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April 18, 2014

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Development:

How we’ll live post-sprawl

End of construction boom will reshape valley in ways good and bad

The disco days are dead, that much is certain.

No more brokers driving Mercedes, no more crane skyline, no more developments popping up around the desert like toast from a toaster.

Construction and real estate, Southern Nevada’s second most important industry, have crashed, and there likely will be little building here for several years.

Now economists and urban planning experts are beginning to consider how the crash will reshape in innumerable ways Southern Nevada’s physical landscape and the way we live — some frightening, but also some hopeful.

Start with the bad: All those half-empty neighborhoods on the edge of town become exurban ghettoes. These neighborhoods share the worst aspects of suburban life, specifically long commutes, big gasoline bills and the absence of urban amenities, while not offering some of the traditional benefits of suburbs such as big yards — the houses in many of the neighborhoods are packed closer together.

“This is the stuff that’s going to be in real trouble down the road,” said Alan Mallach, a nonresident senior fellow at the Brookings Institution and an urban planning expert.

Although these houses and town homes have become affordable compared with their astronomic highs of a few years ago, the type of people who might buy them fear unemployment and might not be able to get a mortgage.

These structures, which were built cheaply and quickly, will become inexpensive rental housing, a process that seems to have already begun.

Next up, landlords begin accepting low-income Section 8 vouchers, Mallach said.

He said he sees merit in the prediction of Christopher Leinberger, an urban planning professor at the University of Michigan and a developer who wrote a piece for The Atlantic last year called “The Next Slum.”

Leinberger describes the emergence of America’s newest ghettoes on the outer rings of the suburbs, where crime is suddenly spiking.

“I think the prospects are grim,” Mallach said.

Clark County Commissioner Chris Giunchigliani, who has long been passionate about the valley’s unmanaged growth, said she hadn’t considered this possibility, but upon reflection, found it alarming.

Giunchigliani said it is time for an inventory.

Mallach endorsed that idea: “They need to inventory these developments, see how they relate to each other and somehow integrate them into larger services and build a viable land-use pattern.”

One way to integrate these residents and drive up value would be to provide quality mass transit, though the prospects aren’t good for new spending with the state and local governments facing severe fiscal problems.

It’s not all hopeless, however.

There’s the aforementioned affordability, which was once the city’s great draw, second only to the plentiful jobs.

First-time homebuyers in particular are well-positioned in the current market, as median home prices have declined 48 percent and continue to fall. The reality, however, is that with 10 percent of Las Vegas area homes in foreclosure, we are quickly becoming a city of renters.

But that’s not such a bad thing, according to the social theorist Richard Florida, who notes in a recent Atlantic piece that in the 1950s and 1960s Americans were twice as likely to move as they were last year. The obsession with homeownership, spurred on by government policy, has made us too rooted, Florida argues.

Nimble renters — that’s us, Las Vegas — can avoid long periods of unemployment because they can pick up and move.

There is a downside, of course: Renters tend to be less invested in their neighborhoods.

Giunchigliani said governments at all levels will have to focus on building community in these neighborhoods now filled with renters.

This relates to another opportunity presented by this downturn: Rethinking our physical layout and how it can draw us together as a community.

Urban planners say suburbanism is dying, evidenced by the shift during the past 15 years or so of real estate value from suburbs to urban cores. Younger people especially have been drawn to urbanism, be it in big cities or mixed-use villages.

Jonathan David Miller, who writes Emerging Trends in Real Estate for PricewaterhouseCoopers, argues that suburbanization is on the decline not just because younger Americans want a different lifestyle, but also because once energy costs rise again, as economists predict, suburban development will reveal itself to be inefficient.

As urban areas continue to grow, exurban developments offer untenable commutes and gasoline bills. These new developments soon won’t be new and will have to undergo expensive maintenance of sewers, roads and other utilities and infrastructure.

In other words, Las Vegas got lucky. The crash has ended the sprawl, and just in time.

Rory Reid, chairman of the Clark County Commission, said policymakers realized the sprawl pattern was foolhardy some time ago and had begun to encourage mixed-use, urban development, only to see the recession kill a number of promising projects.

“I think if there’s a silver lining in the economic travail it’s that we can be thoughtful about how to plan for the future,” Reid said.

In fact, planning for a future that is more dense, more vertical, more urban and connected by mass transit could solve several problems at once.

Here’s how:

Less car traffic would mean better air quality, while denser development leaves a smaller carbon footprint than suburbanization.

But also, Peter Calthorpe, principal of Calthorpe Associates in California, notes that just 25 percent of households are of the two parents and children model that fits best with suburbia.

“The one-size-fits-all American dream isn’t a dream for most Americans anymore,” he said.

Mallach, of the Brookings Institution, agreed, saying Las Vegas could draw skilled professionals it needs with a more varied development pattern that includes urbanism.

“If you want to attract really sharp engineers and scientists and creative people, having a city will make it much easier to do that,” he said.

Miller points to renewable energy research and development as an area where Nevada should thrive, but will need to attract those young achievers to do so.

Why should this matter to Las Vegas?

Well, as is now abundantly clear, our one-dimensional economy leaves us vulnerable to tourism recessions.

The city had come to rely on construction and development as its second most important industry.

But that’s finished, at least for some time.

“We need to replace that economy,” said Keith Schwer, a UNLV economist who has examined the real estate market here in detail.

The apartment vacancy rate is 16 percent, while for homes it is 4.7 percent, according to a recent Forbes report. Schwer thinks the Forbes’ apartment data is overstated, but still, with population flat or declining, it’s clear the construction industry will lie dormant for years.

But there’s a hopeful upside, as noted by Senate Majority Leader Steven Horsford, the Las Vegas Democrat: Without the constant banging of hammer on nail, Southern Nevada can use the silence to think about what it wants to be. “Because of the downturn, the foreclosures, yes it’s a crisis, but it’s created an opportunity for us to rethink what our city is and what it can be for everyone.”

Sun reporter Joe Schoenmann contributed to this story.

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