My former Forward colleague Jonathan Mahler's New York Times magazine article about the subway includes this brief account of the boom created by the rezoning of the Brooklyn waterfront neighborhood known as Dumbo, which is between the Brooklyn and Manhattan bridges:
I've known Walentas since the early 2000s, when I rented a desk in one of his many buildings in the neighborhood, a turn-of-the-century factory that has since been converted into multimillion-dollar condominiums. This is pretty representative of Dumbo's overall trajectory over the last two decades. It's a stark transformation that would have been impossible to predict when his father first started buying up the neighborhood's underutilized properties in the early 1980s, before it was widely known as Dumbo. What enabled it to happen wasn't just the neighborhood's excellent subway access — it's sandwiched between the F line and the A line — or the city's economic recovery, or even the exodus of rich people priced out of Manhattan by even richer people. The transformation of Dumbo required something much simpler: a change in the zoning law. For years, the neighborhood had been restricted to only manufacturing uses, a legacy of the city's losing battle to retain industrial jobs in the 1960s. In the late '90s, Walentas and his father were able to persuade the city to jettison these old rules and allow them to completely remake the neighborhood, filling old factories with loft apartments, design-and-tech-centric offices, retail stores, artists' studios and new condo towers. In the subsequent 20 years, as the neighborhood changed, average condo prices rose from $200 per square foot to more than $1,500....
Like most good-government tools, zoning sounds boring, but it is in fact a secret means by which cities are shaped and fortunes are made. If the subway delivers density, zoning determines where that density goes by doing things like placing limits on how tall buildings can rise or how many dwellings they can contain. New York's zoning codes are byzantine, the product of years of pushing and pulling between the desire to allow the city to evolve and grow and the impulse to keep development in check. These codes have helped preserve the city's historic buildings and neighborhoods while preventing its streets from being forever cast into darkness by endless rows of skyscrapers. But they have also had the effect of restricting the supply of housing, which has driven up prices, especially in neighborhoods with desirable buildings and good subway access.
Factors other than zoning changes also help to explain the Brooklyn boom. The Giuliani-era crackdown on crime and quality-of-life issues also helped increase real estate prices in neighborhoods such as Brooklyn Heights and Park Slope, where historic landmark districts kept the housing supply pretty much frozen. The Clinton-Gingrich capital gains tax cuts, and the George W. Bush income tax cuts, helped create wealth in the New York-centered financial industry.
But Mahler is on to something when he marks the importance of zoning in either chilling or unleashing a city's growth potential, and in suggesting (at least as I read it) that it'd be good for the city to allow developers to build even more.