Air Out of the Bubble

For the past decade, Seattle, Bellevue, and the ex-urban area surrounding these two cities have been dominated by hulking construction cranes. The whole Puget Sound region looked like one massive heron rookery. While a portion of this construction frenzy was residential glass skyscraper condominium projects (hello! Is there an original architect in this region?) a substantial portion of the new projects were commercial real estate.

Just this week, a local investment firm, seeking larger headquarters, left Tacoma and purchased the former Washington Mutual headquarters building in downtown Seattle for about 125 million, or $120 per square foot. The building had been recently appraised at $250 per square foot. Gulp. That is a huge huge reduction (the building is currently owned by JP Morgan Chase and/or the US taxpayers).

So it is not surprising in today's news a local developer filed for bankruptcy. A guy who has been in business for a long time. He now apparently has over $500 million in liabilities and around $200 million in assets (which, of course, are probably buildings that may actually be over appraised). While there are several banks holding onto liens secured with real estate, this developer also, apparently, borrowed heavily from "family and friends," and up until July of this year, paid them a consistent 9% return (does this sound vaguely similar to Bernie Madoff?). To add to this man's woes, the State of Washington has opened an investigation on him over the appeals made to the individual investors. He did not register the "sales" of the "investments" as stocks.

There are still dozens of cranes in the Puget Sound region horizon. The glut of residential housing, mostly in the form of condos, also brought commercial space. The chic thing in urban planning, now, is multi-use, so that ground floors on most condo projects are retail spaces. And just a drive-by assessment says much of that space remains unleased (making me wonder whether condominium homeowner associations are left holding the bag on the empty space?). All of this empty square footage portends another bubble about to burst. Despite the Federal Reserve's somewhat cherry outlook earlier this week, there is still an awful lot of air that has to be squeezed out of the bubble before the real estate markets, at least, begin to recover.

Hopefully the ever optimistic real estate agents, developers, and civic boosters will think long and hard before trying to "sell" us on an other unsustainable ride on the real estate roller coaster.

Land Use Planning and Density

Years ago I did a masters thesis on clustering housing around "working forests." Later I gave a presentation at the Kennedy School for Government at Harvard on the same topic. In New England, the idea caught on and there are several developments, now, around forests which are managed for timber products. So it didn't surprise me to read that the new thing is clustering housing around working farms or ranches. It's the ultimate in eating from local sources.

It's a great idea and it's popularity confirms what the Pew polling data shows, that people prefer to live in single family houses with surrounding open space. While suburbs may be unpopular for many so-called "environmentalists," it's still the dream of most Americans.

In Seattle there is a density dogma. Funneling people into mass transit (I call it planning for lemmings), using behavioral strategies to "nudge" people out of cars, and upzoning in neighborhoods to allow for mass and density in projects (or the nail salon buildings where there are apartments or condos above retail which either remains empty or has amazingly tenacious nail salons as tenants). In a matter of a few years we have gone from a charming city with dozens of quirky neighborhoods to a cranky city with cookie-cutter buildings on every single block. However, it is virtually impossible, if you're an aspiring policy maker or politician, to question this urban planning. Every single interest group, from realtors to environmentalists have bought into it (for a variety of reasons which are at odds with each stakeholder group). But it is also an unrealistic and frankly elitist way of trying to make people conform to a way of life that doesn't exist. It's as if the planners and stakeholders are incapable of even examining their own life patterns: the trips to the doctor, taking kids to soccer games, having to care give for elderly parents, wanting to take in a concert or play...I suppose it's ok for them to use their cars but not anyone else (the Seattle mayor famously has said he can't bike to work because he needs a security detail! Yeah, right).

So here it is, the lusting after the bucolic but being told living in homogenous canyon-like cities is better. And how did these urban planners get in control?

Urbancentric

The embattled General Motors and Segway announced they are developing an electric, two person, urban vehicle.  Pretty darn cool.  But where do I put my skis, dogs, groceries, parents...

It seems to me that much of this green technology is very urban centric.  Which make sense since living in cities can be considered highly efficient.  But much of this country and in fact the world, does not live in cities.  Much less, there is still a large number of people who do live in cities but like to get out of them every now and then.

But this green technology development is sorely lacking in it's focus on rural and yes, I know it's not politically correct to talk about, suburban folks.  Where are the substitutes for trucks to haul hay or new technologies in irrigation that reduce water consumption?  

We have a long way to go to reduce our dependence on oil.  In the meantime, homogenizing everyone as if we all live in a compact European town isn't going to solve anything.  And of course, there are all the issues which don't get discussed on whether electricity is any better than oil.  At least in the Pacific Northwest, the salmon are not so sure the dams that generate cheap electricity are such a great idea.

The creativity is good, but really in the end, technology is not going to solve this problem.  We may actually all have to re-think how we live.  Uh-oh, does that mean I have to give up skiing?

Our Homes

Recently, the Pew Research Center finished a poll on American's attitudes toward their homes.  By this, I mean (and maybe so did Pew) the places American's want to consider home, not just the walls, but the location or ideal, as in near mountains, on a river...

During the past number of years, urban planners as well as hip transit engineers, have dreamed of a new American order, one where sprawl would be eliminated, people would move to cities, urban areas, and live in dense, transit oriented developments.  Now, with the real estate crash, these same urban planners believe the idea of a single family house is dead, and are piling dirt on the suburbs as well.  In fact, many of them have articulated the belief that the real estate crash is exhibit A that the single family home was "unsustainable."  They believe high density housing, clustered around urban amenities is the panacea to everything that irks them.

You can see the effects of this urban planning dream in small townhouse condominiums that sprouted like weeds in cities throughout the West (they are, in my aesthetic opinion, ridiculously designed and probably a developer's dream because they can be replicated over and over without any additional design costs to the developer).  These urban planners believe the single family house with a yard is wasted space, encouraging the suburbanization of America.  They tend to think folks who disagree with them are old guard, out of the mainstream, and not particularly environmental.

But the Pew Research shows that most Americans still want to live in a house with a yard, a fence, and in urban areas that have natural amenities (think Seattle, Portland, Denver).  In fact, one op-ed writer opined that American's want to live in those cities and have a garage filled with outdoor equipment (welcome to my world)!  

Increasingly, I think there is a polarization that is occurring in our society that may lead to as intense battles as the so-called blue/red polarities we currently witness.  This divide is over age and, for lack of a better word, entitlement.  The young, hip, urban planner types remind me of the young, hip, Wall Street types, or the young, hip, dot.com types of the late 1990s.  They know a lot.  And are not afraid to let you know they know a lot.  But they also feel they are entitled to being right.  A recent study on expectations of college grades demonstrates my point.

And so, these young urban planners are confident. They know that all the theories they studied, all the GIS maps they've done, all the European cities they have evaluated, are right.  Density is the trick.

But homogeneity is so un-American.  We don't want to look all the same.  We don't live all the same.  Many of us have kids who play sports, all over the city.  Some of us work from home and use our cars during the day to check on elderly parents.  Seniors like getting out and about, maybe even driving to the store or a mall just to look, to be around people.  Not everyone commutes to a downtown glass office building.  Those who want to live near natural amenities want to get out in them.  Not all of us want to live in cookie-cutter close in townhouses.  I think if we wanted to be Europe we'd have designed our communities based on those models decades ago.

I think about my friend who lives less than a mile from her office.  I have known her for over 30 years, and not once has she walked, biked, or even ridden the bus to work.  But she votes for every tax that will go to mass transit.  She's emphatic that we should have it.  But she has never used it to get from her single family detached house with a yard home to work.  She drives to work because she likes to meet with friends who don't work where she does for lunch, or see them for dinner.  Her car has given her a way to maintain a vibrant and vital life with her community.

While I appreciate what the young urban planners are trying to do, and applaud their ability to reach the ears of many politicians who sit through the transit oriented development seminars at their retreats held in swanky hotels far away from urban centers, I also think the young urban planners need to realize they are not the only ones living in urban centers.  Diversity is what makes us vital.  The Pew Research shows that just as much as we are hip and like Starbucks, the same survey on housing also showed that more Americans like McDonalds.  Now, perhaps the urban planners want to encourage more fast food chains near their transit oriented development?