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No cars allowed

 By Conor Dougherty © The New York Times Co.

Phoenix, that featureless and ever-spreading tundra of concrete, has been called “the world’s least sustainable city.” It has been characterized as a “sprawling, suburbanite wasteland” and “a monument to man’s arrogance.”

The Onion has darkly predicted that by 2050, “most of Earth’s landmass” will be swallowed by the encroaching Phoenix exurbs. The Walk Score index ranks the place as the second-worst big city in America for pedestrians, and traversing it has been described as “a slog through a desert, plus the occasional Mc-Donald’s.”

The Phoenix metropolitan area is, in other words, the last place you would expect a real estate developer to spend $170 million creating what it calls the first-ever car-free neighborhood built from scratch in the United States.

The development, Culdesac Tempe, is a 17-acre lot just across the Salt River from Phoenix. Currently a mess of dust and heavy equipment, the site will eventually feature 761 apartments, 16,000 square feet of retail, 1,000 residents — and exactly zero places for them to park. The people who live there will be contractually forbidden to park a car on site or on nearby streets, part of a deal the development company struck with the government to assuage fears of clogged parking in surrounding neighbor-hoods.

Culdesac Tempe is a proving ground for a startup also called Culdesac, which was founded in San Francisco and moved to Tempe during the pandemic. Started in 2018 by two native Arizonans, the company announced the project last year to a mixture of curiosity and doubt. Urbanists cheered it as a bold and important step toward a future with fewer cars, while suburban developers said the concept could never work on a large scale.

Others preferred to simply ignore Culdesac. “If something is described as ‘car-free,’ ” Car & Driver wrote, “we’re generally not interested in reading any further.”

Although Culdesac was devised before the coronavirus emerged and has experienced some construction delays, the project could end up benefiting from the pandemic as more Americans consider working from home indefinitely in cheaper cities. Culdesac says it expects the first residents will be able to move into their apartments next year, with the larger site completed by 2023 — a pedestrian oasis in the megalopolis known as the Arizona Sun Belt.

To be fair, Tempe, the home of Arizona State University, gets high marks for bike friendliness and has seen a recent boom in high-rise construction. But outside the campus area, it is very much a part of the region’s autoscape. Culdesac’s immediate neighbors include an RV park, a mechanic, a transmission shop and an auto-parts store, and nearby apartment complexes — the competition — are surrounded by parking lots that shimmer in the three-digit heat.

The car-addicted reality of the area makes Culdesac’s architectural renderings both intriguing and a little hard to believe. According to the images, neighbors will lounge in communal courtyards and walk to do their errands. Culdesac Tempe is directly on a light-rail line to downtown Phoenix, but residents may never need to leave: The complex will feature its own grocery store, coffee shop, restaurant, co-working space and other amenities.

The 167 row house-style apartment buildings will be broken up by wide pedestrian malls, and there will be a half-acre park where residents can walk their dogs and stage picnics. A limited amount of parking will be provided for outsiders who want to visit friends or shop at the stores, but the people who live there will have to rely on public transit, bikes, ride-hailing apps, scooters and the like to get around greater Phoenix. Apartments start at about $1,000 a month for a studio and $2,200 for a three-bedroom, about in line with the area.

Because Culdesac’s founders come from the technology industry, where no idea is valid if it does not scale, the company’s plans go way beyond Arizona. Ryan Johnson, a founder and Culdesac’s chief executive — he’s also the Tempe site’s first official renter — said the multidecade goal was to retrofit American cities and end car ownership as we know it.

“After this one, we’re going to build something for 10,000 residents,” Johnson said in an interview. After that: entire municipalities. “The vision of Culdesac,” he added, “is to build the first carfree city in the U.S.”

Rent checks and bar tabs

Johnson’s thesis, as laid out over a few hours of recent Zoom calls, is that (a) the future of American cities is the walkable urbanism found in New York and San Francisco but that (b) that future is headed to the Sun Belt.

Megan Woodrich might become one of these coast-to-Sun-Belt transplants. “It’s absolutely untenable here long term,” said Woodrich, a teacher who lives in South San Francisco — a suburb of 63,000 that sits below its more famous neighbor — with her husband and three children. The family is considering a move to a cheaper place such as Arizona, but they want a walkable neighborhood — a combination of desires that led them to discover Culdesac. Woodrich is on a list of 200 people who have expressed early interest in the development.

Some economists and demographers have derided Phoenix’s growth as cheap. They note that many of the jobs being created are low-paid positions in sales and customer service, the result of the local government’s encouraging corporations in higher-tax states to move their back-office operations.

But in the recovery since the subprime-housing bust, which leveled the local economy and its construction-dependent job growth, Phoenix has developed a budding tech scene and started to attract jobs from Silicon Valley. Zoom, the videoconferencing app that has gone from little known to ubiquitous during the pandemic, recently announced that it was opening a research and development office — full of the higherpaid software engineers that tech companies usually place in the Bay Area, Seattle and New York — in the Phoenix area.

At the Culdesac site, the developers are blending two ideas that usually have nothing to do with each other. The project is both an “infill” development that aims to sleeve itself into the urban landscape, and a master-planned community that recalls a Disney exhibition or a golf-and-condos parcel in Florida.

The goal might be termed instant gentrification: to open up with all the amenities that make a place desirable and hope that they make the neighborhood a destination overnight. The development’s park, shops and co-working spaces will all be open to the public, and every penny spent on site, whether from a tenant’s rent check or an outsider’s bar tab, will filter up to the same company.

An eerily prescient idea

When Culdesac Tempe was announced, the idea of a large, carfree development in Arizona seemed like the extreme but plausible edge of a long-term trend. Americans are getting serious about reducing their carbon footprint, and for years, cities across the country have been rewriting their zoning codes and building regulations to require fewer parking spots and encourage greater density.

Outside urban cores, there has been a parallel trend toward more duplexes, apartments in shopping malls and “car-lite” developments — building projects that acknowledge most residents must drive to work five mornings a week but may prefer to walk or use transit for errands and leisure. Even in Phoenix, the few relatively walkable neighborhoods command premium prices.

Still, there was probably going to be a ceiling on the number of tenants Culdesac could attract. The great bulk of the city’s working population has jobs requiring a car commute. Culdesac might have made a profit courting the subset that shunned automobiles and worked from home, but there’s no disputing it would have been a subset.

Then, of course, came the pandemic, causing tens of millions of Americans to begin telecommuting from their living rooms. Across the country, employers are re-evaluating whether they will ever reopen their downtown offices at full capacity, and some have told their staffs that they can accomplish their tasks via videoconference forever. Suddenly, the Culdesac pitch — a Sun Belt development that caters to people who work remotely and middleclass refugees from the expensive and crowded coasts — started looking eerily prescient.

Builders and urban planners have long denounced city-mandated parking minimums — requiring projects to include one or two spots per unit — as “apartment blockers” that raise the rent. Instead of telling developers how many parking spots to build, they argue, cities should allow parking to be built according to demand. The hope is that once residents see how much a parking space is costing them (a few hundred dollars a month in big cities), they will be more apt to embrace carsharing and public transit.

Petri dish of real estate

Arizona is a magnet for housing innovation. Like the rest of the West, the state boomed after World War II, attracting residents and industries as white Americans suburbanized and the baby boom commenced.

In the dominant Phoenix region, which accounts for about two-thirds of the state’s population, growth was steered by a cabal of civic boosters and Chamber of Commerce men, who courted out-of-state employers by hoovering up federal infrastructure dollars and fostering a good “business climate” — that is, they kept unions weak, taxes low and regulation minimal.

The mix of fast growth and lowkey rules has given Phoenix a reputation for being “the petri dish for housing experiments.” It’s a great place to build because people are constantly showing up. And because so many houses look the same — terra-cotta roof, rock lawn by the driveway, and exteriors in your choice of tan, tan or tan — the region emerged from the housing bust with a reputation for being one of the easiest places in America to gauge the price of a home.

In the aftermath of the Great Recession, when investors built single-family-home empires from the wreckage of a mortgage crisis, the Phoenix region was one of the first markets where institutional buyers started amassing foreclosed properties. More recently, Phoenix also became a test market for an emerging class of “iBuying” (short for instant buying) companies, including Redfin, Zillow, Offerpad and Opendoor, which hope to upset the traditional broker model by offering home sellers quick cash offers, then flipping the properties back on the market.

Arizona is so encouraging of new real estate schemes that its Commerce Authority has a program, Property Technology Sandbox, in which companies can apply to test new ideas to buy, sell and develop without having to get the usual licenses.

Johnson, who grew up in Phoenix, went to the University of Arizona with a full-ride scholarship plus $50,000. This came from the Flinn Foundation, whose elite Flinn Scholars program aims to keep smart locals from leaving the state.

Johnson used the $50,000 to invest in the Tucson rental market, then left for a succession of outof- town jobs in consulting, finance and in public service, the latter at New York’s Metropolitan Transportation Authority. In San Francisco, he joined Opendoor, and in 2018 started Culdesac with Jeff Berens, his college roommate.

Tethered to transit

I asked Berens to show me Culdesac’s potential development sites in other cities, and he agreed on the condition that I describe them only generally. Recently, over Zoom, he took me on a satellite tour of five metro areas: Denver, Washington, Dallas, Atlanta and Raleigh, N.C.

The common element was that the sites were miles from the central business district but still (with the exception of Raleigh) proximal to a rail line. Their neighbors were industrial.

That’s the sort of spot Culdesac is seeking: places that can be bought cheap, covered with hundreds or thousands of new homes, and made to feel that they are connected to the heart of the city because a new generation of tenants fundamentally embraces transit — or maybe doesn’t want to go into the heart of the city at all.

Doing this will require lots of money and lots of interests, pools of debt and equity that developers assemble into a “capital stack” that lays out who is paid for what and when. If Culdesac is successful, it will operate like a franchise or chain hotel that links several individual companies through one brand.

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