In yesterday's post about bottom-up urban development, I mentioned (in parentheses) that the focus on regenerating local economies is arguably even more important in the context of Japan, where a shrinking population is creating urban decline in many communities. And the reason I said this is because it is widely known that Japan has a demographic problem.
Since 2009, the country has seen its population decline every single year. Currently, it is hovering at just over 120 million people, but by 2050, it is expected to fall to roughly 100 million (or lower), with people aged 65+ accounting for nearly 40% of the population.
When this is your backdrop, you're usually more concerned about urban decline than you are about building enough new housing. As Fred Wilson mentioned in this recent post, "pressing issues like the unaffordability of housing, for example, can quickly change if we are living in a shrinking world, not a growing world."
Of course, it's not just Japan. The global fertility rate (as of 2024) stands at around 2.25 live births per woman. This is not that much higher than the replacement level of 2.1, and it's being largely propped up by only one region: Sub-Saharan Africa (>4 births per woman). Remove this region, and the world is now already shrinking in population.
This will have dramatic consequences not just on our cities and real estate markets, but on the global economy as a whole, which is why some people, like venture capitalists, are already betting that the world will need to move from labor-bound to energy-bound. What this means is that we're going to need a lot more energy-consuming tech to compensate for the fact that we have less of the other stuff.
You know, humans.
When it comes to cities, quality of life is a subjective measure. Some people may prefer a small city where homes are more affordable and commute times are negligible, while others may find the unique amenities of a big city more appealing — enough to outweigh the negatives.
Whatever the exact case, there are some obvious negatives that come with urban scale. The usual suspects are high housing costs, traffic congestion, noise and pollution, crime and safety concerns, and the list goes on. But is it universally true that quality of life has to decline as a city grows?
I don't think so at all. I wasn't able to find a good primary source on this topic, but the obvious example and outlier that comes to mind is Tokyo. It is both the largest metropolitan area in the world and a city that consistently ranks near the top of most quality of life indices.
So how do they do it?
There are lots of ingredients that go into a city like Tokyo, but I would argue that one of if not its most important, is its transit network. Tokyo has one of the highest rail modal splits and one of the lowest driving rates in the world. And it's the only way a city of this scale could actually function as efficiently as it does.
This is not me being an ideologue (which I am sometimes called); it is me being a pragmatist. Show me a big global city with more than 10 million people that is oriented around the car and does not have a traffic congestion problem, and I'll happily change my mind.
Over the years, we've spoken a lot about the benefits of cities permitting small-scale commercial uses in residential neighborhoods.
They increase overall urban vibrancy. They promote local consumption (reducing the need for people to do things like drive). And they can help reduce the barriers to entry for small businesses. These spaces tend to be more cost-effective and, in some cases, like here and here, they are spaces that the homeowner already owns.
But there are some important objections to consider. Perhaps the most common one is this: What happens if my neighbor opens a 24-hour taco stand next door? I'm fairly confident that I could single-handedly keep a taco stand in business if it opened up next to me — what an amenity — but I get the concern. It's a legitimate one.
In this part of the world, we have typically responded to this concern by restricting uses. We have thrown the baby out with the bathwater by saying, "Nope, restaurants aren't allowed, because there's a chance it could be a 24-hour taco stand and that might annoy people."
But there are alternatives.
Japan's land-use approach, for example, is (1) generally focused on what you can do (versus what you can't do) and (2) organized around intensity and nuisance. I've never developed in Japan and I don't know the exact nuances of their policy framework, but directionally I think it's an interesting way to moderate this land-use consideration.
An accountant who wants to hang a shingle is different from a coffee shop that's only open from 8am to 3pm (and doesn't have a commercial kitchen), and a coffee shop is different from Peggy Gou DJ'ing next door at an all-night taco bar. But they are all non-residential uses, and that makes them illegal in many/most residential neighborhoods.
Thinking in terms of an intensity gradient is one way to create more mixed-use communities, while at the same time respecting the local context.