Hacker News Reader

Comment by spectaclepiece | Hacker News Reader

What I find most interesting is how this might transform inner cities. If central space is cheaper more space will be available to artists and other cultural activities while also making room for early stage startups which could give rise to a renewal of a vibrant inner city atmosphere in places where this has been on the decline due to high rental prices.

View on HN

There's no shortage of cities where central space has become cheaper after their industry has collapsed, and they do not have a great record of turning vibrant. The rust belt and the north of England are the first areas to mind.

That's true, but if now there is central space freeing up in major cultural hubs like NYC and SF, maybe it could be cool. These places might, although to a lesser extent, have the customer base of affluent people to support new cultural spaces.

For the short term, maybe, but will they still have that customer base if those affluent people don't need to stay there for work?

IMO that's a big open question. Anecdotally, I've heard of a lot of people moving away from these cities, but most of them say they intend to move back. Since the appeal of both cities is largely in activities that are unavailable now, this is plausible to me. But it's also plausible people will find they miss the city less than they expected.

There are important differences between cities in regions where an industry collapsed and where competition for down-town office space has collapsed.

One of them lost their economic engine. The other is undergoing a real estate adjustment.

I have seen this happen in a medium sized coastal city on Australia's east coast. The major employer shut down in the early 1990's and the once vibrant inner city did indeed become a cesspool for a decade. But begining in the early 2000's it started to come back to life, and the people who moved in were the artsy types and the city became a wonderful and curious place while still having a bit of a air of danger and decay. These days it is somewhat gentrified, but it has become very beautiful and pleasant. In the end my city doesn't really have a central core which is a little problematic for public transit (terrible quality), but the old CBD is a lovely place.

The North of England has some good examples of the opposite. The Leeds/Bradford/Halifax/Huddersfield area is - was - gentrifying rapidly with an obvious shift away from the ruins of heavy industry to art/craft projects and enterprises of all sizes. The Calder Valley is almost notorious for it. There's also Salts Mill near Shipley, which is a carefully authenticised artisanal mall in an old converted mill.

And you'll find plenty of web/creative agencies plying their trade in the area, although that sector isn't quite as distinctive as in - say - Manchester.

It's all part of the standard gentrification cycle: - collapse -> bohemian -> artisanal -> gentrified -> investment grade -> collapse... but hurried along some.

To me this is kinda sad. Software Developers are not vibrant or cultured and shouldn't really be in inner cities with the interesting people and artists.

It's a bit more subtle than that, no? GP specifically mentioned early stage startups. The argument is that too high cost of living makes cities less vibrant, not that developers ruin them.

Sure, the ability to work from anywhere in the world coupled with a severe epidemic, riots, looting, and boarding up of city centers will give rise to a "vibrant inner city atmosphere". Uh-huh.

Cities will still exist even if remote work rises significantly. There is a huge amount of buildings and infrastructure which won't just disappear. Rather, demand for them will fall, and since supply is flat, prices will drop. This will give opportunity to less lucrative ventures to work at the city center. Artists, for example, would have a harder time working remotely.

It's a common fallacy that rents fall when demand drops. In fact, they often don't, particularly for commercial space; the owners choose instead to let the spaces go unused. I've seen this happen up close with several buildings my city, in several neighborhoods. There was an article a while ago about how Greenwich Village suffered a similar fate.

Can the city councils do anything to counter that? I wonder...I heard about Frome (Southwest England) where the local council took proactive steps to prevent the high street being filled with betting shops. I think they lowered business rates significantly and possibly other measures.

A land value tax can help quite a bit. It can both prevent landlords from capturing all / most of the value when rents rise and also help act as a cushion when rents fall.

The current property tax system that most cities use make little sense. It penalizes people for improving and updating the structures on their land. Cities should be encouraging property improvements.

Got a source to back up that claim? Detroit for example has seen inflation adjusted commercial office space prices massively drop:

"Adjusted for inflation, the average office tenant paid a peak price of $34.34 per square foot during the fourth quarter of 2000, 65.5 percent more than the current average rate of $20.76, according to Newmark Knight Frank data. It's almost as deeply pronounced for Class A space — which has the best amenities and finishes. Today's Class A rental rate is $24.36 per square foot, but in the third quarter of 2001, tenants paid inflation-adjusted rent of $38.12 per square foot, 56.5 percent more than now" [0].

[0]: https://www.crainsdetroit.com/article/20170730/news/635141/d...

Here's The Atlantic article I was talking about, "How Manhattan Became a Rich Ghost Town" http://archive.is/PWOC2

And a NYTimes article similarly, "The Empty Storefronts of New York" https://archive.is/JnhDS

Basically rents are too high, so businesses won't rent because it won't be profitable. In 2018 when the NYT article was written, "about 20 percent of all retail space in Manhattan is currently vacant, compared with roughly 7 percent in 2016."

So maybe this is bimodal: you have "rich" areas like Manhattan and SF and Seattle, where rents stay high even with low occupancy (landlords sitting on empty properties and enjoying the free ride of increasing asset prices), and you have "poor" cities like Detroit, where no one wants it and you can't even give it away ("free" property still comes with liabilities like taxes and maintenance).

I follow along in /r/realestate and it seems that part of the motivation for this behavior is that the owners are usually leveraged - they don't own the property outright, or if they do, they have taken a loan against the property. If they lower rents, it impacts the valuation more than staying vacant and waiting for a new tenant, which in turn has implications on the loan & ability to obtain loans in the future.

If we don't get a working, _and safe_ vaccine in the foreseeable future (a real possibility), cities could all turn into Detroit - high density living or work just won't be epidemiologically viable.

It's not the 'everybody works there' that does it, it's the 'cheap enough that artists can live there' that does it. My mom split her time between art, her true love, and working as a secretary, or a maid, or an office manager. She had a way of living near where the art was happening, as artists tend to have very little money, as did she. She could afford to live just off the Lincoln Road Mall in South Beach in the mid-80's, as did hundreds of other artists. The South Beach that is now luxurious and pricey was once cheap, and shabby and a bit dangerous. That's really the seed of a vibrant inner city atmosphere. She repeated that (to smaller degrees) several times in her life.

I hear about artists being the ones who create vibrant neighborhoods a lot, and I'm honestly struggling to understand the causal effect that's being claimed. Do people really care about "living near where the art is happening" to the point where it would drive up property prices?

When I talk to people from demographics that are accused of being gentrifiers (young professionals), the overwhelming reasons they choose a neighborhood are to be near restaurants, bars, clubs, cafes, shops, work and friends. I don't think I've ever heard of anyone pay a premium to be near an art gallery, or live near artists' private studios.

There are some gentrified neighborhoods that were known for their artists. New York's Soho is an example. These days the place is full of overpriced fashion stores, both independent ones as well as global chains. I can see why the shops were attracted - for branding purposes it might help to be associated with those artists. But I wouldn't say that artists turned it into a particularly vibrant neighborhood, at least not more than other neighborhoods in Lower Manhattan.

Is it that it's about correlation, not causation? It seems reasonable that artists would be attracted to an area for the same reason as, say, independent coffee roasteries (both require cheap space). I suspect it's only really the latter that are attracting new residents though.

I do suspect it's more the cheap part than it is the artist part, so it may well be correlation rather than causation. That said, given the same low rent in two locations, wouldn't the savvy coffee roaster pick the one with the artists? So, maybe there is a causal argument.

So the term "artists" covers a whole lot of ground here. It doesn't necessarily mean picture painters, but it's a shibboleth for a whole bunch of people with ideas and little to no money. These people try to minimise fixed costs, and move to "bad" areas.

The conglomeration of all of these people tends to lead to events, club nights and new and interesting businesses. This makes the area more attractive, causing others to move in and thus kickstarts the gentrification process.

Reply on news.ycombinator.com