The New Industrial Age

Cities on the cutting edge of the new economy are taking steps to retain their stock of industrial land.
by | December 1, 2007

Apparently even the post-industrial economy needs industrial land.

For a generation, there's been a trend nationwide of recycling industrial land -- and even old industrial buildings -- for other land uses. This has been especially true on the coasts, where high urban land costs have made all real estate development, but especially housing, vastly expensive. Industrial land is a tempting alternative for real estate developers of all kinds because the land is usually much cheaper than land zoned for other uses. It's quickly becoming the urban farmland of the 21st century: a large stock of cheap land that can easily be converted to housing and other urban uses.

Now there's a reverse trend. Cities are fearful that they won't be able to retain the land they need for future industry, and -- kind of like farmland -- they are taking steps to preserve this land stock. Curiously enough, this activity is most intense on the West Coast, in cities such as San Jose, San Francisco, Seattle and Los Angeles, which have a reputation for being on the cutting edge of the post-industrial economy.

In California's Bay Area, the three biggest cities, San Francisco, Oakland and San Jose all have adopted policies to protect industrial land from further conversion to housing. In San Jose, the city has permitted the conversion of 120 acres per year in the past few years. In Oakland, the city has taken steps to protect industrial land in West Oakland, the very neighborhood that former Mayor Jerry Brown lives in.

Meanwhile, Seattle is considering an ordinance that would limit the size of office and retail uses in industrial zones. In Los Angeles, both the city and the county are doing studies to identify which land should be retained for industry and which land could be converted to housing or mixed use.

Why is this happening? Because, as it turns out, industry is still pretty important to the post-industrial economy.

San Jose is not only the center of the world's high-tech brainpower. It's still a pretty important manufacturing center for computers, chips and so forth. And all the other cities mentioned above -- Seattle, San Francisco, Oakland and Los Angeles -- are port cities. That means they are focal points for the import-export economy and centers of goods movement, warehousing and distribution.

Here in Southern California, where I live, there is still a strong manufacturing base. But there's also an enormous, fast-growing import industry that has a ripple effect through our entire regional economy and our regional demand for land. Trains and trucks flow out of the Ports of Los Angeles and Long Beach brimming with goods from Asia. These products are then offloaded, stored, transferred and otherwise handled in a vast number of warehouses and distribution centers all over the region. Since the goods-movement infrastructure is already in place, there's also a vast flow of goods the other way -- out of small factories and workshops onto the trucks and back down to the port, to be shipped to other countries.

In an odd way, all this industrial activity is the result of the post-industrial society. Americans sit at their computers and click-click-click their way through the consumer economy. A lot of pundits think of this as an economy without factories or trucks, but the opposite is true. It's all about goods and trucks. What we're doing while clicking, of course, is buying goods. Those goods have to be made somewhere in the world and delivered to our houses in trucks.

All of which means we still need industrial land, even in the most post-industrial cities. So industrial land has become the new farmland -- necessary for the economy, if not always economically viable on its own.

Like farmers, the business and industrial leaders in our large cities often are politically conservative and frequently advocate a "get government out of the way" approach to public policy. Yet if government gets out of the way and the market operates on its own, the very land that these industrial leaders need for their prosperity, will -- just like farmland -- probably vanish.

What's emerging in industrial land is an uncomfortable hybrid: a heavy set of regulations designed to protect an economic asset controlled by a pretty conservative group of business owners. But in a dense urban environment, this is the kind of regulation that's sometimes required for capitalism to thrive.

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