Sunday, November 27, 2005
Up ... Up ... and Up Again !
Stratification in civil engineering refers to the ability to create multi-layer construction, like high-rise building. Stratatization in real estate refers to the ability to create freehold strata lots, as in condominiums and apartments. Stratification and stratatization are the center-point of attention in many municipal planning departments, as vertical construction (also known as elevation construction) takes strong precedent not only in North America but, in fact, all over the world.
One paramount tenet of today’s core urban elevation construction is the requirement that developers provide, at their sole expenses, public amenities that citizens and urban dwellers want. These are public parks, street and off-street illumination, walkways, sidewalks, waterfront, piers etc. etc. The trick to a model urban elevation development is to establish equilibrium between the overall cost of the amenities vis-à-vis the number of condos allowed in the development to permit developers to make a profit. Needless to say, this is an acrimonious point seen by developers as just another unrightful infringement on the part municipal authorities into their right of return on the investment. If given an option, cities normally like to sprawl out but times are beginning to change. Elevated construction cost of streets, sewer, electric and telephone lines (these days all underground in new neighborhoods) and, more importantly, an increased demand by both young and less young for condominium living as opposed to single-family dwellings are all contributing factors to a change of the tide. People nowadays are beginning to cherish more and more the practical, relatively carefree lifestyle afforded by condo-living. And why shouldn’t they? Apartment dwelling brings you closer to all amenities the city has to offer, frees time and energy that can be better invested productively or recreationally, keeps people more in contact with each others and – some dare say – it even slows aging.
Add on top higher energy and fuel cost, a rampant affordability crisis and shrinking profits and one can easily see how vertical development is favored by consumers. Cities, particularly in North America, are becoming more and more energy inefficient. It costs too much to commute from one side of town, where you live, to the other side of town, where you work, even if you carpool or use public transit. It takes too long to keep and maintain 2,500 square feet of home when, in fact, most people enjoy them only over the week-end. Moreover, property taxes in many metropolitan areas are beginning to reach a threshold wherein they are no longer affordable. This is due to the fact that tax mills applied by municipalities are percentages of assessed values, and with the buoyant real estate markets of recent times these values have gotten out of hand. And finally, baby boomers have now become empty-nesters with children already out of the house and, as such, five-bedroom homes are no longer neither wanted nor needed. Bottom line, therefore, is that consumers demand smaller living quarters, and more affordable.
Of course, the drawbacks of a higher population density are overuse of infrastructures, some of them aging, concentrated traffic and green space. Nobody wants to live in a concrete world full of vehicles and, therefore, environmental concerns are very high on the list. Historic considerations are also at stake, as in many cities certain neighborhoods have historic landmark designations. From a urban economics point of view, this entire surge of vertical developments is very interesting. It is not a question of rejecting or favoring growth. It is more a question of accommodating it. This process of balancing demand with growth is referred to as “New Urbanism”. Although relatively new as a practical discipline, New Urbanism has deep historical roots that date back, in fact, to the advent of the electric rail car all the way back in 1887. This date is important because it freed people from animal power (horses and carriages) and allowed them to relocate where land was cheap. Thus, especially in North America, cities developed horizontally following the topography of New York and Chicago. Paradoxically, it was New York and Chicago that also led the way in the ‘20’s and ‘30’s to what was termed back then as the “Skyscraper Phenomenon”, but the reason as to why both New York and Chicago began their debut and race in vertical urban development had more to do with the geographical boundaries imposed by their respective locations – which constrained and limited horizontal expansion, than by demographic concerns or market demand. In fact many consumers of the ‘20’s and ‘30’s disdained living into skyscrapers and most high-rise buildings were conceived as workplaces, not for residential living.
Nowadays, ‘new urbanites’ even point at the correlation between denser living and obesity. Not only, they say, densification allows for lower cost of infrastructure, transportation and public places. They also decrease the need for driving and parking allocation and increase the walkability of denser neighborhoods – resulting in leaner and fitter dwellers. And, finally, there is also the sheer political factor. Nowhere is vertical urban development more visible than in China, where Guang-zhou, Beijing and Shanghai have all become landmarks of the new Chinese economic prosperity.
Real Estate Chronicle