan areas, Los Angeles, Riverside – San Bernardino and Oxnard (Ventura County). This combined area covers 35,000 square miles or more than 90,000 square kilometers. This is a land area nearly as large as that of Hungary and larger than Austria. The overwhelming share of the CSA is rural, with less than 10 percent of the land area developed.

    Growth from 1900: The CSA had only 250,000 people in 1900, though grew to nearly 5,000,000 in 1950. By 2010, the population was nearing 18 million, a figure not much less than that of Australia, at 22 million (Table 1). Indeed until 1990 the Los Angeles CSA population was closing in on Australia. However, since that time population growth in the Los Angeles area has slowed considerably and Australia should remain larger.

    Table 1
    Los Angeles Combined Statistical Area: Population (CSA): 1900-2010
    Year City of Los Angeles Balance: LA County  Los Angeles County   Orange County   Riverside County   San Bernardino County   Ventura County   Total 
    1900        102,479                   67,819         170,298           19,696         17,897            27,929         14,367         250,187
    1910        319,198                 184,933         504,131           34,436         34,696            56,706         18,347         648,316
    1920        576,673                 359,782         936,455           61,375         50,297            73,401         28,724     1,150,252
    1930    1,238,048                 970,444      2,208,492         118,674         81,024         133,900         54,976     2,597,066
    1940    1,504,277              1,281,366      2,785,643         130,760       105,524         161,108         69,685     3,252,720
    1950    1,970,358              2,181,329      4,151,687         216,224       170,046         281,642       114,647     4,934,246
    1960    2,479,015              3,559,756      6,038,771         703,925       306,191         503,591       199,138     7,751,616
    1970    2,816,061              4,216,014      7,032,075     1,420,386       459,074         684,072       376,430     9,972,037
    1980    2,966,850              4,510,653      7,477,503     1,932,709       663,166         895,016       529,174   11,497,568
    1990    3,485,398              5,377,766      8,863,164     2,410,556    1,170,413      1,418,380       669,016   14,531,529
    2000    3,694,820              5,824,518      9,519,338     2,846,289    1,545,387      1,709,434       753,197   16,373,645
    2010    3,792,621              6,025,984      9,818,605     3,010,232    2,189,641      2,035,210       823,318   17,877,006
    Consolidated statistical area as defined by OMB as of 2010

    The city of Los Angeles had grown 88 percent from 1950 to 2000, but over the past decade added only three percent to its population. Even more spectacular declines in growth occurred in the rest of the CSA. For example, Orange County had grown 1200 percent between 1950 and 2000 yet grew only six percent in the last decade.

    Growth: 2000 to 2010: The population growth in the Los Angeles CSA was widely dispersed and away from the core. The central area (urban core) of the city Los Angeles extends from the Santa Monica Mountains to South Los Angeles and from the boundaries of Beverly Hills, West Hollywood and Culver City to East Los Angeles grew only 0.7 percent. Uniquely, the central area densified strongly between 1960 and 2000, while other urban cores nearly all declined in population, whether in the United States or Western Europe. Much of this was due to strong immigration from Mexico, other parts of Latin America, as well as Asia.

    The inner suburban ring, which includes the balance of Los Angeles County south of the Santa Susana and San Gabriel Mountains as well as the older northwestern Orange County suburbs grew by 1.5 percent. Within this area, 32 inner suburbs (all in Los Angeles County) grew from 1.766 million to 1.767 million (0.1 percent) from 2000 to 2010 (Note 2).

    The outer suburbs, which include the balance of Orange County (including the Mission Viejo urban area) and the western portions of Riverside and San Bernardino counties (including the Riverside – San Bernardino urban area) grew 19 percent.

    The exurban areas, which include areas outside the core urban areas of Los Angeles, Riverside-San Bernardino and Mission Viejo grew 30 percent. The hot spots included Ventura County, the Santa Clarita Valley, the Antelope Valley, the Victorville-Hesperia area, the Coachella Valley (Indio-Palm Springs), the Hemet area and the Temecula-Murrieta area. An argument could be made that Temecula-Murrieta would be in the San Diego metropolitan area if metropolitan areas were defined by smaller area units, such as municipalities (as in Canada) or census tracts. The exurban areas are more attractive to residents at least in part because of considerably less expensive housing and their greater availability of detached houses than in the three core urban areas.

    More remote areas of the desert extending to the Nevada and Arizona borders added 42 percent to their population (Table 2, Figure 1 and 2).

    Table 2
    Los Angeles CSA: Population by Sector: 2000-2010
    Sector 2000 2010 Change % Change
    Central Los Angeles          1,752,024              1,763,967         11,943 0.7%
    Inner Ring          9,093,756              9,231,513       137,757 1.5%
    Outer Suburbs          3,053,615              3,630,273       576,658 18.9%
    Exurbs          2,173,459              2,822,884       649,425 29.9%
    Remote             301,331                 428,369       127,038 42.2%
    Total       16,374,185            17,877,006    1,502,821 9.2%

    City of Los Angeles: The dispersion of population was also evident in the city of Los Angeles. For decades, the city of Los Angeles has grown strongly. Approximately one-quarter of this growth since 1960 has been the densifying central area, as noted above.

    However, little noted is the fact that most of the city’s growth was greenfield suburban in nature, built at low and moderate densities and largely car-oriented. For most of the past fifty years the growth has been “over the hill” in the San Fernando Valley, a formerly rural area which was annexed by the city before 1930. Between 1950 and 2010, the population of the San Fernando Valley grew from 300,000 to 1,400,000. Thus, the Valley grew like virtually every fast-growing historical core city in the nation that has grown since 1950, by filling up empty land (Figure 3).

    Much has been written about the “Manhattanization” of the Los Angeles core. However, with only 13 towers more than 550 feet, downtown Los Angeles is no threat to Manhattan, with more than 125, or even Chicago with more than 70. Further, job growth is stagnant, with virtually no change in private sector employment over the last decade, despite substantial government subsidies.

    Between 2000 and 2010, the central area grew at its slowest rate since the 1950s, growing by only 0.7 percent to its population, growing only 12,000 (to 1,764,000) or barely 12 percent of the city’s growth. Nonetheless, and contrary to the reputation of Los Angeles, the central area is very densely populated, at approximately 14,000 people per square mile, with the highest density census tracts having more than 90,000 residents per square mile. Among the nation’s largest municipalities, only New York and San Francisco are denser than central Los Angeles.

    The big story in growth was on periphery. The San Fernando Valley captured 70 percent of the city’s growth in the 2000s, with considerable greenfield expansion in the hills north of Chatsworth and Northridge. Even so, the Valley’s growth was only five percent. The western portion of the city, which extends from the Santa Monica Mountains to Los Angeles International Airport, grew three percent and accounted for 13 percent of the city’s growth. The Harbor area added two percent to its population and accounted for five percent of the city’s growth (Figure 4).

    The Future: Growth or Stagnation? After more than a century of spectacular growth, Los Angeles demographic juggernaut is stagnating and could conceivably go in reverse due to declining immigration, an exodus of middle class and working class families.  Indeed Even the strong growth in the outer suburbs and exurbs was not sufficient to drag the regional population increase (9 percent) up to the national rate of 10 percent between 2000 and 2010.

    The immediate prognosis should be for even slower growth. The financial, regulatory and cost of living disadvantages of California are widely recognized by households and businesses alike. With stronger regulations in the offing, such as the stronger land use restrictions likely to occur as a result of Senate Bill 375, any future growth on the periphery could be dampened. Even with multi-billion support in terms of tax breaks and public investment, the central core seems unlikely to come close to making much of a real difference, at least beyond the media.  Los Angeles may not be on the road to Rust Belt stagnation, but the dynamism of the last century is no more.

    ——

    Note 1: In this article, the term "city" means municipality.

    Note 2: This includes municipalities and census designated places nearest the central area of the city of Los Angeles, from Glendale and Pasadena through Monterey Park to South Gate, Compton and Gardena and to the west of the central area.

    Note 3: Biographical Note: The author was born in the Echo Park district, near downtown Los Angeles.

    Photograph: Downtown Los Angeles from Echo Park (by author)

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

  • The Shifting Geography of Black America

    Black population changes in various cities have been one of the few pieces of the latest Census to receive significant media coverage.  The New York Times, for example, noted that many blacks have returned to the South nationally and particularly from New York City.  The overall narrative has been one of a “reverse Great Migration.”  But while many northern cities did see anemic growth or even losses in black population, and many southern cities saw their black population surge, the real story actually extends well beyond the notion of a monolithic return to the South.

    The map below, showing total growth in Black Only population from 2000 to 2010, indeed shows that northern and west coast cities had low or even negative growth while various southern cities boomed.


    Here is a list of the top ten metro areas (among those with more than a million total people) for black population growth:


    And here are the bottom ten (among those with more than one million people):


    Of course, looking at total population numbers can mislead. Some cities grew slowly or lost people as a whole while others boomed. With Houston, Dallas, and Atlanta all adding over a million people each, it’s no surprise these regions added lots of blacks. Working and middle class African-Americans likely shared many of the same motivations to move to these cities – such as lower housing prices – as Americans of other ethnicities. In that light, a look at change in black population share (the percentage of the population that is black) provides additional perspective:


    Here we see not a single-minded return to the South, but a complex mixture of shrinking and growing regions in various parts of the country.  This includes some surprising places, like Minneapolis-St. Paul, which was one of the top ten metros in the country for total black population growth, and also saw its black population share grow strongly.  Now the Twin Cities, along with Columbus, Ohio, another strong performer, are two of the top destination for African immigrants from Somalia and elsewhere, which doubtless accounts for part of that strong growth. But anecdotal reports indicate that they are also benefitting from Chicago’s expanding black diaspora, along with places like Indianapolis and various Downstate metros.

    Atlanta, well known as America’s premier metro area for blacks, continued to dominate the charts. Not only far and away the leader in adding raw numbers of blacks, the African-American share also grew share strongly too. Charlotte is also clearly emerging as another key black population hub, ranking #6 in America for total black population growth, which is impressive for a smaller city, and adding nearly two percentage points in black population share.  It grew its black population much faster than other fast growing small cities like Raleigh or Nashville, and added share at more than three times as fast.

    By contrast, Houston, which grew total black population significantly, had a much lower share gain. Austin, one of America’s fastest growing metros, added only 28,000 blacks and actually lost black population share. And Washington, DC, despite being a traditional black population and cultural hub, also lost black population share regionally as gentrification in the District resulted in its loss of its black majority for the first time in decades, according to the Brookings Institution. 

    So even among rapidly growing metro areas in the South, the appeal to black population is selective, favoring places like Atlanta, Charlotte, Florida cities, and even slower growing cities along the length of the Mississippi River like Memphis.  Even some cities in the North are retaining their allure to blacks as well. Less favored or even out of favor are metros like DC, Dallas, and Houston as well as cities such as Charleston and Savannah along the southeast coast.

    Slow or negative black population growth is particularly concentrated in traditional tier one “global cities”, as well as those facing economic or other hardship like Detroit, Cleveland, and immediate post-Katrina New Orleans.

    The latter may be understandable – whites have been leaving these regions as well – but the former is quite troubling.  The global city model, focused on high end and creative services, is supposedly the bright and shining savior of American urbanism. Indeed, it’s hard to find a city that doesn’t have some aspect of that as a core plank in its civic strategy. Yet the cities that have been most focused at promoting this notion – such as New York, San Francisco, and Chicago – are generally those  disproportionately driving blacks away. The reasons for this aren’t clear, but the high and increasing cost of living in those places seems like one logical explanation.

    Here’s a more detailed look at the percentage growth in Black Only population in some tier one global type metros:


    New York barely broke even on black population, while Chicago, LA, and the Bay Area all actually lost black residents, a stunning reversal from their past as black magnets. However, Boston, not a traditional black population hub, grew its black population strongly on a percentage basis, as did Miami and DC, though as noted before, the share change in DC was negative.  Here is that metric for the same metros:


    With the notable exceptions of Boston and Miami – and Philadelphia, seldom ranked highly as a global city but still a traditional large northern metropolis – most global city regions appear to be increasingly inhospitable to Blacks.  Thus their model of success, whatever its appeal to some, at a basic level simply lacks inclusiveness. This shows its clear limits as an overall model for America’s urban centers as a whole.

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile. Data analysis, maps, and charts in this piece were prepared with Telestrian.

  • Banana-nomics

    The price of bananas is again making headlines as it pushes up inflation and threatens rising interest rates. But what’s the price of the humble ‘nana got to do with property markets? Plenty.

    Banana prices have risen almost 500% since Cyclone Yasi wiped out much of north Queensland’s banana crop earlier this year. The immutable laws of supply and demand dictate that when supply falls relative to demand, prices will rise. Which is what they have done, and as they did a few years ago when the same thing happened after Cyclone Larry. As banana supply was restored, prices fell. As they will again.

    Banana prices are a self-evident, every day example of supply and demand at work. They’re the sort of example understood by consumers and even school children with no formal economic training. But clearly the lessons are beyond the capacity of some Australian politicians, most land regulators and many town planners. In the very same way that constraints on supply create scarcity value for every day commodities, constraints on supply and scarcity equate to rising prices for all types of real estate, not just housing.

    It starts with misguided planning schemes that aim to direct consumer behaviour and distort their purchasing decisions by limiting choice. This has become commonplace in planning to the point of representing accepted wisdom. One of the most obvious examples has been the continued efforts by some regulators and planning authorities to attack the detached house as a choice – however best suited to the needs of young families – which ‘Australia can no longer afford.’ Like a contemporary version of Stalinist central command, housing choice is distorted via planning schemes that are biased to high density apartments in central locations (that consumers are told is good for society), as opposed to detached housing on the urban boundary (that remains the majority consumer preference). Faced with little choice, more people are forced to choose the option deemed appropriate by higher authorities than themselves, and when this is later reflected in data, the regulators hail this as some sort of fundamental change in consumer preferences. You’re seeing this type of shallow analysis in the media, pushed by various interest groups, on a regular basis now.

    An equally significant consequence of using planning ideology to achieve social engineering outcomes has been the impact on prices. In the case of raw land for housing, we have succeeded in the unimaginable – needlessly elevating prices far beyond the reach of average Australians, on the basis that we may run out of land, in a country where land is plentiful. This has been achieved simply by making raw land for detached housing development scarce because permission is not allowed outside artificially drawn urban planning boundaries. (On top of creating scarcity, of course, new land supply is taxed more aggressively than existing supply, via upfront levies. This is no doubt because there are fewer votes at risk in taxing new housing lots as opposed to raising council rates or other broad based revenue measures. Plus, new supply is tied up in a regulatory tangle which now means it can take 5 or 10 years just to get permission to develop land in areas already described as intended for future housing. Go figure).

    The proof is readily available. In the Brisbane region, for example, the price of vacant land per metre is now 2.3 times (230%) what is was a decade ago. Established house prices also increased, but at a lower rate – they are 1.5 times (150%) the price a decade ago. Average weekly earnings, just to bring it back to earth, are 0.6 times (60% higher) what they were a decade earlier.

    In Melbourne, where supply constraints have been more sensibly managed, land for housing is 1.3 times the price of a decade earlier. Little wonder developers are giving up hope for south east Queensland and focussing their energies in Victoria.

    If the fundamentals of supply and demand (let’s call it banana-nomics) are so obvious in the market for new land for housing, where else are they revealing themselves?

    Recent reports have noted that Australian retail property rents (a lot like our housing prices) are amongst the highest in the world. Research by CB Richard Ellis suggests that rents in Sydney, Melbourne and Brisbane are higher than the better shopping strips in Los Angeles or Milan. How can this be? Los Angeles County has a population of around 10 million people, some of whom are noted big spenders. Retail demand there would dwarf that of Brisbane’s retail spend.

    Once again, the answer lies in supply. LA’s ‘sprawl’ is arguably more about the historically easy dispersion of retail and commercial space along high streets and back roads throughout the metro area, as it is about expanding housing. As LA developed, it was relatively easy to create new retail space, and there is plenty of redundant retail space in older strip areas where secondary traders can operate at low market rents. In Australia, by contrast, planning constraints have been much more onerous. The major retail centres, developed from the 1960s to the late 1990s throughout metropolitan areas largely remain the same major centres we have today. Finding new opportunities for retail expansion is a large hurdle which few clear – protection of the retail hierarchy and existing centres, and preventing a dispersal of retail activity beyond existing areas, is the deliberate intention of urban planning schemes.

    The result has been that those with the existing retail centres have paid for, and now own, a precious commodity: the permission to conduct retail activity, with limited threat of competition in that catchment. Our retail rents have grown because retailers – and consumers – have had limited alternative choices. New retail operators have encountered barriers to entry in the form of planning laws and no-compete clauses, once again reinforcing the value of existing permissions. Just ask Aldi or Costco what they think our planning schemes are doing for competition if you don’t believe it.

    City carparking is another example of banana-nomics at work. A study by Colliers International reveals that city parking costs in Sydney and Melbourne are more expensive than London, Tokyo or New York. Brisbane came in at 14th most expensive on a global list of 156 central business districts. How can it be? The answer is simply that the anti-car crusade has led to planning policies which deliberately seek to limit CBD parking spaces, in the futile hope that this will somehow force people to abandon the convenience (and frequently the necessity) of private transport in favour of buses or trains.

    Those ambitions have never come to much, so regulators then resort to the blunt weapon of taxes – with car parking levies now common in many cities and the prospects of congestion charging for access to CBDs frequently rearing its ugly head. This deliberate attempt to restrict (and then punitively tax) the supply of city parking spaces has the inevitable effect of raising prices.

    But there is one fundamental difference between how banana-nomics works for banana growers and property developers. Banana growers can grow more plants and create more supply. The same can’t be said for developers of property. In housing, new supply is likely to remain constrained by growth boundaries and the preference of regulators towards higher and medium density within existing areas. This will create a floor under the cost of new supply which means that prices are unable to fall (they can’t fall below the cost of production). So raw land is unlikely to get much cheaper, unless there are some radical (and many would say much needed) reforms to planning policies around Australia.

    The same applies to retail property. Retailers (most recently evidence by Solomon Lew’s Just Group comments about retail rents) may object to high rentals, but they won’t get much option. Major retail centres are where the action is, and the alternative (on-line retail) isn’t sufficiently appealing to the majority of consumers, who get more from their shopping trip than just a retail transaction. New shopping centres won’t be created within existing urban boundaries because planning schemes are unlikely to allow further retail dispersion away from existing centres. In the limited cases where approval is granted, existing centre owners will play hard ball, arguing fervently against the free market (witness Westfield’s objections to a new Aldi Store, approved by Brisbane City Council, north of Brisbane). Their actions are understandable, given they’ve outlaid very large investments that are contingent on the existing planning scheme remaining.

    And the same applies to car parking. Unless there’s a monumental shift in policy attitudes to private transport and city car parking, we aren’t going to see multiple new above or below ground public car parks being created in our cities, no matter how much the demand. That will mean prices remain high.

    In all cases, it has been the planning regulations that restrict supply and limit choice, not demand, that have been responsible for making our housing, our retail rents, our car parking and so much more, amongst the costliest in the world. And given that those constraints are unlikely to change, you’re unlikely to see that position reverse itself any time soon.

    The burning question, of course, is how long can it last? If supply costs elevate prices beyond the capacity or desire to pay, people stop buying. Economies slow down. The music stops.

    How do you like them apples?

    Ross Elliott has more than 20 years experience in property and public policy. His past roles have included stints in urban economics, national and state roles with the Property Council, and in destination marketing. He has written extensively on a range of public policy issues centering around urban issues, and continues to maintain his recreational interest in public policy through ongoing contributions such as this or via his monthly blog The Pulse.

    Photo by Fernanado Stankuns.