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The Economics Lessons in a Single New York City Block

How Greene Street went from a red-light district to hosting some of the highest property values in the world.

View of Greene Street today. (Google Street View)

On Greene Street, between Prince and Houston in the heart of Manhattan’s SoHo neighborhood, personal shoppers clip-clop down cobblestones. Deftly they slip from the cast-iron facades of luxury boutiques into the backseats of Escalades, owned by employers of unfathomable wealth and reach. Tourists mill, perhaps a little shell-shocked by this dense arrangement of wealth.

Taking in the entirety of this single block, I wonder, with an itch of dread, whether it constitutes the future that developers hope for elsewhere. With some of the highest real estate values in New York, and therefore the world, Greene Street is among the loftiest points on the smooth arc of Manhattan’s economic success. It’s hard to imagine it any other way.

But an online project from the Development Research Institute at New York University complicates that picture of undeterred growth. Led by William Easterly, Co-Director of the DRI and an economics scholar, the Greene Street Project is an interactive tour of the historic development of this single block in SoHo.

Most development economists tend to focus on macro-level units such as cities, or even more commonly, nations. But Easterly believes that such broad assessments belie the more chaotic realities that shape economies at the hyper-local scale.

“There’s a ‘Great Man’ view of history: that great successes happen because some wonderful, wise leaders intended them to happen,” Easterly says. “But looking at development at the micro level allows us the ‘common man’ view: that there were unintended consequences from lots of surprises on this block, and individuals taking advantage of them.”

A long history of a short block

The Greene Street Project accounts for more than four hundred years, using photographs, maps, newspaper clippings, survey data, and some frankly astounding charts. The tour begins in pre-Colonial days, when the Lenape Indians ruled Manhattan. It then introduces us to the Dutch, and later English men who farmed the land (pictured below) around what’s now Greene Street.

From the site: “By 1700, the block was part of the large Bayard farm. The farm stretched from what is now Chinatown to the southern part of Greenwich Village, around 200 acres.” (Thomas Howell, ‘Greenwhich Village painting,’ 1768. Via Greene Street Project)

Then it’s on to the tony brick houses of wealthy Americans who developed Greene Street in the 18th century. They moved north when Yellow Fever broke out in the early 1800s. Some came back at night, however, to meet up with sex workers, as Greene Street turned into a red-light district in the second half of the 19th century. When the brothels were razed at the turn of the century, towering cast-iron garment factories took their place. But these were to be abandoned after spats with activists insisting on better worker protections, following the devastating fire at the nearby Triangle Shirtwaist Factory in 1911.

A 1919 ethnic map of lower Manhattan, with a drop-pin placed on Greene Street. Garment factories along the block employed laborers of Italian (brown areas) and Russian Jewish (red areas) descent. (New York State Archives via Greene Street Project)

By the 1930s, Greene Street was a shanty-town. As city officials wondered what to do with the “obsolete area,” as one map called it, artists began to arrive. Later, Andy Warhol, Robert Mapplethorpe, Jasper Johns and others exhibited in Greene Street’s factories-turned-galleries, whose high ceilings could accommodate the large-scale canvases and sculptures of the mid-twentieth century.

As artists revitalized the area once more, Robert Moses developed plans for the Lower Manhattan Expressway. It would have just skirted Greene Street, fundamentally changing the neighborhood again. But the artists, alongside Jane Jacobs, fought against Moses’ vision in order to preserve SoHo’s cultural character—which soon became a large part of Greene Street’s appeal to luxury brands.

Greene Street Project

The common-man view of history

The key to Greene Street’s success, then, was not one man’s top-down plan. Names like Van Cortland, Stuyvesant, Olmsted, and Giuliani don’t loom large in the Greene Street Project, as they might in a traditional, larger-scale history of New York City. Indeed, if Robert Moses, master planner of modern Manhattan, had gotten his way, Greene Street may very well never have achieved its present cachet.

Rather, Greene Street’s success rose from many decisions, precipitated and made by many individuals—farmers, artists, courtesans, activists, public health officials, seamstresses, and yes, even personal shoppers.

Says Easterly: “I think of this block as not just the success of SoHo, or Manhattan, but the success of America—a collection of thousands of these little tiny units where these things were happening, where ordinary communities had freedom and mobility, and where we tolerated failures and moved toward successes.”

Planners beware?

That’s not to say there’s no room for larger-scale planning, as Easterly and a number of colleagues cede in their working paper connected to the Greene Street project:

Development does not have to be at either extreme, all planned or all spontaneous, there exists some balanced view in the middle. Some activities may be more amenable to planning than others, such as water supply or public health… But exclusive attention to the larger units (usually nations) may give an unbalanced view that understates the rapid surprises of creative destruction, and the potential for misallocation problems … which are more visible with smaller units.

“Creative destruction”; “misallocation”: These are loaded terms from the world of economic theory. What they’re getting at are the ways economic projects (such as neighborhoods or businesses) succeed or fail as products of their local environment.

I asked Easterly if the premise of his project isn’t a little deterministic in nature. Greene Street’s narrative seems to suggest that all of those chance events and small-scale decisions—the artists who found SoHo’s high ceilings and low rent, the Yellow Fever that broke out when it did, the factory fire that inspired labor rights activists—were building up to Greene Street’s wildly successful end point here in 2015.

But that misses the point, Easterly thinks, because there’s nothing that guarantees Greene Street’s future will be as rich as its present. People don’t realize how chaotic the world is,” he says. “Greene Street could fall apart again and become a slum or a failure. That’s what the history implies.”

Neighborhoods experiencing economic distress now should take heed, too. Easterly adds: “Don’t freak out with any one upturn or downturn. It’s part of the chaos of a successful, prosperous city.”

That’s macro-scale talk, of course. At the micro-scale of a single human life spent worlds away from Greene Street’s riches, it’s fairly small comfort.

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