The "Sameness" of US Towns
I've enjoyed a few weeks spending time with old friends in California and looking after my dad's dogs while he took a vacation. I was amazed that there was an option to get from my dad's neighborhood in the Inland Empire to LAX via public transit. There's a light rail stop in front of his office in Redlands that goes to San Bernardino, San Bernardino has a transfer to a MetroLink train (double decker heavy rail) to Union Station in Los Angeles, and Union Station has a bus to LAX. I'll be on the move again (next stop Bangkok) later today, so I wanted to share a few thoughts before I move on.
One of my first observations back in the US was the startling "sameness" of the built environment and its commercial tenants. My theory is that Americans don't actually prefer having the same handful of chain restaurants on every corner, but that the changing ownership landscape of commercial real estate is to blame.
Real Estate Investment Trusts (REITs) were invented in 1960 to give investors access to a more diverse portfolio of real estate investments with the same funds. An investor who owned a single $10,000 investment home might occasionally experience a bad tenant, expensive repairs, or any number of factors that would make that property intermittently unreliable. However, if the investor used that same $10,000 to buy shares of a REIT, that investment would be spread over a portfolio of potentially hundreds of properties and would produce more reliable dividends. Also, an investor with only $1,000 could potentially get access to the same dividends.
Commercial real estate used to be owned mostly by individuals or small investment groups who lived near and enjoyed the businesses that occupied their properties. If someone in the community wanted to open up a new type of retail business and had the means to pay the rent, they would probably have an opportunity to pitch their idea to a prospective landlord who knew the neighborhood. Today, however, the people who make decisions about who can lease a property usually aren't local residents, they're third party employees contracted by a Wall Street REIT.
Further complicating this issue is that commercial leases typically entitle the landlord to a portion of their tenant's revenue, so the landlords are incentivized to let properties sit vacant until they acquire a "high value tenant" with a proven track record—in other words, a chain. This model forces even new chains to be derivative of high performing chains, which is why I believe every new restaurant resembles the fast casual cafeteria style of Chipotle. It's not just that they need to copy a successful formula to get investors and franchisees, it's that they need to copy a successful formula to set up a store.
One of the most distinct memories of "real California" from my childhood was the groups of old guys who drove their classic cars to meet up with one another at neighborhood diners and coffee shops. The 1950's appeal of drive-thru restaurants held steady in the SoCal of my childhood, too. The late night crowd at the local In-N-Out Burger was mostly teenagers showing off their cars, and there was often a mass exodus as the crowd would drive up Azusa, Glendora, or La Cañada canyon roads to race.
Newer shopping centers have massive parking lots surrounded by a ring of businesses. That setup doesn't accommodate the social vibe of a small parking lot for only the patrons of that one business. Southern California has always been too in love with cars to create decent public transit, but the newest developments are ironically so car dependent that they're ruining car culture, too.