Is It Time to Ban Amenities?

wikimedia

A Sunday Times cover story ($) late last year told the story of some longtime renters driven out by a new building owner's intent to renovate and move upmarket:

The record pace of apartment construction" is skewing the average rent higher, said local apartment expert Mike Scott. In part that's because the new apartments tend to be steel high-rises with luxury-condominium finishes and amenities like gyms, theaters and game rooms that aren't typically found in older apartments.

"The rent has gone up, but the product is so much superior to what they were doing 10 years ago," said Jon Hallgrimson, executive vice president at commercial brokerage CBRE.

Many people are skeptical of regulation micromanaging the housing market, and with good reason. Arbitrary rules can retard one thing that capitalism does very well: matching supply with demand.* Detailed rules can also create perverse incentives and unintended consequences.

But if Seattle is considering these kinds of regulations, as it is in the aPodment debate, it could do worse that trying to limit free amenities like pools and gyms in new or renovated buildings: not banning them outright, but forcing them to unbundle from the rent and instead operate as separate businesses, open to the public.

Consider the following advantages:

• To the extent it deters construction of these amenities, it leaves more space for units. More units are critical to most of the social challenges density can address.
• Developers evidently believe they can command higher rents by devoting valuable space to these areas. It follows that separating out these features would lower prevailing rents.
• Opening a gym to the general public enriches the neighborhood, allows multiple buildings to diversify their amenities, and uses space more efficiently.

Urbanists are familiar with the identical argument when the subject is parking. Residents shouldn't pay for expensive services they don't use; bundled parking encourages car ownership (with serious negative externalities) and raises housing costs for everyone. While the externalities of a pool, gym, or private club are not in the same league, unbundling these services strikes me as a much better idea than taxing the housing construction we desperately need to encourage.

* And by "demand" I mean "demand with money behind it."