Short and bland

Yesterday, Post writer Dion Haynes noted that office rents have been rising in Washington, to the extent that the DC average is now higher than that in New York City. Haynes, suggests that the rise is due to Washington’s relatively strong, government-supported local economy. No doubt. But the high level of rents in Washington can be chalked up to the artificial supply limit of the city’s ceiling on building heights.

Yglesias points out that the upshot of the policy is an increase in the amount of economic activity that takes place in the Washington suburbs and a real economic loss for Washington (in terms of foregone jobs and tax revenues). He’s quite right, and Washingtonians who sing the aesthetic praises of a short city generally fail to recognize just how much they’re paying for their views. Atrios also comments, and mentions that the effect of the height limit is to generate an increase in heights outside the downtown core. And he’s also right. Washington’s height limit has quickened the development of high-end, up to the legal limits office construction wherever else in the city it’s permitted. Rosslyn and Pentagon and Crystal Cities have also benefitted.

I’d make an additional point, however, which is that the height limit and the associated impact on rents have a direct effect on the composition of the Washington economy. As rents rise, the expense of Washington office space filters for certain types of businesses, namely, a) those who can afford the rents, and b) those who derive the biggest advantage from locating in downtown Washington. And that, in turn, means corporate, rent-extracting firms — law offices, lobbyists, and well-funded industry groups and think tanks. Other industries will be crowded out.

Now, the risk of single-industry dependency is reduced in Washington’s case, because government is very nearly bust-proof. New York and San Jose, on the other hand, are heavily dependent on cyclical industries, which means that every once in a while they suffer fairly substantial downturns. But the bigger cost is in terms of dynamism. Industry towns are dull places, especially when the industry in question is as dull as government. Washington’s height limit means that there is room in the city for little other than the rich corporate interests and the kinds of cultural amenities favored by rich corporate interests. With the height limit in place, there is little risk of Washington becoming as vibrant or as innovative as rival cities to which it so regularly compares itself.

Comments

  1. Christopher says:

    Another thing that’s jacking up rents in DC is a predisposition to tearing down and building new. Especially in the office cores of the city. The new premium spaces are fit for the modern — and expensive — lease holder. Had more of the older stock of buildings been preserved, especially in the formerly industrial areas — more of those buildings would be available to the kind of offices that are leaving DC for the suburbs: creative firms, nonprofits, etc.

    Here in NYC where much of lower Manhattan is off limits to tearing down, there are a surprising number of nonprofits. In midtown and Jersey City which are more developer friendly you see more corporate offices.

    Warehouse areas that have moved from light industrial to creative class and associated businesses have flourished in parts of the Bronx and Brooklyn. Meanwhile DC has leveled much of that type of building in areas like where the new ballpark is and along 14th street. In other places, industrial buildings have been given priority to reinvent themselves as charter schools. Which is a significant change in use.

  2. Alex B. says:

    Christopher, I think that predisposition to tear down low density, light industrial uses is a result of high rents, not a cause of them.

  3. Christopher says:

    @Alex Which is why there is a need for more micro-zoning and preservation. Micro-zoning could require that the new buildings not exceed the original square footage. It could create zones for certain types of buildings. There’s a reason that Lower Manhattan is cheaper than midtown, or that Brooklyn or SoHo or SF”s South of Market retain some of their industrial character — it’s because of tough preservation and micro-zoning.

  4. Alex B. says:

    But those kinds of restrictions on potential density would only exacerbate the problem Ryan is describing…