Where Did All the Small Developers Go?
This article is part one in a five-part series on small-scale, incremental development. Read part two here, and sign up here to receive the e-book for this series when it’s available.
Image via Sightline Institute’s “Missing Middle Homes.”
In the history of America’s cities, there is a window of time that accounts for a staggering explosion of enduringly great places. It extends from roughly the late 19th century to the Great Depression. Take virtually any urban pattern associated with the distinct culture and character of an iconic place, and you can date its mass replication to this era: the brownstones of New York, the Victorian row homes of San Francisco, the workingmen’s two-flats of Chicago, the cozy bungalows of a thousand “streetcar suburbs” in places as far apart as Seattle and Atlanta.
Those alive at the time might have disputed the characterization of “enduringly great places.” The process of building them was tumultuous. In those years, America was simultaneously urbanizing, industrializing, absorbing huge numbers of immigrants, and violently colonizing the Western frontier. Social unrest, poverty, and inequality were the norm.
We are not required to whitewash the ugly parts of that history, though, to recognize that the walkable, human-scale neighborhoods that era produced have stood up well to time. Many are beloved and sought-after today.
And we managed to produce these places at scale. The growth of cities was rapid and chaotic on a level for which there’s no modern American parallel. In 1850, Chicago was a prairie village; in 1890 it was a metropolis of one million. By 1930 it was a metropolis of three million.
It wasn’t just big cities, either. Even small towns achieved an urbanity and liveliness that is hard to imagine today.
You’d be forgiven for thinking that what produced these places must have been enlightened, careful planning; keen aesthetic sensibilities; a highly ordered process. Actually, what produced them was the opposite: a highly decentralized process in which people did what worked and had been proven to work, and they did it over and over and over again.
Image via WikiCommons.
The famous New England triple-decker is a case in point. The triple-decker is a beloved housing type in New England because of its early (lowercase “d”) democratic appeal. For its owners, many of them working-class immigrants, it was a path into the middle class: you could own the building, live in one unit, and rent out the other two. The many thousands of these built in the late 19th and early 20th century were largely not built by professional developers, but by casual investors, factory, and mill owners, and small-time carpenters.
Pick a building style, and find a similar history. The English basements of Washington, DC, proliferated beginning in the 1870s and originally served as semi-separate kitchen and working space for domestic servants and hired day-laborers. But as the city grew and housing demand increased, most were adapted into the auxiliary rental apartments that today’s planners call ADUs.
Ad-hoc adaptation shaped these patterns. Where a design choice was widely replicated, it was because something worked and was copied and became part of a development vernacular. People talked to each other; people shared know-how. There was an ecosystem: networks of tradespeople, laborers, lenders, and small-scale developers you could plug into and learn how to do the work.
This doesn’t mean development wasn’t big business. It was. Land speculators carved up subdivisions at the edges of cities, and faced criticisms that would sound quite familiar today. But even the big developers of the time were working on the scale of a few blocks, not a few square miles, and almost always contiguous with the urban fabric around them. This produced a template that you could fit into at any scale: You could subdivide a few blocks, but you could also buy a single lot and build on it. You didn’t have to be a big-shot developer. And cities under tremendous social stress were able to grow and flex and accommodate rapid change because of that.
It Takes a “Swarm”
If you want to grow good things that will last, and you want to do it at speed, you need to set in motion processes that will take care of themselves. You can’t micromanage it all. I like to talk about small developers and builders as a “swarm,” a term I’ve borrowed (with permission) from planner Kevin Klinkenberg. It’s for a reason—and not the menacing one you might associate with a word like “swarm.”
What we need are ecosystem builders. We need pollinators. People who will share and transport the seeds of good ideas and help them take root in more places. It’s not just about who does the work of pouring cement or hammering nails or placing a pipe in the ground. It’s about who is working to grow, share, and keep alive a culture of building the stuff we need. A “swarm” of neighborhood makers does this work separately but together, in harmony but without one guiding hand.
The Missing Small Developer and the Missing Middle
Who builds your city? The answer to the latter question changed a lot in North America’s cities and towns as the postwar suburban experiment took hold.
This was a gradual change. As late as the 1960s, incremental development was still thickening up the urban fabric in places. A 1964 book called The Low-Rise Speculative Apartment by Wallace Smith describes this phenomenon as it appeared in Oakland, California. (I learned of it from this excellent thread by Twitter user TribTowerViews.) Small-time developers in the 1960s built hundreds of small apartment buildings on scattered lots around Oakland, many of them replacing older single-family homes. At least a third of these developers appeared to have no real-estate industry ties, and by and large these projects did not involve the practices—such as land assembly—typical of corporate developers who build at larger scales.
But the immediate postwar era was the last gasp for the swarm. Since then, the development business has consolidated. There are fewer builders than ever, but they work at larger scales than ever. Urban land costs have skyrocketed, requiring larger projects to turn a profit. Wall Street exercises unprecedented influence in what gets built where. In older cities, a wave of downzonings in the 1970s through the 1990s froze neighborhood evolution, rendering most of what was built there in the past illegal to replicate. No one of these things is The Culprit, nor are these factors independent of each other. They are all deeply interlinked.
In any case, the kind of small-developer activity documented in Oakland in the 1960s is almost unheard of, let alone that which built Boston or Philly or Chicago. Where it happens, it’s the province of a rare breed of committed entrepreneurs whom we see as having some almost supernatural combination of hustle, drive, ingenuity, and pride of place.
The phrase “Missing Middle” describes a key physical consequence of the missing small-developer ecosystem. The term, coined by Dan Parolek of Opticos Design, refers to certain building types, such as small apartment buildings, multi-unit houses, simple mixed-use structures with a storefront and a residence, that were the building blocks of those blossoming 19th-century metropolises, but that are scarcely produced anymore. They are not friendly to the business model of production builders and big finance, which Johnny Sanphillippo characterizes as “predicated on vast amounts of institutional complexity and debt.”
Image via Sightline Institute’s “Missing Middle Homes.”
Whose Problems Don’t Get Solved?
The incremental growth model served cities under the immense social stresses of the Industrial Revolution and the Gilded Age. The prevailing growth model today is failing cities under social stress.
South Bend
Consider South Bend, Indiana. A post-industrial city known for once being the headquarters of the Studebaker car company, South Bend’s population stagnated in the late 20th century as wealth drained to the suburbs. But it was in the Great Recession of the early 2000s that the city suffered what local planner and demographic historian Joseph Molnar calls “the worst decade in South Bend’s history.” The mid-size city lost 7.5% of its households, or a total of over 3,000. Neighborhoods in economic freefall saw homes and storefronts abandoned or demolished.
It wasn’t long before the good news stories began—if you were in the right parts of South Bend. During the 2010s, the city’s downtown underwent a tremendous revitalization, with $160 million of new private investment. Massive new developments have also transformed the area immediately south of the campus of Notre Dame, where the town-gown wall used to be stark.
But on South Bend’s predominantly Black and Hispanic west side, the story has been different. There, residents bear long-simmering resentments over disinvestment and neglect of their neighborhoods, according to Alkeyna Aldridge, the city’s Director of Engagement and Economic Empowerment. In the Near Northwest neighborhood, the neighborhood school was demolished and not replaced after a ceiling collapsed in 1966. There is no full-service grocery store, and older residents remember long-gone professional offices where vacant buildings stand today.
Development which serves these neighborhoods and their existing residents isn’t going to look like the slick mid-rise apartments and chain restaurants near Notre Dame. It will have to look different. (Hint: It’s happening, and it does. You’re going to want to read Part 3 of this series.)
South Bend is a stark case of the Trickle vs. Fire Hose dynamic that exists all over America. Developers follow the money, and often exhibit a herd mentality as they look for the next hot neighborhood. Local governments both follow and contribute to this dynamic by targeting specific areas for upzoning and intensive redevelopment. Outside of those areas, it’s not uncommon for years, even decades, to go by in which almost nothing new is built at all.
Atlanta
The dominance of big developers isn’t serving redlined, disinvested places what they need. But it also isn’t serving places where there’s plenty of money flowing. Atlanta, Georgia, is a world away from South Bend. Atlanta is not Rust Belt; Atlanta is red hot. The city has witnessed staggering increases in housing costs in the past decade, including a 22% increase in a single year from 2020 to 2021. The housing shortage is on everyone’s tongue, as is the displacement of low-income Atlantans that will follow if it is not resolved.
Image via Kronberg Urbanists and Architects.
So far, Atlanta has sought to meet housing demand through high-density construction in specific locations, while much of the city remains low-rise, single-family neighborhoods. This suits just fine the large development companies that build large apartment buildings, which account for 86% of new homes built in the city limits of Atlanta from 2013-2019. But how big is the housing shortfall, and how much would the production of towers and mid-rise apartments have to increase to meet the demand?
More than is feasible, says Eric Kronberg, an architect and developer who founded Kronberg Urbanists & Architects (KUA). And he has not been shy about sharing this opinion with city leaders and in presentations he gives to a wide variety of industry and policy-maker audiences.
“You can’t build your way out of it” with a big-developer, big-project-driven model alone, says Kronberg. “You literally can’t get there from here. There are only so many towers and multifamily things we can build. There’s a limit to the workforce, permitting, the availability of cranes. If we double production of all that stuff and single-family homes, we’re still 40 to 50% shy of unit needs for the City of Atlanta.”
Image via Kronberg Urbanists and Architects.
Those needs, according to city projections, are for 16,600 new housing units per year, up from a current production of 5,170. You could double the production of single-family homes and mid-rise and high-rise apartment buildings and still be far short of the gap. The rest, says Kronberg, must come from missing-middle housing forms: accessory units and duplexes through 12-plexes. Which means legalizing them, and rebuilding the kind of ecosystem of developers who know how to make them happen.
We need people who will build in the places where capital-D Developers won’t. We need our swarm.
How Do We Unleash the Swarm?
The point of this series is to ask, “What do we have to do to get the small-scale developers back in numbers enough to make a difference?” How do we get our urban pollinators working again?
Even a cursory look at this question, and you’re disabused of the notion that there’s one silver bullet. Is it a zoning problem? Is it a lack of access to finance? Is it high land costs? Is it a lack of people with the appropriate training and skills to do this work? The truth is it’s all of these things, and each one exacerbates the others in complex ways.
If there’s a simple answer to the question, “Where did all the incremental developers go?” it’s that incremental development is no longer any sort of path of least resistance to making money in real estate. It requires overcoming unusual, intersecting, and overlapping obstacles to make it work.
And because of that, The One Neat Trick™ policy reforms we’re told are going to fix it all don’t tend to fix it. We should celebrate the cities shedding the straitjacket of single-family zoning, for example—but we also shouldn’t be surprised when the result isn’t a flood of triplexes the next year.
The system is optimized for monocultures from top to bottom. The ecosystem that produced a diversity of small builders and projects is missing. We need to rebuild it.
What does that rebuilding look like? That’s what I’m going to be exploring in this series.
Read part two of this series here, or click below to get a free copy of the full series in e-book form!
Who is actually going to do the work of incremental development, and what will their motivations be?