Bill Lindeke’s How Should Cities Value Industrial Land? started a great conversation. He finds contradictory information from different sources and wonders whether they are reconcilable. One report finds industrial land use as one of the most productive land uses in a city, yet tax value per acre shows a different story. Which is right?
Both points can be right. Property tax data show the real debate is not between industrial and nonindustrial property, but between two different building patterns. Industrial land uses built much of downtown Minneapolis and St. Paul, so these land uses seem very productive. In fact many of the warehouses in downtown Minneapolis from the turn of the last century are now protected historical sites and are filled with condos. On the other hand, much of the current industrial land in cities is filled with newer buildings that sprawl to match their neighbors in the suburbs. I compared two industrial buildings in St. Paul which show building form and type matters more than land use type when determining values.
139 Eva Street
The first site is within the West Side Flats rezoning project at 139 Eva Street; the site is 9.62 acres. It is easy to see from this satellite image that much of the land is used for parking and shrubbery rather than industry. I’m guessing about 50% of the land is used for non-productive purposes. It was built in 1971.
480 Broadway Street
I looked for a multistory industrial building within the project, but instead found a small 1-3 story warehouse on the other side of downtown St. Paul; it is at 480 Broadway St. and is .96 acres. As you can see in the image, very little of the land is non-productive space, maybe 5%. It was built in 1927.
Value compared
Comparing the value of the warehouses side by side reveals some interesting results. Property tax information from the Ramsey county database let me calculate the property tax value per acre (just like the map by Scott Shaffer in Lindeke’s article) showing a stark difference. Even though the 480 Broadway parcel is much smaller, it is 4 and a half times more valuable per acre. The property database also includes finished square feet. I also calculated the value per finished square feet. Here is where the results get interesting. The property at 139 Eva st. is more valuable per sq ft., though by a smaller margin than the difference in value per acre.
The results show that industrial land can still be a valuable part of the land portfolio of cities, but that its form must change (giving another demonstration of Strong Towns’ “Taco John’s Math”). A good start would be to zone industrial land such that it can’t waste land in unproductive ways. A better step would be for industry leaders and city governments to work together to find innovative new ways to build new dense and multistory industrial buildings. Then, maybe, in a hundred years they will be converted to condos.