Salle 3001

Vincent ROLLET (MIT) “Zoning and the Dynamics of Urban Redevelopment”

Abstract: Cities increasingly grow through redevelopment—demolishing old buildings to make way for new ones. This paper studies this process and how it is influenced by zoning, which regulates the size and uses of new buildings, using New York City as a case study. I build the first parcel-level panel of a city’s buildings, zoning, and floorspace prices. This data allows me to estimate a new dynamic spatial equilibrium model of floorspace supply and demand. I validate the model using quasi-experimental variation from recent zoning reforms and apply it to evaluate the effects of relaxing regulation on construction and affordability. While zoning strongly constrains city growth, the effects of relaxing regulation take decades to materialize and are limited in inexpensive or densely built areas. This is due to the large fixed costs of redevelopment, which rise sharply with the size of existing buildings. These costs generate considerable persistence in city structure and substantially lower the expected gains from relaxing zoning. Furthermore, due to migration, the affordability benefits of zoning reform largely accrue to households outside the rezoned neighborhoods.