Self-driving cars: A Force for Urban Densification or Expansion?

Self-driving cars: A Force for Urban Densification or Expansion?

How will self-driving cars affect our cities?

In a recent blog post I predicted that self-driving cars will gradually but dramatically cause our cities to expand. “Faster and more efficient transportation” I wrote, “will convert locations that are currently too remote for most users into feasible alternatives, abundant with space.” I also predicted that buildings and the parking that serves them will be uncoupled, meaning that buildings won’t necessarily need parking that is adjacent. Where land is sufficiently valuable, we will see parking lots give way to new construction and then to self-driving cars dropping off passengers and navigating themselves to near-but-not-adjacent parking on less valuable land.

The blog was picked up elsewhere and drew considerable attention, evoking many responses. A particular theme stands out in which readers argue that, by sparing drivers the anxiety of battling traffic and the ordeal of parking, self-driving cars will make locations which are currently congested more attractive and ripe for densification. But if both remote and congested locations attract development this raises a question: How can we tell whether self-driving cars will cause our cities to expand, or rather to grow denser?

There is no contradiction between local densification and outward expansion

It is important to realize that a city is perfectly capable of growing denser in some areas while simultaneously expanding its footprint. This involves no contradiction, and happens all the time. Nothing prevents the downtown skyline from absorbing fresh new high-rises, while elsewhere in the metropolis ground is cleared for new subdivisions. In other words, expansion and localized densification are not opposites at all. (Nor are expansion and city-wide densification, for that matter. The average population density of a city can decrease when the city expands, but it can also increase. Whether city-wide density increases or decreases when a city expands depends on whether the population growth rate exceeds the rate of geographic expansion.)

But this is unsatisfying, as it merely prompts us to pose the question more accurately. How can we tell whether self-driving cars will accelerate our cities’ outward expansion, or rather slow it down by absorbing population through densification of the existing built-up footprint? The key to figuring this out is to ask what factors prevent construction in different places and which of these factors – if any – will be affected by self-driving cars.

Expansion: What prevents construction in rural areas beyond the urban fringe?

In rural areas that are currently beyond the urban fringe there are two main factors preventing construction:

  • Open space preservation policies.
  • Lack of demand.

Open space preservation policies include setting aside land for various types of nature reserves and other ecologically and aesthetically motivated land uses, as well as policies protecting agricultural land from development. California’s Williamson Act, for example, reduces agricultural land owners’ tax burden in exchange for guaranteeing not to develop the land for an extended period of time.

The second factor preventing construction in rural areas beyond the urban fringe is a banal one. These areas are often simply too far from the city for people to want to live there, and lack of demand begets lack of supply.

Self-driving cars will generate demand for construction beyond the current urban fringe

Self-driving cars are unlikely to affect policies preserving open space, but they will make travel a more pleasant experience and, once they are sufficiently common, they will greatly improve traffic flow, thereby reducing travel times considerably (for several reasons which I describe in my previous blog post). In so doing, self-driving cars will make locations beyond the current urban fringe feasible places to live. In fact, such locations will become at least as attractive as today’s outermost suburbs as they will typically bundle lower housing costs with a shorter commute than is available at the urban fringe today.

As long as sheer distance is the binding constraint on development beyond the urban fringe – not protective policy – self-driving cars will compel developers to expand our cities farther.

Development will continue to push outward until, at the new urban fringe, even efficiently flowing self-driving cars will deliver only a lengthy commute that pushes the limits of commuter tolerance. This will not be unlike it is at the urban fringe today, where the most tolerant among us undertake daily travel which the rest of us would balk at, except that fast and efficient traffic flow will allow those tolerant few whose preferences set the city’s boundary to shift it much farther out than it is today.

In parts of the country where open space preservation policy is less rampant, self-driving cars will give outward expansion further impetus. The real drama, however, will take place in parts of the country like the Bay Area, where such policy has effectively come to impose a moratorium on outward expansion. In these places, environmentalists will cringe as cities leapfrog over their implicit green belts, onto more distant open space where construction is welcome.

Densification: New construction is blocked by local opposition, not congestion

In dense urban locations which are ripe for densification, the factors limiting construction are quite different. For a start, the demand for real estate in such areas outstrips the supply or else they would not fall into the ripe-for-densification category to begin with. Anything built in such areas is occupied at top dollar in no time, so lack of demand is off the list.

The true barrier to densification within the built-up footprint stems from the opposition of local stakeholders, who influence land use planning through various means of civic engagement and effectively suppress densification.

No matter how attractive walkable urban locations may be, they will not house more people or businesses without new construction. It is the arrested supply of new construction in such areas that is preventing them from growing denser, not lack of demand.

Self-driving cars will not undo local opposition

Although traffic and parking congestion concerns are often invoked by the opponents of new construction, they are rarely at the heart of the matter, and opposition will hardly dissipate when self-driving cars ease these forms of congestion. Other arguments will be invoked, and densification will continue to be blocked as effectively as it is now.

The fact that many people are drawn to dense urban locations – and will be even more so after self-driving cars ease congestion – will not cause more people to live there without sufficient new construction. The growing attractiveness of these places will channel into higher local real estate prices instead, churning them over to wealthier residents rather than bringing in more people.

Although self-driving cars will not undo the deep-seated opposition of local stakeholders to raising density, they will increase the number of sites for potential infill development, and a small share of these opportunities will make it past the obstacles. If these opportunities are sufficiently concentrated in certain high-value spots, like old town centers engulfed in sprawl, the conversion of parking will considerably affect the density and character of these confined spots. But this is a far cry from influencing the density of the city at large. Not enough infill development will make it past the obstacles for the city at large to grow substantially denser.

The result: little densification, much expansion, but not all bad

Given the unyielding nature of opposition to dense new construction and self-driving cars’ inability to remove it, we should not expect dramatic densification within the existing built-up footprint. On the other hand, we still have every reason to believe that the expansion of cities will, ultimately, be dramatic.

The proponents of open space will no doubt find this outcome troubling, but in exchange self-driving cars and the expansion of cities may help us avoid a future that is no less troubling for other reasons. This, however, is a topic for another day.

Issi Romem
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Issi Romem has a PhD in economics at the University of California, Berkeley, with a focus on urban and real estate economics. He has consulted for the Bay Area Council Economic Institute on matters involving transportation, real estate and the regional economy. Soon he will be joining the team at OnPoint Analytics.

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