Tag: new york

• Is cycling an inferior economic good?

  Across most global cities, higher household income tends to correlate directly with higher rates of car ownership, solo car commuting, and vehicle miles travelled. So, one could argue, as many do, that cycling is what economists call an inferior good, meaning that as incomes increase, demand for cycling decreases.

  But this isn’t perfectly true. Data from the US — an obviously car-dominated place — has shown that bicycle demand is actually U-shaped. A 2013 community survey showed that the poorest quartile of Americans accounted for 39% of bicycle commuting, whereas the wealthiest quartile accounted for 20%. It was the people in the middle who biked the least.

  In the case of the poorest quartile, it is out of necessity; for the wealthiest quartile, it is a choice, often for health, environmental, and overall efficiency reasons. Cycling saves time and money.

  It could also be the case that the wealthy are able to live closer to work in more walkable communities, and so biking becomes a more tenable option. Irrespective of the reason, it casts doubt on the argument that cycling is truly an inferior good.

  I actually think that the more fundamental cause is our built environment. If you design a place for cars, then of course, as people make more money, they’re going to choose the more convenient option and drive more. It’s what you’ve been optimizing for.

  On the other hand, if you design for transit or cycling, then you start to break this relationship with income.

  Consider that in some of the wealthiest arrondissements in Paris, private vehicle commuting is less than 10%; that in Manhattan, the majority of households do not own a car despite having incomes that far exceed the US national average; and that in Copenhagen, high-income earners in the city centre cycle at the exact same rate as low-income earners.

  Wealthy people will always optimize for convenience. In a car-centric city, that means driving. But this doesn’t mean that cycling is an inferior good; it just means we’re building inferior cities.

  2026.10.13

• Traffic is agonizing, maybe we should try something new

  The other day I asked my dad how a function he attended went, and he responded by saying, “Traffic, BRUTAL. Traveling by car is an agonizing experience.” He’s not wrong, and I know most of us in Toronto like to complain about it. Traffic is one of the negative externalities of a big city.

  But here’s the thing: we know how to solve this problem. You price congestion, as has been done in New York, London, Singapore, and many other cities, and then direct the revenue it generates to a mode of transport that isn’t as agonizing in a big city: rail travel.

  I’ve written so much on this topic over the years that there’s very little I can add at this point. If you’d like to have a read, here are the search results for “congestion pricing.”

  While the policy has proven successful elsewhere, political inertia and valid concerns over equity keep Toronto stuck. But until we charge for valuable road space, gridlock remains our default. New York City has also shown us that once people see the benefits, they quickly change their minds.

  2026.08.19

• Manhattan’s congestion charge is back, maybe

  I first wrote about Manhattan’s proposed congestion charge back in 2018. Naturally, some people supported it and some people opposed it. Four years later, it was reported that the charge was still being considered for the area of the island south of 60th Street, and that it could generate an additional $1 billion in revenue for the city’s transportation authority. But then in June of this year, right before the charge was set to come into effect on June 30, 2024, New York Governor Kathy Hochul said “nah, let’s pause this indefinitely.” And at that point, it felt mostly dead.

  Nope: A revised tolling plan has just been announced — the charge has been reduced from $15 to $9 — and Hochul is now trying to jam it through before Trump takes office in January. Trump opposes the charge and has branded it the “most regressive tax known to womankind”, so there’s a real deadline here. This could get interesting. Do you think it will actually happen, some 6 years later? (In reality, the timeline is far longer. Congestion pricing also looked promising during the Bloomberg era, but then similarly died. And I’m sure there were even earlier proposals.)

  2024.11.14

• Elevators in North America are broken

  It was not my intention to make this building code week on the blog, but for some reason that has happened. So let’s continue. Here is an interesting guest essay — about elevators — written by Stephen Smith for the New York Times.

  Stephen is the founder and executive director of a Brooklyn-based non-profit called the Center for Building in North America. And what they do is conduct research on building codes, specifically in the United States and Canada, and then advocate for reforms.

  Here’s what he thinks about elevators (taken from the above essay):

  Elevators in North America have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed. Special interests here have run wild with an outdated, inefficient, overregulated system. Accessibility rules miss the forest for the trees. Our broken immigration system cannot supply the labor that the construction industry desperately needs. Regulators distrust global best practices and our construction rules are so heavily oriented toward single-family housing that we’ve forgotten the basics of how a city should work.

  Here’s how the US compares to a few European countries:

  Nobody is marveling at American elevators anymore. With around one million of them, the United States is tied for total installed devices with Italy and Spain. (Spain has one-seventh our population, 6 percent of our gross domestic product and fewer than half as many apartments.) Switzerland and New York City have roughly the same population, but the lower-rise alpine country has three times as many single-family houses as Gotham — and twice as many passenger elevators.

  And here’s a set of cost comparisons:

  Behind the dearth of elevators in the country that birthed the skyscraper are eye-watering costs. A basic four-stop elevator costs about $158,000 in New York City, compared with about $36,000 in Switzerland. A six-stop model will set you back more than three times as much in Pennsylvania as in Belgium. Maintenance, repairs and inspections all cost more in America, too.

  If you’re interested in this topic, I would encourage you to give the full article a read. It’s highly relevant to our ongoing discussions around missing middle housing. If cities, like Toronto, hope to build a lot more apartment buildings (especially smaller-scale ones), they are going to need affordable and plentiful elevator options.

  (Thanks to Michael Visser for sharing this article me.)

  2024.07.10

• America’s most and least car-oriented cities

  My partner Kieran sent me this chart this morning:

  

  It is a summary of the average weekday miles traveled by adults in private vehicles, including taxis and ride-hailing vehicles, for the 50 largest metro areas in the US (data is from the fall of 2023). At the top of the list with the most miles traveled is Raleigh, and at the bottom of the list with the fewest miles traveled is, not surprisingly, New York.

  The other cities on the bottom of this list probably won’t surprise you either. But it’s a good reminder of how built form determines our mobility choices. If you look up which US cities have the highest population densities and the most compact built forms, I think you’ll generally find that it mirrors what you’re seeing here.

  2024.06.14

• Infinity and beyond

  Earlier this week, Oklahoma City Council approved plans for the 1,907-foot-tall Legends Tower. If built according to these plans, it would become the 5th tallest building in the world and the tallest building in the Western Hemisphere.

  Currently, the tallest building in the US is One World Trade Center at 1,776 feet (581 meters). This is a symbolic height meant to reference the date of the Declaration of Independence.

  To be even more specific, though, the Legends Tower wasn’t approved at 1,907 feet. As I understand it, it was approved with with an unlimited height. Meaning, if the developers wanted to go even taller in the future, they could.

  This is sort of unique. Usually when a new by-law/ordinance is passed, it includes a maximum height in feet/meters. In this case, I guess they’ll just use an infinity symbol and call it a day.

  Here are some quotes from Dezeen:

  “AO is delighted that the Oklahoma City Council has approved the development team’s request for unlimited height for the Boardwalk at Bricktown,” said AO.

  “We are grateful that the City Council has embraced the vision of Matteson Capital and the entire design team to transform the city into a global destination.”

  The obvious question is “will this get built?” And I don’t know the answer to that. But I do think that infinity is just as symbolic as 1,776 feet.

  2024.06.11

• New York City’s vacancy rate is the lowest since 1968

  Some four years ago, people were talking about the possibility of New York City being dead. But of course that was nonsense. Last week, New York City published the initial findings of its housing and vacancy survey and the key takeaway is that the city’s vacancy rate dropped to 1.41% last year (2023). This is a drop from 4.54% just two years ago and the lowest measurement since 1968. It’s also even worse at more affordable rent levels:

  

  The problem, as described by the city, is a supply-demand imbalance. Over the last two years, the city’s net housing stock grew by about 60,000 homes (~2%). This is, apparently, pretty good compared to recent years/decades; but it wasn’t nearly enough given that the city added 275,000 new households. This is the opposite of dead, and it’s not going to be addressed by just doing things like restricting short-term rentals.

  We have a structural delivery problem and New York City is not alone in facing it.

  2024.02.14

• Does every real estate developer really do this?

  I am not a lawyer. Nothing I write on this blog should be construed as legal advice. In fact, it is highly questionable whether anything I write here should be construed as any sort of advice. Still, Trump’s fraud trial is an interesting one for us to discuss. The case, as I crudely understand it, accuses him of “inflating his net worth to dupe banks” and “issuing false financial statements every year between 2011 and 2021.” And possibly some other things, too.

  Now there are some people who are saying that there’s nothing actually wrong with the way Trump conducts his real estate practice. Kevin O’Leary, for instance, was just on CNN saying, “every real estate developer everywhere does this.” His position was that if you’re going to fault Trump, then you need to go after every developer out there. Here’s the video interview where he says this:

  Let’s break this down. Kevin is right in that people who own real estate ordinarily want it to be worth as much as possible. This is true for individual homeowners and it’s true for large real estate companies. And there are various reasons for this. One reason is that it maximizes your debt proceeds. For example, if you buy a building for $100 and the banks are willing to give you a loan based on a LTV (loan-to-value) of 70%, then you will get $70 in debt proceeds and you will need to put in $30 of your own cash equity.

  However, if you buy a building for $100 and it ends up being worth ~$143, then this same 70% LTV will result in $100 of debt proceeds. This means that you won’t need to put in any of your own cash and that, for all intents and purposes, you just got a building for “free.” By most metrics, this would be considered a good real estate deal. (Of course, you could also buy a building for $100 and have it be worth only $50. And this would be much less fun than getting free real estate.)

  One important question, though, is how does the building end up “being worth $143?” Well, one scenario could be that you just bought really well. It was an off-market transaction (i.e. it wasn’t formally listed), the seller was highly motivated, and so you negotiated a below-market purchase price. You then went out and hired a reputable third-party appraiser who did a bunch of rigorous research and issued you a report that said, “your building is worth $143.” And this would be perfectly fine.

  But one can also imagine ways in which someone could lie and do nefarious things to try and convince people that their building is worth $143, even if it clearly isn’t. Now, at the end of the day, I don’t know the facts of this case. So I can’t comment directly. But I did want to use this as an opportunity to add some nuance to Kevin’s claim that “every real estate developer everywhere does this.” Ultimately, that depends on what “this” is. Are we talking about doing customary things to maximize value creation? Or are we talking about fraud?

  2024.01.12

• More retailers are buying real estate in New York

  Last week we spoke about how many businesses don’t want to own their own real estate, but that some do. We then spoke about Prada’s recent acquisition of 720 and 724 Fifth Avenue for $835 million. However, they’re not the only ones. According to New York’s The Real Deal (thank you John Bell for the article), last year saw the following transactions:

  • Swiss fashion house Akris bought a property from SL Green for $40.6 million
  • Japanese coffee retailer Geshary bought a property on Fifth Avenue from the Riese Organization for $38 million
  • And Dyson bought a building in Soho for $60 million

  Now, some, or a lot of this, is strategic. New York is New York, and global brands need to be there. Another part of this is that there was less competition last year. Fewer real estate companies wanted to buy retail and office buildings, and so end users seem to have stepped in at what they presumably saw as favourable prices.

  But it’s also not totally foreign for retailers to want to own their own real estate. Perhaps the most famous example is McDonald’s, which owns its own real estate and then leases it out to franchisees. Though as I alluded to last week, it’s important to know what business you’re ultimately in. And McDonald’s knows it’s in the real estate business.

  2024.01.07

• Introducing the Meta City

  During the pandemic, there was a lot of erroneous talk about the death of cities. Much like when the consumer internet first came around, the thinking was that technology would make geography irrelevant. I was and am vehemently against this idea, but it’s hard to not feel like technology is doing something. But what exactly? According to Richard Florida, Vladislav Boutenko, Antoine Vetrano, and Sara Saloo, it is creating something called the Meta City:

  The various communities that make up the Meta City may be in different time zones and noncontiguous locations, but they function together as a coherent network with a distinct structure and logic. The Meta City combines physical and virtual agglomeration, in seeming defiance of the laws of physics, making it possible to occupy more than one space at the same time. As a result, urban areas within the Meta City network can share economic and social functions.

  The narrative is compelling. Cities have always responded to and been a product of new mobility technologies. Streetcars, subways, and the car have all reshaped the geography of our cities. Some would argue for the worse. What the Meta City proposes is that technology today is not a disruptor of cities, it is simply another mobility shift. Rather than make cities irrelevant, it actually makes them more important by expanding their reach:

  The pandemic-era shift to remote work is yet another technology stretching the boundaries of the city into a new and larger geographic unit. But instead of doing so physically, it does so by enabling virtual expansion. The share of American workers engaged in remote work tripled from roughly 6% in 2019 to almost 18% in 2021. Remote workers can access significant quality of life at far more affordable prices in smaller cities, suburbs, and rural areas.

  Some specific examples:

  Many of these rising places are critically connected to established cities. As we will see, Austin’s rise is best understood as a satellite of San Francisco’s long-established tech hub. Miami is enmeshed in New York City’s finance and real estate complex. The rise of the Meta City informs a counterintuitive logic: Leading superstar cities are seeing their role as economic hub expand, even as some talent and some industry disperse to satellite centers.

  Finally, here’s their ranking:

  

  If you believe this to be true, then it should be good news for the real estate located in the cities listed above. But it also means that we are now facing a new kind of hub-and-spoke model of urbanism. London and New York remain at the center, but tech is only strengthening their reach and influence. This is a new way of thinking about the flow of human capital around the world, and I’m sure it will have impacts on how we plan and build our cities.

  Image: Harvard Business Review

  2023.11.29