24 California Buildings News • Q2 2021
Future Cities: Vertical or Horizontal? By Ed McMahon, Senior Fellow, Urban Land Institute
When it comes to land development, Americans typically dislike two things: too much sprawl and too much density. For half-a-century, the pendulum swung sharply in the direction of spread out, single use, drive everywhere for everything, low density development. Then the pendulum swung back. Energy prices, smart growth, transit-oriented development, new urbanism, infill development, sustainability concerns all coalesced to foster more compact, walkable, mixed use and higher density development. Cities were cool again. The pendulum swing was both necessary and long overdue. In addition, there was a growing demand for higher density housing because of demographic and lifestyle preference changes among boomers and young adults. The problem was that many developers and planners decided that density required high rises: the taller the better. Buildings 20, 40, 60, even 100 stories were proposed and built in once low and mid-rise neighborhoods all over the country. All of these projects were justified with the explanation that if density is good, even more density is better. The problem was that the units in these buildings were almost always very expensive and invariably small. Even the larger units were typically a maximum of two bedrooms with an open concept, living room, dining room, kitchen. The idea was that the amenities in the neighborhood: parks, bars, restaurants, theatres and other urban assets would make up for the lack of space. The tallest and most expensive buildings, like the pencil towers in New York, were, according to the NY Times “mostly empty, most of the time” because the units were simply investment vehicles for the super-wealthy.
When the Pandemic Hit...
Then two things happened. First, millennials started to have families and then the pandemic hit. All of a sudden, both parents were working from home and then they realized that there was no place to put a desk, a bookcase or a file cabinet, unless it was in front of those lovely floor-to-ceiling windows. And
how were we supposed to work with small kids at home? The office sector saw a similar compacting of space. Before the pandemic, there was a trend toward “open offices”. This meant more employees in less space, reduced boundaries between staff, interaction encouraged, centralized supervision and of course, more offices downtown. The pandemic has turned these trends upside down. Now we are seeing fewer employees in more space, increased boundaries among staff, staggered workdays, the return of cubicles, more employees working from home and a shift to offices in the suburbs. A big question is: how many employees will go back to the office, once the pandemic has subsided? According to a recent report by the National Association of Business Economics, few employers expect to completely abandon office space, but only 1 in 10 employers expect all employees to come back into the office. The post pandemic office will include much more flexibility. A majority of companies are developing hybrid offerings in which people work from home some days and in their office’s other days. What’s more, the long duration of workplace disruption has caused some people to prefer the new normal, while others are over it and are ready to go back to the office.
The Future of Vertical Cities
An even bigger question is what is the future of cities, especially vertical cities, following the pandemic? In the short term, the pandemic has accelerated the out-migration of people, jobs and capital from high rise, high-cost cities like San Francisco and New York, to smaller cities, suburbs and high amenity small towns. In the longer term, big gateway cities, could become more affordable again. We already see lower rates and higher vacancies in urban multifamily projects and in Center City office buildings. So what happens, if many of those offices never fill up again? Well, older office buildings can be converted to housing and some tenants from the older buildings will now be able to relocate to Class A space in the newer, but now more affordable buildings. Vacant
