Zoning and Commercialization

YIMBY is a movement that calls for liberalizing land use in order to produce more housing. However, its take on non-residential development is more complicated. I’d always assumed that San Francisco YIMBY was not calling for more commercial development because the Bay Area already builds a lot of office space because of California’s tax incentives, which let municipalities raise taxes on sales but not residential property; however, as a check on this hypothesis I asked YIMBYs in New York, but they too said that office upzoning wasn’t really a priority and only cited mixed projects to me. This approach is usually harmless, but in a few places it creates serious long-term problems, and one of them is the center of SF YIMBY, the South of Market (“SoMa”) area, and the reason is commercialization of near-CBD neighborhoods.

A few months ago I wrote about job sprawl in the US vs. in Europe. In Europe, hostility to high-rise office buildings in most historic city centers has caused jobs to spread to neighborhoods near the CBD, often in the direction of the favored quarter; in the US, CBDs have office towers, but everything right outside them is usually strictly zoned, so jobs sprawl to suburban office parks. Both situations have a number of exceptions (e.g. Kista and La Defense are both examples of high-rise edge cities independent of the CBDs, while Kendall Square and Back Bay are contiguous extensions of the Boston CBD), but for the most part they apply in their respective areas.

In the same way that on a wider scale building more housing in New York and San Francisco would reduce the demand for housing in the places to which these cities’ working and lower middle classes have been pushed out, building more office space in city centers would reduce the demand for suburban office parks. Permitting jobs to move back from suburban edge and edgeless cities to city centers is a good thing, both for urbanism and for transit: for urbanism, the CBD is accessible from all directions (which is why it’s so valuable to begin with), and for transit, congested CBDs tend to maintain decent transit mode shares even in otherwise completely auto-dominated cities.

The political problem is that this requires replacing residential development with commercial development. It’s questionable but possible in European zoning regimes. In the US it’s harder, for several reasons:

  • Near-CBD neighborhoods are as far as I can tell never middle or lower middle class. They’re either very poor (though by now they’ve all been urban-renewed) or rich. The greater extent of local empowerment in the US makes it harder to permit office development in rich areas over NIMBY objections.
  • American residential zoning is stricter than at least German residential zoning, and as far as I can tell is also stricter than French residential zoning, in that it permits no commercial uses at all, except ground-floor retail on main streets. In particular, doctors, lawyers, and accountants’ offices must go in designated commercial zones in the US.
  • American cities are more likely to have low-density neighborhoods in desirable near-downtown areas (for example, Georgetown) and defend their character fiercely through single-family zoning.

While all three factors seem important, the biggest examples of American near-CBD NIMBYism trigger only the first factor. In New York, the main example right now is the Meatpacking District, where there is extensive commercial demand (Google is located there and so do some other tech firms), which already has fairly high residential density, but the residents are rich homeowners who have successfully fought off attempts to build more office space. Historically, Midtown arose this way – rich areas around Fifth Avenue commercialized until the city’s 1916 zoning code put a stop to the practice.

And this brings me back to this post’s motivating example – SoMa. Located right next to the Financial District, with equally good access as the Financial District to the BART and Muni subway spine on Market Street, and better access to Caltrain’s 4th and King terminal, SoMa is a prime target for commercialization. Unfortunately, SF YIMBY opposes this process, saying the city’s zoning plan should add housing there and not office space. The argument is that permitting mostly office space in SoMa would create more demand for housing elsewhere in the Bay Area, exporting San Francisco’s high rents to Oakland and other East Bay cities. Unwittingly, SF YIMBY has turned into a NIMBY group when it comes to the highest and best use in the neighborhood in which it is the strongest.

To SF YIMBY’s credit, it recognizes the similarity between today’s tech workers (who form the vanguard of YIMBY) and last generation’s (who bought houses when they were cheaper than today and form one of several vanguards of area NIMBYism) and is pursuing preemption laws that reduce its own ability to object to growth. But, as preemption is not yet the law, SF YIMBY is opposed to commercialization in its own back yard.

The more specific argument SF YIMBY uses is about jobs-to-bedrooms ratio. Per YIMBY, zoning should have a maximum jobs-to-bedrooms ratio within a neighborhood or city, to prevent creating too much housing demand in other Bay Area cities. Right now, the Proposition 13 regime is such that municipalities derive tax revenues from commercial development but not so much residential development, and so they favor office space. But in reality, the only jobs-to-employed-residents ratio that’s sustainable this way is 1, a ratio that’s far too low for a city that has suburbs, let alone a central neighborhood such as SoMa. The consensus SF YIMBY proposes – an even balance between residential and commercial development everywhere, achieved through preference for housing in areas that are net recipients of inbound commuters – is thus untenable in a major metro area.

The proposed SF YIMBY consensus also does nothing to unseat the current consensus in favor of sprawl. Contrary to the narrative of selfish suburbs that add office space but no housing, the Silicon Valley suburbs are fiercely NIMBY toward high-density office development. Google could never hope to build a supertall skyscraper on top of Mountain View’s train station; it can’t even get permission to build a bridge to let the Googleplex expand to a nearby office park.

The selfish suburbs’ preference is not just office but also sprawl, and blocking commercial development in San Francisco increases sprawl in two distinct ways. First, the tech companies that would like to expand in SoMa – Uber, Slack, Airbnb, and so on – would, if not permitted to build more office space, open more back offices in sprawling areas, in or outside the Bay Area. And second, office development in the suburbs is only accessible to people from one wedge of the metro area, which encourages people to move to exurbs on the outer side, for example Gilroy for development in San Jose.

To counteract the tendency of hyperlocal planning to produce sprawl and replace the single-family housing consensus, the consensus YIMBY should seek is not about managing office-to-residential space ratios, but about letting places densify in whatever ways the market deems to have the highest and best use. In a high-demand place like San Francisco or New York, this means a consensus in favor of a bigger, faster-growing city, using its high productivity to add more people, offices, and apartments, rather than to increase the property values of the incumbents. Plan for long-term growth and long-term changes in zoning rules and don’t play the demand suppression game that NIMBYs love.

24 comments

  1. brecchie1

    ” First, the tech companies that would like to expand in SoMa…would, if not permitted to build more office space, open more back offices in sprawling areas, in or outside the Bay Area.”

    I think they consider that a feature, not a bug. SF rents aren’t pushed up, another city gets high-paying tech jobs, everyone wins. It certainly seems that, perverse tax systems aside, the Bay Area needs homes more than jobs right now. It’s like an anti-Detroit.

    • Alon Levy

      “Another city” in this context means somewhere in the corridor between Redwood City and San Jose, hardly a deprived area.

      • Ian Mitchell

        Not Austin, Phoenix, Reno?
        I agree that these jobs aren’t going to the rustbelt, but they aren’t restricted to within the peninsula.

        • Alon Levy

          Definitely not Phoenix or Reno. Austin, sure, it has a growing tech cluster, which as far as I can tell exists exclusively because the Bay Area has expensive housing.

          • adirondacker12800

            Austin’s tech industry has been there almost as long as Silicon Valley’s.

  2. Tatil Sever

    I enjoyed reading your perspective on SoMa. Yet, I feel there is a small hole in your logic, at least for those hoping for improvements in next decade or so. The adjacent suburbs of San Francisco (maybe except for Marin county) already has more jobs than houses. They may be low density, but they are not functioning as classic suburbs primarily providing housing. These cities are not going to be the ones carrying the load of additional imbalance that will be created by an office heavy SoMA. You would have to travel 10’s of miles and an hour or two drive away from SF to reach those types of suburbs.

    Most of the suburbs here are relatively accommodating towards 5-6 story high office space that would increase the value of the houses owned by the residents, who tend to resist housing of the same height. Sure, 5-6 stories is not really high density and the end result is sprawl, but it is a pipedream to expect them to convert 1-2 story high residential areas into higher density housing or commercial any time soon, even though that may be a better long term goal than jobs-to-house ratio targets. As long as mid to high income families predominantly view high density living as “fine until you have kids” or “until you save enough for a downpayment on a *real* house”, I wouldn’t expect the city governments that represent them to act differently.

    It is more realistic to start out with the assumptions that the suburbs will not have any skyscrapers, instead there will be many 5-6 story office buildings close to freeways, some apartments along select few arterial roads with some town homes and mostly single family houses in the rest. Within these constraints, the only way to avoid congestion and extremely high housing costs is to spread the offices just as widely as the housing.

    • Alon Levy

      If I’m Mountain View, I’m selling Caltrain parking lots for supertall office towers. The highest demand is right on top of the station, where there is plenty of land, and the surrounding land use isn’t even residential but Main Street-style commercial.

      The problem with the “spread the offices just as widely as the housing” theory is that it works only in one specific corridor, namely, San Francisco to San Jose. It fails when you take the residential East Bay into account. It doesn’t really reduce congestion – if anything, it increases it, by pushing more commercial development into places where there is no reasonable transit service, i.e. Silicon Valley office parks.

      • Tatil Sever

        If Mountain View builds those office towers, how are people going to commute there? BART from residential East or North East is barely acceptable quality and it ends at SFO. We might add a new transbay tube to increase capacity, extend BART further south (or improve BART-Caltrain transfers) but those would take a decade if not more.

        If Mountain View adds towers of housing there instead, people will be able to bike/bus to the existing office complexes nearby or take Caltrain to the office towers of SF. Thus, I don’t see why it’d be wrong for YIMBYs to push MV and other peninsula cities to add more housing than offices.

        • Alon Levy

          Caltrain! The biggest problem with reverse-commuting on Caltrain is that the connections from the station to the office parks are awful. People have to bike on bike-unfriendly streets, which also has the effect of screwing everyone’s train ride since the bikes take up a lot of space and take forever to get in and out of the train.

          If Mountain View adds housing and no offices then people will drive to Silicon Valley jobs or take the train up to San Francisco.

          • Tatil Sever

            There are no cities adding residential towers around Caltrain stations, so I doubt many people will be able to use Caltrain to reach this new office tower in MV. Actually, if Atherton, Bayview or MV was willing to build some high density housing, there wouldn’t be a problem with office only development in SoMa.

            MV already has more jobs than housing. New housing wouldn’t add to local traffic, as these people are already using the freeway to get to MV and then using the same local roads to get to the office parks. It would actually make it feasible for many people to take a short bus ride or bike to work, instead of driving from another county. That area is already pretty bike friendly already.

            For the few commuters that prefer biking from the train stations, bike sharing could be a privately funded and quick to build solution for the “too much space on the train” problem.

          • Alon Levy

            Travelers are willing to accept more complicated transfers at the origin end than at the destination end. Reinhard Clever gives examples of how suburban commuters in North America drive a few kilometers to park-and-rides, even driving farther than the shortest necessary distance in order to get to a cheaper lot or a faster train, but are loath to connect to a train or bus at the destination end.

          • adirondacker12800

            And those silly people in metro New York, Philadelphia, Boston and Washington D.C. didn’t read his book and go and do it anyway. Silly. Though it’s more middle of the trip kinda thing.

          • Alon Levy

            That’s the thing: they don’t if they can help it. In Boston, South Station is walking distance from the CBD and North Station isn’t. The transit mode share for commutes from the south side suburbs to Boston is way higher than the mode share for commuters from the north side suburbs to Boston. And in New York, the argument for East Side Access is that most Midtown jobs are not within walking distance of Penn Station, and Metro-North has a slightly higher mode share than the LIRR (per this, it’s 73.3% vs. 70.6%).

            People transfer on the subway all the time, but mid-trip and end-trip aren’t the same. Even then, there is a transfer penalty, it’s just usually lower subway-to-subway than commuter rail-to-subway because the walk is much shorter (does anyone transfer Times Square to Port Authority as part of their regular commute?).

          • adirondacker12800

            They all walk to work from the PABT.
            If you are changing to the Market-Frankford from the all the stuff that converges on 69th Street that’s middle-ish. Or from the Nassau county buses that go to Jamaica. Or the city buses that go to Jamaica. Or Flushing. Or changing trains in Jamaica. Or changing to PATH in Newark or Hoboken. Or from the bus to Metro or from MARC and the three dozen people from VRE to Metro.

    • Ian Mitchell

      Given the fires in Marin County, and that the local governments have made it functionally unlawful even to rebuild the housing that was already there, if there are no job losses, they have more jobs than housing.

  3. Tatil Sever

    By the way, I don’t think the affinity of cities for office buildings is due to Prop 13. Property taxes on office buildings get reassessed even less frequently than an average home. However, office workers have low demand for city services. The workers create congestion, but at least homeowners get compensated through higher home values. Housing presents neither upside.

  4. Untangled

    Why stop at offices though? What about health, education, sports, services (like banking) or retail?

    • Alon Levy

      The main health and education services are already spread pretty evenly in American cities. You can’t put doctors’ offices in residential zones, unlike here or in Germany, but there are hospitals all over the city and the same is true of schools. Retail, same thing: there’s local retail on arterial streets in all kinds of city neighborhoods as well as suburbs. The only land use that’s concentrated in a few centers besides offices is a few kinds of retail: malls if they exist (and in most American cities they don’t), and very high-end stores of the kind that clusters on Fifth Avenue, Champs-Elysees, and Oxford Street and in Ginza.

      • adirondacker12800

        Railroad ‘burbs and trolley ‘burbs all over North American have clusters of retail and professional …at the station. Even if the station was abandoned in 1955.

  5. Brendan Dawe

    I’ve always gotten the impression that this is less a sincerely held view on how the city should be developed and more of a rhetorical positioning to paint various incumbents as hypocrites

  6. adirondacker12800

    Midtown arose this way – rich areas around Fifth Avenue commercialized until the city’s 1916 zoning code put a stop to the practice.

    Huh? Rockefeller Center razed a bunch of tenements that Columbia University owned. A really quick surf finds that Bergdorf Goodman razed a Vanderbilt Mansion for their store. In 1928. From a store that was where Rockefeller Center is now. Bonwit’s moved into their building in 1930. Look at construction pictures for Penn Station. It was surrounded by walk-ups. The Empire State doesn’t go up until 1931. When the Waldorf-Astoria moved uptown. I’m not in the mood to ferret out was was there before the Lever House or the Seagram Building.

  7. FlavaNation

    In Midtown New York, they’ve been trying to increase density through the East Midtown Re-zoning. The first effort back in 2013 didn’t pass, but they’re having more success with a piecemeal approach, starting with the Vanderbilt corridor, then expanding to other areas. One Vanderbilt is already under construction, and will feature direct access to Grand Central. Midtown may seem dense, but there are still a lot of early to mid twentieth century office buildings that are 20-30 stories in height, that will be replaced by modern office buildings of 70-80 stories in height. These buildings will have taller floors, and wider column spacing. Here’s to hoping that East Side Access will help with the influx of office workers at first; SAS Phase 3 will really be needed once many of these office buildings start opening.

  8. wanderer

    There’s plenty of space to build offices in Downtown Oakland. The city government would welcome it with open arms. There’s tons of transit in or close to Downtown Oakland–3 BART stations, an intercity rail station, a ferry dock, numerous bus lines. There’s a lot of housing getting built in Downtown Oakland, but very little office space. Developers and companies are reluctant to make that move. The Metropolitan Transportation Commission preached the gospel of how offices should move to Oakland and have a reverse commute, then moved its office from Oakland to San Francisco.

    The amount of vacant/underutilized land South of Market in San Francisco is rapidly shrinking. South of Market is one of the few places in the Bay Area where a significant amount of highrise residential is allowed. More offices there would mean less housing, which doesn’t seem like a good outcome.

    • Alon Levy

      Oakland gets you better transportation from the East Bay than SF, but SF gets you decent transportation from the East Bay as well as from the city proper, the Peninsula, and Marin County.

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