There is an opportunity within the chaos created when work from home and hybrid work hollowed out the Central Business District (CBD) of places like San Antonio and Portland.  In San Antonio I saw a number of former office buildings with concrete structural frames and floor plates which are not excessively deep headed for conversion to residential.  This includes several great Art Deco buildings, but a number of Class B and Class C buildings which would not pencil to renovate into repositioned office space.

The large floor plate office buildings with lots of vacancy are in trouble, as they are really hard to convert to residential apartments.  Institutional equity will want to exit from those properties and minimize their losses.  The developers operating those buildings will turn many of them back to the banks rather than absorb negative cash flow with no end in sight.

The banks will fire sale lots of buildings and book the losses at a time when loan volume is already greatly reduced due to higher interest rates. Buildings that are coming up for renewing their loans or refinancing are already facing lower appraisals.

So the context in many local downtown markets is going to be varying degrees of hot mess. Food and drink downtown is in tough shape now and for the foreseeable future, so the amenities argument for having your office in a downtown full of vacant storefronts is going to be pretty weak.

The opportunity in all of this is going to be a chance to experiment with the pattern of the poly centric / 15 minute city.   While lots of people like the flexibility of working remote, some of them don’t want to work from their home, preferring coffee shops, libraries, co-working spaces.  The ability to leave home and leave the office can be a way to establish reasonable boundaries between work and domestic life.

Tenants for small 300-1200 SF offices are not thinking in terms of rent per SF.  They are thinking about monthly cost of occupancy and proximity to their home, gym, food and drink, their kids’ school or daycare.  The downtown office comes with the trade off of a stressful commute and an opportunity to park in that dismal and creepy parking structure.  If you can provide space with good broadband they can avoid the frustration of dealing with Comcast.

These could be the ground floor/storefront tenants needed for the fringes of existing smaller town main streets.

Let the big economies of scale developers, commercial brokers, and economic development folks wrestle with the downtown.  Decanting work places into existing or new mixed use neighborhoods can be a good thing.

There are lots of businesses in the US with 12 employees or less. Those outfits are a good fit with a diverse walkable mixed use place.

MAY 29, 2023INCREMENTAL DEVELOPMENT, 15 MINUTE CITY

Some years ago, I was looking at building a four-plex in Portland, Oregon. At the time the local impact fees were calculated at $20,000 per Dwelling Unit. That was the fee for one of the 4,000 SF single unit houses that were replacing little 800 SF workers cottages as One-forOne Tear-downs, and it was the fee for one of the 500 SF one bedroom four-plex units I wanted to build in a diverse walkable SE Portland neighborhood.

$20,000 per Dwelling Unit translated to $5 per SF for the big house in the one-for-one Tear-down scenario. $20,000 per Dwelling Unit is $40 per SF for a 500 SF one bedroom apartment. My tenants would be paying $200 a month in rent to amortize a fee that does not actually purchase land or building materials.

I had a hard time finding sites where I would be allowed to build four units on a 50 x 100 lot. There are 8.7 5,000 SF lots in a net acre and four dwelling units on a 5,000 SF lot is 35 Dwelling Units per acre. —Never mind that there were lots of 4 and 12 unit buildings on 50 x 100 lots up and down the street where I found a vacant lot, the zoning code would only allow single family residential buildings to be built.

This experience showed me how inequitable and unreasonable the definition of “Dwelling "Unit” can be when it is used to assess fees and calculate allowed density. Portland’s Comprehensive Plan contained all kinds of well-intentioned policy language about increasing housing affordability and housing choice, but those policies could not be implemented because the local zoning code made such things illegal. One more frustrating example of why we cannot have nice things, (even though we have adopted an elaborate policy document that says we want to…) NOTE: Recent statewide legislation has changed what you can build in Oregon cities with more than 10,000 people.

The Proposed Text Amendment above is a patch which can fix this problem in your local zoning code.

I have been at this Placemaking for a while. I have met so many sincere and dedicated people who want to make their town or neighborhood better. I have been in the room when they confront the reason their town’s planning process has failed. It is never pretty.

Most states mandate municipalities to adopt a Comprehensive Plan and keep it updated regularly. The shorthand is Comp Plan. The intended purpose is for local elected officials, senior staff, and local residents to create a policy framework for the manner in which their town with build/rebuild. Producing these documents can be pretty expensive. Most places make a real effort to engage their residents and community leaders to help write the Comp Plan and to get the work out so that folks can pay attention while it is still in draft form. Eventually the Comp Plan is presented to the city council accompanied by a lengthy staff report recommending approval. The council votes to adopt the Comp Plan as a key policy document they expect will guide the current and future elected officials and senior staff in conducting the town’s business.

In the Implementation or Work Plan sections of the Comp Plan, there is typically a paragraph describing the need to revise the local zoning code and development ordinances to make sure the policies in the Comp Plan are going to get turned into reality.

A couple years go by and there are no changes or revisions to the local zoning. And that’s the problem. The Comp Plan is a policy document. The zoning code is a law. The law is written with greater precision and if the law contradicts the policy, the law is what folks need to follow until the city council changes the law…

I have seen good developers propose excellent projects which totally deliver the stated intent of the policy guidance in the Comp Plan get shot down based upon the leftover zoning code from 20 years ago. When this plays out there is often an earnest young planning staffer in the mix who is shocked and heartbroken to see this happen. There are frequently folks sitting on the city council who do not understand that leftover zoning code actually prevents the diligent realization of the policies of the Comp Plan.

I used to think this was an unfortunate and isolated occurrence. With time I found that is is common enough that people tend to just accept the contradiction that crushes the hopes and dreams of local residents.

Read your Comp Plan and then read your zoning code. On the first pass it may seem like you probably aren’t fully understanding the two documents. The two documents seem to have been put together with serious intent and a lot of technical detail, so a casual reader might think it is them, they are not getting it.

The best Comp Plan can be crippled or canceled by a mediocre zoning code. It really does happen.