Quote:
Originally Posted by Khantilever
You guys are literally debating my research agenda, so I'm really enjoying your discussion. I don't have a clear opinion one way or another on whether we can expect nearby property values to increase or decrease based on this upzoning--we don't yet have a good idea of the effects at such a local level, but this is a gap I'm hoping to personally fill. Just my two cents on why I don't think it's obvious, and why both you and TUP are right in some sense:
There are two, basic effects of an infusion of floor space: 1) the first-order price effect of increased supply, reducing land and floor prices; and 2) the second-order effect of increased demand for floor space, and thus land, as a result of those agglomeration externalities you mentioned (i.e., a thousand more workers demanding housing and retail, and then other workers also being induced to come to the neighborhood).
The first effect decreases land and floor prices, while the second increases them. Which effect dominates? Generally, the first is much larger, so I'd generally agree with you there. But the second effect is much more concentrated than the latter; some good estimates of the productivity externality say that the spillovers from a given increase in worker density decay at such a rapid rate with distance that they are effectively zero past a 9-minute travel radius (i.e., the neighborhood). Meanwhile, the [first] price effect is likely much more diffuse, especially in the West Loop since firms in need of large amounts of office space are looking over a relatively large area.
So I wouldn't be surprised if this upzoning increases property values locally and reduces them at a larger scale, but it's impossible to make a strong conclusion about the net effect at such a small scale in such an idiosyncratic case.
|
^ I never said that upzoning is the primary reason that the West Loop is seeing higher property values. There are many reasons that the West Loop's property values are increasing.
I am simply saying that, in this particular case, the upzoning with the development to follow
will lead to a rise, not to a decline, in nearby property values. Yes, it's competition for Sterling Bay and, well, sucks for them. Perhaps they may not get a project or two off the ground because of this, but so be it. It's not like Sterling Bay isn't pulling the same crap on everyone else with their whole Lincoln Yards proposal.