In the LA Times Seeing Factories as Essential Parts, the tag line reads The shape of modern American cities may be changing as urban planners weigh the conflicting merits of housing versus industry.

In many large urban markets, like Los Angeles and New York, it is getting more and more difficult to consolidate large parcels of land to create more housing. Politicians are all for it because it replaces a tepid tax base with a strong tax base. New York City has upzoned neighborhoods to encourage development, while land in outlying areas of LA are becoming scarce.

When is enough, enough? I have heard the joke in the NYC said on more than one occasion that its only a matter of time that Manhattan will become one big condo development.

At the same time, restricting supply will push housing prices even further.

Local governments are beginning to take steps to protect industry as residential developers eye industrial land for housing:

  • Long Beach – Adopted a strategy in January for protecting jobs and creating business that discourages conversion of industrial property to residential or commercial uses. Formal policies are expected in a year.

  • New York City – Just wrapped up public comment on boundaries for a series of “industrial business zones” proposed by Mayor Michael Bloomberg last year. The Industrial Business Zone Boundary Commission could be convened by the end of the month to decide on the boundaries.

  • San Diego – Has mapped the city’s industrial areas and drafted a plan to protect prime industrial land. The City Council’s land use and housing committee began hearing testimony on the draft, and the Planning Commission will address it later this month.

  • San Francisco – Last month began a series of community meetings to discuss its Eastern Neighborhoods plan, proposed zoning changes to balance industrial land protection and residential development in the South of Market, Mission, Potrero Hill and Waterfront districts. The Planning Commission eventually will weigh in on potential zoning changes.

  • San Jose – Changed the general plan on 4,000 acres in North San Jose to increase industrial density on part and allow housing on the rest in a compromise to protect manufacturing land and allow necessary residential development. The plan is in limbo after an unfavorable court ruling on March 2. The city now must decide how to proceed.

  • Santa Monica – Is updating its general plan to find ways to preserve areas for industrial and light manufacturing uses. The new plan should be completed within a year and a half.

  • Ventura – Recently debated industrial protection as it refigured its general plan. Zoning and economic development details are in the works.

Supply would certainly temper prices in a weakening market, but what happens when industry can’t afford to locate in the very same market the housing market is there to serve (at least partially?) The influx of new housing units can change the texture and characteristics of an area to the point where the reasons for moving there in the first place are lost.

There is a fine line between progress and a solid tax base.



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