London street of early 20th century Edwardian terraced houses by Bombaert Patrick on 500px

Over the weekend The Economist published an interesting article called, Space and the city: Poor land use in the world’s greatest cities carries a huge cost. The argument is that land isn’t scarce. It’s the land use policies we have created that are artificially limiting supply and driving up real estate values.

In fact, land is not really scarce: the entire population of America could fit into Texas with more than an acre for each household to enjoy. What drives prices skyward is a collision between rampant demand and limited supply in the great metropolises like London, Mumbai and New York. In the past ten years real prices in Hong Kong have risen by 150%. Residential property in Mayfair, in central London, can go for as much as £55,000 ($82,000) per square metre. A square mile of Manhattan residential property costs $16.5 billion.

And part of the reason this has become so prevalent is because of the shifts we’ve seen in our economy and the great return back to cities.

In the 20th century, tumbling transport costs weakened the gravitational pull of the city; in the 21st, the digital revolution has restored it. Knowledge-intensive industries such as technology and finance thrive on the clustering of workers who share ideas and expertise. The economies and populations of metropolises like London, New York and San Francisco have rebounded as a result.

So how do we get better at meeting real estate demand in our cities? The Economist has two suggestions.

One:

First, they should ensure that city-planning decisions are made from the top down. When decisions are taken at local level, land-use rules tend to be stricter. Individual districts receive fewer of the benefits of a larger metropolitan population (jobs and taxes) than their costs (blocked views and congested streets). Moving housing-supply decisions to city level should mean that due weight is put on the benefits of growth. Any restrictions on building won by one district should be offset by increases elsewhere, so the city as a whole keeps to its development budget.

Two:

Second, governments should impose higher taxes on the value of land. In most rich countries, land-value taxes account for a small share of total revenues. Land taxes are efficient. They are difficult to dodge; you cannot stuff land into a bank-vault in Luxembourg. Whereas a high tax on property can discourage investment, a high tax on land creates an incentive to develop unused sites. Land-value taxes can also help cater for newcomers. New infrastructure raises the value of nearby land, automatically feeding through into revenues—which helps to pay for the improvements.

These recommendations will probably be unsettling for a number of people. 

I would imagine that many communities would prefer to have planning and growth decisions happen bottom up, as opposed to top down. But I think there’s some truth to this recommendation and I don’t think it has to mean completely excluding bottom up feedback. Communities and individuals are naturally going to look out for their own self-interests. And so I think many would agree that there’s value in having a holistic urban strategy in place.

Recommendation number two pertaining to land value taxes is a loaded one. So I’m going to save my specific comments for a dedicated post on LVTs. 

But I will say that I don’t think trying to squeeze landowners into development via taxes is the most efficient and immediate way to address supply shortages. In advance of this, we should be examining the current barriers to development. Because we’re talking about hyper competitive global cities with perpetual supply deficits. And I don’t believe the problem is incentive-based. The problem is finding sites. The problem is finding ways to build.

What do you all think? This is an interesting topic of discussion.

“Project-triangle” by Cosmocatalano - Own work. Licensed under CC0 via Wikimedia Commons.

When I was in business school, one of my friends – who runs his own agency – explained to me the Project Triangle and the “pick any two” philosophy. 

Whether you’re building a building or building a mobile app, projects can be typically broken down in terms of 3 constraints: speed, price, and quality. The “pick any two” philosophy is that – because these dimensions are interrelated – you can only really get 2 of these dimensions at any one time.

So for example:

• If you want a project done really quickly and you want it to be high quality, then it’s not going to be cheap. It’s going to be expensive.
  

• If you want something done really quickly and you want it at the lowest price possible, then it’s not going to be high quality. It’s going to be low quality.
  

• Finally, if you want something high quality and you want it done cheaply, then it’s not going to be done quickly. You might get it done, but it will be deprioritized by whoever is doing it.
  

Few things in life are truly black and white, but I really like this framework. It acknowledges the fact that something has to give. It’s unsustainable to think you can always get super fast, high quality work at rock bottom prices.

One of the things I noticed this past weekend when I was on my Porter Escape in Quebec City was that there’s still evidence of the seigneurial land use system. I saw it on île d'Orléans.

Established in 1627 in New France, the seigneurial system was a feudal way of distributing land and creating subsistence farming for those who occupied it. It was ultimately abolished in 1854, but you can still see vestiges of it.

With the seigneurial system, a typical farming lot was a long and narrow strip of land emanating from the water, which in this particular case was the St. Lawrence River. Here’s a map from 1641 showing what that looks like:

The reasoning behind this spatial arrangement was rather simple. By having long narrow lots, it meant that you could maximize the number of farmers who had direct access to water. This was needed for navigation, but also for many other obvious reasons. This was an efficient layout.

At the same time, the long strips meant that each farmer had access to a broad cross section of different kinds of land. They had fertile land for growing, land for their home, and frequently land with trees so that they had material to build, fuel to burn, and so on. It also meant that, despite the overall lot sizes, people actually lived fairly close to each other. It created communities.

Of course, there’s a lot more to the seigneurial system than just its physical form and there are reasons it was eventually abolished. But today I just want to focus on spatial layout. Because I think there are parallels to how we continue to plan our communities.

If you live in a city you’ve probably come across a narrow rowhouse, a narrow townhouse, and/or a long and narrow condominium – which many people like to pejoratively refer to as a “bowling alley” plan. In these cases, the width of the home could be somewhere between 10 and 13 feet.

If you stop and think about this, it’s exactly the same spatial principles as the seigneurial land use system. But instead of maximizing the number of people with access to the St. Lawrence River, it’s about maximizing the number of people who front onto the street and who have access to natural light.

In tight urban conditions, it’s not uncommon to have no “side yard windows.” In my case, I live in a condominium with 20′ feet of windows on one side only. The other 3 sides of my box have none. And that’s a fairly common urban condition.

I find this interesting because as much as the world is rapidly changing, some things don’t actually change all that much.

Image: Wikipedia