Developing Palo Alto is worth $1T

https://www.bensouthwood.co.uk/p/developing-palo-alto-is-worth-1-trillion

by jseliger • 2 years ago

28 87 2 years ago

bensouthwood.co.uk

porphyra3• 2 years ago

Yeah I don't really understand the nimbys who think that building more housing will make their house prices go down. Nearly everywhere in the world, house prices are way higher in densely populated cities than in the sparsely populated suburbs. Perhaps the Bay Area is more of an exception (expensive suburb).

d4mi3n• 2 years ago

A lot of things drive those prices, but a big one is access to work and amenities. Mostly work, though. The Bay Area is characterized by suburbs, but also provides some of the highest paid and most highly desired jobs in the country.

nerdponx• 2 years ago

I can't imagine that they're highly desired for any reason other than the earnings potential. Not only in those jobs specifically, but also in the future opportunities that they unlock.

bombcar5• 2 years ago

The NIMBYs are more against change than they are against house price variations specifically.

Most want to continue living where they're living without it becoming vastly different, and so they oppose things that would change it, even if it would make them more money theoretically.

asdfman123• 2 years ago

I wonder if the main obstacle is the ability for a few obstructionists to stop everything. Maybe there should be some kind of imminent domain system.

coolspot• 2 years ago

A person living in UK teaching us how to manage our land.

__MatrixMan__• 2 years ago

Ok, but who cares?

Do people want Palo Alto to look like Manhattan? There will always be ways to make the number go up. Finding them might make getting a loan possible, but it doesn't mean they're good ideas. Usually, the fact that they haven't been done yet is an indicator that they're bad ideas in ways that a one-dimensional number-go-up model fails to represent.

bagels3• 2 years ago

Many people in Palo Alto absolutely do not want more more building and density.

bombcar5• 2 years ago

And many people outside Palo Alto want to live there without substantially changing it.

If Palo Alto becomes Manhattan, is it still Palo Alto?

At some point you're facing a contradiction, where a million people want to live in a town of 80,000 without substantially changing the feel of the town.

marcinzm3• 2 years ago

“ let’s say we build 30 miles of subway, about what Manhattan has in that area.”

Public transportation that connects to nothing is not useful. The NY metro area has a massive public transit set of systems that extend out for a hundred miles in every direction. That’s why you can support such density.

edit: It's 665 miles of MTA track, 14 miles for PATH, 700 miles of LIRR train tracks, and 385 for Metro North tracks. Plus Amtrak and the regional buses (the new depot alone for those will cost $10 billion).

rm_-rf_slash• 2 years ago

NYC used to be a zillion municipalities that grew into 5 boroughs over time.

The only way you could swing that kind of government heft is to reincorporate the Bay Area into a similarly singular entity.

Otherwise, as is now, all problems in the Bay are the fault and responsibility of the next city over.

autoexecbat• 2 years ago

reincorporate the Bay Area into a similarly singular entity.

I really wish this would happen, the city boundaries are so small and arbitary

whymauri• 2 years ago

Yes and no. In transient oriented development you can build the transit infrastructure first and then densify around the new nodes of transit.

marcinzm3• 2 years ago

I agree but that's not what the article is discussing and accounting for the costs of.

porphyra3• 2 years ago

On the other hand, the fact that the Bay Area has a bunch of chronically congested freeways due to everyone driving to work is a clear symptom that we need better transportation such as rail transport or buses. For example CA 85 is clearly congested in the direction of driving towards Apple in the morning and away from Apple in the evening.

marcinzm3• 2 years ago

Sure but if housing density also increases then you'll just keep the existing equilibrium. NYC has the best public transit in the US with less than half the households even owning a car. Yes car traffic is famously bad.

bagels3• 2 years ago

People in Saratoga successfully stopped the development of rail in that corridor.

angarg12• 2 years ago

What the hell is going on with this article?

The article posits that NIMBY-ism is a myth, and to prove it, they do a thought experiment that shows that building more density in Palo Alto would yield more value, and hence it would be the rational thing to do. But why use an unrealistic thought experiment when you have real world examples of NIMBY-ism in action?

This article makes no sense at all.

xyzzyz2• 2 years ago

This argument assumes that we can destroy Palo Alto, rebuild it anew into something completely different, and preserve the value people ascribe to Palo Alto. This is not how it works.

If it worked this way, why do it to Palo Alto? Why not do it to Eureka, CA, or, even better, some unincorporated land with no zoning rules to speak of? Just buy it for pennies on the dollar, slap midtown Manhattan density construction on it, and reap the profits. Why are Bay Area VCs throwing billions at stupid startup ideas, yet won't stoop to pick up trillion dollars from the zoning gutter?

babelfish• 2 years ago

They are doing that, with the California Forever project, which is equally as dumb

trhway2• 2 years ago

My idea is even more "dumber" - 12+ miles off the shore of SF. Drive a lot of pillars and pour a lot of concrete and build some similar monstrosity to that "Wall City" Saudis are planning in the desert (or that Star Trek Millennium Tower). Don't need even city charter from the state, no voter approval, etc. Fast hydroplaning taxis to SF, etc. Probably some no-work-visa loopholes.

petesergeant• 2 years ago

which is equally as dumb

What’s dumb about it? As someone who heard about 5 minutes ago, and did 5 minutes of research, it doesn’t look that dumb

dnissley• 2 years ago

How do you think NYC became NYC?

wkat4242• 2 years ago

NYC became NYC in a different time and it was always the gateway to the new world

You can create a new city in the middle of nowhere but you'll be missing any authenticity or history. You won't find a bar "since 1889". Some care more about that than others.

Of course that's less of a factor in the US anyway as everything is much more recent.

Planned cities can work but I still tend to find them quite weird. Luke Canberra in Australia. Or Lelystad and Almere in the Netherlands (their whole province is reclaimed land).

baggy_trough2• 2 years ago

Through incremental changes over the past 400 years.

quickthrowman2• 2 years ago

It developed organically over Four Hundred Years. 400 years. Four Hundred Years.

mdgrech23• 2 years ago

A lot of ignorance in this comment. Many early American cities now big major metros were built on top of native American trading routes/trading posts. This idea of a blank slate is grounded is totally false.

renewiltord• 2 years ago

The answer is that there's no real difference. People object to it no matter where. California Forever is the current attempt to get this done outside the immediate Bay and I hope it succeeds.

Overall, most people just don't like change. I see this among Americans a lot. They'll complain that their lot in life is miserable but if you ask them to do something about it it's always "you expect me to just drop everything and leave for an uncertain chance at something"?

No, Mr. Bond, I expect you to whine.

But it's all right. These kinds of things don't last long. The UK did all of this before and the nation is crumbling. Most of Europe did this, too, and now it's primarily a theme park for relatively rich Americans to come visit.

The local Europeans complain about the cost of living and how their $40k job as Head of Cybersecurity for their nation pays only for a 50 m^2 home 1 he from work. But they made a bed and now we lie in it while they lie on the floor.

It is the nature of people to stall at some point. Then the ones who come after take their stuff. Online they'll complain about it but what are they going to do.

seanmcdirmid4• 2 years ago

Why not just do this to East Palo Alto, Palo Alto's less attractive sibling right across the highway?

bombcar5• 2 years ago

Or any of those nature preserves, eh? We could develop even just one of them and pocket a cool trillion!

Then using the trillion, buy Palo Alto and turn it into a nature reserve. Win/win!

hnav4• 2 years ago

Why not $SOME_OTHER_PLACE _is_ the classic NIMBY argument.

xyzzyz2• 2 years ago

Yes, and? You cannot just point to an argument, say it’s NIMBY and call it a day. You have to actually argue against it. Slapping a derogatory label on it and dismissing it is not enough.

voisin3• 2 years ago

Just buy it for pennies on the dollar, slap midtown Manhattan density construction on it, and reap the profits.

China has been running a real life Monte Carlo simulation on this for two decades and the results are eerily quiet. Your point is accurate.

spicyusername• 2 years ago

I'm not so sure the results are as dour as you're implying. China has many, many enviable "20-minute cities" scattered all over, all built high density from the ground up.

ccgreg• 2 years ago

I live in downtown Palo Alto, and it has a lot of mid-rise buildings and is walkable. Expanding the area that this is true for is not something completely different.

KindAndFriendly• 2 years ago

I encourage the author to spend an afternoon and evening in Palo Alto as well as in SF and SJ downtown. Please tell us afterwards where you and your family would rather live.

iknowstuff• 2 years ago

https://m.youtube.com/watch?v=oHlpmxLTxpw

Dangers of Car-Dependent Suburbs: How Urban Planning Affects Parenting

In this segment, the speaker highlights the stark contrast between the freedom and independence of Dutch children versus the restrictive upbringing in car-dependent suburbs of North America. By comparing their own childhood in London, Ontario, to their current experiences in Amsterdam, the speaker argues that the Dutch city's design and culture enable children to develop autonomy and independence, whereas North American suburbs lack the necessary infrastructure and social norms to allow children to thrive without excessive parental supervision

cmdli2• 2 years ago

I've spent an afternoon in downtown Manhattan; it's rather a nice place. The world could use more places like that, preferably close to existing population centers.

uxp100• 2 years ago

I may be biased since I lived in San Jose for a while, but definitely San Jose. Palo Alto sometimes has that small college town thing where everywhere can be unexpectedly busy (like why is a sit down restaurant bar absolutely packed with 22 year olds doing shots? Because the college bars are too full to even enter). San Jose is a little dull, but charming. I’m thinking northside, like around backesto park. Palo Alto’s proximity to both SF and all that state park/open space preserve to the west is really nice, and I think it might stay a bit cooler than San Jose, which occasionally gets toasty, but still, I’d pick SJ.

quickthrowman2• 2 years ago

This is an absurd article with a ridiculous premise not worth discussing.

“What if Palo Alto had the density of Manhattan?”

Manhattan has had 400 years to get to where it is today, the Dutch established a trading post there in 1624.

jrflowers• 2 years ago

Ah yes. NIMBYs do not exist because a blogger can conjure the image of somebody with a trillion dollars cash to buy the town in their imagination. Check mate

ToucanLoucan• 2 years ago

Still wouldn't be the dumbest thing Elon's done with his fortune. Assuming he has one after X finally finishes crashing to Earth.

toasted-subs• 2 years ago

Developing expensive areas seems like an effort in refinement, not as an actual monetary investments.

deadbabe• 2 years ago

Why not just leave Palo Alto alone? There is nothing special or desirable about that area, and it’s populated by weird, quirky, or even insufferable people. The world does not need more Palo Alto.

mcoliver2• 2 years ago

Some people choose to live in dense cities. And that's great. Other people would like a bit more space. And that's great also. Still others want a rural life. This world is big enough to accommodate all of it. I for one feel people would benefit from having a bit less noise and a bit more space in their lives (both mentally and physically). If you want to live in a dense place, go live in the downtown of any major city. I fail to understand the urge to increase density outside city centers that have the infrastructure to support it.

rezonant• 2 years ago

Your comment is duped

mcoliver2• 2 years ago

bombcar5• 2 years ago

We could do with a bit more "clusters" that allow you to travel rapidly from one type to another, similar to how you can get from rural Japan to Tokyo by train quite easily.

But in general we should let the cities be as dense as they want, and everywhere else also. Part of that is allowing density to increase, which a part of that is making houses not so long-lived.

TaylorAlexander3• 2 years ago

Well the problem with the Bay Area in general and the peninsula in particular is that more people want to work there than can live there. So those than can pay extremely high prices for housing and those that can’t commute very long distances or live in a van on the side of the road. So there truly is a lack of adequate supply, and all the people who already have their idyllic little houses don’t want things to change. So I think it’s a real issue. But pretending we can just rebuild it all isn’t really gonna get us anywhere.

hidelooktropic• 2 years ago

NIMBY = Not in my backyard

Since I couldn't find it in the article or the tweet it linked to, maybe someone else needed this too. https://en.wikipedia.org/wiki/NIMBY

UseofWeapons1• 2 years ago

This article is just an exercise in back of the envelope math. There’s no coherent point to it. “If we just assume that Pablo Alto was as desirable as Manhattan and could justify building the same infrastructure…”

It’s not. You can’t.

jfim2• 2 years ago

So many things are wrong in this blog post.

- Palo Alto isn't in San Francisco ("Palo Alto in San Francisco")

- The value of Manhattan is because there's a large pool of people who can commute there using mass transit, while Palo Alto isn't even connected to Bart. If you ignore that, then even a random plot of land in Wisconsin could be worth one trillion

- Large scale development requires a critical mass of employable people and employers; it's unclear whether building a ton of skyscrapers and apartments would induce enough demand on both sides to make things work. This is the same problem that the new city in Solano county has.

- Since development would happen over time, there's a lot of value for a plot holder to maximize their gains by holding on as long as possible since their land value would go up as the surrounding area increases in value; if every plot owner does that, no development happens, and no increase in value is to be had by anyone. This is why the land in Solano county had to be acquired before announcing their plans to build a new city there.

seanmcdirmid4• 2 years ago

Palo Alto is connected to Caltrain, which has a Bart connection up in Millipedis or so (I'm sure I spelt that wrong). It isn't connected enough to justify super high density, but a lot of Stanford students live in or around Palo Alto without cars (bikes are super common).

jfim2• 2 years ago

Millbrae or Milpitas?

Animats2• 2 years ago

Palo Alto has slowly gone from being a college town to almost a retirement community. Some years ago the city government asked residents when and if they intended to move. 80% said they'd stay for the rest of their life. Turnover isn't quite that low, but it's low.

It's also 36% Asian now.

Menlo Park is a little more willing to build. East Palo Alto is very willing to build. The Whiskey Gulch problem ("Murder City USA") was solved by leveling the area and putting in a Four Seasons hotel and an office building full of lawyers. I used to live in Menlo Park near there, and heard automatic weapons fire most weekends. Which is why I don't own a house a mile from what's now Facebook HQ.

City census stats: [1]

[1] https://www.census.gov/quickfacts/fact/table/paloaltocitycal...

porphyra3• 2 years ago

In 1992, [East Palo Alto] had the country's highest per-capita murder rate, with 42 murders for 25,000 residents. In 2023, the city had no murders, the first time in its history. --- https://en.wikipedia.org/wiki/East_Palo_Alto,_California

Pretty cool! I guess the Ikea also contributed to the improvement.

Animats2• 2 years ago

Here are East Palo Alto's census stats.[1][2]

Percentage of black people:

* 1980 - 68%

* 1990 - 43%

* 2000 - 23%

* 2010 - 17%

* 2023 - 13%

[1] https://www.census.gov/quickfacts/fact/table/eastpaloaltocit...

[2] http://www.bayareacensus.ca.gov/cities/EastPaloAlto70.htm

manlobster• 2 years ago

Why does everyone need to live in Palo Alto? There's housing elsewhere. If we built more housing in Palo Alto, it wouldn't be such a nice place to live.

fsadfasdf• 2 years ago

I own a house worth single digit millions in a neighboring town to Palo Alto.

The thing is, the life is exactly the way I want it. There's no dysfunction or riffraff like you see in San Francisco. I will vote against development because I simply don't want development. I was exactly the opposite before I bought this house, now that I put over 100% of my net worth into the house I am on the opposite side of the table.

My net worth is under $10 million but I would not accept a $30m check to live in a condo on the 35th floor directly over the land that I inhabit today.

baggy_trough2• 2 years ago

High housing prices are a feature, not a bug (at least in a society that cannot maintain order).

hnav4• 2 years ago

No dysfunction, just teenagers offing themselves because they live in a boring suburb with pearl-clutcher, neurotic high-achiever parents.

aidenn0• 2 years ago

To each their own, but I'd accept a $30m check to move to a different town in a heartbeat. With that amount of money I wouldn't have to worry about commuting distances...

scoofy2• 2 years ago

We can either have slow, incremental development that keeps up and tempers demand. Or we can let that demand build up so much that it becomes an issue in the higher political unit (in this case, the state of California). It would take literal generations for that demand to rise so much that a majority of people are on the losing side of that political position... and it has.

The YIMBYs wouldn't be a threat to the people in Palo Alto if the effects of NIMBYism hadn't grown and entrenched themselves for literally 50 years. We are now dealing with the consequences of decisions made in the late-70's and early-80s by people making the same argument that you are making today.

bagels3• 2 years ago

I feel exactly the same as you on not wanting the character of the place I live to change, in a nearby city. I made tremendous sacrifice and investment to live somewhere pleasant. Increasing density will make it exactly like the other places I did not want to live.

That said, $30m will buy a lot of freedom to live like this somewhere else.

AirMax98• 2 years ago

It'd be cool if the vocal-on-twitter-urban-planner-community expanded their imagination a bit and explored this kinda stupid thought exercise with some different locations. Obviously this is tricky because it seems this crew has only ever been to NYC (but never the Bronx) and Bay Area suburbs. But I'm here to ask: what if Naples, Florida was built more like Philadelphia?

tootie• 2 years ago

I feel like I'm nuts but I think everyone in this thread is misreading this article entirely. He is not saying "NIMBYism is a myth" in that it doesn't exist. He's saying the premise the NIMBYism is a way to protect property value is wrong. Hence, if NIMBY's are really motivated by economics, they'd be advocating for massive increase in density. And yes, the post is all napkin math and glosses over the actual process of converting suburbs to urban, but the point is still pretty clear and he's almost certainly correct. I don't think he expects the Palo Alto government to approve 800 building permits tomorrow, but resetting people's expectations is certainly possible. Silicon Valley thinks we can extend life indefinitely, upload our brain to the cloud, colonize Mars, create intelligent machines, but not build big apartment buildings and trains? Of course we can. We broke the climate in 100 years without even trying.

bombcar5• 2 years ago

NIMBY = property values is almost certainly wrong.

NIMBYs use property values as one of the arguments, but if you countered it (for example, with a dedicated buy offer at some fraction above expected appreciation) they would just find another argument.

They're literally conservative, in that they are rejecting change.

nemothekid• 2 years ago

Has the author ever spoken to a resident of Palo Alto? This article is completely bizarre.

Yes if a God himself came down to Earth and gave every Palo Alto homeowner 30 million dollars, sure they would be completely irrational to take it. But if you could guarantee me that over X years, I could double my money, by simply raising a fund to pay 10x over market for every homeowner, then why is this a substack article? Go out and do it.

If you think through the logistics you would find, in our current regulatory framework, that Palo Alto homeowners are acting rationally. If you build a ton of midrise apartments in a suburb, the homeowner has to guess when to exit at the right time to sell their home. For every new apartment that goes up, the marginal cost of their home decreases. In other words that "30 million dollars" of value that is created isn't guaranteed to the marginal home owner. Some will get more, and a lot will get less.

w10-1• 2 years ago

Yes, you'll expend resources to protect resources, but that's not the issue.

NIMBY is always an argument about character, not price.

You live where you live -- meaning you can't avoid the influences around you.

So you pick a place with good influences, and protect them.

High density requires defenses against the combinatoric explosion of risk of bad faith actions by others. Defenses are emotionally and financially costly.

Low density - being influenced by people within the Dunbar limit of 150 people you can know - means those defenses can be shared. Every actor is disciplined by the fact that everyone knows what others are doing.

But depending on your needs, there should be enough social variety to be interesting without being threatening. It's unlikely in a monoculture town (of factory farms or government jobs), but possible in a university town, or an area of high economic diversity - Palo Alto or Manhattan.

For those with the courage and the blinders to live in the city, their neighborhood can be a kind of small town. But I suspect this can change with a traumatic experience, or if you are responsible for people who are more attacked/less defended (young, old, female, discriminated...). So people move to the suburbs, or to gated communities or to buildings with a doorman. This is just as true of the ultra-wealthy on Aspen mountain-tops as it is for the homeless who prefer certain doorways.

If home is your castle, your neighborhood is your moat - worth defending.

scoofy2• 2 years ago

None of this matters if property taxes are aligned with actual value. If people want to pay the taxes to preserve their low density township, fair enough. The issue is that in CA, we've created a system where density is disconnected from land value, so there is effectively no incentives to use land efficiently. Unsurprisingly, we see vast amounts of sprawl in California.

Facilitating the development of sprawl has negligible exteralities in the short run, but is terrible externalities in the long run.

I've said this once, I've said it a hundred times. The NIMBYs are penny-smart-pound-foolish in their war against incremental density. The political model of CA's housing crisis is not a pendulum swinging back-and-forth. The housing crisis is two generations of pent up demand, finally getting the political power to do something about it. The better allusion is that of a cascade, a dam breaking. Every unit added to these intransigent cities will be occupied by a person previously blocked from home-ownership, and more likely to support more development. Every state law passed that forces these towns to add housing undermines their ability to block it further.

The NIMBYs can build the foundations of the dam, but they won't be able to control the fallout when it breaks, and it will be swift and unpleasant. Creating sustainable, incremental systems is the only way to prevent this in the long run... but that requires a concept of stewardship and common wealth, which is contrary to the NIMBY ideology.

SequoiaHope• 2 years ago

In the world of pure fantasy thought experiments, I want to redevelop San Francisco one block at a time by taking blocks in an area like the sunset (lots of low rise housing) and redeveloping it in to high density high rises. The trick is you do the following: whichever block you’re going to redevelop, you offer relocation cash to the residents and some other compensation to owners. Then you let each block vote on which one wants to accept. If none pass the threshold, raise the offer and repeat until one does.

Then remove all the housing and build super dense. You might need to start by big roads so maybe something around Sloat. Gotta build out transit too of course.

Anyway that’s never gonna happen but I want to see Hong Kong levels of density in SF, and if I were Housing Stalin that’s what I’d want to do.

hnav4• 2 years ago

Thing is it doesn't need to be super dense, people just need to stop kicking and screaming about every development that's going to "bring riff-raff" into the neighborhood and make it "hard to park". Stop looking skittish every time you see a person not like you and stop buying urban assault vehicles and dumping them on the street like that's your birthright.

TaylorAlexander3• 2 years ago

Stop looking skittish every time you see a person not like you and stop buying urban assault vehicles and dumping them on the street like that's your birthright.

If only!

hnav4• 2 years ago

Nothing of the sort will happen unless we start taxing suburbanites for the externalities of their lifestyles. As the daytime cost of electricity production goes to 0, hookup costs need to be higher for SFH. Road maintenance and such should be paid for by fixing prop 13. Mileage surcharges for cars.

Developing Palo Alto is worth $1T

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