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Reconsidering the Cul-de-Sac The cul-de-sac pattern of residential development has enjoyed public acceptance for many decades, but it has recently been attacked as a formless, socially segregated, automobile-dependent pattern of development. Despite these criticisms, it is worth examining the potentials of this pattern, which has a long history. It offers safe and quiet streets, can be less invasive in ecologically sensitive areas than the interconnected grid, and can provide extensive unbroken open space for pedestrians and bicyclists. Creative design approaches could fuse the advantages of both the grid and cul-de-sac patterns.
Fused Grid Planning in a Canadian City A new planning model, the fused grid, was tested and applied in a small town in Canada. The fused grid represents a fusion of two traditional North American approaches to residential neighborhood planning: the traditional, 19th-century grid, and the curvilinear pattern of looped streets and cul-de-sacs of modern suburbia. The fused grid combines the connectedness and legibility of the normal grid with the land efficiency, tranquility, and safety of a conventional suburban plan. Its first application demonstrates that the fused grid is adaptable to a specific context without diminishing benefits. It also shows that there are no commonly accepted definitions for qualitative attributes of subdivision plans or recognized methods for measuring these attributes. The main lesson of this application is that it is possible to combine the advantages of both planning approaches without their disadvantages.
Northeastern University and Boston's Avenue of the Arts The new West Campus of Northeastern University in Boston consists of seven buildings that have opened since September 1999, totaling more than one million square feet, with more than $200 million in construction costs. Not content merely to expand, Northeastern wanted to support the surrounding city. This article describes a number of issues related to the spatial relationship of campus and surrounding neighborhoods. The author concludes that campuses are best linked to the surrounding city by obvious visual connections such as retail, spaces open to the public, and architectural portals. The Northeastern investment has encouraged investment by other institutions. Private-sector investment in retail and residential uses has followed.
The West Philadelphia Story A university that undertakes a leadership role in the redevelopment of its surrounding urban neighborhood faces new and unusual challenges. This article describes of the residential, commercial, and educational initiatives taken by the University of Pennsylvania in West Philadelphia. These included improving public safety, building mixed-use development, a variety of retail and commercial buildings, and a school. The importance of integrated programs and community relations as well as community-building is stressed. Penn's investments have proven to be the catalyst for attracting approximately $250 million of private investment to the area. Between and 1996 and 2003, crime has fallen 31 percent. Homeownership and the price of houses have increased significantly. More than 150,000 square feet of new retail inventory has been added to University City, with 25 new stores opening over the past four years. Thousands of new jobs for local residents have been created.
Population Changes and the Economy Due in part to the baby boom retiring, labor force growth will be slower over the next 20 years than it was for the last 50. This slower labor force growth will allow capital/labor ratios to increase, increasing productivity of the work force. Economic models predict no large shifts, however, in aggregate spending or savings. Baby boomers will have higher rates of housing demand, including both primary and secondary homes, than prior generations as they enter retirement due to their greater income, wealth, and education. Demand for housing will also increase as the echo baby boom enters into the housing market in the next decade. Long-term predictions of the performance of the national economy, especially in response to long-term demographic changes, are not sufficiently reliable to serve as a basis for immediate decisions about strategies for investment in real estate or other asset markets. Rather, the more accurate predictions of near-term national and local economic performance and the near- and medium-term predictions for the age and ethnic composition of local populations provide a sounder basis for developing investment strategies.
Real Estate Crashes and Bank Lending This paper analyzes the role that non-recourse bank lending plays in generating boom and bust cycles in real estate. The ability to default on a loan represents a put option written by the lender and owned by the borrower. Rational economic behavior typically dictates that lenders charge the borrower for the imbedded put option through higher interest rates, origination fees, or mortgage insurance. In this paper, we discuss the conditions that lead lenders to rationally underprice the put option imbedded in non-recourse lending and analyze the impact of put option underpricing on asset prices. We find an underpricing equilibrium in which all lenders rationally choose to underprice the put option. This underpricing results in inflated asset prices, compression in the spread between lending and deposit rates, lending booms and real estate crashes. We apply this model to the real estate bubble in five Asian countries during the 1990s. Macroeconomic instability and higher interest rates both worked to induce price declines. Nonetheless, while countries in which underpricing was curtailed through government policy or institutional improvements experienced a decline of 30 percent to 40 percent in real estate prices, countries that experienced the symptoms of underpricing suffered a far greater drop in real estate values of 80 percent or more.
What Should Stabilized Multifamily Cap Rates Be? Focusing on the "modern" real estate era of the last 25 years, commercial real estate investment markets have become increasingly tied to, and therefore influenced by, global capital markets. Examining historical forward cash flow cap rate spreads (over 10-year Treasuries) and filtering out "abnormal" periods such as the overleveraged 1980s, the tech boom, and the Russian ruble crisis, we are able to benchmark that growing interdependence and, in turn, anticipate multifamily cap rate movements. Our analysis demonstrates that a disciplined approach exists to analyzing multifamily cap rates, based on a theoretical foundation. Because multifamily properties have short leases and fairly predictable Cap Ex requirements, they are ideal candidates for cap rate analysis. In "normal" economic times, forward cash flow cap rate spreads (over 10-year Treasuries) for institutional-quality multifamily properties are roughly 50 to 100 basis points, as the market and operating risk premium of these properties relative to Treasury bonds is offset by the stability of their cash flow growth potential.
Creative Places To assess the degree to which knowledge-based industries are attracted to regions with a high creativity score, this paper examines the location choices of one specific category of creative employers: large consulting firms that offer design services in the construction field. Research suggests that a high degree of clustering is taking place, since roughly half of the 50 largest firms in the United States are located in only five urban regions: New York City, Los Angeles, San Francisco, Houston, and Denver. Of the 39 largest design firms rated in terms of international business, there is a higher degree of clustering: more than 70 percent of the firms are located in only eight urban areas, and almost half of these are concentrated in only two areas, San Francisco and New York. There is likewise a high degree of clustering among architectural firms: 100 of the 133 largest firms are located in clusters of two or more, and more than half of the largest 100 firms are located in only six urban regions. The distribution of firms is not related to the size of the urban region. Small Boston has the same number as large New York; Atlanta and San Francisco have more than Houston or Philadelphia. The study upholds the hypothesis that the power of place plays a role in attracting creative workers and knowledge-based industries.
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