Skyscrapers and affordable housing

By Charles Houston

Land use, housing, sprawl and property rights have been studied to death, and I don’t think many of those studies have found any universal truths. One recent attempt is from James Barr, an economist and professor, who has just published a book titled, “Cities in the Sky, The Quest to Build the World’s Tallest Skyscrapers.” I’ve just finished it.

The book’s title suggests that it will not be a best-seller, but may appeal to a narrow group of practitioners and to skyscraper buffs like me.

Barr presents a lot of history of these buildings, e.g. Chicago was the home of the first tall buildings – six stories, I believe, and he tries to draw conclusions from his vast amount of historical data. His history is better than his conclusions, a number of which appear to be wishful thinking, but one observation is thought provoking: Billion-dollar, 1000-foot-tall residential skyscrapers increase the availability of affordable housing. 

Barr’s Counterintuitive Idea

Some may say that Barr is nuts, but I think he may be onto something.

You may be familiar with the needle-thin, 1000-foot-tall apartment buildings at the south end of Central Park in New York City. They call it “Billionaires Row.” Many people are offended by these towers, at the idea that a relative handful of rich folks will pay enormous sums – perhaps a $100 million – for a full-floor apartment on an upper floor. Barr correctly dismisses this as envy. 

He explains that housing is a continuum, from shacks to palatial abodes. We know that. What Barr is saying is that along this continuum, each tranche (a slice of the whole) is linked to the more expensive segment above it and to the less expensive slice of housing below it. 

Barr then applies the law of supply and demand to his data. I’ll explain that for those of you who have government jobs and those of you who are so wealthy that they can ignore the price of everything, even their Gulfstream jets. Loudoun has plenty of both types.

Here you go: When the supply of anything outstrips demand, prices will fall. Conversely, when demand exceeds supply, prices will increase. 

While Barr’s research was almost worldwide, New York City was his primary laboratory and the super-tall Billionaires’ Row skyscrapers were under his microscope. 

Supertall Apartment Buildings

There’s a general belief that prime US real estate like apartments in these thousand-foot-tall structures is often bought by foreigners as a safe place to hide money. There’s some truth to this. For example, in some booming areas a huge portion of expensive properties are bought by offshore owners. It’s impossible to know the source of the buyers’ funds, or even who the buyers actually are. The titular owners are shell companies and no one will ever know if the money is clean or dirty. 

Barr, though, found something interesting in Manhattan’s uber-wealthy enclaves: Something like 68% of the apartment owners in these supertall buildings already lived in the city, but in less-opulent quarters.  The units they had vacated meant that the supply of their lesser apartments increases, and per the law of supply and demand, prices for those vacated units will fall. 

Does this mean that to provide more affordable housing in Loudoun County, we should encourage development of mega McMansions? Maybe, but while Manhattan is much more of a self-contained economy, Loudoun functions as a small part of a large metropolitan whole: Buyers of our new homes may well have come from far and wide, not just from Fairfax but from distant states.  Coming to a provable conclusion would take a host of economists, each with a supercomputer and plenty of time. 

Does this mean James Barr is wrong? In the apothegm assigned to economists, on the one hand he may be right, but on the other hand he may be wrong. Moral: Take economists’ statements with a grain of salt. (My collegiate minor was Economics, so I know whereof I speak.)

Is Barr Correct?

I don’t think so. While his logic and methodology are thought provoking, Loudoun is a totally different market than Manhattan. As I see it, there is danger in some of his opinions.

Barr suggests an absolute free-market solution to housing: No zoning. Faster and easier approvals and so on, and thus more houses. That idea would endorse the kind of greed developers spew, which usually goes way too far. 

Look at the dreadful new subdivision on Dry Mill Road in Leesburg. Its developer had the audacity to name it “White Oak Farm,” after having bulldozed every single tree, every single shrub and every single blade of grass.

My Conclusions

Housing is a complicated topic. It’s especially so in bedroom areas that feel intense development pressure. As much as I endorse free-market economics, government must impose some controls and restraints. It must be skeptical about its actions. 

I fear that we’ll see some poor consequences from the current push to use zoning bonuses to compel developers to set aside “affordable” units in their projects. We’d be much better served by giving grants to lower-income families to use as they see fit. 

One benefit from this would be to make older housing stock in Leesburg, Sterling, Purcellville and elsewhere more attractive and more valuable. This would enhance overall home values, while the current plan—the needy get new housing—puts a downward pressure on values.

Citizens are best served by elected officials who truly believe that the county belongs to its citizens, not developers and promoters. That’s critical for land use issues. Pity that doesn’t seem to be case here. I suggest they begin by eliminating Special Exceptions.

A Diversion for You

When you have some idle time, Google “Supertall Skyscrapers” and see what you think. (I favor ones which have sculptural merit.) One tower that you’ll see is the Jeddah Tower, now under construction in Saudi Arabia. At a height of some 3,200 feet, it will be the tallest building in the world. By far.

Charles Houston helped develop six million square feet of office buildings, the tallest of which was only 612 feet. (Only one-fifth the height of the Jedda Tower.) He lives on an old farm outside Paeonian Springs.