The related work of Jason Roberts and the Better Block Foundation is similarly inspirational. Jason, a website designer from the Oak Cliff neighborhood of Dallas with no technical experience in city-building, started doing projects to transform entire blocks as a demonstration of what was possible. He told me that they started with the Dallas book of codes and “tried to see how many we can break.”
Of course, this was not done in pursuit of deviancy. Quite the opposite. Jason would invite city council members to witness the temporary neighborhood transformation – bikes lanes, street trees, shops open for business, street art, music – and ask them if they liked it. With dozens of smiling constituents milling around enjoying things, the public officials would always voice their enthusiasm. This is when Jason would give them a list of the rules they were breaking, the regulations preventing the transformation from becoming permanent.
The Better Block Foundation now travels to cities helping train local leaders – both inside and outside of government – to make these iterative changes themselves. They developed an entire open-source catalog of hacks and improvements and made it available at betterblock.org. Together with the Tactical Urbanism toolbox, these are proven models for incremental approaches local leaders can use to make high-returning investments in any neighborhood.
The keys to making this work are to take cues from an observation of where people struggle, seek to respond quickly to address those struggles, observe the reaction, and continue to repeat. With little bets, we’re not seeking a solution; we’re humbly iterating responses to cultivate a wealthier and more prosperous place.
Maintenance secures a community’s wealth; little bets are how to expand it.
Filling in the Gaps
The “reservoirs untapped by imagination” are everywhere in our cities. In fact, for the typical American city, the amount of underutilized space is mind-numbing. Most Americans don’t experience it because they interface with human habitat through the windshield of an automobile. The empty space is difficult to perceive when speeding past at 15 to 30 times the speed our ancestors would have experienced. Get out and walk, however, and the number and size of the gaps are overwhelming.
All that space – the space between buildings, all the buffers and ditches, all the parking lots and redundant access roads – represents nonperforming assets costing the community enormous sums of money while producing next to nothing in return. When we thought we were rich, or were going to become rich, we skipped over these places, not bothering to consider the return on our public investment. Now that we know better, we need to go back and find ways to make use of this space.
Planners often call this process infill, but I intentionally don’t use that term. Modern infill projects are done with the same destructive mind-set that has undermined the financial health of our cities: that new development should be done in large increments and built to a finished state. Very little – almost nothing – in our cities can ever be built to a finished state, and so each of these gaps represents an opportunity to establish the first increment of the development process.
Monte Anderson, an incremental developer with Options Real Estate in Duncanville, Texas, told me once that the first increment of commercial development was a tent. Monte has rehabilitated entire neighborhoods and I thought he was kidding, until I started noticing what was right in front of me. Street venders – tents! – the true first iteration of commercial development.
The city of Muskegon, Michigan, took this to the next iteration by installing an entire block of what are essentially storage sheds on an empty lot near their downtown. They did a minimal amount of work to bring in some sand and plastic patio furniture to turn a vacant lot into a temporary park. They then added the sheds along the street to fill a gap in the commercial streetscape, connecting their farmers market to the downtown. The sheds are rented out at affordable rates to startup businesses, several of which proved so successful that they have graduated to larger spots in the downtown.
Muskegon won the 2018 Strongest Town competition and so I was fortunate to spend a day with the mayor, Stephen Gawron, who shared the community’s vision for the site. The storage sheds are temporary; when the city identifies a developer with the right vision for the city-owned vacant lot, the sheds will be moved to another location, someplace that needs a boost. In the meantime, they are a little bet that is paying off.
Joe Minicozzi’s team at Urban3 has assembled some stunning data on the financial productivity of small commercial spaces. One of my favorites – and quite representative of the norm – is from High Point, North Carolina, where Joe and I were invited to make a presentation. High Point has a Walmart and a Kmart, both newer big-box stores out on edge of the city. With varying degrees of subsidy, the city and state had installed, and assumed the long-term responsibility for, tens of millions of dollars of infrastructure to make those stores possible.
In contrast, the downtown has a small restaurant called Jimmy’s Pizza. It is the quintessential startup building: a nondescript, single-story, concrete block box on a narrow lot with a retail window and a front door. Every city with a traditional neighborhood has some of these. For pre-Depression development, buildings like Jimmy’s Pizza were the first permanent increment of development.
A building the size of Jimmy’s Pizza would fit into many of the gaps we are seeking to fill. If cities spent the next 30 years simply working to accomplish that, the resulting wealth would be enormous. Here’s the value per acre of these three sites in High Point:
Walmart: $968,000/acre
Kmart: $385,000/acre
Jimmy’s Pizza: $3,450,000/acre
Jimmy’s Pizza is 350% more financially productive than the Walmart. It’s 900% more productive than the Kmart. It uses very little of the community’s resources, it generates only a small amount of liability, yet it makes fantastic use of its space. And it’s a marginal building in a neglected neighborhood; imagine what would happen to the wealth here if the neighborhood were improving, not declining.
The financial success of Jimmy’s Pizza is about more than just the wealth created on the site. When cities start to fill in the gaps with startup buildings like this, they change the entrepreneurial culture of the community. The profits from Jimmy’s Pizza go, of course, to Jimmy. And Jimmy is important to the community because he’s fully vested. It’s people like Jimmy who attend the local church, put their kids in local schools, volunteer on the parent-teacher board, sponsor a youth softball team, and put a float in the Independence Day parade.
Small business owners like Jimmy put their money in local banks. They use the services of local accountants and attorneys. They advertise in the struggling local paper. They use a local ad agency. In short, unlike the big-box stores, they are part of a local economic ecosystem, one that passes capital around within the community before that wealth escapes outside. To build wealth, communities need to cultivate this kind of ecosystem.
Allowing residential neighborhoods the same kind of startup opportunity is critical to building successful economic ecosystems. Again, planning language often gets in the way. Planners like to describe neighborhoods with both homes and neighborhood-friendly businesses as mixed use. Our ancestors would have simply called them neighborhoods. Little has done more to atrophy our neighborhoods than the planning profession’s fixation on a building’s use instead of its architecture, style, or form.
Likewise, planners often refer to single-family homes that are less than 1,000 square feet as “tiny homes.” Again, these were just “homes” to the people who came before us. In neighborhoods that evolve over time, starting small and incrementally growing was a way to build wealth, for a family and the community. When city regulations demand that everything be built at a large scale and to a finished state, we not only price out much of society but we ensure that many of those who do own a home will struggle with that investment.
It is critical that every neighborhood in America be allowed, by right, to evolve to th
e next level of development intensity. That means empty spaces need to be allowed starter homes, even small houses, on footprints that can be expanded over time. It also means that single-family homes must be allowed to add accessory apartments, or convert to a duplex, without any special permitting, approval of neighbors, or added conditions. To become more financially productive, we need our neighborhoods to thicken up.
Allowing all neighborhoods to evolve to the next increment of intensity is essential to creating positive feedback loops. No neighborhood can be kept under glass, prevented from changing over time, without doing damage to the entire community. Stagnant, frozen neighborhoods are the deepest dysfunction the post-war development experiment has created.
Even so, the next increment of development must be allowed by right, but no more. Neighborhoods need to evolve, but I’m now going to make the case for some prudent constraints on that growth.
Prudent Constraints
In pre-Depression development patterns, there were natural constraints on our capacity to transform neighborhoods. The main limiting factor was mechanical: We knew how to build skyscrapers, but we lacked the machinery to make that happen at scale. We also had constraints with everything from mobilizing capital to the capacity of heating and cooling equipment in different environments.
Going back even further in history, to times before the widespread use of elevators, there was a natural height limit to most buildings. Two and three stories were comfortable. Buildings as high as six stories would often be built in the most valuable places. Going taller meant walking up many more flights of stairs than could be routinely justified, a natural limit on development intensity.
These natural limitations created an equilibrium between the forces of incremental outward expansion of cities and the forces that incrementally intensified existing development. The first European city I ever flew into was Milan. On approach, the pilot announced that the city could be seen out the window. I looked but didn’t see it because I was looking for the skyscrapers that a North American city of 1.4 million would have. There might be buildings taller than six stories in Milan, but I didn’t see one.
San Diego has roughly 1.4 million people, as well. In contrast to Milan, there are hundreds of buildings greater than six stories in San Diego. I’ve been there many times and I’ve found the development pattern confusing to the point of being disorienting. The pockets of intense investments follow no discernible pattern.
It is a common experience in San Diego for a street to have a series of one- and two-story buildings, then a 20-story tower, then go back to one- and two-story buildings. In a world where there is a rational relationship between the value of the land and the value of the improvement on that land, this kind of random pattern should never happen.
That it is common in San Diego and other major cities suggests one of three things. Either, first, whoever built the tower is a fool for building something so overvalued on land so lacking in value. Or, second, the underlying land is so valuable that all those one- and two-story buildings are soon to be redeveloped. Or, third, there is something deeply broken in the relationship between the value of the land and the value of what is built on it.
In the case of San Diego – and many cities in North America – it is the third explanation I find most compelling. Developers can be induced to do many dumb things, but they will not repeatedly overbuild on cheap land. The land has tremendous value. The reason the one- and two-story buildings aren’t redeveloping isn’t demand; it is due to the way the properties are regulated. There are a unique set of incentives that is inducing cities like San Diego to evolve in ways different than Milan, to end up with random jumps of intensity instead of smoother increments of change.
Consider three adjacent parcels of identical size, shape, and all other defining characteristics. One contains a single-family home worth $200,000. The second is a vacant lot. The third parcel contains a 12-story condominium unit worth $10 million. If the vacant lot in the middle is put up for sale, what should the asking price be (Figure 8.2)?
Figure 8.2 What Is the Value of the Vacant Lot?
The most logical way to make that determination is to look at the adjacent properties and determine how the parcel could be developed. What is its highest and best use?
If the purchaser of the parcel was going to build a single-family home consistent with the local market, they could pay up to 15% of the final sale price of $200,000 – or $30,000 – for the vacant lot and still make the math work. However, if the plan is to build a $10 million condo unit, the purchaser could pay 50 times that much, about $1.5 million.
If you owned the vacant lot, would you rather have $30,000 or $1.5 million? The answer is obvious.
Now that we’ve established the value of the vacant lot, look again at the value of the single-family home (Figure 8.3). The underlying land is the same as the vacant lot, and if it really were worth $200,000, even with the price of demolishing the home, that would be comparative steal.
Figure 8.3 What Is the Value of the Single-Family Home?
That’s why it’s not worth $200,000. It’s worth far more, simply because of the development potential.
There are some fantastic breakdowns in market feedback here. The main one is that, for San Diego to develop an entire city of multi-story condo units at the intensity suggested by the underlying land values, the city would need tens of millions of new people. That’s not going to happen, so prices should drop.
They don’t, and that’s because the next increment of development is not allowed. Or, where it is allowed, it has nearly as cumbersome a regulatory process, with as much uncertainty, as a more intensive development. Neighbors are given outsized influence to stop change. Environmental regulations call for extensive reviews. Various boards and commissions all get their say, even for modest projects.
That means the only developers who can pay the price and build are ones with the capacity to work through years of regulatory process, despite the uncertainty, or the ones who have special insider knowledge, or those who have both. In any case, the resulting projects are going to be large. And seemingly randomly located.
This reality has the pernicious side effect of stagnating otherwise perfectly fine neighborhoods. Some are “protected” from development with restrictive zoning, regulations that try and keep the neighborhood in an artificial stasis. This can create a temporary state of prosperity, especially when the neighborhood is disproportionately affluent. As soon as the affluence, and corresponding political influence, begin to wane, the neighborhood becomes the target of random intensity leaps by savvy and connected developers.
Other neighborhoods become trapped in decline. With the bulk of the overall property value being inflated land prices, there is little incentive to make any improvements to the property. Adding a new roof, for example, won’t provide a value increase if the property is priced for a scrape off and redevelopment scenario. The poorest people wind up paying inflated rents for low-quality housing in neighborhoods where they can’t afford to own. And, if things ever turn around, they will be quickly priced out and forced to move.
I could add to these distortions the centralized mechanisms of finance that induce larger developments, the national building and fire codes that favor massive new construction projects over incremental expansion, or the environmental rules that apply more scrutiny to neighborhood redevelopment than nature-wrecking projects out on the edge, among a long list of things we’ve done to make incremental development exceedingly difficult.
Much of this our cities have no direct control over, but the key parts they do. To remove as many distortions as possible, to give neighborhoods a chance to evolve, to build wealth in neighborhoods that is not merely transactional but reflected in the net worth of the people living there, cities must allow, by right, the next increment of intensity throughout all neighborhoods, and they must limit by-right development to only the next increment.
The goal is to thicken up neighborhoods, to c
reate feedback loops that allow emergent prosperity to build on itself. No neighborhood can be exempt from change, but no neighborhood should experience radical change all at once. This is the prudent discipline we must impose on ourselves.
Complex systems overwhelmed with resources stop behaving in complex ways. They become merely complicated, losing the feedback mechanisms that drive adaptation. The temptation to work only in bold ways, to embrace instant and comprehensive transformation as a strategy, guarantees eventual atrophy and decline. If our cities are to be truly strong, they must resist the easy path and dedicate themselves to the work.
Cities can and should grow rapidly where that option is available to them, but that growth needs to be one step at a time, not huge leaps in the dark.
Suburban Retrofit
I’m going to use the remaining space in this chapter to discuss the concept of “Suburban Retrofit,” which is also sometimes called “Sprawl Repair.” Some very brilliant people have looked at failing suburban developments and, given the modern approach to development (build in large blocks, to a finished state), come up with a way to reimagine old sites for new uses.
It is hard to overstate how creative and architecturally impressive this work is. One schematic I saw took a failed big-box store site and started by running a street down the middle to create a walkable Main Street. The parking lot was then transformed into an adjacent urban village with lots of housing, parks, and open space. It was idyllic.
Another design I reviewed retrofitted a neighborhood of single-family homes on cul-de-sacs. The first step was to connect the streets to form a grid. Then the intersections were intensified with commercial buildings. In between these commercial centers, the residential homes were reconstructed to bring them up to the street and form a more walkable environment. Again, as an exercise in design, it was gorgeous.
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