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Regional Growth Variability Over the next twenty years, an increasingly prosperous U.S. population is expected to grow by 65 million, bringing with it significant infrastructure requirements, as well as the attendant demand for consumer and business goods and services. As this growth takes place, the national and local economies will go through hot and cold periods. This paper examines which MSAs will over-react and which will under-react as the U.S. economy moves through its economic cycles. Those that over-react will be great places to be on the up-cycle (around trend growth), but will disproportionately suffer during down-cycles, while those that under-react will grow more steadily around their trends over the cycle.
Residential Land-Use Regulation in the Philadelphia MSA Land-use regulation of residential housing is ubiquitous across the Philadelphia metropolitan area, as it is across the nation. However, on average, the communities in this metropolitan area have a much more regulated land use control climate than does the typical American community. Formal approval of projects, even when proper zoning is in place, is required in virtually all communities. Most Philadelphia MSA communities control density with some type of minimum lot size restraint. A third have affordable housing requirements; two-thirds have open space and infrastructure cost requirements. Review times in the region are almost double those of the average for the rest of the nation. There is more regulatory control in communities with higher income, higher housing values, higher education, and a higher proportion of white residents. The densest places have experienced the smallest lot cost increases over the past decade—a finding contradictory with the hypothesis that land scarcity is the cause of higher prices.
Land-Use Regulation, House Prices and the New Social Contract A recent upward spiral in house prices has led to an affordability crisis in many cities. Until recently, most observers have explained this surge by demand factors—excessive speculation or just a desire to live in certain favored locations. However, a strong case can be made that growth management and other land use regulations have been a major contributor to unaffordability because of their role in rationing land for building. The author argues that this may be part of a vast and largely unacknowledged transfer of wealth from renters, young people, low-income families and future generations to an "incumbents' club" of existing homeowners.
Lessons from New Daleville This paper summarizes conclusions drawn from observing the planning and development of a neotraditional residential subdivision in exurban Chester County, Pa. The permitting process was lengthy, due to a zoning change, community resistance, and unforeseen problems. The final, successful outcome was the result of the developer's patience and his willingness to accommodate the demands of the township. Planners need to look at more varied ways of accommodating cars on small lots. They also need to study how people do— and want to—live, rather than proscribing how they should live. Marketing a concept such as neighborhood or community requires more than simply model homes; it needs model streets. Whatever the theoretical advantages of neotraditional planning, in terms of controlling sprawl, encouraging walking, and promoting sociability, developers and builders must bear in mind that their customers are buying a home, not an ideology.
How to Fix Detroit This legendary developer advises that the once-great city of Detroit can and will make a comeback, with a little luck and a lot of forethought. He asks, Where is Detroit today? What does it aspire to be? And what steps can be taken to implement that dream? The city must find a new product to drive its growth; build more housing to attract population; build better schools to keep that population; and move colleges back into town, since education could be the city's next great growth industry. By encouraging creativity from all ethnic and business leaders, the city can once again flourish.
Real Estate Transparency Commercial real estate has recently become more transparent in many parts of the world. As the industry becomes more international, stakeholders—owners, investors, lenders, occupiers, developers and service providers—demand more information, consistent regulatory treatment and higher ethical standards. In many countries, the industry still struggles to provide the expected, basic market data, reporting standards and governance. Major markets tend to have much higher levels of transparency than second- and third-tier markets. Nonetheless, the Jones Lang LaSalle Real Estate Transparency Index (RETI) indicates that the overall trend toward greater transparency is unmistakable, with new investment performance benchmarks, more financial disclosure by listed real estate companies, and heightened external governance of these listed companies. This article provides a global analysis of the 2006 RETI, in the Americas, Europe, the Middle East, Africa, and Asia-Pacific.
Real Estate Opportunities and Risks in China Since China's adoption of its open-door policy in 1978, real GDP has grown 9.7 percent per year. Last year, China overtook the United Kingdom as the fourth-largest economy in the world. China is experiencing slow population growth, at about 0.6 percent per year, but massive urbanization will expand the urban population by more than one-third over the next ten years, with annual increases projected to be more than 19 million. China's middle class and affluent households now compose fewer than one-quarter of all urban households, but their share will rise substantially over the next decade. The downside risks to China's future growth should not be overlooked. Severe environmental issues, the increasing income gap between rich and poor, and external political tensions could slow or derail economic growth. Investors also face risks arising from China's deficient legal system, underdeveloped contract law, and cronyism and corruption in government. Foreign currency control, the government's monopoly on land supply and frequent rule changes are additional hurdles that investors need to overcome.
The Russian Investment Environment Russia's economy has benefited from high international commodity prices over the past few years. The medium-term economic outlook appears robust and the reserves generated from oil and gas revenues should offer a partial solution to some of Russia's severe structural problems. Russia's population is decreasing and will likely fall by 6 percent in urban areas in the next twenty-five years versus a rural decline of 30 percent. However, the prognosis for Moscow and St. Petersburg, whose populations will likely rise in the next ten years, is much more positive. There have been deregulation and a reduction of administrative barriers to business in Russia. Positive changes have also taken place in some institutions enforcing corporate governance laws, but progress has been slow, and the enforcement of contracts and property rights has been uneven. Bureaucratic corruption appears to have risen in recent years. Nevertheless, there has been a significant improvement in the investment environment over the past few years, as evidenced by an improvement in sovereign ratings.
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