What City Observatory did this week

Two of the three candidates for Oregon Governor are Climate Deniers. Oregon will elect a new Governor next month, and two of the three candidates for the job insist on repeating the discredited myth that greenhouse gas emissions can be reduced by widening freeways so that people don’t spend as much time idling in traffic.  As we’ve demonstrated time and again at City Observatory, wider roads lead to more driving and increased emissions.  Pretending that wider roads will reduce greenhouse gas emissions is climate denial, something that independent Betsy Johnson and Republican Christine Drazen are shamelessly repeating. Falsely claiming that reduced idling will lower greenhouse gases is a popular lie among highway advocates.  Current Oregon DOT director Kris Strickler made this a centerpiece of his confirmation testimony in 2019.  But repeating this lie doesn’t make it true.  What it does do is further delay taking action that would really address the climate crisis.

Must read

What’s behind regional variation in housing production.  Nationally, we have a significant shortage of housing, but in reality, there isn’t a single national housing market.  Housing is in many ways a distinctly local set of markets.  Why do some markets seem to produce a lot of new housing, and others not so much?

The Urban Institute’s Yonah Freemark offers a typology and analysis of housing production in US metro areas.  Freemark’s unit of analysis is the municipality, and he classifies cities within a Metro area based on their housing costs relative to the regional average–a good indicator of demand and amenities.  Overall, few housing units get built in the lowest value cities and the highest value cities, but for very different reasons.  In low value cities, there’s little demand; in high value cities, local policies often greatly constrain new development.

Freemark’s work points up a consistent pattern in which high value, high demand communities consistently tend to allow less housing to be built than other municipalities in the same region:

. . . of the nation’s most-in-demand municipalities—those where housing values are at least 30 percent higher than their respective metropolitan areas—less than a third added more housing than their encompassing region, despite plentiful developer demand to build there. In contrast, more than 40 percent of such jurisdictions added new housing at 50 percent or less of the rates of their respective metropolitan areas—and many actually lost housing units.


It’s time to reform streets, not just highways.  While there’s considerable push-back against urban freeway expansion projects around the nation, Washington transportation advocate Anna Zieverts says we also need to pay attention to how we use streets.  Writing at Next City, Zieverts, who works for Disability Rights Washington, argues that we priortize car movement on local streets, and that multi-lane arterials, limited pedestrian crossings, and car-oriented signal timing all make streets difficult or dangerous for non-car road users.  While replacing freeways with boulevards may lower their impact, even boulevards are chiefly designed to move cars.  For city streets, we ought to reverse the priority, putting pedestrians and bikes first, and slowing car traffic.

What if slow speed streets were the default for our cities? Yes, it would take longer to travel far distances by car in a city, but that may be one of the more equitable ways we can incentivize people to choose other modes, especially if roads designed for slower car speeds were paired with investments in faster bus-only lanes.

Maryland highway expansion sued by Sierra Club and NRDC.  Environmental and community groups are challenging plans to widen I-95 and the Capital Beltway outside Washington DC, alleging, in part that the project’s environmental impact was concealed by faulty traffic modeling. The most obvious error in the traffic modeling was that it wildly exaggerated traffic levels, congestion and pollution in the “No Build” scenario, assuming a lemming-like behavior of commuters in the face of ever increasing delays.  The plaintiffs complaint argues:

Defendants relied on traffic modeling performed by MDOT to predict that
adding toll lanes will reduce traffic congestion on the Beltway and I-270. MDOT’s
model, however, counterfactually assumes that drivers will continue to pile onto these highways no matter how far the backup and no matter how long the delay. In reality, drivers often re-route when faced with extreme congestion. Defendants did not explain how they could reasonably rely upon the model’s outputs given this serious limitation. MDOT also refused to release its underlying modeling files, further thwarting public scrutiny of Defendants’ justification for the toll lanes project.

By exaggerating traffic congestion and pollution in the No-Build, the EIS makes the build scenario look relatively more benign than it actually is.  And all of the modeling is closely guarded secret: a black box that’s not subject to any external review, and one that conveniently always produces the answers the highway department’s want.

New Knowledge

Work from home is shredding office values.  In the wake of the Covid pandemic, there has been a persistence of remote working, particularly among knowledge work occupations.  According to a new study from three economists at New York University and Columbia University, the work from home trend is having a dramatic impact on the value of the nation’s commercial offices.

Spending more time working at home means spending less time working in the office.  With fewer people in the office, there may be less demand for office space in the future.  This study looks at recent trends in office occupancy, their correlation with work from home, and its impact on commercial leasing.  Most office space is leased for a period of several years, and in the short term (i.e. since the advent of the pandemic) there have been limited opportunities for firms to adjust how much space they lease.  But as leases come up for renewal, and as firms seek (or don’t seek) new office space, we would expect the declining demand for office space to begin to be reflected in the market.

The study shows that there’s been a sharp slowdown in new leasing activity, and in general a shift to shorter-term leases (more leases for fewer than three years; fewer leases for more than seven years).  Prior to the pandemic, the national market included about 250 million square feet of new office leases per six months; after that leasing rate has fallen to less than 100 million square feet.

But while new leasing activity has declined sharply–and not rebounded as the pandemic has eased, the path of prices has been different.  Average rents for new leases did in fact fall during 2020, but have rebounded since then.  As the authors point out, some of this rebound is due in part to a composition effect, a result of a larger share of leases being signed for the highest quality office spaces; adjusting for those effects (the solid line) shows a much smaller rebound.

Looking forward, a decreased demand for office space could significantly effect both commercial office development and city finances.  Based on their estimated trajectory for persistent work-at-home, the authors estimate that commercial office values in New York, for example, could decline almost 40 percent in the long run.  Because the city relies heavily on property taxes tied to values, that could result in a significant fiscal impact.

Arpit Gupta, Vrinda Mittal, & Stijn Van Nieuwerburgh, Work from Home and the Office Real Estate Apocalypse, Working Paper 30526. http://www.nber.org/papers/w30526 National Bureau of Economic Research