Sprawl to meet its limit in Atlanta

By Christopher B. Leinberger, From News Services, Wednesday, November 05, 2008

Submitted by Leslie Ransom, Founding Partner

This phenomenal growth has been in all four cardinal directions but particularly to the north, up I-75, Ga. 400 and I-85. This northern thrust is in the heart of the “favored quarter,” that 90-degree arc coming out from downtown that has been the focus of the vast majority of growth in Atlanta, just as it is in every metropolitan area in the country.

However, this development pattern is changing.

The underlying population and employment growth will continue —- well above national rates. However, where that growth will locate is evolving.

We are witnessing the beginning of the end of sprawl. Like much of the rest of the country, the overproduction of automobile-driven suburban development at the fringe of the Atlanta metropolitan area has reached its limits. The combination of outrageous commutes, environmental degradation and the increasing number of consumers preferring a “walkable urban” way of life have combined to start the end of the geometric increase in land consumption of the past half century.

The subprime crisis and the energy price spike of the past 18 months have just accelerated an underlying market trend.

Evidence of this structural change comes from many sources:

The city of Atlanta had been losing population since 1960 in spite of rapid metropolitan growth. That changed in the 1990s and has phenomenally accelerated this decade. The city is now among the top 10 fastest-growing cities in the country.

The city of Atlanta’s share of office market demand had been falling for at least a half century; it stabilized a couple of years ago. If you follow trends from other metro areas that are ahead of Atlanta, the office market share and the employment that comes with it should start gaining on the suburbs during the next upturn.

While the national housing depression has not affected metro Atlanta quite as badly as many other regions, it has followed national trends in one important respect: Homes in the center of the region and close to job centers have not suffered much, if any, price declines. Prices on the fringe are down twice the regional average, losing on average at least 14 percent of value. The highest-price housing on a per-square-foot basis is now in the city and close-in suburban job centers, a fundamental change from 20 years ago.

Metro Atlanta is following a national trend in creating and growing high-density, walkable urban places. The two-week party that was the Olympics in 1996 first showed you how exciting a temporary walkable urban place could be, and you set out to make it permanent over the subsequent decade.

But it definitely is not confined to downtown.

Midtown, Atlantic Station, Virginia-Highland, Buckhead, Vinings and Decatur have also emerged as walkable urban places. There will be many more.

The metro area that has the most walkable urban places, per capita, is the region surrounding Washington. It has 20 such urban communities today and 10 more are emerging; 20 years ago there were just two. Given that metro Atlanta has exactly the same population as metro Washington, if you follow the Washington model, you will be growing 15 to 25 more walkable urban places in the next decade. This represents tens of billions of dollars in investment over the next decade and will be home to thousands of jobs and housing.

But where will they be? Follow the MARTA rail and other planned rail lines, such as the Beltline. Ninety percent of Washington’s 30 current and emerging walkable urban places are served by rail transit.

However, these walkable urban places will not all locate in Atlanta. The experience in Washington and other metropolitan areas indicates that the majority of these places will be in the inner suburbs and job centers. Think of places such as Alpharetta, Doraville, Norcross and Smyrna.

There will be losers. Certain fringe, drivable-only suburbs will find themselves too far out and unaffordable to drive there and back for every trip from the house. The emerging demographic trends show that the vast majority of households created over the next 20 years will be singles and couples. Most of these households will eschew the Ozzie and Harriett houses on the fringe, preferring the many options offered that are walkable or a close transit ride away from home. The end of the “drive until you qualify” housing will mean Atlanta needs a conscious strategy to provide work force and affordable housing.

Yet on balance, more walkable, urban centers in metro Atlanta will have many environmental, financial and social benefits. It may hurt certain households on the fringe, but its societal and family benefits far outweigh the costs. In any case, it is what the market is demanding.

Christopher B. Leinberger is a visiting fellow at the Brookings Institution, a professor at the University of Michigan and a real estate developer. He is author of “The Option of Urbanism: Investing in a New American Dream.” Sarah Kirsch of the Atlanta office of RCLCO, a real estate advisory firm, helped compile local data.