Tag: city observatory

• People tend to prefer independent restaurants over chains

  

  I just came across the above chart from City Observatory showing the percentage of restaurants in each city that are part of a chain. (The data is taken from Yelp.) On the top is New York City, where only about 13% of restaurants in the city are a chain. And on the other end is Louisville, where more than 35% belong to a chain.

  The article also observes that there appears to be a correlation between restaurants per capita and the percentage of independents. In other words, the more restaurants you have, the higher the likelihood that more of them will be independents. New York City is once again at the top with 22 restaurants per 10,000 people.

  What is perhaps most interesting about this data is that Yelp ratings show a pretty clear preference for independent restaurants. Meaning that, on average, independent restaurants receive a higher rating compared to chain restaurants. At the same time, this spread seems to be widening. Here’s data from 2012 to 2017:

  

  This is maybe obvious; but it’s worth reiterating. As city builders, it’s good practice to encourage independent and small businesses. They are a competitive advantage. People, at least based on this Yelp data, seem to clearly like them more. So I guess Jane Jacobs was right: “The greatest asset a city can have is something that is different from every other place.”

  Charts: City Observatory

  2023.08.05

• Consumer city and playground city — are they any different?

  

  One conventional way to think about cities is that people migrate to urban areas in order to make more money. This remains true today and the data is pretty clear that, if you live in an urban area, you’re likely to make more money than if you didn’t — even if you’re just as educated. You’re also likely to make even more money if the city is really big (there’s a correlation between income and city size). And you probably also walk a little faster given that, you know, time equals money.

  But there are other reasons for wanting to live in a city. And probably the biggest is that they can bring us pleasure. Back in 2001, Edward Glaeser, Jed Kook, and Albert Saiz published this paper called, “Consumer City”, where they showed that high amenity cities have tended to grow faster than low amenity cities. They also went on to demonstrate that, in high amenity cities, urban rents have tended to increase faster than urban wages, suggesting that there are other reasons for wanting to live in a city beyond simply wage growth.

  Fast forward to today and Ed Glaeser has a new opinion piece in the New York Times arguing the following:

  New York is undergoing a metamorphosis from a city dedicated to productivity to one built around pleasure. . . The economic future of the city that never sleeps depends on embracing this shift from vocation to recreation and ensuring that New Yorkers with a wide range of talents want to spend their nights downtown, even if they are spending their days on Zoom. We are witnessing the dawn of a new kind of urban area: the Playground City.

  I saw City Observatory comment that they thought it was odd Glaeser didn’t mention his previous work on the Consumer City. But I wonder if this is him not wanting to suggest that this was a trend decades in the making. Maybe instead, he wanted to position it as a dramatic and profound shift brought about by a pandemic. But how can you not ask this question: Is the Playground City truly something novel, or are we just following a trend line?

  In my view, they’re not all that different. The basic idea is that people like cities that are cool and fun, and so they will pay a premium to be in those kinds of places. This was true in 2001 and it’s still true in 2023. The only difference today is that we now believe we have too much office space in some markets, and so we’re trying to recalibrate around work vs. pleasure. But even with this, the work component of our cities isn’t going to zero.

  Photo by Jan Folwarczny on Unsplash

  2023.05.12

• Higher gas prices impact cities differently

  Gas prices are up. And here is a chart to support this statement:

  

  If I were trying to be as sensational as possible, I would likely leave things here. But since that is generally not what I try and do with this blog, here is another chart showing gas prices over a longer time horizon.

  

  Shown this way, gas prices don’t seem as crazy. In fact, we’re only now returning to where prices were back in 2008.

  That said, these swings do impact things. And it is interesting to consider how these impacts might be felt differently across different cities.

  So here is one more chart from City Observatory looking at the average number of miles driven per person prior to COVID:

  

  One way to think about this chart is that it generally speaks to built form. Compact cities with higher densities and greater access to public transport, generally translates into people driving less.

  The result is something that City Observatory refers to as a “green dividend.” Less driving, means you save money on cars and gas. And so when gas prices go up, so does your green dividend.

  Of course, if you were to get really serious about calculating your green dividend, you’d also want to look at your housing costs, as land prices tend to decline as you sprawl outward.

  Ultimately, this is a trade off between housing costs and transportation costs (both direct and indirect, such as the cost of your time).

  But I think that there should be another dimension to this green dividend and that is the environmental benefits of less vehicle miles travelled. That too, of course, can be measured.

  2022.03.25

• Case studies on inclusionary zoning

  Back in 2017, Portland, Oregon enacted new inclusionary zoning policies mandating that all new residential projects with 20 or more units must deliver a specified amount of affordable housing. Early accounts, by people like Joe Cortright of City Observatory, suggested that the market was reacting to this new requirement as you might expect. Developers rushed to get new applications onto the books and then there was a drop off in new housing supply.

  Now that it’s been a couple more years, it is perhaps worth checking in on Portland. Cortright did that in the fall of last year and the housing numbers are continuing to fall. From 2019 to 2020, new multi-unit housing permits in Portland fell by more than 60%. I really don’t know the Portland market and so it’s hard for me to comment on whether it is solely the fault of IZ, but there was a peak in 2017 and now housing permits are down significantly. However, they were also down significantly during the financial crisis. It’ll of course be interesting to see how this plays out over a longer time horizon.

  That said, a similar market response was recently reported in another Portland — Portland, Maine. In 2020, the city implemented a “Green New Deal” that stipulated, among other things, that all new residential developments with 10+ units would be subject to their new IZ policies. It has only been just over a year, but according to the city’s planning department, there were 756 new housing units on the books in 2020 prior to the new IZ policies. And since then, that figure has dropped to 139 new housing units. This is admittedly a small market and a relatively short time horizon, but it is still a data point.

  As many of you know, I struggle with inclusionary zoning. Maybe it’s confirmation bias, but I just haven’t been able to find much data suggesting that it can meaningfully increase overall housing supply and the supply of new affordable units. So if any of you are aware of some good case studies outlining successful examples, please share them in the comment section below.

  2022.02.04

• Rich people and single-family zoning

  

  This is a chart from Abundant Housing LA (a YIMBY group), via City Observatory, showing the relationship between median household income and single-family zoning across the 88 cities that make up L.A. County. On average, about 80% of the land in the County is zoned for single-family housing. This is also true for Los Angeles, which is not surprisingly its biggest city. What is pretty clear from this chart is that the richest areas tend to have a higher percentage of single-family homes. If you read Anthony Dedousis’ post, you’ll also see that the housing tends to be more expensive (makes sense) and that the homeownership rates are higher in these single-family areas. One obvious takeaway is that it shows you how clearly we are dividing our cities. Zoning is regulation. And here we are seeing some of the socioeconomic implications. But I’m curious if this relationship would be as strong in other cities around the world and at different scales (i.e. neighborhood levels). When it’s made available (not all cities have this much space), how universal is this pull toward single-family housing?

  2021.05.28

• K-shaped housing market

  

  If you’ve been following the housing market (in most cities) over the last year, this chart likely won’t surprise you. It is from a recent City Observatory article by Joe Cortright talking about the “k-shaped housing market” that we have seen emerge over the last year. The above is for the US, but I would imagine that the chart would look similar for Canada, as well as for other countries. Here’s an excerpt from the article:

  There’s an obvious explanation for the different trajectories of house prices and rents:  Low income workers rent; high income workers own and buy homes. High income households have been barely grazed by the Covid-19 recession.  In fact, the combination of low interest rates and enforced savings (because many kinds of consumption spending, including dining, entertainment, travel and even much retail have been constrained by lockdowns), mean higher income households may find housing a much more attractive spending item.  If you can’t go out to dinner, or take a vacation, you have more money to spend on a new home.  Low wage workers are in the opposite situation.  Low wage workers have borne the brunt of the recession; they are also much more likely to be renters than higher income households.

  It is perhaps worth reiterating that our fixation on homeownership is not universal. If you live in Switzerland — a very wealthy country — you’re more likely to rent than own. And if you live in Germany, you’re more likely to live in an apartment than in a low-rise house. Still, that doesn’t change the fact that the impacts of COVID-19, and our lockdowns, have been felt unequally. This chart is an example of that.

  2021.02.06

• The pull toward “close-in” neighborhoods

  City Observatory has a new report out called, Youth Movement: Accelerating America’s Urban Renaissance. In it, they look at and track the number of 25 to 34-year-olds with a 4-year college degree living in “close-in neighborhoods” within the 51 largest metro areas in the United States. The first thing I asked myself when I read this was, “what’s a close-in neighborhood?” They define it as being a three mile radius centered on the CBD of each metro area. They opted for a distance-based measurement because municipal boundaries usually vary a lot and can therefore be misleading.

  So what did they discover? From 2010 to 2016, the number of young and well-educated people in central neighborhoods increased by about 32% or 1.2 million. And it happened in every single large US metro area. In 80% of these cities, the growth rate also increased compared to the period of 2000 to 2010. Overall, City Observatory believes that this demographic cohort is now about 2.5x more likely to live in a close-in neighborhood compared to other Americans. And I don’t believe that this pandemic is going to change that.

  

  One of the things that’s interesting about this study is that it takes you below some of the top line numbers that you might hear. For example, the above chart starts by showing you the total population living “close-in” within the top 51 metro areas — again, people living within 3 miles of a CBD. From 2000 to 2010, this population figure was more or less flat at about 9.4 million people. But the number of adults and young adults with a 4-year degree increased pretty significantly, driving up the college attainment rate. So even though the total population may not have changed, the demographic composition did.

  For a copy of the full report, click here.

  2020.06.16

• Safety and security per capita

  This is a city metric I haven’t seen before. City Observatory recently looked at the number of police officers (public) and security guards (private) per capita across American cities. They also ask a bunch of interesting questions. Why do some cities have far fewer police officers? Is high security an indicator for “anti-social capital?” (Social norms aren’t encouraging people to behave.) And do some cities simply have more cops because it is perceived to be necessary?

  Here is what they found:

  

  The average is about 3.3 police officers per 1,000. And in each case, city is defined as the metro area. The study relies on census data and, if we’re being precise, the data represents where people live as opposed to where they work. So some cities could be reporting a lower number simply because police officers tend to live outside of the metro area — perhaps because of housing costs. Either way, it’s interesting to consider why some cities spend a lot more on security than others and why Miami has so many security guards.

  Chart: City Observatory

  2020.03.06

• Shortage of cities

  Joe Cortright of City Observatory recently looked at “the myth of revealed preference for [the] suburbs.” In it, he cites the work of Jonathan Levine, who is the author of a 2006 book called, Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land-Use.

  There’s an argument out there that, on average, people prefer the suburbs to urban neighborhoods because, well, more people in the US live in auto-oriented neighborhoods compared to urban ones. What Levine wanted to figure out was whether this was truly a result of consumer preference or simply a lack of urban neighborhoods – or a “shortage of cities” as Cortright calls it.

  To do this Levine examined two cities with very different urban fabrics: Boston and Atlanta. The idea was to take a city with lots of urban neighborhoods (Boston) and compare it to one with relatively few (Atlanta). 

  For his comparison, he classified all of the neighborhoods in both cities on a scale according to how urban they were. “A” meant very urban. And “E” meant sprawling/exurban. He then went out and interviewed residents, asking them about both the kind of housing they would ideally like to live in and how happy they were with their current housing. 

  What Levine discovered, among other things, was that in Boston – where about half of all housing fell into the top 3 most urban categories – about 83% of people with a strong preference for urban neighborhoods were also living in one. Whereas in Atlanta, just 48% of people with a strong for urban neighborhoods were living in one.

  Put differently, the study suggests that in cities with fewer urban neighborhoods, it is more difficult for people with a preference for that housing type to find and live in it, which makes intuitive sense. The spread between preference and reality widens, once again suggesting that this could be about supply rather than an issue of demand.

  Anecdotally, I have seen this phenomenon play out here in Toronto. I often hear people talk about the neighborhoods that they would ideally like to live in, if only they could find a reasonably priced home. (Low supply leads to upward pressure on pricing.) How aligned would you say you are with your ideal level of urban-ness? 

  For more on Levine’s work, head over to City Observatory.

  2018.11.16

• HQ2 isn’t coming to Toronto

  So I was wrong. Amazon didn’t pick Toronto for HQ2. It instead picked Crystal City, Virginia (Washington) and Long Island City, NY (New York City). More on that, here, in the NY Times. Confession: My prognostication was at least partially about trying to create a self-fulfilling prophecy.

  In any event, it’s interesting to consider the locations that they did pick – as well as the fact that they ended up picking multiple cities. This was not part of their RFP. Though, many have convincingly argued that this process was over before it even began. HQ2 was always going to end up on the east coast, near one of Bezos’ homes.

  Nevertheless, urbanists such as Aaron Renn took the announcement as a direct repudiation of the American heartland. He believed that Amazon would be far more cost conscious in their decision making and ultimately elect for a lower cost locale in the middle of the country. Instead, the coastal hegemony won out. 

  Joe Cortright of City Observatory correctly predicted that Amazon would, for a few reasons, parlay their HQ2 search into multiple smaller locations (HQ2, HQ3, and so on). One of the reasons for this is that it gives the company more leverage when it comes negotiating subsidies on a go-forward basis. If NYC doesn’t want our next round of hires, we’ll take them to Washington.

  Looking at the locations, one of the first things I noticed is that both are just outside of their respective “downtowns” (across a body of water), as well as adjacent or on the way to an international airport. Crystal City is across the street from DCA and Long Island City is a 15 minute drive from LGA. Both are situated on top of higher order transit. Makes sense to me.

  Now, who wants HQ4?

  2018.11.07