How To Make a Pile of Dough With the
August 22, 2010
Sometimes people ask me how we -- Americans in particular, who have
dug their Suburban Hell hole the deepest -- can transition to a
Traditional City/trains format.
The first step, as I noted earlier, is that you have to have some idea
of what you want to create. Obviously, you can't create it if you can't
imagine it. In fact, there are actually quite a few people, both "New
Urbanist" types and even some more commercially-minded property
developers, who want to create something like the Traditional City, but
since they haven't been able to imagine it properly, their results have
basically been a failure.
So, the first step is to be physically, mentally, and creatively
capable of making something that is worthwhile -- nay, that is a
shining example to future generations of the excellence of our
civilization. But then, somewhere along the line, someone is going to
have to make a profit with the Traditional City. Once this happens,
consistently, then the transition will be well underway.
All sorts of amazing things can happen when people start to turn a
profit. Look at wind turbine development, for example. While making
electricity from the wind might be a good idea on a lot of levels
(although with some problems like any real-world activity), the reason
that there have been hundreds of
billions of dollars invested in wind turbine development in
recent years, worldwide, is because it provides an adequate return on
capital. This was a tree-hugging fantasy a decade ago. It might take
some government subsidies to make it profitable, but so what. (Many
will argue that this simply mirrors the hidden subsidy of fossil fuels,
thus "leveling the playing field" somewhat.) The fact that wind
turbines are considered "cool" today helps, but you still need to make
that hurdle IRR.
Just imagine if hundreds of billions
of dollars a year were invested, today, in Traditional City
development. We would just stop making so many suburbs and start making
some Traditional City neighborhoods instead. It's the same amount of
work. There is no "extra" spending or effort. In 2000, for example, the
GDP statistics show that $449 billion dollars were invested in
residential strucutres, in the U.S. alone (not to mention the rest of
the world!). Another $318 billion was invested in nonresidential
(commercial) structures, such as office buildings, retail, hotels,
warehouses, factories and the like. I pick 2000 as a year that was not
really a bubble (in property), and not really a recession either. This
was 4.5% of GDP for residential structures alone, and 7.7% when you
include commercial structures. In 2009, 7.7% of GDP would translate
into $1,087 billion.
Let me say that again: on average, smoothing out the boom/bust cycles,
we are spending about a trillion dollars a year on structures. Right
now. Today. Not including land costs, just construction. Not to mention
government spending on Suburban Hell infrastructure, like roadways,
paid for with your tax dollars. So, if half of that spending
represented Traditional City type development, and the remainder
Suburban Hell development as is already going on, then that would be
$544 billion a year of spending on Traditional City development, just
construction costs alone without land costs, and more if you include
Traditional City government spending, and more still if you consider
transportation-related spending in the Traditional City/train format.
showed that, in 2001, there was $130 billion in total spending on U.S.
highways and roads, plus another $849 billion spent on personal
automobiles. It works out to 9.5% of GDP, which would be $1,344 billion
today. So, there's another $1,344 billion we spend every year, to
maintain our Suburban Hell/personal autos system. If we took half of
that spending, and used it for Traditional City/trains instead, that
would mean another $672 billion every
single year devoted to building out the Traditional City/trains
Combined with spending on structures, it adds up to 7.7%+9.5%=17.2% of
GDP that goes directly into building/maintaining Suburban Hell+personal
automobiles. If we put half of those resources towards
building/maintaining the Traditional City+trains instead, we would have
about $1,216 billion every single year
of spending on the Traditional City+trains. Just imagine what it would
look like if we spent $1,216 billion (or 8.6% of GDP) every year for
ten years on the Traditional City+trains. That would be along the lines
... in total, over ten years. Actually more, if GDP grows as one would
expect. That is only for the U.S. What if the Traditional City concept
catches on elsewhere in the world -- as it should, since people
in the rest of the world are already living in Traditional Cities built
by their ancestors, and enjoying it? On a planetary basis, we could be
looking at more like ... fifty trillion bucks over ten years.
The point being: if you can make an adequate profit, the amount of
resources that can be directed into Traditional City+trains development
is quite stunning in its total scope. People say that "we don't have
the resources to build the Traditional City." Baloney. We have only a trillion bucks a
year, and that is even if we leave 50% for those who prefer the
McMansion/Lexus pattern. And if there was some sort of super-disaster
where the productivity of the economy declined by ninety percent, we would still have
the labor and resource equivalent of a hundred billion bucks a year, in
today's money, to build the best Traditional City ... that we can
We've looked at the Traditional City from a number of angles. It just
plain looks good. It's fun to live in. It's cheaper, in terms of living
expenses. Resource demands are drastically reduced, and it's much
better for the environment. It's even easier to build. It's a winner
from every angle (there are more angles to come), the only real
drawback being: it's hard to get there from here.
Traditional City: Bringing It All Together
Now let's look at a different angle: potential profitability.
The fact of the matter is, U.S. property developers -- the people who
actually build buildings, and sell/rent them for profit -- have already
been moving toward Traditional City ideals in recent days, in many
situations. Not all situations, of course, but you can see this trend
pop up over and over again.
One of the recent trends among developers, for example, is the
combination enclosed shopping mall and condo development. You can walk,
or take the elevator, right from your condo to the shopping mall.
the Future of Housing?
How about those Baby Boomers and Silents who made every sacrifice for
their Suburban McMansion in the 1970s, 1980s, and 1990s? Mowing the
grass every Saturday -- and paying off that backbreaking mortgage --
gets a little old. Been there. Done that. Wasn't really what it was
cracked up to be.
The mall as we know it today is a mistake.
... In its newest incarnation, the mall has finally become not just a
place to shop, but to live. The mortgage meltdown, shifting
demographics and a growing antipathy toward suburban sprawl have caused
developers to see malls not as retail dinosaurs but as giant land
banks, where going vertical can appease environmentalists, potential
buyers and stockholders alike.
It’s happening slowly, but it’s happening all over America, and
industry experts expect the trend to grow. If inner cities are starting
to see condo projects go rental or remain unsold, and some new suburban
subdivisions are settling into modern ghost towns as the foreclosure
crisis deepens, the one bright spot in the housing market might just be
here: at the mall.
“This is not just a fad,” says Anita Kramer, senior director for retail
development at the Urban Land Institute. “This is the wave of the
Roll right out of bed and into the mall
Condos, lofts going up at retail meccas around Valley in housing trend
The Arizona Republic
Aug. 9, 2005 12:00 AM
Many people in the Valley already feel that shopping centers have
become their second homes, but soon they literally will be able to live
at the mall.
Hundreds of condominiums and lofts are in the early-planning stages for
Valley malls, both existing locations and malls still on the drawing
Thirty lofts already exist at Kierland Commons in north Phoenix. A
project is in the works at SanTan Village in Gilbert. And housing has
been built along with other shopping centers across the country as part
of developers' efforts to reinvent the role of the shopping mall.
living has become ever so popular for retirees in this country.
Of course, the "condo+mall" idea is really a super-crappy version of
the Traditional City residential/commercial combo.
are choosing this type lifestyle so that they can
focus their time on traveling, hobbies and spending more time with
friends and family.
"Condos," Traditional-City style, with retail at street level. Spain.
"Condos" and street-level retail. Segovia, Spain.
Street with shops, townhouses, apartments. Kyoto.
Ski resorts have been trying to combine their slopes and lifts with
"European-styled alpine villages," including in-town condos. Maybe the
3000 square foot log cabin ten miles from town, with a couple Chevy
Suburbans to get to the slopes, is falling out of fashion?
Town of Mountain Village
Unfortunately, most of these attempts don't come anywhere near the
fabulosity of a real Traditional City. Anyone going to compare Mountain
Village, Telluride, with a real European alpine village?
A Modern European Alpine Village
Perched at 9,500 feet, Mountain Village is an intimate alpine enclave
with luxury hotels and condominiums, stylish boutiques and innovative
dining. Home to the state-of-the-art Telluride Conference Center, and
world renowned hotels lumiere and Capella Telluride, this
European-styled alpine village provides unsurpassable scenic ambiance
with an emphasis on guest service. Ski runs meander through the town,
giving many homes, condominiums, and hotels direct ski access to the
slopes. All elements combine to create a modern alpine elegance to
complement the rustic charm of Telluride.
Mountain Village, Telluride Colorado.
Ehhhh. Could be worse, but ... not really inspiring. Is this supposed
some kind of wonderful environment for pedestrians? Some kind of
world-famous destination for travellers? How many people do you see in
this picture? A big fat zero.
Look how many of the buildings are actually buffered from the street
with Green Space.
Mountain village, Switzerland. Pretty good, although you know that I
would prefer some Really Narrow Streets. This is more like an
"arterial" street. Maybe the Really Narrow Streets are off to the side.
No Green Space here. Also, note how we now have some people appearing
in the scene.
This is a proper Really Narrow Street pedestrian environment.
From the standpoint of profitability,
which do you think is going to be more profitable?
building something that sucks
b) building something that is
fabulous, but costs the same price or less than something that sucks.
Look at these photos. If you were going to make a ski resort village,
do you think you're going to make a bigger profit with the one on the
top or the one on the bottom?
From the place that nobody wants to
, or the place that everybody
We will continue our discussions on how to make a boatload of money
from the Traditional City in the future.
2010: Let's Take a Trip to New York 2: The Bad and the Ugly
24, 2010: Let's Take a Trip to New York City
2010: We Could All Be Wizards
2009: What a Real Train System Looks Like
2009: Life Without Cars: 2009 Edition
2009: What Comes After Heroic Materialism?
2009: Let's Kick Around Carfree.com
November 8, 2009: The Future Stinks
2009: Let's Take Another Trip to Venice
2009: Place and Non-Place
2009: Let's Take a Trip to Barcelona
September 20, 2009: The Problem of Scarcity 2: It's All In Your Head
September 13, 2009: The Problem of Scarcity
July 26, 2009:
Let's Take a Trip to an American Village 3: How the Suburbs Came to Be
July 19, 2009:
Let's Take a Trip to an American Village 2: Downtown
July 12, 2009:
Let's Take a Trip to an American Village
May 3, 2009: A
April 19, 2009: Let's Kick Around the "Sustainability" Types
March 3, 2009:
Let's Visit Some More Villages
2009: Let's Take a Trip to the French Village
2009: Let's Take a Trip to the English Village
January 4, 2009: Currency Management for Little Countries
August 10, 2008: Visions of Future Cities
2007: Let's Take a Trip to Tokyo
2007: Let's Take a Trip to Venice
July 9, 2007:
No Growth Economics