Neocities and Neodistricts
A Framework for Building Cities of The Future
The tech industry is outgrowing its main hub cities. In San Francisco Bay Area, New York City, and London, rising rent and immigration limits force major corporations and investment funds to get serious about finding “new homes” for future expansion. The bets were placed on cities like Dublin, Zurich, and Austin, TX. At the same time, a more radical idea of building an entirely new city is getting increasingly more attention. In recent months, several tech industry leaders began work on urban development: Google with Sidewalk Labs, YCombinator with New Cities initiative, and Facebook with Menlo Park housing plan. A real opportunity to build a great new city can be just around a corner.
Designing future cities has been my favorite side project for the last few years. Over time, my research notes evolved into a comprehensive roadmap for constructing a next-generation city. Today, I am excited to make the Neocity Framework public and open for discussion. Let’s work on this together! Ask questions, propose ideas, identify weaknesses, and help make it a better plan for building a city of the future.
I believe that new cities will be amazing. I believe that they will be different — that they will avoid the mistakes of the past. And I believe that you and I can actually build them and live in them.
Neocities Are Coming
I use the term neocities to describe technology-driven, planned cities that will begin construction in the next 2 decades. Similarly, neodistricts are futuristic planned districts to be built at the edges of existing cities. By 2040, we are likely to see at least 3–5 neocities and 30–50 neodistricts.
The industries of the future are growing fast. In the next few decades, healthcare (including biotech and pharmaceuticals) and engineering (e.g., robotics, artificial intelligence, new forms of transportation) will add millions of jobs. These jobs will be highly concentrated and go to a small number of cities. With high costs of living, low housing supply, and immigration limits, existing industry hubs will struggle to absorb new arrivals. According to a recent report by the Wall Street Journal, San Francisco and Silicon Valley annually add around 65K jobs but approve construction on only 10K housing units. While top destinations struggle to grow fast enough, it becomes easier to move jobs and capital to new places. As a result, the new wave of hub cities will emerge.
We are in the dawn of the post-car era in terms of urban planning. With the arrival of fully-electric transportation, we can finally move transit systems under the surface and organize cities around people, not cars. Advancements in speed rail technology (including Hyperloop), city-level climate control, and land reclamation technologies allow for urban expansion in previously undesirable locations. And, on the investment side, the world has trillions of dollars of long-term capital seeking alternatives to the stock market and bonds. Privately built and operated cities can emerge as a new asset class for capital markets.
Neocities have the opportunity to make major improvements over traditional cities across a number of dimensions:
- Commute times. With medium/high density, mixed-use zoning, transition from personal cars to on-demand taxi networks, and dedicated transit layer(s) under the surface, planned cities can achieve 1.5–2x shorter commute times than comparable traditional cities. A neocity with 1M residents will have an average commute time under 30min.
- Cost of living. High real estate prices of most desirable cities are driven by land scarcity, ineffective regulation, independent construction of each building, and the discrepancy between supply and demand. Recognizing this, neocities should do for urban construction costs what Elon Musk did for rocket costs — disassemble the costs to raw materials, labor, and energy, and drive down everything else.
- Walkability. Once transit systems move under the surface, the entire city becomes walkable. Adding public atriums, roof parks, sky streets (inspired by High Line and Marina Bay Sands), and streets with retractable, transparent roofs creates a massive increase in public spaces. Neocities will be able to break the home-work-home routine and significantly increase the amount of high-quality “third place” time in our lives.
- Talent density. People are attracted to people. Neocities will thrive by creating clusters of talent (and capital) in select industries, while driving diversity with investment in culture and local services.
- Safety. By investing in security and support services, neocities can become radically more open and safe for children and seniors. An entire city open and built for children is a much better learning environment than the fenced schools we have today.
The first step towards building a neocity is creating a city model. The model should (1) provide a clear vision, (2) support testing and feedback collection, and (3) generate massive demand from future residents, investors, and host territories.
A comprehensive “full-stack” city model should cover a number of layers:
- Economic development. A plan to attract jobs, residents, short-term visitors, and real estate investors.
- Financial model. Important metrics should include the initial investment for the first 10 years, a fully loaded construction cost per resident (that is, including infrastructure costs), and the projected price and rent of a one-bedroom apartment.
- Urban planning. The city model should define key parameters — density, population, zoning policy — and provide a high-level, multi-decade timeline for city growth. While the visual models are important for marketing and should be created early, the actual master plan will significantly evolve after a neocity location is selected.
- Governance and policy. Neocities are more likely to be developed as privately managed, special economic zones as opposed to traditional cities led by democratically elected officials. A neocity model should include a high-level plan for governance structure and key policy innovations.
- Transportation. Recent advancements in transit technologies (electric, self-driving, on-demand cars and high speed rail) are the primary enablers for neocities. A neocity model should include a transit architecture including local mass transit, local on-demand transit, freight and delivery networks, and transportation links with the outside world.
- Host nation. Achieving autonomy and security are key to neocity success. A neocity model should include a draft agreement with the potential host nation or territory and a negotiation strategy to secure the deal.
Prototyping and Testing
The neocity modeling process should include wide-open review stages involving both the experts and general public. Testing should be both qualitative and quantitative. The latter is particularly important for modeling average commute times and stress-testing financial models for adverse scenarios. As is commonly done in software development, neocity model iterations will have version numbers or code names (e.g., Neocity v2.0 or Neocity Beta).
The initial high-level model will likely be open-sourced to inspire neocity movement (similar to Coworking Wiki), while later stage and more detailed implementation roadmaps can be developed and monetized privately. Drawing an analogy, the initial Google algorithm was openly published as a research paper and served as a foundation for both Google Inc. and further advancements in computer science research.
Once the neocity model is developed and tested, a number of visual representations can be created, starting with a concept art album, a video trailer, and a physical 3D-printed model. Additional modeling formats can include Minecraft, virtual reality, a theme park, a feature film set in the neocity, and a neocity modeling app.
Building a new city should follow the sell before you build principle. In fact, the idea of a new city should be sold to a number of stakeholders: future residents, job creators, short-term visitors, investors, and a host nation or territory. To validate the demand from future residents and job creators, the neocity should collect pre-orders in the form of corporate campus reservations and preliminary residency applications. For a successful start, a neocity should line up at least 20K high-skill jobs and 50K residents ready to move in within the first 3 years.
To compete with established industry hubs, neocities should offer a streamlined immigration process for high-skill workers, competitive real estate prices, low taxes, high talent density in anchor industries, and short travel time to a tier-one airport. The initial job creation plan is likely to involve a number of categories:
- Anchor industries. Los Angeles is the home of media industry, New York City is the capital of finance, and the San Francisco Bay Area is the leading cluster for technology companies. New cities need to establish themselves as clusters for emerging industries, such as robotics, artificial intelligence, urbantech, and bioengineering. Urban retirement is another interesting, possible anchor industry. Starting small, a neocity has a real shot with just 2–3 anchor industries.
- Regional industries. Using their novelty and autonomy, neocities can attract or develop regional leaders in education, hospitality, and healthcare. At the same time, neocities can compete to host secondary offices for global companies. Dublin, Ireland and Austin, TX are particularly known for job creation driven by satellite offices and regional headquarters.
- Location-independent workers. Many freelancers and small technology startups can work from anywhere. Neocities can compete with other startup hubs by providing affordable mid-term rental options, creating coworking and coliving spaces, and building an active investor community.
- Local industries. Early on, local construction will create a significant share of neocity jobs. The number of jobs created by other local businesses will grow linearly with the number of people working in anchor and regional industries.
In order to convince future residents to move in (and place residency applications), new cities need a strong and differentiated value proposition. Neocities’ promise is to combine the benefits of large cities (e.g., talent density, great jobs, strong culture) and small towns (e.g., walkability, low commute times, safety) in a single place.
Cities built from scratch can provide the following advantages:
- Transit performance. Moving from personal gasoline cars to electric, automated, on-demand transit systems can cut commute times by 40–60% when compared to traditional cities of a similar population.
- City for children. Paradoxically, all modern cities are optimized for working adults, while adults themselves often choose a place to live based on its value for their children (e.g., good schools, parks, playgrounds). Recognizing this problem, neocities should be designed as “children-first” territory.
- Streets as public spaces. Moving all transit systems underground creates a completely walkable surface. This unlocks a massive amount of space for public activities, including sports, arts, and commerce. With retractable street roofs and cross-building atriums, many public spaces will be weather-independent.
- Anchor industries. In terms of great jobs, a new city is at a disadvantage when compared to an established industry cluster. To solve this chicken-and-egg problem, a neocity should bet on becoming the global center for an emerging industry, e.g., robotics, artificial intelligence, urbantech, or bioengineering. In parallel, neocities should recruit anchor residents, such as modern artists, writers, and filmmakers, to bootstrap the local culture ecosystem. To attract early stage companies, neocities need to start their own venture funds (e.g., Tony Hsieh started VegasTechFund to bring more startups to Las Vegas) or convince top-tier venture capitalists to open new offices in the city.
- Cost of living. Achieving and maintaining lower costs of living (rent and taxes) than comparable cities will be a massive advantage for neocities. Streamlined construction regulations, unrestricted housing supply, and economies of scale can be used to drive real estate costs down.
While the city will be open to move in, it will need a number of policies and incentives to promote diversity and balance between genders, races, and demographic groups.
The interests of direct neocity investors, secondary investors (backing residential and commercial real estate, hotels, private utilities, and infrastructure), and a host nation are primarily focused on economic factors. Participating in a neocity project should be profitable and low-risk. To build an investment coalition, a neocity project needs (1) an open, stress-tested financial model; (2) a high volume of pre-orders from future residents and job creators; and (3) committed funding for neocity infrastructure costs. With predictable and effective rules for real estate investors and initial $5B direct capital, a neocity can attract another $10–20B in secondary investments.
Neocities will combine the best elements of organic and centrally planned cities. The neocity design starts with infrastructure planning (e.g., single foundation and transit systems), target parameters (population, density, ratio between housing and commerce), and performance metrics (construction costs, average commute time, average amount of sunlight per apartment). These constraints lead to a number of hard and soft development guidelines. From there, a neocity grows organically, with each building and block designed and developed independently.
Building a new city from scratch makes it possible to rethink centuries-old urban planning principles and introduce a number of new elements:
- Transit layer and walkable surface. The emergence of self-driving, electric cars will allow new cities to move all high- and medium-speed transportation underground and keep the surface for pedestrians and micro-transport (e.g., bikes, electric skateboards, wheelchairs).
- Utility layer. Another underground layer can host all necessary utilities: water, sewage, power, telecom, garbage collection, and HVAC systems (heating, ventilation, and air conditioning).
- Terraced architecture. Neocities have a chance to completely rethink the role of city roofs. There will be more elevated public places (sky parks), walkways between buildings (sky streets), and public staircases and slopes between levels.
- Public atriums. In order to stay weather-independent and increase the amount of time residents spend in public spaces, neocities can build public atriums and retractable, transparent roofs for main surface-level streets.
- Design code. Guidelines for neocity developers should cover minimum ceiling policy, natural light management, illumination systems (with centralized control for holiday displays), accessibility for seniors, and safety/openness for children.
- Performance metrics. Unlike organically developed cities, the neocity planning process will be largely data-driven. Performance objectives will include minimizing average commute time and routine task time (including grocery shopping), and increasing quality time spent by residents in public spaces (including time for culture, sports, and outdoor activities).
To attract both residents and visitors, neocities should develop signature experiences:
- Sky streets. Take the idea of New York’s High Line to the next level and develop elevated pedestrian streets connecting city roofs into a single system.
- Riverpool. Build a river-like, open, heated pool with retractable roof that runs through the city. Residents can literally “swim to work.”
- Play park. Build an open-access, super-sized playground with the capacity to handle 500–2K children playing at the same time. With regularly changing installations and features, the central children’s space can become the “Netflix of playgrounds.”
- Street art. Incorporate performance stages and art display spots into city streets and atriums. Create an app for artists to reserve places for their performances and exhibitions.
- Quiet spaces. Evolving the concept of a library, create quiet, public spaces where residents can disconnect from the world, enter a state of deep focus, and be protected from the stress and noise of the outside world.
As a neocity grows, it will go through several distinct stages: a town, a city, and a megacity.
- Town stage. A neocity will start with the initial population of 50–100K residents. Early arrivals, or colonists, will come from several categories: individual remote workers, small companies relocating full teams, and satellite offices for major corporations. In parallel with colonist recruitment, early neocity growth will be driven by construction and local services. The town should aim for high enough density to keep most of the commute traffic pedestrian or micro-transport and under 10–15min. Almost by definition, the town is a mixed-use territory, including offices, high-end residences, affordable residences, commerce, and local services. The town’s plan should include placeholders for city-level systems (e.g., reservations for future subway stations and lines).
- City stage. As it gradually grows from 100K to 1M residents, a neocity will turn into a collection of 5–20 town-sized districts. The initial town becomes a regular district in a new city. Some districts can serve as hubs for individual industries (e.g., education district), others will stay multipurpose. One of the new districts will serve as the city center and will host city-level attractions, including a shopping cluster, performance arts venues, and a convention center. While most of the growth will be driven by adding new districts, some of the early districts will undergo a modest “densification” process (i.e., addition of a few high-rise buildings).
- Megacity stage. The transition to this stage will require multiple city centers and high-capacity, high-speed transit links between individual cities. New cities within the megacity area can develop further specialization by industry, affordability, and density.
Technology advancements make it possible to build radically different and more affordable cities. In turn, the development of neocities will drive further advancements in urban technologies. The neocity technology stack will include the following categories:
- Transit systems.
District-level. As individual cars and mass transit move under the surface, there will be an explosion in all forms of micro-transport, including electric bikes, electric skateboards, uniwheels, and wheelchairs.
City-level. A city needs both mass-transit options (subway) and on-demand personal transportation. The latter can start as an Uber/Lyft model with electric cars only, then transition to a self-driving taxi network (e.g., as described in Tesla’s recently published Master Plan, Part Deux). Inspired by the free tram route in Melbourne, Australia, certain mass-transit options can be tax-supported and free to use.
Region-level. To connect with nearby cities and the airport, a neocity needs a speed rail line and/or self-driving highway. Individual regional trips can be covered by electric car rentals, which can drive both inside the neocity transit layer and on traditional roads outside.
- Delivery network. Automated delivery is the future of grocery shopping. Neocities are likely to develop self-operating delivery networks to directly connect retail warehouses with package rooms in residential and office buildings.
- City-level climate control. With time, neocities will develop a number of technologies to control climate both in public and private spaces. Potential solutions include retractable, transparent street roofs and city-wide HVAC networks.
- Single foundation. Unlike traditional cities, neocities can design underground space as a single system of city-wide layers to host transportation, utilities, parking, and delivery systems. The city-owned foundation literally becomes a “platform” for rapid and low-cost surface construction of individual buildings, which makes it faster, cheaper, and easier to reconfigure. The single foundation approach is most likely to be used for high-density districts located on flat terrains. As an alternative to digging, transit and utility layers can be built on the ground, with surface streets elevated a few levels up.
- Food services. Large-scale, robotized meal preparation factories combined with automated delivery will provide a popular alternative to restaurants and at-home cooking. Free or employer-subsidized food, on-demand meals, and meal subscription models will continue to evolve.
- Payments. With continuing development of smartphone-based payments, neocities can go cashless from day one. No more ATM machines or ticket booths.
- Water feature construction. Swimmable beaches, lakes, rivers, and pools make cities more desirable and significantly increase the real estate values. The ability to build large-scale, low maintenance, heated swimming areas (including artificial lakes and rivers) will make inland and moderate climate locations more desirable for urban development.
The key to securing the necessary agreement with a host nation or territory is to make the location selection process highly competitive. Once there is committed investment of $10B+, the role of a neocity host becomes attractive for national and regional governments. A neocity will bring jobs and pay national taxes, and can also absorb a certain number of refugees coming into the host territory. Running a competitive bidding process for governments is a common practice for the Olympic Games, World Cups, and World Expos. Recently, Tesla Motors invited several states to compete (with tax breaks and other benefits) to become a host for their Gigafactory 1 project. Selecting Nevada as the winner, Tesla Motors is set to invest $5B directly into the factory complex and drive a projected $100B in economic benefits for the state over the next 2 decades.
Request for Host Nations
The location selection process should start with a requirements document. Ideal neocity locations should support future growth from 1–5M people, have a nice climate, be near a body of water, and be relatively close to a major airport and a power plant. The host nation should have a stable political system and be willing to provide necessary autonomy to the neocity project.
Given the requirements listed above, early neocities are likely to be placed 50–200km from capitals of underpopulated nations and states. I predict that we will see Neo-Toronto, Neo-Melbourne, Neo-Austin, and Neo-Tallinn in the next few decades.
Another important option is land reclamation. This approach can be used to place neocities in highly attractive regions where no land is available for urban development. The limitations of land reclamation include high cost, longer construction times, complexity of high-rise development, and potential impact on the local ecosystem. To combine the benefits of both options, neocities can start on land and gradually grow into the sea. In fact, many major cities — including San Francisco, Dubai, and Singapore — used land reclamation for their expansion.
Negotiated agreement between a host nation and a neocity is likely to include the following terms:
- Long-term lease or land ownership. Historic examples include Great Britain’s 99-year lease for Hong Kong and the United States’ authority over Panama Canal for 95 years. The lease should also include security guarantees, e.g., oversight from third-party countries or international organizations like the United Nations.
- Private management. The new city will be incorporated as a private company and eventually will go public. The neocity corporation will be led by the CEO and the board of directors. The host nation can be given a minority stake and one or more board seats.
- Deregulation. Neocities are likely to ask for policy autonomy in matters like transportation, construction management, and primary education.
- Tax autonomy. Ideally, a neocity should have full control over tax policy and collection. It will make a single tax payment to the host nation (e.g., calculated as a fixed percentage of neocity revenue). European Union member states have a similar relationship with the EU.
- Access to key systems. A neocity needs a speed rail or highway to a nearby major airport, an affordable (and ideally, clean) source of energy, and membership in national healthcare and law enforcement systems.
- Immigration autonomy. A neocity should be able to both recruit high-skill immigrant workers and host short-term visitors in the most straightforward way possible. In return, a neocity can bring around a $250K investment for every immigrant resident (similar to investor visa requirements in many countries) and also absorb a number of refugees coming to the host nation.
- Eminent domain. A neocity should be able to acquire the land for the city itself and for the key outside infrastructure projects (e.g., airport connection, power plants, wastewater treatment plant).From Model to Reality
Neocity as a Startup
The neocity movement will be led by a new startup company. It will build and operate the first neocity, develop the blueprint and technology foundation for other neocities and neodistricts, and inspire transformative changes in traditional cities. Although the idea of privately built cities may seem unconventional, this approach is pretty common for smaller scale developments, including gated communities, country clubs, private university campuses, and retirement communities. On a larger scale, notable examples of privately built cities include Irvine, California (largely developed by Irvine Company) and Masdar City (developed by Abu Dhabi Future Energy Company).
The first neocity can be built in three major stages spanning approximately 10 years.
Model Stage — 2 years and $10M investment. The initial stage will be focused on the following objectives:
- Develop a high-level “full stack” model of a new city, including a compelling vision, a preliminary master plan, an initial financial model, traffic simulations, and visualizations.
- Develop an aggressive cost strategy. Identify opportunities to significantly reduce construction costs comparing to modern cities.
- Run an economic development campaign. Form a job creation alliance (with preliminary commitments to bring 15K+ high-skill jobs to the city) and collect 100K+ early residency applications.
- Scout potential locations and prepare the request for host nations.
Pre-Construction — 3 years and $100M investment. During this stage, the neocity startup will advance every critical component from high-level planning to the full construction readiness.
- Direct and secondary investment commitments for early construction will exceed $15B.
- Host selection process will be completed and the master agreement with a regional and/or national government will be negotiated.
- Several corporate campuses will be committed for the initial construction phase.
- Key construction contractors and infrastructure partners will be selected.
- A location-specific master plan and construction timeline will be developed.
Town Construction — 5 years and $25B investment. At this stage, 20% of investments will go directly to the neocity itself and the remaining 80% will go to individual real estate and infrastructure developments. The completion of this stage will result in a fully functioning town with a population of 50–100K. The budget plan should keep the fully loaded construction cost per resident in the $250–500K range. The $25B projected neocity cost is in line with budgets of recent similar-scale developments: modern Olympic Games costs are in the $10–50B range, Songdo International Business District was budgeted at $40B, Apple’s new campus and Tesla Gigafactory 1 each cost $5B, and Panama Canal’s expansion budget is projected at $5.25B.
Future Developments. Scaling the neocity from 100K to 1M residents could take another 2 decades and an investment of $200–500B.
Under private management, neocities have the potential to be run as high-margin, software-as-a-service companies (e.g., Amazon Web Services). First, the initial infrastructure costs can be (partially) funded by selling construction site licenses for individual residential and commercial development projects. After that, the annual revenue will come from local taxes: property tax, sales tax, income tax, and hotel tax. Additional revenue streams will include utilities, transportation, and administrative services.
Neocity ownership structure will have several tiers. At the top, there is a neocity corporation that has full control over the city (under the agreement with the host nation). The neocity corporation is likely to go public and trade on one of the major stock exchanges. The host nation can be given a minority stake and/or a revenue share in the neocity corporation. The next tier includes core city services: local transit system, delivery network, utilities, internet providers, primary healthcare, school system, and a convention center. Most of these services will have local monopoly and be structured as joint ventures between the neocity corporation and outside strategic partners. The third tier consists of residential and commercial real estate, will be privately owned, and will pay property tax to the neocity corporation.
This Is the Day One
The roadmap outlined in this document is only a starting point. Now, we need a critical, constructive discussion to improve the vision. Together, we can identify and address the gaps in the plan.
Do you believe in neocity creation in the next 2 decades?
Do you agree/disagree with the roadmap? Any changes? Missing elements?
Do you agree with the funding model? Who and how can fund the first neocity?
The Neocity Framework is shared under CC-BY license. Feel free to re-post, translate, or use in any other way. If you are interested in building new cities and want to talk more, feel free to reach out by email email@example.com or Twitter @yurylifshits. I am also planning to organize a dinner discussion in San Francisco (ping me if you want to be invited).