My colleague recently moved into a cool place in Soho Lofts in the Arts District—would someone please change the name of this otherwise worthy building?—and is mostly happy with downtown living. But he’s also discovering its frustrations. Walking his dog, he noticed two new developments, one on the ground floor of Newport Lofts and one at Third and Gass. A restaurant? A market? No, sorry. The former will be a law office, and the latter will be a wedding chapel. Arrghh.

Sometimes it seems like the “invisible hand”—Adam Smith’s image for the magic of the free market—is drunkenly swinging a mallet into some rusty nails to build things we don’t want.

So what’s the deal? We have some idea of what we need more of downtown (a grocery store, storefronts that aren’t boarded up, more housing) and what we don’t need (law offices and wedding chapels, and let’s throw in bail bondsmen and payday lenders).

So why can’t we get more of what we need and less of what we don’t? I talked to Flinn Fagg, the city’s director of planning, about this.

First, the good news. Fagg, who has been here nine years, comes from a planning philosophy called “new urbanism.”

At the risk of oversimplifying: The idea is that the way cities developed for centuries made sense. They were walkable and built to human scale, and they mixed commerce, living and cultural pursuits, all in close proximity. Then for a few decades, we built superhighways and suburbs and big box stores, because cities were perceived to be grimy and cramped and dangerous.

All that was fine, but it didn’t work for everybody, so the new urbanists began designing new urban spaces that were a throwback to those old principles. The fact that Fagg comes from this school of thinking is good news, because we’re trying to build an urban downtown, so we need someone versed in the tenets of urbanism to help us plan it.

I asked him why on Earth a new urbanist would come to Las Vegas, which is known for its Sunbelt sprawl. Fagg said he was inspired by former Mayor Oscar Goodman’s vision of a revitalized downtown.

Now the bad news: Fagg’s hands are tied, at least for the moment.

The city approved plans for 40 condo towers by 2007, but the recession killed most of those projects. Until developers see higher demand and higher rents, we should not expect any new building. (Hopefully the arrival of Zappos employees in 2013 will catalyze the rental market.) Residential development downtown will be hampered by all the excellent, spacious and cheap rental houses in the suburbs.

And without more residents, there won’t be demand for new shops or a much-needed grocery store. Fagg said despite the city’s valiant efforts, he didn’t anticipate a grocery store downtown for “several years.” It’s worse than that, however, because the lack of a grocery store will dissuade people from moving downtown, and you see how this is a vicious circle that leads back to wedding chapels and bail bonds.

Other cities are a decade or two ahead of us in this process, so we’d be wise to see what they’ve done. They often use their development rules for leverage. So, for instance, Fagg said a city will adopt incentives, perhaps waiving the height limit on a residential tower if the builder will put a grocery store on the ground floor. Everybody wins.

Unfortunately, we don’t have those tools at our disposal, because in 2000, in a bid to encourage development, we created the downtown Centennial Plan Overlay District, which minimized development restrictions in much of downtown. And without restrictions, we can’t offer incentives.

Our hands aren’t completely tied, however. In other cities and sometimes here, community activists have often had success—with the help of their elected representatives—persuading a developer that their neighborhoods really didn’t need another 7-Eleven or liquor store.

That’s cause for hope, but it also means people downtown need to get political if they want to see more fresh produce and fewer drive-thru wedding chapels.