Houston Strategies

3D Virtual Houston

Came across this interesting Newsweek article on the back and forth arms race between Google and Microsoft in online maps. Microsoft has just introduced 3D satellite maps for 15 cities, including Houston. You can fly around between buildings, which are rendered amazingly accurately (I put it in the slowest but most detailed mode). Microsoft makes money by placing floating billboards in the sky over paying customers.

After a slow install process (only works in Internet Explorer), I checked it out, and they're pretty cool, albeit extremely limited. As far as I can tell, the only portions of Houston they have in 3D are downtown and midtown, which is a little lame. The Texas Medical Center, Reliant Stadium, Greenway Plaza, and Uptown are all flat as a pancake. Dallas seemed to have a lot more buildings in 3D, although still broadly spread in the area around downtown. I recommend trying it out, but the controls take a little getting used to. For your convenience, I was able to create links to pretty cool views of downtown from the southeast side near Toyota Center and from the west side. Huh. I just tried those links out that they generated for me, and they sent me to central Washington State. I guess it is beta software. Oh well, play around and enjoy. Try the "Houston" link in the left sidebar, and "Las Vegas" is pretty cool too.

posted by Tory Gattis @ 8:57 PM 3 comments

Enron's seeds in Houston, big Texas nation, and urban vs. suburban social lives

A few minor items of interest tonight. The first is a Wall Street Journal article (nonsubscriber copy) on a new life for former Enron traders among various hedge funds and commodities trading groups. The interesting part is that they seem to be forming in Houston, obviously because many of them started here, but also, evidently, because many of the traders evidently liked it here and long to return.

Five years after the Texas energy-trading giant collapsed, the traders behind some of Enron Corp.'s brashest efforts to carve out new markets are pushing further into those frontiers.

Enron alumni have joined hedge funds and trading operations capitalizing on fast-growing commodity markets that the company once dominated or helped develop, from its stronghold of natural-gas and power trading to experimental futures markets in pollution-emission credits and weather contracts. A few Enron refugees have even joined industrial or consumer-goods firms, where they negotiate contracts to reduce the risks of volatile energy, food and raw-materials prices.

The growth of commodity markets popularized by Enron, and the ability of its veterans to raise money in budding areas, is to some a validation of at least part of the company's model: trading commodities of all kinds.

...

Citigroup snapped up Stuart Staley, a successful coal trader at Enron. Mr. Staley, 40 years old, now runs the gas- and power-trading operations of Citigroup from Houston, where traders he sought to hire already resided or wanted to return. Lehman Brothers Holdings Inc. and Bear Stearns Cos. are building energy-trading operations in Houston, among other cities, with former Enron traders.

It would be a big win for Houston if these seeds developed into a robust financial industry cluster here, something I discussed earlier in this blog. Many top world cities are built at least in part around a financial industry cluster (London, Tokyo, NYC, Chicago commodities), so it would be a great one for Houston to cultivate.

The next item is a random excerpt from an investing newsletter I read, with a fascinating set of comparative stats.

He makes a solid case in the speech for needing to incorporate more global data into the Fed models, as the global economy is influencing the US economy to an ever greater degree.

What if Texas issued its own currency and had its own central bank? Texas as a nation would not be a small player. In dollar terms, it is larger than Korea or Brazil or Mexico and 25% larger than India. But even given that, a Texas central bank could not discern proper and prudent monetary policy by just looking at Texas data. They would clearly have to take into account the data from the US and the rest of the world in order to maintain price stability and full employment.

All very reasonable and thoughtful, and an explanation why the Dallas Fed is beefing up its economic staff in search or more and better data.

I would not have guessed we would have a larger economy than those countries with only 22 million or so people here. Finally, and excerpt from a recent report on urban vs. suburban social lives.

A new study says that people who live in sprawling suburban areas have more friends, better community involvement and more frequent contact with their neighbours than urbanites who are wedged in side-by-side. The results challenge the accepted idea that suburban life is socially alienating a notion that's inspired everything from the Academy Award-winning American Beauty to Harvard professor Robert Putnam's book Bowling Alone.

The study, released by the University of California at Irvine, found that for every 10 per cent decrease in population density, the chances of people talking to their neighbours weekly increases by 10 per cent, and the likelihood they belong to hobby-based clubs jumps by 15 per cent.

"We found that interaction goes down as population density goes up. So, turning it around, it says that interaction is higher where densities are lower," says Jan Brueckner, an economics professor at UC Irvine who led the study. "What that means is suburban living promotes more interaction than living in the central city."

Quite counter-intuitive, eh?

Have a great Thanksgiving. I may or may not be able to post Thursday night.

posted by Tory Gattis @ 6:17 PM 10 comments

WSJ on Midtown problems and one potential solution

Soon after Thaddeus Herrick wrote the glowing piece in the Wall Street Journal on Houston's real estate market, he wrote another less-than-glowing piece on Midtown, which has not developed into the urban neighborhood people had hoped. Thankfully, Kevin at blogHouston alerted me to the article, which was buried inside the B section where I didn't see it. You can read the first four paragraphs of the article there.

Problems include land speculators demanding too much (up to $50/sq.ft. from $10 a decade ago), difficult land assembly, downtown competition, and uneconomic suburban parking requirements. Some people blame bad management and infighting by the Midtown Redevelopment Authority TIRZ. There are some successes, though: a population increase from 450 to 15,000 since 1990, the Randall's grocery store, and tons of townhomes, mainly east of Fannin and San Jac.

You can read my previous thoughts on Midtown here, and I still stand by the assertion that the roads feeding the 527 Spur off of 59 are not only not pedestrian friendly (because they move so many cars), but the businesses along there are perfectly happy with easy parking for those commuters - and easy in-and-out, front-side parking is not a hallmark of pedestrian-friendly, mixed use, urban neighborhoods.

One possible solution comes from one of my earliest posts on this blog: cut-and-cover tunnels under Bagby and Brazos connecting the spur to I45, paid for with EZ-tag tolls. With a little extra work, those tunnels could also offer exits and entrances to the downtown grid (Smith, Louisiana, and others) near the Pierce Elevated, which would take those cars off of Midtown streets and make it much more feasible for them to become pedestrian-friendly, including diagonal street parking like Cotswold. Some of those businesses may not be too happy, but commuters would still have the option of using the surface streets if they need to run an errand or two before getting on the spur (say... the mega-Spec's on a Friday evening...), but all the pass-through cars could go underneath, greatly calming the surface traffic. And, as I originally wrote, the big bonus would be relieving the north-south freeway bottlenecks in Houston through Uptown and Downtown (including the Pierce Elevated) by providing another alternative. I would definitely call that a win-win for both the city and the neighborhood. If you know people with the Midtown Authority or TXDoT, please pass it along. And I have a Word document with more details (including maps) if they're interested.

posted by Tory Gattis @ 6:39 PM 7 comments

Harvard questions Boston's commuter rail

Closing out "Rail Week" at Houston Strategies, today we have a Harvard Kennedy School op-ed in the Boston Globe on their commuter rail (thanks to Chris for the heads-up). But first, if you haven't caught 'em already, don't miss Christof's recent posts on possible Metro University Line routings around Montrose and Greenway Plaza. My own thoughts here.

On to the excerpts:

...the history of commuter rail in Massachusetts suggests that while commuter rail can be helpful, it generally has not revitalized communities or reduced sprawl.

Since the early 1970s, the state has provided hundreds of millions, perhaps several billion dollars to support and expand commuter rail service, which now stops at over 100 separate stations in Greater Boston. In the 1970s and 1980s, moreover, the state closed lines serving 39 other stations.

This history provides a natural experiment on how commuter rail service affects nearby communities. And it turns out that while commuter rail lines do carry thousands of people each day, they have not revitalized or significantly changed their host communities. That's the key finding in a new study by former Harvard graduate student Eric Beaton and published by the Rappaport Institute for Greater Boston (which I direct).

...

Beaton also found that while areas that had, gained or lost rail service are significantly denser than the region as a whole, density levels did not increase significantly in areas near new rail stations. Nor did they decrease in areas when nearby stations were closed. In other words, areas served by commuter rail tended to be dense at the outset, and losing rail service didn't change that.

Even more surprising, introducing commuter rail wasn't even associated with significant increases in transit ridership. Rather, people who started using new commuter rail stations merely stopped using buses or older rail stations. Any increases in transit ridership were so modest that the share of adults using transit to get to work in areas that gained commuter rail lines is still very close to the share of people in areas that lost that service.

From his data, Beaton concluded that " providing new commuter rail facilities is not likely to produce significant changes in travel and land use patterns." That's not to say that commuter rail has no benefits. Rather, it suggests that commuter rail can, at best, play a modest role supporting stringent efforts to increase density, reduce sprawl, and promote transit.

Commuter rail competes for public money with other transportation projects and a host of other priorities, from law enforcement to education.

Beaton's findings do not mean that we should cancel planned rail lines or close down existing lines. But they do suggest that we should rigorously analyze whether proposed, planned, and perhaps even existing commuter rail are efficient and equitable ways to achieve important public goals. The data also suggest that in doing so, we should focus most heavily on transportation benefits, such as reduced congestion or faster travel times.

Above all, the data suggest that we should be very wary of claims that commuter rail will also produce a variety of indirect benefits, such as reducing sprawl or revitalizing ailing communities.

In Houston's case, the question is, does this also apply to street-level light rail service in the core? There's work currently going on called the Urban Corridors initiative to figure out how to encourage density around these stops (more, including challenges, here: parts 1, 2, and 3). It is possible that Houston, because of a lack of zoning, may be more successful than the Boston metro in this regard, on the assumption that they did not sufficiently change their zoning around the stops to create density (most small municipalities/neighborhoods seem to hate density). But the results so far along the Main St. line in Midtown are not very encouraging.

posted by Tory Gattis @ 6:41 PM 7 comments

Brookings Scholar and Berkeley Economist on Rail Transit in America

Continuing "Rail Week" at Houston Strategies, today I want to pass along a piece from Bob Poole's Surface Transportation Innovations at Reason.

Brookings Scholar on Rail Transit in America

Rail transit projects in most U.S. urban areas arouse controversy. Many taxpayer advocates argue against them, contending that they produce very small benefits in exchange for very large taxpayer costs. But transit advocates justify the projects as essential to reduce congestion and improve air quality, by “getting people out of their cars.”

Brookings Institution’s transportation scholar Cliff Winston has taken a quantitative look at this issue. His new paper is titled “On the Social Desirability of Urban Rail Systems,” co-authored with Vikram Maheshri, an economist at the University of California at Berkeley. It appears in the Journal of Urban Economics and is available online at www.sciencedirect.com.

The purpose of the paper is to estimate the contribution of U.S. urban rail systems to social welfare. The authors define the net benefit of a rail transit system as the difference between its benefits, broadly measured, and its net cost to taxpayers. If this difference is positive, it means that the dollar value of the rail system’s benefits is greater than its net cost to taxpayers (i.e., the difference between what the rail system’s customers pay as fares and the total cost to build, operate, and maintain the rail system).

On average, rail transit systems cover about 40% of their operating costs from farebox revenues and none of their capital costs, according to figures in the National Transit Database. That means their net taxpayer subsidy is large, given the high capital costs of rail.

Winston and Maheshri construct an elaborate econometric model to estimate the “consumer surplus” of 25 rail transit systems. This is economists’ term for the benefits to users, over and above the fares they pay. The large systems (New York, Washington, DC, San Francisco’s BART, etc.) all produce significant consumer surpluses. But most of the smaller ones do not; those with “negligible” consumer surpluses are Miami, St. Louis, Sacramento, San Jose, Pittsburgh, Denver, Buffalo, and Newark. Most of these are relatively new light rail systems.

Next, the authors compare the consumer surplus of each system with its net taxpayer cost. On this measure, every single one of the 25 systems has negative net benefits—i.e., the annual value of the benefits to users is less (usually much less) than the annual cost to taxpayers. Surprisingly, this is true even for the massive New York City rail transit system, which by itself accounts for two-thirds of the nation’s rail transit passenger miles.

But what about larger benefits to the metro area? Rail systems are advocated not just to benefit their riders, but because they are expected to reduce traffic congestion, reduce air pollution, save energy, etc. So the final step in Winston and Maheshri’s analysis was to estimate the value of these “externality” benefits. They first conclude that the only one of these purported benefits large enough to make any difference is congestion relief. Given rail transit’s low load factor (less than 20% during all the hours of the day these systems operate, generating costs), neither the energy savings nor the emission reductions are significant.

They do quantify the congestion reductions, which are significant because the rail systems attract riders during rush hours, when marginal reductions in cars on the road can make a meaningful difference in the level of congestion. Adding the congestion savings to road users to the consumer surplus gives the total benefits of rail transit. When this total is compared with the net taxpayer costs, only San Francisco’s BART produces net social benefits (though the Chicago Transit Authority system comes close).

All 23 other U.S. rail transit systems are net losers. The net social cost of some of these systems is as follows:

Miami-Dade Transit: $141 million/year

St. Louis light rail: $171 million/year

Dallas DART light rail: $457 million/year (ouch!)

Sacramento light rail: $106 million/year

San Jose light rail: $210 million/year

Pittsburgh light rail: $135 million/year

Denver light rail: $279 million/year

(I checked the whole paper - no Houston)

This means each of those urban areas is poorer by that amount each year.

Winston and Maheshri anticipate that some rail advocates will protest that these systems offer other benefits that are not accounted for in their calculations. For example, rail stimulates some development around rail stations. “But case studies have yet to show that after their construction transit systems have had a significant effect on employment or land use close to stations and that such benefits greatly exceed the benefits from commercial development that would have occurred elsewhere in the absence of rail construction.”

And there is also the claim that rail systems increase the mobility of low-income residents. But the authors point out that the median annual income of rail users in 2001 exceeded $50,000, which was greater than the median income of the general population in that year. So rail’s primary market is not the poor (unlike bus transit).

Overall, then, the authors conclude that rail transit is erroneously believed by the public to be socially desirable, because “supporters have sold [rail systems] as an antidote to the social costs associated with automobile travel, in spite of strong evidence to the contrary.” [emphasis added] They conclude that, in fact, rail transit is “an increasing drain on social welfare.”

Whole paper (pdf)

posted by Tory Gattis @ 10:05 PM 11 comments

NATIONAL CHAMPS, and What do economists think of rail?

Houston Dynamo - MLS Cup National Champs!

Just caught the end of the Dynamo MLS Cup Championship Game vs. New England. Talk about drama. 90 mins, no score. 23 mins into a 30 min overtime, New England scores. Looks very, very bad. One minute and 7 seconds later, Houston gets the ball back and Ching heads it into the goal. Tied! Goes to penalty kicks at the end of overtime, and Houston blocks the last penalty kick to win 4-3! It's Clutch City all over again. The Houston Dynamo get the MLS Cup National Championship their first year in Houston! Very cool. Heck of a way to quickly build a local fan base...

Moving on, this is going to be "Rail Week" at Houston Strategies, as there are three recent research items that have come out, including one from a Brookings Scholar and another from Harvard. As most of my readers know, I mostly support Metro's LRT/BRT plan for the core, but I am opposed to commuter rail, which is slower, less direct, and less frequent than HOV/HOT express buses, especially when it comes to serving multiple job centers. That said, I think it's always important for Houston to be keeping up with the latest research and what's happening in other cities, so we can learn from their mistakes and build the highest-benefits/lowest-cost transit system we can.

The first report we'll cover comes via Reason's Out of Control blog, which points to a paper surveying what economists have said about rail projects, trying to distill a consensus opinion. Here is the abstract:

In the United States, the public debate over urban rail projects is complicated by the lack of agreement on goals. Supporters offer a wide variety of justifications to build and expand rail transit. If one focuses on the judgments of economists, the list of justifications shrinks considerably, but we are still left with a bundle of goals. Compared to other justifications, economists appear to be somewhat optimistic about rail transit’s impact on local economic development, but less optimistic about rail’s ability to achieve environmental improvement and serve the transit-dependent poor. Economists seem quite pessimistic about rail’s ability to achieve key transportation goals like reducing congestion. Economists often attribute rail’s political success to rent-seeking and romantic political factors. Of those economists who offer a big-picture view, there appears to be wide, though not unanimous, agreement that rail’s costs exceed its benefits. And it seems that almost all economists who write about rail agree that various demographic features, such as suburbanization, the declining influence of central business districts, and increasing wealth will make it increasingly difficult to design successful rail systems.

I definitely agree with that last point. I'm curious if that "costs exceeds benefits" point holds from a local perspective if federal money is treated as "free" - which, as far as the locality is concerned, it is (that money is going to get spent in some city, it might as well be theirs).

I came across another stats table here which demonstrates that, despite their higher capacity, rail lines typically carry far fewer people than a single freeway lane - at much higher cost. Houston looks pretty bad in that table, but that is 2004 data, the first year of the Main St. line, which now carries far more passengers, becoming, I believe, one of the highest density lines in the country in terms of passengers per mile of track (recent Christof analysis).

We'll cover the other two rail reports later this week.

posted by Tory Gattis @ 5:52 PM 6 comments

Empty lanes, dog rescue rally, and the new UH Master Plan

Tonight we have a collection of small items. First, if you didn't catch it on Channel 2 News, check out the video of this story about 4-year-old, closed, unused diamond/HOV lanes up near The Woodlands, staring Christof Spieler of the Citizens Transportation Coalition. The hang up seems to be that TXDoT doesn't have an entity to hand off the lanes to for operations and enforcement. They somehow figured Metro's jurisdiction was going to get extended northward (where did they get that idea?), but it didn't happen. It made me think of the diamond lanes in Ft. Bend County on 59. Does anybody know who enforces them?

Our second item is a public service announcement, if you're looking for something fun to do on this beautiful weather weekend:

The third annual Dogtoberfest Rescue Rally will be held this Saturday, Nov. 11, from 1-5 p.m. at the Ginger Man Pub, 5607 Morningside in the Rice Village. The event will feature animal rescue groups from throughout Houston and will focus on breed awareness and education. Basically we are talking about dogs, beer, wine, games and a silent auction – what a way to spend a Saturday afternoon!!!

Kuff's post is here. I've also been told from an insider that it will be swarmed by women who drink beer and love dogs - so single guys should strongly consider attending.

Finally, thanks to this Houstonist post, I discovered this site about the University of Houston's long-term master plan, which is pretty impressive. It should go a long way towards helping the university get to the next level ("slated to be Texas' third Tier 1 research university"), a critical need for the city. Watch the video if you're casually interested, and download the 79mb PowerPoint if you're want the deep detail - including some inspirational pics of very impressive improvements to Georgia Tech in Atlanta. And if you have the ability to direct or influence big philanthropy money, please consider a donation to the effort. I don't care if you went to UT, A&M, Rice, or wherever, if you care about the future of Houston, you should care about UH.

posted by Tory Gattis @ 10:23 PM 5 comments

Houston's real-estate "payback"

So, after my post last week on Houston being the hottest housing market in the country, where I referred to the Wall Street Journal's explanatory paragraph as "lame", they come out this week with an in-depth profile of Houston's real-estate boom. Coincidence? I think not. Clearly my word has sway in the hallowed editorial halls of the Wall Street Journal... (um, yeah, right). Thanks to Len for the link. Some good stuff in here, so we'll move straight to the (extensive) excerpts.

Houston Missed the Real-Estate Boom of East And West Coasts, but Now It's Payback Time
By THADDEUS HERRICK

HOUSTON -- This sprawling city missed the real-estate boom that sent home prices soaring on the East and West coasts. Now, with much of the nation's housing market in retreat, it has yet to feel even a tremor.

In September, local sales of single-family homes and condominiums were up 17.7% from a year earlier, logging their 32nd straight month of increase, according to the Houston Association of Realtors. The median price of an existing single-family home: $143,400, up 3%.

By contrast, nationwide sales of residential real estate fell 14.2% in September, according to the National Association of Realtors. Home prices nationally were down 2.2%, retreating in such former hot spots such as Washington, Boston and San Francisco. The national median sales price for September for existing single-family homes was $219,800, according to the Houston Association of Realtors.

Houston's gains are nothing like those seen in the past decade in the Northeast and California, but that may be the secret to Houston's success and the reason a bubble is unlikely to develop here. Land here is abundant, and the city has some of the least-restrictive land-use and construction rules in the nation. Those factors help supply to keep pace with demand and keep prices within reach of a broad range of potential buyers.

"We haven't had a bad year in the past decade," says Lorraine Abercrombie, chairwoman of the local Realtors group and marketing director for Greenwood King Properties.

Houston's model is in stark contrast to cities such as Boston and San Francisco, which have strict zoning, exacting building codes and laws governing historical preservation. Some economists, including Edward Glaeser of Harvard University, say excessive regulation in such cities has slowed construction to the point where demand has outstripped supply, fueling a run-up in home prices.

In the once-sizzling markets where home prices are falling, housing costs are double, triple or even quadruple those of Houston. The danger, says Dr. Glaeser, is such places have priced out today's highly skilled "knowledge workers," forcing them to live in a more affordable locale where their contribution to the economy might not be as great. "These are places where only the elite can live," Dr. Glaeser says.

Not so Houston. Confined by neither oceans nor mountains, the Houston metropolitan area has plenty of room to spread out. What is more, the city has no zoning, weak historical-preservation rules and few tools to preserve open space.

The result is unfettered growth. For that, too, there is a price to be paid.

Houston lacks the historical charm of a city such as Boston and the natural beauty of a place such as San Francisco. In recent years an increasing number of Houston residents have warned that the city's affinity for strip malls, freeways and endless subdivisions may be putting it at a disadvantage in attracting talented workers.

Even so, Houston's economy is humming, thanks in part to a sustained boom in oil and gas and the city's burgeoning medical industry, which attracts patients from all over the world. In addition, the Hurricane Katrina evacuation in 2005 brought tens of thousands of refugees here, pushing up retail sales and lowering apartment-vacancy rates. Most of the Katrina refugees weren't wealthy enough to buy homes, however.

The Houston metropolitan area has added 420,000 jobs since 1995, according to the Greater Houston Partnership while the 10-county metropolitan statistical area topped 5.2 million people in July 2005, up about 11% from the 2000 Census count, according to the Texas State Data Center.

Affordable housing has played a significant role. James Gaines, an economist at the Texas A&M University's Real Estate Center, says a Houston developer can be "cutting roads and building houses" within a year of buying 500 acres. The same project would take a developer in Florida three years and as many as eight years in California, substantially pushing up the price, says Dr. Gaines.

The Houston Association of Realtors reported total property sales -- everything from single-family homes to country homes to lots listed on the Multiple Listing Service -- numbered 7,163 in September, up 17.8% from a year earlier. Sales of new and existing single family homes were up 19.3% to 5,954. The pace of home sales is also picking up. The trade group says the area has a 5.5-month supply of unsold homes, down slightly from August.

The national outlook isn't so bright, with some economists forecasting that sales of new homes are unlikely to start rising again before early 2008. A joint survey by consulting firm Global Insight and Cleveland bank holding company National City Corp. showed that 67 metropolitan areas experienced price declines in the second quarter this year, and not just those that enjoyed the boom. The Midwest, for example, showed the highest concentration of falling prices.

The survey also showed slower home-price increases nationally in the past year, with the most rapid slowdown coming in high-price markets such as California, Florida and the Northeast corridor. Nearly 70% of the 317 metropolitan areas surveyed showed a decline in appreciation during the period.

Texas had six markets where home prices rose at a rate of between 6% and 12% and another nine markets where prices increased 12% or more, the survey showed. Richard J. Dekaser, chief economist for National City, says, "It's like revenge of the nerds."

posted by Tory Gattis @ 6:49 PM 2 comments

Houston's thought diversity

A quick pass-along tonight from Otis White's Urban Notebook at Governing.com titled "The Fading Urban Marketplace of Ideas." It talks about how we as a society are separating out into our own little non-diverse monoculture bubbles where we no longer debate ideas or learn tolerance. I definitely have noticed this developing trend. My own step-daughter at UT in Austin was stunned that Bush won the last election - she "didn't know a single person that supported Bush" (welcome to the central Austin monoculture - Keeping Austin Weird with a wide array of left-wing upper-middle class Anglos). To be fair, I'm sure the exact same thing was said about Kerry all over the A&M campus.

The good news is that I think Houston has somewhat resisted this trend. Although we are majority Republican regionally, we're suprisingly balanced inside the city - a rarity among central cities in America. I also think the lack of zoning has lead to a "marbled" city of diverse neighborhoods with many different ethnicities, religions, and income classes. We lack the legal land-use/approvals/permitting enforcement mechanisms that are usually used to keep "others" out. Even our suburbs can be surprisingly diverse. Let's hope we can resist the national trend and keep it that way. Keep Houston Weird!

Here it is, posted in-full as usual because there are no permalinks:

An Epidemic of Homophily
The Fading Urban Marketplace of Ideas

If you look back on the novels written about cities since the 18th century, one theme stands out: the young person who moves to a big city to escape the sameness of small-town life. In these books, the appeal of cities was their surprising diversity — of ethnicity, religion and class, of course, but also of thought. You could hear ideas expressed in New York, Chicago, New Orleans or Seattle that were never uttered in Midwestern farm towns, West Coast fishing villages or Southern mill towns. All of which makes the following sentence so sad: Our modern metro areas may be losing their role as marketplaces of ideas.

It’s not that cities don’t still have people who feel passionately about things. There are libertarians, feminists, black nationalists, religious fundamentalists, conspiracy theorists and, yes, even a few communists in every city of size — not to mention lots of plain old Democrats and Republicans. But opportunities for these people to meet and exchange views (or even just hear each other’s ideas) are dwindling, social scientists believe.

Why? Partly because of human nature and partly because technology and affluence are allowing us to separate from those who think differently, a recent article in the Washington Post reported. The human-nature part is easy to understand. We like to be around people who are like us in social class and general outlook. The academic term for this, the article said, is homophily.

In the past, cities and social institutions tempered our homophilic tendencies. In public schools and the workplace, around our neighborhoods, in mainstream churches and synagogues, we came to know (and sometimes like) people who thought differently about things. The media also helped. Whatever their faults, daily newspapers and evening TV shows introduced us to how others looked at events and came to different conclusions. This, in turn, bred tolerance and sharpened our thinking. (There’s nothing like someone pointing out obvious flaws in your argument to make you think more deeply.)

What’s different now? Our sprawling metro areas allow us to live in neighborhoods and suburbs that mirror our opinions (most big metro areas have congressional districts that elect only liberal Democrats and others that send forth only conservative Republicans). Affluence permits many to withdraw from institutions such as public schools that once introduced people to diverse thought. Technology plays a role, too, giving us cable networks, talk-radio shows, blogs and publications that endlessly echo our own opinions.

A result of growing homophily is unthinking partisanship. One social scientist told the Post that, at election time, “I often hear people say with absolute certainty that whoever they are in favor of is obviously going to do well because they haven’t talked to ’anyone’ who supports the other person.” Another result is intellectual poverty. We don’t think about our views because they’re rarely challenged. “Most of us would be hard pressed to provide clear explanations for our political beliefs,” another social scientist told the Post. ”We participate in settings where we don’t have to explain ourselves because everybody else agrees with us. What this means is, I have no reason to challenge or question my own beliefs.”

And yet there are still people who are curious about ideas and willing to consider others’ viewpoints. There could be an opportunity for cities here — if they find new ways of introducing people with opposing opinions to one another in settings that encourage listening and polite argument. But it’s clear that this must be done deliberately. After all, we’re fighting human nature on this one.

posted by Tory Gattis @ 9:32 PM 6 comments

Comparing Atlanta, Dallas, and Houston

Today's post is a little different from our usual at Houston Strategies. It's an email dialogue I recently had with Steve sparked by the Chronicle article on downtown Atlanta's struggles. This is also a much longer post than usual, but I think anybody curious about how cities evolve in both good and bad directions will find it pretty interesting. Hopefully a broader dialogue can continue in the comments.

First, one quick side note: don't miss Christof's analysis of Metro's planned intermodal terminal north of downtown. Some excellent detailed analysis. My thoughts on it from earlier this year are here.

On to our dialogue, starting off with Steve:

Houston should feel VERY fortunate that its downtown vacancy rate isn’t similar to that in Dallas and Atlanta. Also, downtown Los Angeles’ vacancy rate, though similar to Houston’s, is much higher than in non-core locations. Some thoughts on this:

• Central Houston has remained central geographically to the region’s growth, unlike in the other two cities, where growth has been very lopsided to the north (an outgrowth of racial bias in my opinion).

• The wave of corporate consolidations in energy and finance / banking seems to be over for the moment in Houston. It did have a significant negative impact on downtown and other urban core office markets here. It’s still occurring in Dallas and Atlanta, apparently. Not that we couldn’t still see more of it here though.

• Dallas and Atlanta both have strong freeway access to their downtowns, just like in Houston. Atlanta is particularly notable for its giant freeway “connector” through downtown. However, with such employment decentralization (and of course residential decentralization), residents from outer suburbs – still the premier destination for upwardly mobile families – just have to go through too much congestion to access downtown, from the outer suburbs all the way in. In Atlanta (and Dallas too), the first-ring suburban employment centers suffer the same problem. It just drives employers further and further out. Upscale residential densification in the core helps to slow this a little maybe, but upwardly mobile families with school age children are still the employees you have to please – they’re often your most valuable human resources. Freeway extension and expansion seems to alleviate this problem at best temporarily if regional growth is strong. Plus, the more you accommodate cars coming into downtown, the more your parking demand…

• The highway problem means you’re left with transit solutions as one of your few remaining options. We are especially fortunate that METRO covers most of Harris County, including all of the unincorporated area. Harris is a very large county geographically, so that means METRO can put park-and-rides and HOV / HOT lanes pretty far out, and the service in most corridors is really exceptional. The weak spots are Fort Bend and Brazoria Counties, which really aren’t very far out. The Woodlands has its own commuter bus service. The transit providers in Dallas and Atlanta are limited to much closer-in coverage. For example, in North Texas , McKinney, Frisco, Allen, Flower Mound, etc. – where enormous middle and upper class residential growth (and now employment growth) is occurring – are outside DART’s reach. Houston’s downtown would be much, much worse off without park-and-ride service.

• Dallas and Atlanta have significant low-income, high-crime neighborhoods within and adjacent to their downtown areas. Houston’s comparable neighborhoods are a bit more removed from downtown for the most part, helping make downtown a relatively low-crime area. We obviously still have a homeless issue to deal with however.

• Many employers (a U.S.-wide phenomenon) are looking for a different physical building type than what you find in a downtown. They want larger floorplates to accommodate a high employee density. This means they also need a high parking ratio, even with transit access. Lower lease rates too – trophy buildings / real estate are often now considered to be a negative financially. Pretty hard to satisfy such needs in a downtown. The more a region is dominated by such companies, the less likely is downtown office space to be in high demand. San Jose is a great example of this.

Tory:

Steve, this is a fascinating article. Thanks for the heads up. I had no idea Atlanta was hurting that badly. 25% of their crime downtown? Ouch. And AT&T will probably lay off a bunch of BellSouth employees.

I pretty much agree with all your very well thought-out points. The lopsided growth is one I've mentioned before but people don't seem to recognize what it does to an old core city (also see: Detroit). Having only one freeway to the popular northern suburbs from downtown is extremely limiting - Houston's downtown has many more feeder freeways from desirable suburbs. Obviously MARTA didn't save downtown Atlanta as commuter rail supporters would have you believe. You're right that it's good Metro's area is big, but they should be trying to figure out how to make it bigger, at least for commuter services from Montgomery, Ft. Bend, and Brazoria.

Metro's announcement of tolling the HOVs will help downtown Houston. Obviously one set of users will be top executives that can afford the toll no matter what it is, and if they have a reasonable commute, they're a whole lot less likely to look at moving their office to the suburbs.

Can you explain to me the floorplate/employee-density issue? Maybe with a couple good/bad building examples?

Steve:

OK, prepare yourself for a non-compact response…

I do have to wonder how Atlanta’s “downtown” is defined…are they including adjacent residential areas that may have much higher crime than the CBD proper? I don’t know.

Atlanta actually three radial freeways serving the northern suburbs, and two of these have spurs that split off to get more coverage. However, because the desirable residential areas have vaulted so far out, the “opportunities” for congestion if you’re going downtown are just too numerous. Really, how likely is it that a freeway in a high-growth corridor will be congestion-free for a 25-30 mile distance (or longer) during peak hours? Especially when you get a lot of intervening employment centers along the way (see the Georgia 400 going north out of Atlanta plus other examples). More than likely, you’ll hit the brakes at least two or three frustrating times. Short of building mega-facilities (minimum five through lanes each direction) for several 30-40 mile radii from downtown, plus the associated intervening circumference loops, it’s hard to see how you avoid this problem for solo drivers looking to use a “free” facility. And the mega-facility idea is obviously extremely unlikely under current funding constraints. Plus with mega-facilities you have to have mega-ramps at major interchanges and mega off-ramps to surface thoroughfares, plus lots of separations to minimize weaving, since otherwise each create choke points and congestion…you can see the sort of perpetual-motion nature of the problem. Not to mention where do all these cars coming into town from mega-facilities park? Structured parking has gotten very expensive.

HOT can address this for the highly paid executives that you mention, and that’s certainly important. At some point though, you have to wonder if even some affluent commuters would balk at the tolls required an HOT facility to keep it congestion-free for that long a distance: what if the 30-mile price during peak hour reaches $8 or more each way? Then their alternatives are (a) going back to the old congested freeway or (b) taking transit (ostensibly on the HOT facility). However, MARTA barely goes outside the Perimeter 285 freeway and DART has similar limitations as I’ve already mentioned, so they’re going to be fairly minimal help to their downtowns. People have to drive through miles of congestion just to get to a park-and-ride station (and hope the parking lot isn’t full). Plus you’ve always got a market segment that won’t take transit regardless of quality of service (I don’t have much sympathy for those folks unless they truly have special needs that prevent their using transit).

You’re right about METRO needing to expand – the lack of service to Fort Bend, Brazoria, Montgomery, and maybe even Galveston counties will become a real problem for downtown employment, as well as other urban core areas that are or should be served by METRO commuter buses. Even with HOT expansion, in the end, good commuter transit becomes essential.

The floorplate / employee density issue isn’t necessarily one that I have in-depth expertise in, but I can tell you that certain industries seem to prefer low-rise, low-cost office buildings where they can have “cube farms” – fewer employees have enclosed offices and window views. Some have mid-rise buildings or taller but prefer to be isolated in a campus environment. It may be a cost thing in some cases, for others it might be related to their business and innovation model. Silicon Valley is dominated by these low-rise users and you see similarities in Dallas and Austin with their high-tech employers. And in general, across many industries, you’re seeing an increase in employee density within buildings, primarily to save on occupancy costs. Skyscrapers typically have smaller floorplates, part of which are taken up by elevators and HVAC, etc., so it’s harder to accommodate this density. Plus, the more employees in a building, the more parking demand, unless you can increase the transit share (not easy). Most of the high-rise buildings built up through the 1980s have parking ratios of 3.5 spaces or less per 1,000 sq.ft. of leaseable space. Most new office buildings in the suburbs have ratios over 4.0 and as high as 6.0. Not to mention employees at suburban buildings typically don’t have to pay “extra” out-of-pocket for parking – not good policy perhaps but it is the current market reality. All of these things make existing dense urban centers less competitive for such office users.

In Houston, many of our energy firms seem to be able to make this work in high-rises, which benefits our urban core office centers since that’s what they offer. Law firms and finance / banking also do well in high-rises and can afford to pay top dollar for Class “A” space (to a point). Another reason downtown / Uptown / Greenway Plaza etc. are fortunate.

To conclude this long response, I think we should step back and look at the “big picture.” The real root of the downtown / urban core problem is that upwardly mobile, middle and upper-middle income families with school age children – a minority of the market to be sure, yet still so important because of the emphasis we place on raising our children – just don’t seem to find the residential product they want in the urban core, the inner suburbs, or even the middle suburbs. They want the outermost suburbs, for the most part. I know there are some exceptions, but the relatively few closer-in neighborhoods considered “acceptable” for such consumers tend to be very expensive. In low-density places like Houston, Dallas, and Atlanta, with tremendous affordable single-family detached housing stock even in their urban cores / inner suburbs which should provide the needed physical product, this problem is particularly dismaying. The geographic distances between urban employment / cultural core and desirable fringe become huge very quickly. And middle-income suburbs seem to cycle into undesirability after only 20-30 years of existence (if that). Short of radical changes in the perception (and reality) of public schools and crime in our inner / middle suburbs, it’s hard to see how this problem will go away in the foreseeable future.

Tory:

I basically agree with all your arguments. I see what you're saying about 3 northern radial freeways, but they all collapse to one well before downtown. That makes commercial office centers farther north at major intersections and before chokepoints to be much more attractive. MARTA/DART won't help. In my mind, the only option is HOT lanes with express bus and vanpool service from many points in the far suburbs. But even that, I think, is only good for holding on to existing downtown employers - and probably won't attract new ones when there is cheaper, more accessible, newer office space in the nice suburbs closer to workers.

I might guess that part of the attraction of low-rise is lower construction cost and easier surface parking without the expense of giant parking garages, not to mention the annoyance of winding your car up and down them every day. It's a good point that Houston is helped by a hefty dose of very big companies, inc. F500 HQs, and they want a lot of contiguous office space, which drives them to skyscrapers instead of just low-rises (see the recent Chevron deal downtown). BP has announced they want to add 2000 employees at Westlake - you don't do that with low rises. Places like Dallas, Atlanta, and Phoenix have more midscale companies (like Silicon Valley), and I think they're perfectly happy with low-rises.

I very much agree with your second to last paragraph. I think Houston is helped tremendously by our limited zoning/permitting regulations, which allows the townhome phenomena - an attractive housing product in the core, at least to households without children (a rapidly growing market, to be sure). Most cities, I think, have a hard time enabling teardowns/townhomes because of powerful neighborhood NIMBYs and the governmental mechanisms to stop them (zoning/permitting regs). As I explained to Joel the other day, the flip side of our core flexibility is that we don't have the downtown housing demand of other cities because there are so many affordable townhomes available. In other cities without that product, people are driven to condos downtown - one of the few places they can get built.

The aging middle suburbs are problematic, but they're also a source of affordable housing. As Reason has noted, it's much better to allow unfettered new, upscale construction and then let aged residences become affordable than to mandate new affordable home construction, which tends to pretty much shut down almost all construction. I think the best a city can hope for is a vibrant but upscale core, affordable middle suburbs, and upscale outer suburbs - with employers in both the core and the far suburbs, and commuters going both directions to get better freeway utilization/balance. I think the outer affluent residents/employers is a given (i.e. it's inevitable in almost every healthy metro), the question is whether a vibrant core can be maintained (see Dallas, Atlanta, Phoenix, and Detroit) - and that, in my mind, depends on good HOT transit to hold on to the legacy employers that are already there. I think the young would like to live in a vibrant urban core (and would be ok with a reverse commute), but if it's not there or not affordable, they'll end up in these suburban town centers like The Woodlands and Sugar Land.

And, of course, schools are the linchpin - but I don't see any imminent breakthroughs there.

Steve:

A few more quick points, and then I think we need to draw this to a close, before we’re overwhelmed!

I agree with your HOT assertion, the point about new employers, and about the large block users. The only caveat is that if there is a glut of high-quality office space downtown and there is rapid employment growth, you can sometimes get new smaller employers downtown by default, because that’s where immediate space needs can be best satisfied, often at very affordable lease rates if occupancy is really low. How sustainable such occupancy is becomes questionable though.

Absolutely second the townhome / no zoning point. Have a large set of neighborhoods within the core that are attractive to childless households helps the core employment centers too, to an extent. Reverse commuting certainly helps utilize our transportation facilities more efficiently too. Interesting that the Katy Freeway outside Loop 610 actually achieved overcapacity conditions in both directions from this phenomenon.

The affordable housing benefit of aging suburban neighborhoods is helpful, true. And I am generally opposed to regulatory measure requiring affordable housing allowances, inclusionary zoning, etc. The problem is that while the location of the employment core doesn’t really move, the desirable outer ring does – sometimes disturbingly fast. It would be of great benefit to core employment centers to be able to house a greater share of affluent families with school-age children in the inner and middle suburban area. That would still leave room for a lot of affordable older neighborhoods. It makes me wonder, once a single-family suburban neighborhood becomes undesirable from a schools or crime standpoint, can it re-emerge as desirable for affluent families? While we have some subdivisions in our inner suburbs that were formerly in “free fall” and have recently stabilized (Westbury is a good example), they’re still not considered desirable for families with kids in junior or senior high, and in some cases not even for those with elementary school kids. Can expanding the roster of private / charter schools be part of the solution?

Tory:

It's not just schools and crime - affluent families want newer, larger, more modern homes, and those are much more affordable in the far burbs, along with better schools and lower crime. There are places like Bellaire and West U that get the teardown/rebuild biz, but it's very pricey. Better schools would help, but they can only do so much. More charter schools might help, but even then, most charter schools are focused on disadvantaged kids (as they should be) rather than the affluent - so I'm not sure they would accomplish what you're looking for.

> the desirable outer ring does (grow) – sometimes disturbingly fast

Not as fast as you might think. Check out one of my earliest blog posts on this topic.

Steve:

Last points – yes I agree about the tear-down-and-rebuild vs. buy an existing old home and live in it vs. new production home price trade-off – I actually thought of that after I had already sent my last reply. This economic reality definitely factors into it too. Not to mention that newer subdivisions are often more in tune with consumer tastes regarding amenities (playgrounds, walking trails, water features, etc.) that often can’t be retrofit into older subdivisions.

I also agree about the mathematical property of ring area – more sq.mi. of area for less radial distance the further out you go. The problem is that school districts are “lumpy” and once their perceived reputation goes downhill (can happen in a matter of 5-10 years), you’ve suddenly lost a big chunk of real estate with appeal to a certain demographic. This applies to specific high schools also, but on a smaller geographic level.

posted by Tory Gattis @ 7:35 AM 5 comments