I laid out my case for a private American megacity in City of the Future. However there are many challenges with building a greenfield, privately-owned city. I'd like to discuss what I consider to be some of the biggest challenges to this idea and how I think about them. This isn't supposed to be a rebuttal, but an admission and discussion of the drawbacks and how I think they might be solved.
Probably the biggest challenge for a new city is getting the initial residents. History is filled with cities and developments that couldn't get off the ground. It's further complicated by having to create a two-sided market of employers and employees. Companies like Uber bootstrapped their two-sided markets with subsidies, but the cost of building real estate is already so high that subsidies would be untenable.
One possible solution is to give early residents and employers upside in the city's success. Early residents could be given a small amount of equity monthly that would equal or offset their rent if the company reached its eventual goal of millions of residents. Companies that plan to locate and hire in the city could invest in generous bond-like instruments to help finance the office buildings, where their upside is tied to hiring milestones. Governments offer similar deals now using tax incentives, but often without necessary protections that the jobs are actually created.
Others have proposed creating cities around new universities. Many students move to attend college, so you'd be targeting a group that is inherently mobile. However the American higher education market is not very dynamic and it would be difficult to create a superstar university that provides sufficient draw. Perhaps it would be better to target primary education and have a city with innovative charter schools. This would tie in well with the pronatalist focus of the city. Find employees that work remotely and provide a great environment for them to raise their families. Remote workers reduce the need to create a balanced two sided market.
You need massive migration to populate a new city. This is in opposition to the trends that show Americans are less likely to move across state lines and to opportunity. Much of this may be attributed to expensive housing. There is a lack of entry level housing which would make the transition to a new city feasible. Furthermore any wage gains from moving to a superstar city are eaten up by housing costs. The city would provide abundant housing to keep costs low and offer entry level housing such as single-room occupancy units. This reduces a giant barrier to migration. Furthermore, given the high lifetime value of a resident, large amounts can be spent on customer acquisition costs, including paying their moving costs.
A planner can't possibly anticipate how a city will be used and market forces determine the eventual form of a city. That's the central argument in Order Without Design. This is probably the second biggest challenge after bootstrapping. There is no guarantee that the city meets the needs of the residents. We can use data and prices to develop models of the city that explain demand. This can be used to predict demand and prices for future extensions and how those will impact the prices of the existing city. In a fast growing city, so much new capacity is being added that mistakes can be corrected in new development.
Even if you were able to build the perfect city today, with the right ratio of apartment to office to retail, you wouldn't be able to anticipate future technologies and trends that would develop over the life of the city and its buildings. The ratio of ideal spaces might change based on consumer and technology trends. Adapting the city to new technologies could be expensive and nullify the cost savings during initial construction.
Providing extra spaces and conduits throughout the city would help future-proof the city against new technologies. Looking back, the major technology trends of the past would have all benefited from conduit: electricity, plumbing, heating and cooling, and new telecommunications wiring. In the near future we might see flying taxis and underground transit pods. The former could be accommodated by reserving rooftop space, which is a good idea regardless. New underground tunnels would be easier to construct than in a legacy city because there is no buried infrastructure to avoid except for perhaps a few major sewer and water lines.
Evolving real estate needs are handled by providing flexible spaces that can accommodate many uses. Lack of traditional zoning means that spaces could be repurposed for a variety of purposes. A retail space could become a daycare center or a personal art studio. Live/work units could convert between businesses and additional living space depending on the tenant.
Existing cities might improve faster than the new city can grow. If the private city model is effective, cities are likely to copy the best ideas and policies, thus reducing the competitive advantage of a private city. Self driving shared transit services and congestion pricing would immediately increase the living standard in existing cities.
On the other hand, existing cities will be reluctant to add new housing and prices will remain high. They are burdened with legacy infrastructure while the subterranean infrastructure layer provides the greenfield city with a permanent cost advantage. Municipal government's lack of cost discipline and culture of program growth would hinder them against a private corporation's focus on reducing costs and improving efficiency.
New technologies might neutralize the benefits of agglomeration and spread the population out rather than centralize them in new cities. Solar power, batteries, and LEO internet satellite constellations make it possible to live off-the-grid with modern amenities. Improved virtual reality and teleconferencing may increase the adoption of remote work and remove the need to live in a city near your employer. Flying Uber drones will lower the travel time to far-flung housing.
The internet was predicted to decentralize work but instead we've seen even larger agglomeration effects and the growth of superstar cities. The same technology that makes remote work possible will also allow workers to live in the city and perform remote physical work. Just like Air Force pilots can live in America while piloting drones around the world, so too will factory workers be able to control robots in VR from the comfort of their urban apartment. Technologies will make off-the-grid remote-living feasible but the city will still be attractive for the social aspects such as dating, visiting friends, attending live performances, etc.
Building small, human-scale streets is at odds with the goal of delivering efficiency. Streets and buildings have continued to grow in size to accommodate larger, more labor-efficient work vehicles. Delivery and garbage trucks have grown in conjunction with streets and loading docks. These can be replaced with automated logistics robots, but other more specialty vehicles have grown in size as well and can't easily be automated away. Cranes, fire trucks, ambulances, and other specialty vehicles are designed to fit on large American streets and by their nature can't be moved to the underground logistics layer. They will be a challenge to accommodate in our narrow, human-scaled streets.
While side streets and alleys might not accommodate these vehicles, the thoroughfares could be wide enough to be equivalent to a single lane of a typical American city and the city is dense enough that you are never far from a thoroughfare. Another option is to import specialty vehicles from Europe or Japan that are designed for narrow streets. Future technologies will allow delivery of wide or heavy loads (such as mechanical equipment) without using the street network. Helicopters are already used for construction in remote environments and future drones will make that even more cost effective. Heavy loads can be transported with future heavy-lift airships.
The city would effectively be the only employer for certain trades. If the city owns and operates most of the buildings then the city is the primary employer of electricians, plumbers, and other tradesmen. Getting fired by the company might necessitate leaving the city or finding a different profession. While the city would operate many of the apartments and offices, there would still be a large number of specialty buildings that would need to hire tradesmen. The industrial and light-industrial spaces would all be managed by the lessee and there would be work opportunities there.
Owners treat property better than renters. With an entire city of renters there is a risk that no one has the interests of the city in mind. Pervasive surveillance can be used to protect the commons, but the best solution is to create a culture of respect and pride in the city. The city has a vested interest in helping the residents grow, earn, and create the life they want, and the residents should feel respect and gratitude towards the city. Personal investment in the city can be enhanced with equity or ownership-like products (such as persistent discount for time spent living within the city).