Gentrification
"Brooklyn is Not For Sale!!!"
Actually, it is. Exploring how developers and planners respond.
“At the neighborhood level itself poor and vulnerable residents often experience gentrification as a process of colonization by the more privileged classes. Stories of personal housing dislocation and loss, distended social networks, 'improved' local services out of sync with local needs and displacement have always been the underbelly of a process, which, for city boosters, has represented something of a savior for postindustrial cities.” - Atkinson and Bridge, 2005
Real estate development and speculation is a popular way for investors to grow pools of money over time. Investors can include wealthy individuals, pension funds, insurance companies, and banks. Similar to buying a stock or a bond, an investor in real estate seeks to buy a property, earn some sort of income or dividend from it, and sell it over time at a higher price. Contrary to a popular belief amongst opponents of gentrification, this isn't necessarily greedy behavior.
The U.S. inflation rate hovers around 2.5% per year, which means that savings, which aren’t invested to earn a rate of return higher than that, will decrease in value. It is simple math, really: if the cost of living increases by two percent per year, and savings can't keep up with that increase, than people who save money are punished over time. Recently, interest rates for U.S. bonds have hovered between 0 and 2%, which means that investors have been forced to take extra risk to earn a return on saved money. As a result, real estate has become one of the most popular investment opportunities for a range of people with financial goals.
As noted by Neil Smith, a tremendously popular thinker on gentrification, real estate developers face a trade-off over time between investing money into the upkeep of previously made investments and making new investments. In his "rent gap" hypothesis, he theorized quite accurately that this trade-off, when paired with fast changing economies and cities, induces investors to forego the upkeep of previously acquired buildings in exchange for making new investments. Over time, as previously popular and well-invested city districts deteriorate, a 'rent gap' exists between what the building is worth currently, and what it could be worth when put to its best use (renovated and rented to a more affluent tenant).
This gap exists most obviously in gentrifying neighborhoods - as more people move to city centers and create demand for housing, the unchanging supply of crowded-Manhattan raises the price of housing and induces more people to look for housing they can afford elsewhere. As many people embark on a neighborhood and housing hunt, and follow the previously described trajectory that gentrification takes into places like Brooklyn, real estate developers follow them to provide housing, renovating buildings to their best and most profitable use!
In many cases, residents of neighborhoods who are weary of gentrification despise developers - and a subset of them reserve the same kind of ignorant rhetoric typical of the Occupy Wall Street Movement. Banners and art in Brooklyn neighborhoods that announce, "Brooklyn is Not For Sale!" or "Developers Get Out!" are confused and misplaced in the context of change and action. Actually, Brooklyn is for sale, and there are better ways of dealing with it than yelling aimlessly at real estate investors. To be sure, there are some corrupt, greedy, horrible landlords that use heinous tactics to oust lower-value tenants from buildings. These landlords are inhumane, and are actually violating the law, which prevents this behavior. These objectionable landlords are not fairly representative of real estate investing.
Policy-makers have long worked together with urban planners to design solutions for their cities. Much literature pertaining to gentrification and urban planning suggests that the focus has been on helping to make cities exactly what they've become: enclaves of smart, educated people and families who bring wealth and jobs to neighborhoods; who help to make the city a destination for tourism; and who help to bring in tax revenue to support public institutions that serve the larger city and the neighborhoods within them.
Removed from the realities of gentrification, urban renewal policy goals are noble. As the thinking goes, when executed correctly, utopian liberal justifications of these goals include ideas that social mixing of neighborhoods will help to better educate the neighborhood poor, and bring them jobs and increased prosperity as they rub soldiers with tolerant, educated, liberal newcomers; conservative justifications include falling crime rates, enhanced economic productivity, and improved infrastructural development.
As the real gentrification experience indicates, the neo-liberal justifications are overblown. Sure, more wealthy residents rub shoulders with the poorer indigenous residents - but this interaction goes little beyond physically rubbing shoulders, and the tax increases don't necessarily improve the local services that indigenous residents want or need. Further, the renewal goals have been so lauded on both sides of the political spectrum that historical public policy has done little to curb the negative effects of gentrification. City governments often grant developers incentives to build and renovate in gentrifying neighborhoods, allocate larger police forces to make the neighborhoods feel 'safe,' and market gentrifying neighborhoods as liberal, creative destinations for young professionals.
Another way that planners try to make the city more attractive to newcomers is to transform districts with the creation of more "livable" space. As it pertains to housing, this means tenement building units are transformed and combined into larger, nicer apartments. On the street level, bike lanes are created, sidewalks are turned into green spaces, and old buildings are either transformed or torn down. There is no question that these initiatives make cities nicer places to live. However, there is also no question that many tax dollars go into funding these sorts of initiatives (instead of providing any safety net to indigenous residents). These initiatives invite well-to-do newcomers at a fast pace.
Pictured: The Highline Park in Chelsea, Manhattan - once an elevated train track converted into a public park in one of New York's most famous urban renewal projects.
Another way that city planners encourage gentrification is through public-private partnerships - where local governments make plans to renovate infrastructure, provide incentives for developers, and re-zone properties to be used for housing or business.
Zoning in many gentrified neighborhoods takes a variety of forms. In some cases, it restricts the rebuilding of structures and encourages developers to renovate existing buildings instead of replacing them. In the case of many Brooklyn neighborhoods, like Park Slope and Bedford-Stuyvesant, the beautiful, renovated historic looking Brownstone buildings still exist much like they did generations ago because they sit on protected streets designated by historical commissions. In other cases, planners do the opposite and encourage building replacement - which has resulted in more modern looking condos and high-rises being built in places like Williamsburg. In yet a third case, properties can be either designated or lose designation as housing for lower income people. Properties can be re-zoned to either include more, less, or no affordable units - either allowing or restricting properties to derive value at a market rate.
While city planners create public works projects to attract people to their neighborhoods, they also use zoning laws as a way to attract and incentivize developers and private-sector actors to participate in urban policy. To be sure, not all zoning laws intend to create gentrification - in fact, some have the opposite goals. For the purposes of this primer, we need to hold off on scrutinizing zoning laws, and instead try to understand how they are used, how they can be more complex than they appear, and break down the widely held notion that they are always imposed from the larger city government onto the neighborhood.
Zoning laws, to put it simply, place restrictions on what land can be used for. They have an impact on the development of residential and industrial districts, regulate how many people can occupy buildings, and set rules on what buildings can be used for. They can establish architectural norms, and mandate maximum building heights. They can also denote buildings as being completely or partially affordable - and either force willing developers to accept lower rents or reserve lots on which government can build.
City planners can change zoning laws as neighborhoods evolve to set in motion various policy goals. For instance, in order for old industrial neighborhoods like Williamsburg to have changed from containing factories and low rise housing to being a center of Brooklyn high-rise and condo development, zoning laws were changed and allowed areas once reserved for industry to be used for residential luxury development. Since many of the old factories were vacant anyway, city governments often incentivize developers to change the city scape of neighborhoods, which partially compensates them from the risk they take on by investing in gentrifying neighborhoods. Furthermore, public-private partnerships in gentrifying neighborhoods are executed on by changing publicly owned space, and inviting in specific private-sector actors to achieve urban renewal goals. This type of zoning-law creation is top town, in that it is imposed upon city neighborhoods by city governments and planners at the top.
Zoning laws can also be created from the bottom up, starting from efforts led by of neighborhood residents that convince city governments to enact zoning laws on their behalf. Neighborhood level committees and organizations can be made to achieve specific goals. For example, the Park Slope Civic Council is a neighborhood advocacy group in Park Slope, Brooklyn which works with city governments to preserve the look and feel of the historic neighborhood. They create zoning laws that limit development activity along avenues, and implement stringent regulations on the preservation of the brownstones that line the streets. Real estate investment activity is limited to renovation, so that the streets keep their aesthetic character.
Both the top down and bottom up processes are in response to increasing demand for neighborhoods, but one tries to protect neighborhoods nostalgically while the other generally results in commercialization. As a result, opponents of gentrification often condemn real estate development and public-private partnerships that intensify commercialization, while praising efforts that are more protectionist by nature. They praise local organizations and are accusatory towards big business. Its clear to see why when you compare Park Slope or Boerum Hill with Williamsburg or Bushwick - the former feel like quaint little village neighborhoods, while the latter feel like exploited industrial towns turned cosmopolitan. But if we step back and examine the processes driving gentrification, and if we approach the topic with skepticism because indigenous neighborhood residents and their cultures become displaced by it, it becomes clear that both methods driving the creation of zoning laws don't really matter. Both are implemented with power, something that indigenous residents don't have, and both are inhabited by higher-class, more affluent people representing less diverse backgrounds.
First off, neighborhoods like Park Slope are protected not as they were when inhabited by their indigenous residents, they're protected as they were after they were already gentrified. Some first wave gentrifiers moved to the charming neighborhoods for the charming buildings and corner shops, for low-rise buildings and tree lined streets. They put their time and energy into renovating older buildings, taking care to preserve the architectural marvels.
As more people sought to move to the neighborhood, land values increased, and gentrification began to take hold, first-wave gentrifiers realized that developers would want a piece of the action. In order to prevent their neighborhood from turning into what looks like commercial Williamsburg today, they organized to create zoning laws that created stringent restrictions on development. As a result, real estate investment activity and increases in land value in Park Slope takes the form of new tenants, renovation, and increased preservation. It also changes the types of local small businesses and shops that exist along its avenues. But there are no Urban Outfitters or American Apparel chains there.
Pictured: New Urban Outfitters chain in commercialized Williamsburg, Brooklyn
Contrary to how the neighborhoods may look and feel, protected neighborhoods like Park Slope are more expensive and more gentrified.
In part, this is because the supply of housing is constrained due to zoning laws, and is not dynamic enough to meet demand. Because housing supply is so limited, indigenous Park Slope residents felt the increase of demand for the neighborhood more bluntly than indigenous residents of neighborhoods like Williamsburg, who's increase in value was partially absorbed by the development of new housing supply. So while it is easy to point to Park Slope's protectionist efforts favorably, more critical thinkers have to acknowledge the effect that limited housing supply has had on the cost of living. Park Slope, along with other neighborhoods that have responded to changes similarly, are more expensive than many desirable parts of Manhattan!
Similarly, while it is easy to point to development activity as a negative effect of gentrification, it is characterized more fairly as a symptom of neighborhood change rather than the cause of it. While it may look to outsiders like development activity is destroying neighborhoods, indigenous populations of neighborhoods like Williamsburg may well note that it has an effect on absorbing the more affluent population and slowing gentrification's displacement effects. To be fair, development also has the potential effect of increasing demand in and of itself, but it isn't clear that development increases demand more than preservation does.
In short, restricting development activity vis-a-vis zoning laws isn't a legitimate way to stand up up for vulnerable residents being affected by gentrification. To the contrary, it is a way for a more powerful first-wave gentrifiers to organize and make their changes to neighborhoods permanent. While I agree that Brooklyn's historic Brownstone buildings should be preserved, I recognize that the only economic effect of protecting neighborhoods with zoning restrictions on residential development is increases in real estate values that pushes gentrification further into Brooklyn.
Another way that zoning laws are used is in mandating the creation of housing that is fully or partially subsidized by the government. Some buildings are on land owned by the government, and contain entirely public housing, and some buildings contain a mandated number of affordable units. Still yet, some buildings have a cap on the amount rent can increase each year. All of these zoning laws are protective measures to help ensure that poor and working class people can afford to live in their neighborhoods and prioritizes their economic stability in them. As gentrification sweeps through neighborhoods with public housing and housing with affordable units, those institutions come under pressure - as the gap between their current value and potential value becomes clear to planners, investors, and landlords. Some stakeholders argue for the elimination of affordable housing units so they can rise in value as the market dictates.
Pictured: Two young residents of a Brooklyn public housing development outside their building
While I believe affordable housing should continue to provide for the cities' most vulnerable residents, it is important to recognize two major problems that it poses on cities when confronted with gentrification. First, if housing unit rents are locked at a low price or are prevented from increasing as the rents in the rest of the neighborhood rise, the displacement effects of gentrification are accelerated amongst households that don't live in public housing or in a building mandated to provide affordable units. Further, this acceleration induces gentrifiers and developers to spill into adjacent neighborhoods by way of constrained housing supply. The second major problem is that in the face of drastically increasing rents, more and more people will need affordable housing and city governments won't be able to pay for it.
As real estate investors respond to incentives and city planners respond to changing demands of population demographics in cities, their policies do little to curb gentrification, and in reality, even those policies intended to protect native residents don't stop gentrification, they just move it elsewhere. Therefore, while providing publicly funded housing or placing caps on rent increases might be a short term solution, they unfortunately will not be able to withstand the current pace of gentrification and changing cities, and will certainly not be able to absorb the displaced residents of gentrifying neighborhoods.
Having come to understand how some major stakeholders respond to changing cities, we will finish with with a reflective look at gentrification and try to draw some larger conclusions about it.
