In our article Rising Lease Costs More to Blame Than Tax Rates we discussed the problems with the current development atmosphere in DC. When the economy of scale that is necessary in urban redevelopment is artificially restrained it causes lease rates or amenities to pick up the slack. Therefore lease rates of $100 per square foot shouldn’t be touted as economic strength, but rather as a future indicator of economic woe. New York City, a notoriously expensive city, has become a hub for tech start up companies, a notoriously cash strapped industry. How does this apply to the current dynamic in DC and Tysons?
A healthy development environment imitates an ecosystem. Imagine a forest. The understory is sometimes the birthplace of larger canopy trees but also the home for smaller more adaptable plant species. Plants at the forest floor have found ways to use less, be more efficient, and exist to serve their purpose even with canopy trees overhead. Canopy trees are more rare than floor species, they take more resources, and if the entire forest were replaced with only canopy trees it would be unable to sustain itself. Eventually canopy trees and understory plants decompose and create new growth.
This occurs in urban environments as well. New development grows out of a forest floor as well. Early on in the urban life the understory looks consistent, but eventually the economics (resources available versus those that are available by growing) lead to some locations developing into canopy trees. Unlike the understory this prominent growth is more stable and lasts far longer and gives the forest a different and important ecosystem. The understory of smaller development begins to evolved and through its adaptable nature fits a niche. In cities this becomes the affordable space for new growth. Some of that growth will turn into monumental trees, some will just decompose and start again.
Imposing height restrictions and arbitrary controls on the nature of development may start off as a wise choice. You avoid a single tree suffocating any new growth by blocking all resources. Eventually these controls create a homogeneous development environment. There is no such thing as an understory because all of the space evolves at the same pace, all projects believe they are premiere and therefore every new building charges the “going rate”.
When things are so controlled it becomes a component of the process to indicate and force redevelopment. A city must pick and choose where they want a building to come down, and how a new project will grow. To some extent having a plan for how to grow a region is smart, but by turning the process into a fully artificial implantation you increase the cost. At the same time of increasing cost, the end result will be the same growth that you recently removed… in a new configuration. You have created a christmas tree farm, not a forest.
Growth is good, not just for the developer who pays more and gets a good return, but also for residents and businesses. Many people argue that new premiere spaces cost far too much and often are bought up by large firms, anchor stores, or millionaire residents. What is ignored in this analysis is the effect on existing older units. These become naturally affordable spaces for younger residents, offices for emerging industries, and store fronts for local retailers because they adapt to a new environment.
I am all for smart growth where new projects pay for the resources they require in infrastructure and facilities, but to impose a cookie cutter limitation for something as arbitrary as “a vibe” is a dangerous game for any region. The lease rates in DC aren’t an indication of improvement costs and sustainability being provided by these projects to the city, it is the end result of a growth pattern which has reached its limit.