Post #5: Cities and the COVID-19 Aftermath

It has been about 7 weeks since cities and states got serious about canceling events, closing non-essential businesses, and issuing stay-at-home orders in response to the COVID-19 virus. Testing is still problematic -- too few tests being done and too many false negatives being reported. The little random-sample testing that has been done seems to show that a significant number of people have been infected but suffered such mild symptoms that they didn’t realize they were sick. On balance, people are still dying and I don’t think anyone really knows the true extent of this pandemic or whether significant progress has been made in stemming its spread. Still, conversations are starting about loosening restrictions so that the economy can start to recover.

What will urban life be like as we slowly emerge from our quasi-isolation? The current crop of predictions range from “life returns to normal in a few months” to “this is the apocalypse and cities will never be the same.” As is usually the case, reality will probably be some place in the middle, but I’m leaning toward the pessimistic end of the scale. I think a recovery to anything that resembles 2019 is two or three years out, and some things may change permanently. Businesses and city governments need to develop a long-term strategy for survival in an environment of substantially reduced revenue. All is not lost, however. People are resilient, cities are essential to our civilization, and opportunities for progress do exist and will continue to pop up in unexpected places.

I am going to focus my thoughts on the next couple of years, with an occasional side note when I see a change that I think might be permanent or at least very long term. I have grouped my discussion into four broad categories that each contain several interlocking trends or outcomes. Interestingly, many of the trends existed for years but are being amplified or accelerated by the pandemic. Consequently, cities that have been actively preparing for the future (as opposed to simply doing what they have always done) may prove to be more resilient.

The Retail Apocalypse Perhaps the economic sector that has been hardest hit by COVID-19 has been retailing. Most stores were deemed “non-essential” and forced to close temporarily. Those who had a well-developed online presence may have been able to limp along and a few may have even thrived, but for the vast majority this has been a very hard time and many retailers will never recover.

Let’s start by looking at the state of the retail economy prior to the virus. To begin with, the US has been “over retailed” for many years which meant that many stores were just marginally profitable. Overly aggressive expansion plans or leveraged buy-outs resulted in many companies being up to their eyeballs in debt. And to cap it off, online retailing was slowly eroding sales in many brick-and-mortar stores. Consequently, even before the pandemic, numerous national chains were closing stores in massive numbers (e.g. Sears, K-Mart, Payless ShoeSource, Gymboree, Walgreens, Dress Barn, Family Dollar, Gap, GameStop, Forever 21, etc.). Many mom-and-pop retailers were struggling as well, primarily because retailing is a tough business and mom-and-pop operations are almost always on the edge of disaster. 

Recent events will dramatically accelerate the existing trends. The weaker retailers will go out of business entirely and even relatively stable retailers are likely to shutter their worst performing locations. Although retailing will eventually recover, that could take years and in the meantime there are a variety of issues that cities will face.

First, sales tax revenue will plummet -- early estimates suggest that a 10 to 20 percent decline in 2020 revenues is possible. Cities will need to find ways to adjust their budget while still providing essential services. Big-budget, capital improvement projects are the most likely targets although cities need to avoid cutting projects, if possible, that are important for future economic growth.

Second, cities need to get serious about lobbying state governments for legislation requiring online merchants to collect sales tax at both the state and local level. Sales tax compliance is a major headache for online retailers so cities and states should cooperate in producing and freely sharing the types of databases needed to link the shipping address to the appropriate sales tax rate. Do whatever needs to be done because capturing sales tax for online transactions is essential to the future economic health of nearly every major city.

Third, there are going to be a lot of vacant retail storefronts. Over time, retailers will consolidate into the strongest shopping centers and districts. Weaker centers will either be largely vacant and slide into blight or will be populated with third-tier businesses paying bargain basement rents. Cities should avoid using tax incentives or special taxing districts to try to save every shopping center. The hard truth is that some shopping areas need to fail so that they can be redeveloped as something else. Commercial property owners will resist this trend and propose half-baked schemes to buy time -- cities should just say “no.”

The Rise of Germaphobia A Harris Poll conducted in early March found that over half of adults were afraid of dying from the COVID-19 virus. That fear is not going to go away quickly or easily. This isn’t really a new trend either. Germaphobia (perhaps more accurately referred to as Mysophobia) has grown over the past decade or so as Purell pumps have proliferated throughout office buildings and public facilities, especially during flu season. The current virus, of course, is more lethal than most and so has people particularly on edge. I still can’t buy disinfecting hand soap in my local supermarket.

As workplace closures and stay-at-home orders are eased, many people will be reluctant to return to business as usual. Social distancing is now an ingrained habit with proven effectiveness and it may take years before people are willing to pack themselves into a concert venue, or spend hours in a crowded bar, or even shake hands with a stranger. The businesses and facilities that will do the best are the ones that are sensitive to this fear and proactive at making visible changes in response.

Restaurants, for example, should make reductions in seating capacity that are significant enough that they are immediately obvious to regular patrons who return after the shutdown.  Owners will hate the loss of potential revenue that will come from this strategy, but it will be better than a restaurant that people avoid because they are uncomfortable. Similarly, every office building, government facility or retail shop should make sure that every clerk or receptionist has a spray bottle of disinfectant or a box of Clorox wipes so they can be wiping down public surfaces whenever they are not tied up with a customer.

Keep in mind that no one can actually see whether a particular surface or a particular room is virus-laden, so from a logical point-of-view, extra cleaning efforts may not be worth the effort. One infected person can destroy hours of cleaning. But this is a situation in which perception is reality. People are more likely to frequent places that are perceived as being “sanitary” and where efforts at cleanliness are obvious, regardless of whether those efforts are truly effective. Many businesses and organizations would probably benefit from increasing their janitorial staff or increasing the hours spent on-site by their cleaning services. Schedule cleaning during business hours so that customers see cleaning work being done. Again, this is about building a perception that your facility is clean and that you are going to great lengths to keep it clean.

The germophobia trend will be particularly hard on transit services and on facilities that host large gatherings (e.g. theaters, live music venues, public markets, churches, sports arenas, fitness centers, etc.). These facilities by their very nature tend to be effective conduits for spreading germs so they will need to be creative at finding ways to encourage at least some social distancing. Unfortunately, they may not fully recover until a vaccine is found.

Governments and many private organizations will need to use technology to restructure public meetings. It will be one thing to simply stream live video from meetings so that people can see what is going on, but it will be more difficult to find ways to get effective public input and to facilitate true public discussion.

Re-Thinking Work and Learning One silver lining from the pandemic mess is that it has forced people to explore the technology for remote work and remote learning. This is not to say that everything has been wonderful and that no one will want to return to their normal office or their normal school. The percentage of the population that is disciplined enough to really be productive working from home over an extended period of time is definitely less than 50 percent and even people who are disciplined enough to get work done at home probably miss the face-to-face social interactions that the office provides. Remote learning, in particular, requires discipline and initiative that most children don’t have and it requires teachers to structure their lessons in very different ways.

But what has happened is that many people who would not have considered working or learning from home have now been exposed to the available technology and have learned that it is possible. The combination of new software options and faster internet connection speeds in most urban homes means that things are possible now that would not have been possible even a few years ago. This forced experiment in remote work will be particularly eye-opening for managers who may have previously downplayed working from home as an excuse to goof off.

To take advantage of it, however, managers will be forced to adjust the way that work is assigned, the way that progress and obstacles are managed, and the way that productivity is measured. For those willing to figure out the details, a new option is now available that may change our definition of “office” or “school.” Again, this isn’t really new. All of this was gaining ground before recent events, but the pandemic has accelerated the trend and expanded it in new ways.

So what does this mean for cities? I suspect that many white collar jobs will get a noticeable jump in work schedule flexibility. Instead of a rigid 8-to-5 requirement to be in the office (plus, in many cases, after-hours work as well), it will become increasingly acceptable to work from home certain days or certain times during the day. This, in turn, may end up altering rush hour traffic patterns. Even if only 10 or 15 percent of office workers opted to start their day working from home (e.g. checking emails, doing research, or polishing a presentation) it would make a significant impact on traffic congestion. Would cities reduce the priority of road widening projects as a result? Many midwestern cities have designed their road networks specifically to handle rush hour traffic even though that means that most streets and highways are grossly underutilized for the vast majority of the day. Spreading out the normal work commute from a one-hour window to a two- or -three hour window, or reducing the number of people who go into the office at all, would make our utilization of street infrastructure far more efficient and ultimately reduce the per capita cost of that municipal investment.

Second, the expanded use of remote work or learning technologies will likely lead to a re-thinking of office space or school space requirements. The concept of “office hoteling” is already fairly common in big cities on both coasts where office space is very expensive. The idea is that most professional workers will no longer have a fixed office, cubicle or desk assigned exclusively to them. Instead, a corporate software system will allow them to reserve a work space and equipment on an as-needed basis. Alternatively, companies may make greater use of “team rooms” or other types of collaborative spaces that use less floor area per employee. If you need privacy to focus on a difficult task, then work from home.

Companies were already finding ways to shrink the amount of office space per employee, this simply accelerates the trend. The result is that companies may reduce their office footprint, or at least grow it more slowly, thus resulting in overall office space demand growing at a lower rate than it has in the past.

Finally, cities may need to rethink their position relative to the telecommunication companies working in their jurisdiction. Many midwestern cities already feel “under siege” from the pressure to approve and monitor the variety of requests to install new fiber optic lines or small-cell antenna systems that are necessary for the 5G service that every cell phone provider is anxious to roll out. Such construction projects are often widely unpopular with citizens because they are messy and ugly, and it is unpopular with municipal employees because it often causes conflicts with other existing infrastructure systems. Instead of dragging their feet, however, perhaps cities should embrace and facilitate new internet communication infrastructure as a way to differentiate their city in the race for the next generation of information-age jobs and workers. Having a robust communication infrastructure might become the economic equivalent of previous generations getting a rail line, or airline service, or interstate highway access.

The downside is that all of this exacerbates the digital divide issues that our society currently is facing. If poor communities are slow to get 5G infrastructure or poor households cannot afford 5G service, are we perpetuating a “rich get richer” trend? I don’t have an answer to that problem, but I think cities need to address it in their social equity strategies.

Density and Design Already some commentators have speculated that the pandemic would not have been so severe if cities were less dense. They point to New York City, Detroit, Chicago, Seattle and Los Angeles which have been particularly hard hit with COVID-19 deaths as proof of their theory. Given how little hard data we have on what factors affected the spread of the virus, I think such speculation is extremely premature. While density may end up being a contributor to some degree, I suspect that other factors -- such as large areas of concentrated poverty -- will prove to have a far more powerful explanatory impact.

Blaming density is also rather pointless. No one is going to use public health dollars to tear down skyscrapers so that the next pandemic won’t be so bad. Cities are here to stay. In fact, cities have been and are likely to continue to be the economic engine that powers the world economy. There is an undeniable link between the density that cities provide and the creation of innovative ideas. As Matt Ridley put it “cities are where ideas go to have sex.” (1)

Still, the pandemic has highlighted a few issues of urban design that could stand to be improved. Chief among them, in my opinion, is the public space/private space dichotomy that has become increasing severe over the past few decades. Streets, sidewalks, parks and plazas are almost always considered public -- almost anyone can go there and nearly anything is allowed to happen. Inside a building or behind a wall is normally considered private, where your presence and behavior are subject to the control of the owner or tenants. That is all fine except that public to private should be a scale, not a black and white dichotomy. To put this in pandemic terms, public spaces are uncontrolled and dangerous, but interesting; while private spaces are safe but isolating. What has become obvious in recent weeks is that one of the keys to maintaining your sanity has been the discovery of semi-private spaces where social interaction can occur, but in a reasonably safe and controllable way.

In my hometown of Kansas City, the older neighborhoods in particular seem to have more porches, balconies, decks and patios that function as semi-private spaces that allow informal conversations to take place between neighbors. In newer neighborhoods, there are front yards and mini-porches, but they serve mainly as a buffer between the street and the house -- they are rarely used for any purpose involving human activity. Outdoor spaces tend to be in backyards that are isolated from the neighborhood.

Commercial property can also have a range of semi-private spaces, typically in the form of a courtyard, atrium or formal lobby. Unfortunately, many property owners see these areas as unproductive space and so more modern buildings have tended to minimize these areas as much as possible.

Although the problem has been highlighted by the current pandemic, it isn’t really a health issue, it is an issue of good urban design. When there is a range of interesting spaces spanning public to private, cities are much more livable and, as it turns out, more resilient to the occasional pandemic as well.


Thoughts? As always, share your thoughts and ideas by leaving a comment below or sending me an email at doug@midwesturbanism.com.


Notes:

Matt Ridley, The Rational Optimist: How Prosperity Evolves, 2010

Post #4: Demographics and Urban Form - Part I

“Why are so many apartments being built”?

I would be willing to bet that this is the most common question city planners in the Midwest have gotten from non-planners over the past few years. A full answer to this question would have to reference several different factors, but one of the primary ones is a demographic trend that I want to explore in greater detail in today’s posting.

The decline in household size is a long-standing trend that all planners should be familiar with and it has gotten enough publicity that most members of the public are probably somewhat aware of it as well. But I think that most people, even professionals, don’t appreciate the impact that this trend should have on cities in the long term.

This chart looks at just two slices of this trend to illustrate in clear terms the exact scope of what has happened. Very small households consisting of just one person have grown from roughly 13 percent of all households in 1960 to more than 28 percent in 2019. (1) At the same time, large households (five or more people) have moved in a nearly opposite manner, declining from nearly 23 percent of all households in 1960 to less than 10 percent today. This demographic trend stands in stark contrast to what I think most people view as the predominant housing form in midwestern cities. I think that most people assume that the predominant housing type is, or at least should be, single family homes.

I should point out that this trend is not limited just to the extremes. The percentage of households containing two people has also been growing, and represents the single largest share of total households (34.5%). The percentage of households containing either three people or four people (mid-sized, if you will) has been falling, although not as quickly as the percentage of large households. The bottom line is that the “typical” household now is smaller than would rationally require a single-family home, and yet our housing policies and much of our city planning efforts don’t seem to reflect this reality.

It is tempting to discount the small-household phenomenon in two ways. First, some might assume that it is a temporary condition that people generally would avoid if they could. In other words, people might be living alone now but in a relatively short period of time they will become part of a larger household. For some households, this is true -- a young, single person might get married and start having children, for example. But the larger trend is not temporary. People are choosing to live in one- or two-person households with no real intention of changing. In fact, the percentage of people living alone increases as income increases. People don’t live alone because they are forced to, they seem to prefer privacy in their living arrangements and they purchase this privacy by living alone as their economic resources increase. (2)

Second, it is often assumed that people living alone are a relatively narrow subset of the general population -- recent college grads just starting their career or empty-nesters, for example. Again, there is a larger trend that goes unappreciated. A hundred years ago, most single-person households were young males but today the gender split is nearly even and actually favors women (54%). Similarly, there is no concentration in terms of age. Thirty six percent of single-person households are between 45 and 64 years of age, matching the percentage that are 65 and older, and exceeding the share that are 44 and younger. (3) People who live in small households are not just young people starting a career or elderly spinsters, they are people of all ages, all genders, and all races who choose to live in small households for a wide variety of reasons.

Where this demographic trend intersects urban form is in the range of housing options. In midwestern cities, the most widely produced housing types are large, single family homes and apartments (including condominiums in an apartment style building). Single family homes, of course, can come in a wide variety of sizes and designs, but the reality is that only 10 percent of new single family homes are built with either one or two bedrooms. And although multi-family housing can come in a wide variety of forms, the reality in midwestern cities is that over 90 percent of multi-family units are in apartment projects containing 10 or more units. (4) While there is nothing wrong with either large single family homes or traditional apartment buildings, my contention is that these two housing forms do not effectively meet the wide variety of housing needs or preferences that are contained within the small-household demographic.

It is my belief that small households -- now comprising more than half of all households in this country -- should be able to choose from a much wider variety of housing forms that can supply the amenities and features that they want without forcing them to purchase more housing size than they need or packaging them into apartment communities that don’t meet their lifestyle preferences.

The reason that a wider variety of housing isn’t being produced is that our current housing industry -- including municipal housing regulations -- is still dominated by systems optimized for suburban style development. That may have been fine 40 years ago when demographic trends were different but it does not meet today’s needs. Those
systems are good for large developers who produce housing “at scale” but they do not incentivize small developers producing creative housing options for the numerous demographic niches that small households tend to form. In fact, rather than being incentivized, small developers often face obstacles that large developers do not.

Prior to the suburbanization phase of urban development, cities generally contained a wide variety of moderate density housing types that are rarely produced today. Quite a bit has been written about this so-called “missing middle” but few steps have been taken to actually encourage it to be built again. In this posting I don’t have room to describe all of the possible options for housing that could be beneficial for small households, but I will go over a couple of options that can serve as examples.

Accessory Dwelling Units The first option is what is known in planner jargon as an Accessory Dwelling Unit or ADU. This is an idea that has actually been around for centuries, going back to large estates that had servant’s quarters over the carriage house or a gardener’s cottage in the backyard. More recently, they have been used for elderly relatives and commonly referred to as “granny flats.” Now they are starting to be used simply as another way to meet the demand for relatively affordable housing in existing neighborhoods.

Nelson/Pitt/Mix Accessory Dwelling

An ADU is simply a second living unit added to an existing single family home. It can be in the form of an apartment carved out from a large home or constructed as an addition to the main house, but more commonly it is a separate structure built in the backyard. A typical ADU is roughly the size of a large, two-car garage and is generally one or two stories in height. Even though accessory buildings, such as detached garages, sheds or workshops, are almost universally allowed in single family zoning districts, accessory dwellings are typically banned in midwestern cities. And yet where they have been tried, the overall impact on the community has generally been positive.

The advantages are numerous. To begin with, the small size is often the perfect match for the needs of a small household. Second, they don’t require the building of new streets, water mains or streetlights, thus adding to the assessed value of a neighborhood without adding to the infrastructure that needs to be maintained by the city. Third, they typically require new construction or extensive remodelling which means they have the latest appliances, high energy efficiency, and can be designed to be handicapped accessible. Fourth, they are typically added to existing neighborhoods which means they are perfect for nearby households looking to downsize but wanting to maintain their social networks and neighborhood familiarity. Finally, they can serve as a
secondary source of income for the occupants of the main structure, thus increasing housing affordability in a different way.

Cottage Courts  This second option is a new spin on an old concept where small, single family homes are clustered around a shared open space. Although not as common as accessory dwelling units, cottage courts are gaining popularity particularly in the northwest due to the work of architect Ross Chapin. In addition to developing several cottage court projects, he has also authored a book on the subject called “Pocket Neighborhoods: Creating Small-Scale Community in a Large-Scale World” (2011).

Ross Chapin Cottage Court

Once again, the homes in a cottage court are typically quite small -- perhaps 800 to 2,000 square feet -- and consequently can fit the needs of small households better than traditional single family homes which now are typically being built at 4,000 square feet and up. In addition, the shared open space means that the land area per dwelling is also very small, generally 3,000 to 4,000 square feet. Enough area to allow your pet to get some exercise or to indulge in some gardening, but not so much that it becomes an economic burden. This means that a cottage court can reach the density of a small apartment building (8 to 12 units per acre) while using a single family form that is generally more acceptable to existing neighborhoods. It also lends itself to shared contracts for landscape and exterior maintenance, thus relieving small households of maintenance chores that they typically have no interest in performing themselves.

Perhaps best of all, cottage courts promote at least some degree of socializing between the various households. While many small households might not feel the need to socialize with their physical neighbors, social isolation is a concern for a certain subset of households, particularly for those who live alone. The cottage court layout lends itself to casual conversations as you come and go, which also means that someone is more likely to check on you if they don’t see you for several days.

The problem is that cottage courts do not fit neatly into the vast majority of zoning regulations, particularly when such developments are proposed in existing neighborhoods which is where they logically belong. They are likely to either not be permitted at all or permitted only with a variety of variances or zoning adjustments. If the units are going to be owner occupied, there are likely to be similar problems with subdividing the property because of the unconventional lot layout. By not following the conventional pattern for single family homes, cottage courts not only run into problems
with governmental approvals, but their individual buyers may have difficulty finding a financial institution that will give them a conventional mortgage at competitive rates.

Conclusions The easiest way to be a successful developer is to mimic successful developments that have been done by others in the past. It simplifies the process of getting development approvals, arranging financing, and finding buyers because everyone understands what it is you want to do. The system breaks down, however, when societal needs change and the housing that is being produced no longer matches the characteristics of new households.

Sure, small households can adapt to old housing formats. An elderly couple can live in a four bedroom house despite the maintenance burdens that result from that choice. And a single parent with a school-aged kid can live in an apartment complex despite the lack of amenities for children. But why shouldn’t there be more options that might better meet their needs?

The housing options that are typically built today are only partially a result of developers supplying what the market demands -- they are also the result of governmental, financial and marketing systems that warp supply to what was common in the past rather than what will be needed in the future. We are fitting square pegs into round holes because we are really good at creating round holes, instead of breaking out of the box and learning to create holes of different sizes and shapes.

Fifty years ago, society encouraged conformity and the result was subdivision after subdivision of nearly identical houses. Our society now celebrates diversity and it is time for the housing stock of our cities to reflect that change.



Thoughts? As always, share your thoughts and ideas by leaving a comment below or sending me an email at doug@midwesturbanism.com.


Notes:
  (1)  US Census Bureau, Current Population Survey

  (2)  Rose Kreider and Jonathan Vespa, “The Changing Face of Living Alone, 1880 - 2010”, September 2013

  (3)  George Masnick, “The Rise of the Single Person Household”, May 2015, Harvard University Joint Center for Housing Studies

  (4)US Census Bureau, Characteristics of New Housing