Analysis: To reverse local city exoduses, ditch onerous housing regulations

Post-COVID, remote work rates have skyrocketed, many Californians now preferring to be “on the clock” in their own homes. Recently, SJ and SF were even rated #5 and #7 in the nation for remote work-friendly cities. On the flipside, Arpit Gupta points out the fiscal consequences of an increasingly remote workforce. He suggests that strategically deregulating zoning and housing construction could turn things around for local metropolitan attrition statistics. To receive daily updates of new Opp Now stories, click here.

Lower-quality offices—class B and C space—are in much less demand and should be converted into residential units. Office-to-residential conversion is challenging but far from unprecedented. In New York City’s financial district, old office buildings possess narrow plates, which make for easy conversion. Conversions are particularly appealing because they produce new housing at the center of the transit network, offering residents many appealing transit options.

Zoning changes and the relaxation of residential regulations can speed the process. Conversions are made more expensive by various housing regulations, including the requirement that each bedroom have a window. While natural light is indeed valuable, famed investor Charlie Munger has successfully designed buildings with bedrooms without natural light, which remain quite appealing nonetheless. Ultimately, it should be up to residents whether they want to live in units with natural lighting.

While office work is down, tourism is booming, especially in amenity-rich cities. However, effective bans on new hotel construction, as well as short-term Airbnb rentals, drive up hotel prices and limit the number of tourists who can visit. As cities shift away from being centers of production to being centers of consumption, they will need to accommodate visitors and tourists who bring revenue.

This article originally appeared in City Journal. Read the whole thing here.

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Image by David Sawyer