Forget Heathrow – here’s why we should shut down London City Airport

Up, up and away. Oh wait, that's balloons, isn't it? Never mind. Image: Getty.

Zac Goldsmith, the people’s dog-whistle-prone freedom fighter against the scourge of Heathrow expansion, has lost his pointless and taxpayers’-money-wasting campaign to be re-elected as an independent MP for Richmond Park & North Kingston in an unnecessary by-election that he himself forced. Sad!

But in the midst of all this Heathrow grandstanding, preceded as it was by the advert-scattered battle between Heathrow and Gatwick, another London “hub” has been quietly expanding.

In July, Philip Hammond, Chris Grayling and Sajid Javid clubbed together in their new roles as chancellor, transport secretary, and communities and local government secretary respectively, and announced a £344m expansion programme for London City Airport. The plan included an extended terminal, new taxi lanes, and more parking spaces for places.

In the immortal words of Liz Truss, that is a disgrace.

The case for the prosecution

London City Airport pretending to be a legitimate and valid airport is a bit like how Liechtenstein pretends to be a country. Or how Daniel Hannan pretends to be a politician. Stop trying to make it happen. It’s not going to happen.

When it was opened in 1987 in the midst of the money-mad Thatcher years, its developers must have thought they were jolly clever. Some land between two docks, shaped like a runway, right slap-bang next to the unfortunate bit of East London they had chosen to become banker-central? Wow!

Except, not. It’s too small for most big aircraft. The biggest plane that can stop there is the Airbus A318 – a plane that can just about manage transatlantic flights to New York, but only if it can stop at Shannon in Ireland on the way out there so that it can pick up a bit more fuel.

It has no jet bridges, either (those are the gangways that you walk through to get onto a plane). So the only way your average FT-reading Canary Wharf pinstriper can board his morning flight to Zurich is to suffer the indignation of walking along the tarmac and going up some stairs. It doesn’t even have any space for covered aircraft hangars, meaning there’s nowhere to do any serious repair work on damaged planes.

It’s not even like the airport is wildly popular, either. In September, British Airways killed off one of its twice-daily all-business class flights to New York from London City citing economic reasons – in other words, it couldn’t sell enough tickets. Sure, passenger numbers ticked up by 15 per cent between 2014 and 2015, but put that in gross figures, and that’s an increase of just under 600,000. Compare that with Heathrow, which gained 1.6m in the same period. When you think about all the new developments in housing and business in the area, it’s perhaps surprising the airport hasn’t grown faster, until you remember IT CAN’T EVEN GET YOU TO NEW YORK PROPERLY.

Approximately 125,000 people live within two miles of the hustle, bustle, pollution, noise, and aggravation of London City Airport. Sure, lots of people live near Heathrow, too, but does Heathrow have the country’s most densely populated area just round the corner? Is it about to have Western Europe’s tallest residential building erected three miles away? No.

What’s more, for all the whining from the locals, Heathrow has been there since 1929 (though admittedly, much of its growth came after the war). Almost everyone who lives there now arrived since then, and it’s safe to say they probably knew there was an airport there. When London City was slapped down in the 1980s, the poor unassuming inhabitants of East London certainly hadn’t budgeted for it.

It doesn’t even make that much money. London City Airport takes up 500,000m2 of prime Zone 3 territory, and makes around £100m a year. That works out at roughly £200 per square metre per year.

Just a hop and a skip away, the ExCel Exhibition Center is a similarly gargantuan structure that might not seem all that useful. But at 45,000m2, it pulls in around £500m a year, making about £1,100 per square metre per year – more than five times more than London City.

But it’s so close to crucial business passengers! Well, yeah – but in the spirit of 2016, aren’t we supposed to be taking back control from the wealthy elites of the City and Canary Wharf? What’s more, Crossrail will make Heathrow closer than ever, whilst improvements to Thameslink services should change the way a flight from Gatwick often feels like a death sentence. Also, cry me a river.

Land of opportunity

So, what to do? In this year’s mayoral campaign, the Green Party candidate Sian Berry proposed shutting it down and converting it into housing, but because it’s the Green Party a sum total of zero people took the idea seriously.

But the idea had some credibility, and similar things have been done before. Berlin’s Tempelhof Airport is now a park beloved by high-level cool hipsters; Kai Tak Airport in Hong Kong is slowly being converted into grim-but-authentic hi-rise housing blocks; Edmonton City Centre Airport in Canada is becoming a rather nice town-within-a-town.

Look at all this lovely land. Image: Getty.

London City was bought by a suspicious-sounding consortium, comprising Alberta Investment Management Corporation, the Ontario Teachers' Pension Plan and Wren House, in March 2016 for £2bn. Sian Berry’s idea was that we lobby the new owners to shut it down, on the premise or promise that you could make a whole load more money if you converted it to lovely flats and shops and schools and houses.

Business mogul super-rich owner-types don’t have a great track record of doing what you want them to. But what if the Government just straight up went and bought it off them? Even if they paid £2.5bn for it – a handsome 25 per cent return within a year on the consortium’s investment – that capital expenditure would be an investment of very good value.

London City Island, the newly-developed Lea Peninsula, is 12 acres in size, and host to 1,706 new apartments. The site of London City Airport is around 120 acres. If apartments were built at a similar density, you could in theory build 17,000 homes.

Say you split those properties in half and kept one group to rent as social housing – sorely needed – and sold the other half privately. Selling 8,500 units around the average price for the borough of £352,211 would raise £2,993,793,500. Spruce up a few of them into swanky penthouses and you’ll easily hit the £3bn mark. Job done.

Rent out the remaining 8,500 units at a price a healthy dose below the borough average of £1,234 per calendar month, and you net £102m a year. In ten years, the government would have almost doubled the cost of buying the airport in the first place. Not bad going, huh?

Jack May is a regular contributor to CityMetric and tweets as @jacko_may.

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How the pandemic is magnifying structural problems in America's housing market

Justin Sullivan/Getty Images

Long before Covid-19, the United States suffered from a housing crisis. Across the country, working class and low-income Americans struggled to pay rent, while the possibility of home ownership receded into fantasy. In hot markets, affordability became a struggle for even the middle class: In California, 41 percent of the population spends over a third of their income on housing costs. 

The coronavirus pandemic will only make these trends worse as millions are unable to work and the economy dives into a recession. Building could slow down in the medium term, as construction loans (risky bets in the best of times) become harder to come by. Unsubsidised affordable housing is often owned by small landlords, who are more likely to struggle during recessions, prompting flips to home ownership or sales to rental empires. 

New York Times reporter Conor Dougherty documented America’s longstanding housing crisis – and California’s efforts to battle it – in his book Golden Gates, which debuted just before the pandemic hit. “My sense is that right now coronavirus is magnifying a lot of things that were already happening,” Dougherty says.  

While Covid-19 adds new pressures, he says that many of the same issues we were facing still loom over the issue, from developers crowding the higher end of the market, to escalating construction costs, to stagnating wages and vulnerable service-sector jobs that leave ordinary Americans struggling to keep a roof over their heads. “That’s my larger message,” Dougherty says. “I think the structural problems continue to be a much bigger deal than the cyclical problem in housing.”

CityMetric spoke with Dougherty about how his thinking has changed since Covid-19, Donald Trump’s pro-suburban rhetoric, and the apparent exodus from San Francisco. 

I’ve really been struck by how strong the housing market seems to be despite the epic economic crisis we are facing. Costs seem to be higher everywhere. I've heard realtors talk about bidding wars like they haven't seen before in Philly, where I live. But perhaps that's just pent up demand from the big shutdowns?

What you have is an economy that has bifurcated. You have fewer middle-income jobs, more lower-income service jobs, and more higher-end jobs in software and finance. That's how our economy looks and that's a problem that is going to take the rest of our lives to solve. In the meantime, we have this housing market where one group of people have so much more money to spend than this other group. Cities reflect that. 

What's important about this bifurcation isn't just that you have gross inequality, but that these people have to live next to each other. You cannot be someone's Uber driver and telecommute. You cannot clean someone's house remotely. These lower-end service workers have to occupy the same general housing market as the super-high-end workers. 

All the pandemic has done is thrown that even more out of whack by creating a situation where one group of people is buying and expanding homes or lowering their home cost by refinancing, while another group are at income zero while trying to live in the same housing market with no demand for their services. When you see home prices booming and an eviction tsunami coming in the same newspaper, that tells you the same thing the book was trying to show you.

Does America writ large have the same housing shortage crisis as California and the Bay Area more specifically? There are other super hot markets, like New York City, Boston, or Seattle. But in Philly, or in Kansas City, is there really a lack of supply? 

There are three kinds of cities in America. There are the really out of control, fast-growing, rich cities: the Bay Area, Seattle, New York. There are declining Detroits and Clevelands, usually manufacturing-centric cities. Then there are sprawling Sun Belt cities. This book is by and large concerned with the prosperous cities. It could be Minneapolis, it could be Nashville. But the housing crisis in places like Cleveland is much more tied to poverty, as you pointed out. 

Those kinds of cities do have a different dynamic, although they still do have the same access to opportunity issues. For instance, there are parts of Detroit that are quite expensive, but they're quite expensive because that's where a lot of the investment has gone. That's where anybody with a lot of money wants to live. Then you have Sun Belt cities like Dallas and Houston, which are starting to become a lot more expensive as well. Nothing like the Bay Area, but the same forces are starting to take root there. 

I think that the Bay Area is important because throughout history, when some giant American industry has popped up, people have gone to Detroit or Houston. Now tech, for better or for worse, has become the industrial powerhouse of our time. But unlike Detroit in its time, it's very hard for people to get close to and enjoy that prosperity. There's a certain kind of city that is the future of America, it has a more intellectual economy, it's where new productive industries are growing. I think it's an outrage that all of them have these housing crises and it's considered some insane luxury to live there. 

A recent Zillow study seemed to show there hasn't been a flood of home sales in the pandemic that would signify a big urban exodus from most cities, with the glaring exception of San Francisco. Do you think that could substantially alleviate some of the cost pressure in the city proper?

On the one hand, I think this is about the general economy. If unemployment remains over 12% in San Francisco, yes, rent is going to be a lot cheaper. But is that really the reality we're all looking for? If restaurants and bars that were key to the city's cultural life remain shut, but rent is cheaper, is that what everyone wants? I bet you when this is all over, we're going to find out the tech people left at a much lower rate than others. Yes, they can all work from home, but what do you think has a bigger impact on a city: a couple of companies telling people they can work from home or the total immolation of entire industries basically overnight?

I don't want to make predictions right now, because we're in the middle of this pandemic. But if the city of San Francisco sees rents go down, well, the rent was already the most expensive in the nation. It falls 15%, 20%? How much better has that really gotten? Also, those people are going to go somewhere and unless they all move quite far away, you're still seeing these other markets picking up a lot of that slack. And those places are already overburdened. Oakland's homeless problem is considerably worse than San Francisco's. If you drive through Oakland, you will see things you did not think possible in the United States of America. 

Speaking of markets beyond San Francisco, you have a chapter about how difficult it is to build housing in the municipalities around big cities – many of which were just founded to hive off their tax revenues from low-income people.

That’s why you see Oregon, California, or the Democratic presidential candidates talking about shaking this up and devising ways to kick [zoning] up to a higher level of government. We've always done this whenever we've had a problem that seems beyond local governance. Like voting rights: you kick it to a higher body when the local body can't or won't solve it. 

But for better or for worse, this suburban thing is part of us now. We cannot just undo that. This notion of federalism and local control, those are important American concepts that can be fiddled with at the edges, but they cannot be wholesale changed. 

The first time I ever met Sonja Trauss [a leader of the Bay Area YIMBY group], she told me she wasn't super concerned about passing new laws but that the larger issue was to change the cultural perception of NIMBYism. We were living in a world where if you went to a city council meeting and complained about a multifamily development near your single-family house, you were not accosted for trying to pump up your property values or hoard land in a prosperous city. You were seen as a defender of the neighbourhood, a civically-minded person.

What is significant about YIMBYism is that the cultural tide is changing. There is this whole group of younger people who have absorbed a new cultural value, which is that more dense housing, more different kinds of people, more affordable housing, more housing options, is good. It feels like the tide is turning culturally and the movement is emblematic of that. I think that value shift will turn out to have been much more lasting than anything Scott Wiener ever does. Because the truth is, there are still going to be a bunch of local battles. Who shows up and how those places change from within probably will turn out to be more important. 

As you said, we've been seeing a lot of Democratic candidates with proposals around reforming zoning. How does Joe Biden's plan compare to the scope of the ambition in the field? 

There are two big ideas that you could pull from all the plans. First, some kind of renter's tax credit. It is obscene that we live in a country where homeowners are allowed to deduct their mortgage interest, but renters aren't. It is obscene that we live in a world where homeowners get 30-year fixed mortgages that guarantee their house payment pretty much for life and renters don't. If we think that it's a good idea to protect people from sudden shocks in their housing costs, that is as good of an idea for renters as it is for homeowners. 

I tell people that in this country, homeowners are living in the socialist hellscape of government intervention and price controls. Renters are living in the capitalist dream of variable pricing and market forces. Homeowners think they're living in this free market, but actually they're in the most regulated market – there are literally price controls propping up their market mortgages. 

Then there is Section 8 housing. Right now homeowners get access to the mortgage interest deduction. That programme is available to as many people as can use it, yet only about a quarter of the people eligible for Section 8 can get it. I think rectifying that is hugely important and a lot of the plans talked about that. 

The second big idea is using the power of the purse to incentivise people to more robustly develop their regions. You should have higher density housing in fancy school districts, near job centres, near transit. We're going to use the power of the purse to incentivise you, within the bounds of your own local rules, to do this right. Of course, that’s what Donald Trump is running against when he talks about Affirmatively Furthering Fair Housing (AFFH). 

When I was a local reporter in Philly, the city went through with that AFFH regulation despite Trump and HUD Secretary Ben Carson not being interested in enforcing it anymore. The city produced a fat report that maybe a few people read, but I don't think it changed policy. It's this phantom that Trump is running against, an ideal version of the policy that did not exist. It's also a phantom no one's heard of until Trump started tweeting about it. 

It’s been bizarre to watch. But Trump does seem to recognise that suburban politics don’t neatly fit into a red or blue construct. People who live in Texas and claim to want a free market system will turn around and erect local regulation to make sure nobody can build apartments near them. People in the Bay Area who claim to be looking for a more diverse place will use different logic, anti-developer logic, to keep apartments being built near them. 

People like that regardless of how they feel about things nationally. The bluntness with which Trump is doing it is discordant with the electorate and quixotic because people don't know what he's talking about. But the basic things he recognises – can I make voters feel like their neighbourhoods are threatened – he's onto something there. As with many things Trump, his tactics are so off-putting that people may ultimately reject them even if under the surface they agree.

You hear people on the left say the scary thing about Trump is that one day a good demagogue could come along. They're going to actually tax private equity people and they're actually going to build infrastructure. They're going to actually do a lot of popular stuff, but under a racist, nationalist banner. I think the suburban thing is a perfect example of that. There's a lot of voters even in the Bay Area who [would support that policy] in different clothing.

The world has changed completely since Golden Gates debuted just a few months ago. Has your thinking about housing issues changed as a result of the seismic disruptions we are living through?

The virus has done little more than lay itself on top of all of the problems I outline in the book. Whether we have an eviction tsunami or not, a quarter of renters were already spending more than half their income on rent. There's a chapter about overcrowded housing and how lower-income tenants are competing with each other by doubling, tripling, and quadrupling up for the scant number of affordable apartments. We now know that overcrowded housing is significantly more of a risk [for Covid-19] than, say, dense housing. If you live in a single-family home with 15 people in it, that's a lot more dangerous than 40 apartments in a four-story building.

Housing is just a proxy for inequality, it's a way of us building assets for one group at the exclusion of another. It is an expression of the general fraying of American society. I don't feel like that larger message has been affected at all, it's only been enhanced by the pandemic. With the caveat that this can all change, it just doesn't seem to me like there's some uber housing lesson we can learn from this – other than having a bunch of people crowded together is a really bad idea. 

Jake Blumgart is a staff writer at CityMetric.