Entrepreneurs see opportunity in city-building

Ever played SimCity and thought it might be fun to try your hand at creating a city from scratch in real life? You aren’t alone: A growing cohort of entrepreneurs backed by deep-pocketed financiers are giving it a whirl.

Driving the news: A company backed by a who’s who of the tech world has spent US$800 million buying up tens of thousands of acres of land as part of a plan to build a new city in California, per an investigation by The New York Times.

  • Spearheading the plan is Jan Sramek, a 36-year-old ex-Goldman Sachs trader, who reportedly hopes to build a new population-dense, highly-walkable city on the land, complete with clean energy power sources and a robust transit network.
  • The project’s backers include LinkedIn co-founder Reid Hoffman, venture capitalist Marc Andreessen, and Stripe founders Patrick and John Collison. 

Why it’s happening: Soaring housing prices are colliding with growing interest in walkable communities that are less car-dependent than the typical suburban development. 

  • The first residents of a 17-acre planned car-free community in Tempe, Arizona, began moving in this year, and a similar project is in the planning stages in Houston.
  • Dense, apartment-style developments that have fewer parking spaces are often cheaper to build than detached homes—ditching parking alone saves more than $30,000 per unit, according to Bloomberg

Yes, but: These projects are still in very early stages, and they’ll need to overcome the reality that most people say they’d be very happy with a detached home in the ‘burbs.

  • An RBC poll found that more than half of Canadians would prefer to live in a detached house, and most said they’d look to live in the suburbs.

Bottom line: The California project will be a well-funded test of whether building new cities from scratch is feasible anymore—and whether people will actually want to live in them.