Tuesday, June 15, 2010

Why Big Box Retail is Unsustainable

By Ariel

An interesting statistic, and explanation thereof, came across my desk the other day. The New Rules Project crunched some numbers from the US DOT and found that while we are driving less as a nation, our shopping trips are much longer. I will let the excerpt from their report speak for itself.

Miles Driven for Shopping Continues to Climb, But Pace Slows

Newly released data from the U.S. Department of Transportation show that the average American household is driving less than it did in 2001. But, while the number of miles logged going to work, social events, and other activities declined over the last decade, the number of miles families drive for shopping each year continued to climb — although at a much slower pace than in the 1990s. The figures come from the National Household Travel Survey, which is conducted every 6 to 8 years. The 2009 data were gathered during some of the worst months of the economic collapse, from late 2008 into early 2009, which may have skewed the results somewhat as people were driving less than normal. The findings show that, since the last survey in 2001, overall miles driven per household fell 4.4 percent, but shopping-related driving bucked the trend, expanding by 1.3 percent to 3,102 miles per year for the average household… While suburbanization accounts for much of the general growth in driving, it does not explain why the number of miles households drive for errands grew so much faster. As I’ve argued elsewhere, the probable culprit is the rise of big-box stores. Where once a gallon of milk, a prescription, or a piece of hardware was available at a neighborhood store only a few blocks or short drive away, many of those small, local businesses are now gone. They've been replaced by a much smaller number of giant superstores, each of which serves a much larger region. As a result, the average trip to a store is now about three miles longer than it was in 1990. That adds up to a lot of additional miles when multiplied across 113 million households that make an average of 470 trips to stores each year.

Monday, June 7, 2010

Putting the brakes on TOD enthusiasm

By Ariel

In this month's Atlantic, Chris Leinberger suggests that private developers should fund the development of street car lines because of the higher values that proximity to transit brings.

Over at the Next American City, Yonah Freemark has some pretty scathing criticism of Leinberger's enthusiasm. He writes that "Leinberger’s solution — that developers could benefit by spending their own money to build transit — is problematic. For one, it fails to account for the fact that most land speculators move on to new work once they’ve sold off their projects to home buyers. Who would continue to subsidize the operations costs of the new transit systems once the land has been sold? Is it fair to expect municipal transit operators to take over the servicing of privately developed systems? Second, Leinberger’s argument assumes that developers would be either wealthy enough or powerful enough to assemble the necessary right-of-way for said transit and then build it. Noting Detroit’s recent public-private streetcar deal, he posits that the federal government should be more willing to fund private-initiated public transportation, and it’s true that involvement from Washington would make such investments far more feasible."

Yonah's criticisms are pretty spot on, but they miss even bigger problems that would actually squash any of Leinberger's lovely dreams. When you actually look at the costs of building a light rail line, and you look at the scope of profits, and even the marginal growth in value induced by TOD, you still don't cover the costs of building a light rail line.

Even more importantly? The lead time to build a light rail line is HUGE, and long, probably much longer than the time a developer wants to spend building. Developers want no more than five years of pre-development commitment. Assuming that the costs justified the TOD, which I doubt, the amount of time required to build a light rail, is so long that it’s just not worth it for developers.

Finally, Leinberger who uses the early developers of regional rail and light rail as his model, forgets that they had a few different things going for them that made their 19th century projects a success:
  • low labor costs

  • control of LOTS of land. (Now its scattered sites, and even if you could control all the land, the market for people to move into these new neighborhoods would be a HUGE risk that no developer would take on, at least not in a city, maybe for greenfield development, and definitely not in this economy)

  • fair grounds: Lots of these developers had fairgrounds at the end of their lines, transit use was actually much higher on the weekends when people went to the fairs. That won’t work these days with much more competition for our entertainment dollars.
This isn't to say that there is not a role for the private sector in TOD, but we can't think we should just abdicate the role of the government in building our cities from the ground up.