How the Sharing Economy Will Change Cities

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When designing the Bay Area’s bike share program that debuts August 29th, urban plannersagonized over bike share locations. Although San Francisco is not the first city with a bike share program—Chicago and New York also rolled out programs this summer—the thought put into Bay Area Bike Share is evidence of the sharing economy’s effect on our living spaces.

Most sharing economy companies like Zipcar and AirBnB were founded in cities. Sharing in cities is logical; people are clustered, streets are walkable and transportation is convenient. But as sharing economy grows further—the peer-to-peer sharing economy alone is worth $26 billion—it is shaping not only cities, but rural and suburban areas as well. A recent survey by Sunrun found that the sharing economy is no longer an urban and coastal phenomenon. Nearly 50% of Midwesterners and Southerners reported that they would also rent items that they would traditionally buy in the upcoming year.

To see how the sharing economy might shape our living spaces, social fabric and economy, NerdWallet turned to experts for their views:

  • Julian Agyeman, Professor of Urban and Environmental Policy and Planning at Tufts University, believes the sharing economy’s ability to provide utility without ownership might be a social leveler:

“The sharing economy benefits from, and probably has greater traction in, urban areas, but that’s not to say that it couldn’t be used as a driver towards building stronger communities in suburban and rural areas as well.  Suburban areas, in part because of their low density, are difficult from a sharing economy point of view and one thing that is very interesting about suburban areas now is that there are increasingly people of lower incomes, and immigrant groups who don’t initially go to the city as in the past. They go straight to suburban or small city America. With the rise of the sharing economy (car share/bike share requires a credit card etc), you probably have more issues related to the separation of income and cultural groups. But, the converse would be that sharing economy-type of projects if designed well would be good for integrating these groups in small city and suburban America. However, I’m absolutely confident that the new sharing economy urban, suburban or rural will lead to a real diversification of employment opportunities. It might not be assembly line employment; people will have to be flexible.

“If the sharing economy is handled in the right way—I don’t even know if it can be ‘handled’ as such—it could be the leveler between socio-economic groups: it could decrease inequality. Alternatively it could be a way to increase inequality with better off groups sharing nicer stuff. That will be sad and not the way I would want to see it go.”

  • Anita Daley, the spokesperson for City CarShare, a San Francisco-based non-profit, explained that City CarShare is already working extensively with urban planners:

“At City CarShare we are already seeing the impact of how the sharing economy is impacting city planning.  We are working with the City of San Francisco to develop increased access to on-street parking that will provide our members with easy access to our fleet. When many neighbors (members) share access to cars and these spaces, parking availability increases around them.

“We also work with developers of new buildings to add carsharing spaces when they open. As sharing based businesses and organizations grow – such as cars, homes, tools, gardens, etc. – they will continue to have a positive impact on the way cities plan for the future.”

“Any ‘sharing’ organization or business can enhance the urban or suburban relationship by providing more options for residents. Carsharing in particular reduces car ownership and parking congestion in dense urban areas.  This frees up more room for parks, residential developments and businesses, while making for more walkable and bike-friendly cities.  As the city becomes more livable in this way, tourists and visitors from outside the urban core will be more likely to visit.”

  • Michael Keating, the Founder and CEO of Scoot Networks, does not believe the sharing economy will affect city planning, but that cities receptive to the sharing economy will be more attractive and thus spur innovation:

“The sharing economy can make living in cities a lot more attractive because sharing economy businesses work best in places where people who want to share and things to share are conveniently close together. Sharing economy businesses can also do more good in cities where space is at a premium and it is expensive to own things, so the access vs. ownership preference can really work in cities by helping people save space and save or make money.

“Urbanization and city planning are very long processes and are almost always backward-looking, meaning they make projections based on the firm truths and trends of the past rather than speculations about new technologies or lifestyles. Because of this, the sharing economy will have little impact on planning, because planners will not be confident enough in it to plan for it. Where we should see an effect is in how many people move to and stay in cities in part because being in a city gives them access to lots of shared services, and not just new ones. Restaurants and transit systems and museums are all shared services of a kind. The decline in car ownership among young urbanites is more directly a result of sharing services like Zipcar, and rising rents are more directly related to people’s abilities to pay more for their apartments because they can turn them in to hotel rooms occasionally thanks to AirBnB.

“Cities won’t be ‘shaped’ by this in the near term. The time frames are just too long, but car-dependent cities will see less innovation in shared transportation services because people who are car dependent definitionally only drive their own cars. At Scoot we call these people “Car-nivores” and prefer to locate in cities that have lots of transportation omnivores who mix and match different modes of transportation depending on where they are going and how fast they need to get there. San Francisco is a pretty omnivorous transportation ecosystem. More people in SF are likely to try Scoot than in Detroit.

“As location-based, shared services become more widespread and effective, living in cities will become more attractive, and living in the ‘burbs or rural areas less so. The advantages of more affordable large homes, greenery, and good public schools are being eclipsed by the employment opportunities, social life, and services that cities offer. This has been happening in other parts of the world for a while (historically in Europe and recently in a big way in China) and is starting to happen in the US as fuel prices rise, urban crime falls, and young people are spending more of their time on their phones than behind the wheel. This is a good thing not just for urbanites, but for the planet too. The only sustainable form of settlement in a world with billions of humans is the city. The more people who want to live in cities, the better.

  • Alex Stephany, CEO of ParkatmyHouse.com, believes that the sharing economy will allow cities to grow efficiently, but it might also heighten the urban-rural divide:

“I don’t see the Sharing Economy as an exclusively urban phenomenon – farmers can share their expensive machinery through collaborative consumption startups. However, its effect may be to increase the rural-urban divide. Quite simply, the pace of change is greater than ever and this leaves marginal areas falling more quickly behind than densely connected centres. This trend will continue when city centres become extensive free Wifi zones. You’ll also see the re-emergence of neighbourhoods within megacities and community spirit as social media empowered P2P businesses connect inhabitants with their neighbours in a far more transparent way than was ever imagined in the twentieth century.

“The Sharing Economy adds most value in areas of resource pressure and by utilizing such resources more efficiently, it should allow cities to continue to grow in size without imploding under the weight of their consumption and ageing logistics and infrastructure. City planners have yet to confront the reality of the Sharing Economy in a meaningful way but I’d expect to see the continued erosion of those familiar categories of property – residential, commercial and retail – with an increasingly high percentage being mixed use and with fluidity in the occupiers or tenants. With the increased liquidity in local property markets, I’d also expect new methods of leasing and financing to emerge as a result. Also, retail units will continue to shrink in number as the growth of e- and m-commerce continues. The UK currently has the largest per capita e-commerce spend and its high streets have been decimated in the last decade – expect this trend to continue in Continental Europe, then Asia and Africa.”

  • Andrew Pontti, a Consumer Educator at Sunrun, does not believe what he terms “Disownership” is an urban phenomenon. Rather, he believes the sharing economy will seep into every aspect of life regardless of geographic location:

“Disownership isn’t just a trend, it’s a movement. Consumers are ‘disowning’ because it allows them to spend less and still have quality experiences – and in some cases even gain access to new services they wouldn’t have been able to afford previously. And while most would think trends like disownership thrive only in coastal or urban hubs, our studies show that’s not the case. It’s nationwide. We’ve seen unique examples across the country that reflect local demographics, like boat sharing in San Diego, office sharing hubs around Austin, and local surfboard rental shops in Hawaii. Solar is a great example of this trend too—since Sunrun invented the third-party-owned solar model, thousands of homeowners from states like California to Colorado and New York have switched to clean solar power for little or no upfront costs. Disownership models give American families more choice, and opens the door to a smarter and more efficient lifestyle.”