Tuesday, August 2

Hint: Make more Tel Avivs

The fascinating protest cities that have sprung up in the centers of Israeli cities have brought me back to the original intent of this blog: How do we build value in cities? And some new questions: Can we build in too much value? Can the network effect of a dominant city harm its neighbors?

My working hypothesis has been that the sum total of real estate value in a city correlates with the investment in all aspects of that city's development. Build a new opera house? You should be able to see that investment reflected in the prices of houses and apartments. The same goes for a new system of bike paths, a new sewer main, or a commissioned report on future development.

When real estate prices take off, the investors are betting on the rightness and viability of the city, and its future prospects.

This dynamic tends to place cities in either an upward or downward spiral of development and prices. When things are going well, development taxes fill the city coffers and new public facilities are built, and old ones improved. Mayors beam with pride, cut ribbons, and demean the opposition. Young people flock to live there, and the prices rise more. Eventually young people, the lifeblood of the city can't afford to live there. We have seen this cycle in successful cities all over the world.

The downward spiral is less photogenic, but even more pervasive in its momentum. Landlords have trouble filling their buildings at a viable rent, projects are abandoned, leaving highly visible hulks, new development shies away, and whole areas of cities are shunned. Once these areas fall off our mental maps, they can remain under-used for generations.

Yesterday, a new project took me from the bustling center islands of Rothschild Boulevard in Tel Aviv to the ghostly lower city of Haifa. I parked in the old business district of Haifa and continued on foot. The pedestrian traffic in the area was sparse, and I could easily imagine I was walking around alone at the bases of the huge new buildings for banks and national institutions.

Surrounding this recent attempt at revitalization, there are both Jewish and Arab neighborhoods in various states of decline. Prices are low, certainly relatively to similar areas of Tel Aviv, but even at those prices, new residents have to wonder whether their investment can turn around years of momentum.

When the protesters do leave their tents, and in the years they are waiting for the clumsy efforts of city and national government to actually affect prices, it couldn't hurt for them to walk around some of the declining urban neighborhoods in the country and imagine life behind the empty windows.

No comments: