UW Runstad Center Fellows “Town Hall” Event, 6/7/11

Tuesday, June 7 @ 6:00 – 7:30pm

Town Hall, Seattle

Success | Damage Ratio: Is a Denser City a Better City?

Is it possible to craft a more sustainable future by thinking differently about how we measure successes and damages? Seven city-savvy Seattleites traveled to Hong Kong to learn more from one of the world’s leading examples of sustainable land use and transportation planning. Hong Kong’s stunning successes on some measures are juxtaposed with some surprising unintended consequences. What can we learn from this? What metrics should we focus on? How can we make choices that take into account both successes and damages of development? Please join the Runstad Center fOR Real Estate’s Affiliate Fellows from the UW College of Built Environments to share ideas and images from their trip, followed by a discussion about the future of sustainable urbanism in the Pacific Northwest.

Affiliate Fellows Upcoming Events

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Runstad Affiliate Fellows “Next City” Event

Tuesday, May 17 @ 4:30-6:00 – Gould Hall Room 435, UW Seattle Campus

Success Damage Ratio

Rethinking the Balance Sheet: Lessons from Hong Kong

Is it possible to craft a more sustainable future by thinking differently about how we measure successes and damages? Seven city-savvy Seattleites traveled to Hong Kong to learn more from one of the world’s leading examples of sustainable land use and transportation planning. Hong Kong’s stunning successes on some measures are juxtaposed with some surprising unintended consequences. What can we learn from this? What metrics should we focus on? How can we make choices that take into account the success: damage ratio? Please join the Runstad Center’s Affiliate Fellows from the UW College of Built Environments to share ideas and images from their trip, followed by a discussion about the future of sustainable urbanism in the Pacific Northwest.

Affiliate Fellows Upcoming Events

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Office Space: Enough is Enough

In a previous entry I discussed my amazement at the striking size differential between the typical housing unit in the U.S. and Hong Kong. The average Hong Kong resident occupies only a fraction of the living space of a typical U.S. citizen. This economy of space usage also extends to Hong Kong’s Cathedrals of Commerce. We heard tales of office space per employee ratios as low as 100 square feet. This compares to somewhere in the range of 200 to 225 square feet per office employee in the United States. While this may be an exaggeration (I have not been able to verify the typical ratio in Hong Kong), our visits to various office buildings and discussions with market participants suggest that it is not a wild one. This makes sense as Hong Kong’s office space is the priciest in the world, while ours is relatively cheap, but cultural factors are likely also at play.

I can’t help but to wonder how this influences productivity. While the Hong Kong offices we visited appeared to be somewhat cramped and cluttered, they seemed functional nonetheless. Does closer proximity to colleagues stimulate greater interaction and collaboration between workers, which might enhance idea generation or lead to faster project turnaround times? Hong Kong office workers would certainly have a harder time getting away with playing solitaire at their desk. Or do these tight quarters foster claustrophobia and a lower sense of well being that might reduce productivity? What happens when the inevitable sick employee insists on coming to the office anyway, spewing their germs about in a much denser environment? Perhaps this is only an American thing. I would guess that smaller offices would at least reduce paper costs – as there simply isn’t a place to store hard copy. This is certainly desirable from a cost and sustainability standpoint.

Could the U.S. potentially achieve this level of space efficiency? We clearly don’t have the same economic need as office space is relatively cheap in most of our markets and our productivity is high by global standards, but there certainly has been a lot of talk (and some action) in the U.S. about using office space more efficiently. Office space efficiency is likely to receive more attention as U.S. firms look for more ways to wring out costs in an increasingly competitive global economy. This has potentially ominous implications for our office markets. Given our relatively slow rate of office employment growth, even a 25% reduction in space per employee would imply that we have enough space on the ground to last a very long time. On a positive note, think of all the resources we would save if we used our existing space more efficiently and didn’t have to build the next 2.5 billion square feet of offices.

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Is there such a thing as too much density?

Over the past couple of weeks, I’ve had many people ask about my trip to Hong Kong.  While I go through and describe the wonderful conversations we had and places we saw, I find myself keep coming back to the following picture

While the picture does showcase the vast density of Hong Kong, as many of my peers can attest, it still doesn’t really convey the true feeling a person experiences when witnessing this first hand.   Even having been in Hong Kong for a couple of days, this sight really did leave me speechless.

That being said, I thought back to the US and how there is definitely a push to make many urban areas more dense.  The hope is that larger numbers of people living closely together allows for amenities within walking distance.  The density can also generate the potential for more environmentally sustainable living where people can perform some of their errands on foot or by taking public transit.  The latter of which really only works in higher density areas, such as Hong Kong.

But, there can be a thing as too much density.  While there are many benefits to the dense urban environment, it can come with many negative externalities as the previous post discussed.  I came across a report from Demographia that pointed out the world’s most densely populated cities generally score poorly on the prosperity scale (when focusing on price and income).  Hong Kong while ranking 42nd in population was 3rd in density at roughly 66,000 people per square mile (Bangladesh at 90,000 and Mumbai at 70,000).  However when looking at GDP, Hong Kong was 16th, Mumbai was 29th, and Bangladesh was in the 70s.

Of course the inverse is not any more true.  The less densely populated cities don’t seem to have a greater change of being prosperous so there may not be a direct correlation between prosperity and density.  However, in spending a few days in Hong Kong, I personally found it to be very prosperous and vibrant.  More data points would need to be gathered to identify the true factors of prosperity and help earmark that level of density that is absolutely efficient and sustainable for the given urban area.

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Success/Damage Ratio – part 2

First of all a bit of a confession.  I’m kind of a numbers geek.  I do Sudoku and KenKen puzzles to unwind.  I balance my checkbook to the penny.  Every month.  Pie charts are a favorite way of analyzing information on just about any topic.  And I find ratios the most interesting way of measuring just about anything. 

So what does this have to do with the built environment or our recent trip to Hong Kong?  As one of my travel partners noted in a previous post, we’re pretty good as architects, builders, developers and owners at measuring our successes, but often times we ignore or significantly undervalue the damages that are done in the process of acheiving those results.

Choosing to measure only part of the equation yields incomplete (at best) or truly misleading (at worst) results.  A more holistic view is needed.  And it’s really pretty simple – in any ratio, there are only two ways to acheive a greater result:  1) increase the numerator, or 2) decrease the denominator.

In the built environment space, we’ve done a pretty good job lately at increasing the numerator.  Green building efforts like LEED or Built Green are examples of programs that recognize measures that include environmental capital in the value equation.  These programs have been gaining wide acceptance and are being used as laudible targets in many of today’s projects.  But that only tells part of the story.  Unfortuantely, we’ve not done such a good job at measuring the damages caused by the built environment to our human or natural resources.  While there are new programs such as the Living Building Challenge that seek to guide projects to be restorative, rather than simply less bad, only the early adopters or truly committed owners have embraced this program so far.

Our trip to Hong Kong demonstrated that there are an abundance of successes there driving the numerator (transit, density, development patterns, public/private partnerships, etc…..).  When Hong Kong is held up as an example of a highly sustainable city, the reasons cited often focus on its various succeses. There are, however, also a significant number of damages that result from these successes (air quality issues, lack of personal space, environmental impacts associated with land reclamation and solid waste disposal, etc….). 

I’m not sure there are more successes or damages in Hong Kong than there are here at home – it’s just that the successes and damages are different.  What I am quite sure of is that it’s time to start recognizing that there is indeed a denominator in the equation at all.  The days of ignoring what many folks conveniently call “externalities” is over.  There is nothing “external” in the real equation……that is just a term used to make us feel better about ignoring the complete (and often negative) impacts of our actions.

Let’s start looking at the whole equation, not just the parts that give us the results that we want to see.  Increase the numerator and decrease – but don’t ignore – the denominator.  It’s that simple.

And check out KenKen.  But be careful.  It’s pretty addictive.

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Greed and Good

During the past 30 years, the Chinese have thoughtfully reverse-engineered (from studying the Hong Kong experiment, in part) a breed of capitalism that exists to serve the common good, officially called a Socialist Market Economy with Chinese Characteristics.  Their nation’s rapid economic rise is largely attributed to the double bottom line accounting inherent with this economic model.  It works like this:

Government owns all land and sources of production (capital)

Government lends (leases) land and sources of production (resources) to corporations, who in turn are encouraged to maximize profits for the owners (individuals) and the lessor (Government).

Lots of people get rich (10% of all the world’s billionaires are in China), which in turn motivates more people to lease more land and sources of production.  As those people get rich, so does the Government.

Government then spends all this money on more infrastructure, education, and health care to make more farmers and workers fit which benefits the corporations and Government.

People are generally better off financially, and they are healthier, better educated, and have their basic needs (food, water, shelter, clothing) met.

It is a virtuous cycle.

From a Western perspective, a primary social and diplomatic challenge facing China is that the political oligarchy (“people’s democratic dictatorship”) that is necessary for the functioning of this system flies in the face of our views of individual freedom.  However, if you ask the average Chinese they may tell you that the system works, that they as a nation they seem to be able to accomplish the impossible, and that they are on their way to achieving their place in the world economically.  The Maoist communist rhetoric of old has been modified by a deeply nationalistic pride that now recognizes market economic forces as serving the needs of many.  In a culture that has lived for 5000 years under one form or another of caste system, feudalism or imperialism, the improvements nationwide for greater good are largely looked at as justifying the limited personal freedoms.  Under this political system, the good of the community is more important than the rights of any one individual.  A silent minority desires greater freedom of speech and suffrage, but are they willing to trade that for their own economic self-interest?  The other minority pole views capitalism as a source of evil, ideologically.  But are they willing to abandon the great economic progress of the people for these ideals?  It appears that China’s dominant socialist market economy is here to stay, but its political system is in tension between the two extremes.  Only time will tell where the point of social equilibrium exists.

A second, and potentially more vexing problem for China (and the world for that matter), is the realization that natural resources are not unlimited and that pollution poisons people.  In response to the risk that the depletion of these resources poses to the national interest, China appears to be moving ahead of the United States in pricing the externalities of extraction of domestic resources and environmental destruction within their economy.  They have to in order to preserve their virtuous economic cycle.  Western economies long ago have given or sold the national assets of land and resources to individuals and corporations, who would be harmed economically by environmental regulation, and so these powerful interests often successfully oppose their adoption.  The Chinese Central Government by contrast has a vested interest in maximizing the nation’s balance sheet, since government owns all land, resources, and primary sources of production.  To preserve the assets on its balance sheet means to preserve the nation and advance its global competitiveness.  So China is now investing $800 Billion over the next five years in energy conservation, renewable energy production, and sustainable infrastructure.  Whereas, the United States just invested about $800B to prop up its failed banks.

Is it just a coincidence that China has been selling us tons of useless crap that we finance with home equity loans, and then it turns around and buys tons of our coal reserves with the proceeds, thereby subtracting from our national balance sheet and adding to theirs?  Moreover, they are investing the profits into renewable power production.  Genius.

So who is going to win the race to the top of the charts, economically?  America can’t even find the track that it used to own, and the Chinese have already left the starting blocks on the first lap.  If China figures out how to successfully balance a triple bottom line in the next 30 years to incorporate resource consumption, the world will be way better off for it.  But unless we get our heads in the race, it may prove to be the last chapter in the great American story.

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Social Input

One of the issues that seemed to arise during our conversations is the idea of gaining public support for projects and plans around the city.  However, with the government owning the land and having the ability to “buy out” residents and move them elsewhere to gain space for future malls and high rise building, one has to wonder how much public input they are really wanting.  Another question that came to me is would the level of growth and the type of development occurred in Hong Kong if there was more public support.  As a comparison, it’s taken us in Seattle years to get the 520 bridge tolled and an alternative the viaduct.  So it’s hard to say what the absolute right level of each is most efficient.

After control of the former colony was turned over to mainland China, Hong Kong has continued to thrive as the economic powerhouse of the developing Chinese economy.  Back in 2007, the GDP per capita was a little over $40,000 but the mainland was only between $5,000 and $6,000.  Recently, Shanghai has surpassed Hong Kong in GDP but with a population that is double of Hong Kong, it was inevitable.

The one advantage Hong Kong has over other Chinese cities is the long history of British regulation and oversight.  This translates into many investors wanting to buy property in Hong Kong because the property laws are so clear and they know their assets will be secure.

Another advantage Hong Kong maintains politically over mainland China is the continued influence of the former British rule and this helps them maintain some economic freedom and political autonomy.  They still maintain a semi-direct democracy and still have in their constitution the promise of universal suffrage by 2007.  However this has been postponed to 2012 and then again to 2017.  This apparent “dragging of feet” has prompted some protesting but even with the push for democracy there is a widespread conservatism and cautiousness of Hong Kong residents as a whole.

Although these protests may indicate a massive support for democracy and a “people’s voice”, there are many others that are more concerned with their economic rights over their political rights.  As long as incomes and standard of living will continue to rise, the political needs will fall second to economic needs.  As long as the government can continue to pay above “market” to transplant individuals for prime development land and their standard of living can increase, most of the movements may continue to be grassroots and isolated to a few who see political freedom as a fundamental necessity to the masses of Hong Kong.

 

 

 

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