Community Planning Academy Atlanta Metro 2040 FUTURE SHOCK

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Community Planning AcademyAtlanta Metro
2040FUTURE SHOCK

• Arthur C. Nelson, Ph.D, FAICP
• Professor Director, Urban Affairs Planning
• Virginia Tech Alexandria Center
• March 23, 2006

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Front Page December 4, 2004
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Getting Ahead of the CurveMetropolitan Atlanta
2000-2040

• Category 2000 2040___
• Population 4.2 million 9.4 million
• Housing Units 1.6 million 3.7 million
• Jobs 2.8 million 4.7 million

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Residential Development Metropolitan Atlanta
2000-2040

• Figure 2000 to 2040
• Growth-Related Units Built 2 million
• Replaced Units Built 1 million
• Total Units Built 3 million

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Nonresidential Development Metropolitan Atlanta
2000-2040

• US 2000 to 2040
• Growth-Related Square Feet 1 billion
• Replaced Square Feet 2 billion
• Total Square Feet 3 billion

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Life-Span of Building Space
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What About .?

• Telecommuting?
• Office hotelling?
• Internet retailing?
• Emerging technologies?
• And their effect on future space needs?

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Retail Trends
Share of grocery store, warehouse club, super
store, department store sales, catalog sales,
Internet sales
Source US Census Bureau
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Reality Check

• Space Class 1992 2003 Dif
• Retail Service 57 62 9
• Office, Medical, Ed. 88 87 -1
• Total Glamour Space 145 149 3
• Warehouse Storage 45 35 -23
• All Other 75 63 -16
• Figures for U.S.
• Non-percentage figures per capita based on Census
  estimates.
• Source Energy Information Administration,
  Commercial Buildings Energy Consumption Surveys
  for 1992 and 2003.

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Bottom LineNew Construction Metropolitan
Atlanta 2000-2040

• Construction
• Residential 750 Billion
• Nonresidential 400 Billion
• Infrastructure 150 Billion
• Total 1.3 Trillion

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Where Does It Grow?
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Market Analysts Finding Changing
Preferences National Association of
Realtors National Association of Home
Builders Nationally Recognized Market
Analysts Urban Land Institute Lend
Lease/PriceWaterhouseCoopers Joint Center for
Housing Policy at Harvard Golfing Buddies and
Taxi Drivers
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The New Urban Economics

• Old School
• People locate where jobs are
• The employment-centric model
• New School
• Jobs locate where people are
• The homo-centric model
• The New Urban Economics
• Real estate development follows people
• Where are people going?
• Source Arthur OSullivan, Urban Economics, Sixth
  Edition (2007).

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What is the Market Telling Us?

• Resale prices of condominiums rival resale
  prices of single-family homes for first time
  ever
• Appreciation of condominiums is higher than
  single-family homes nationally and in every
  region

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Resale Prices 2002-2005SF detached
townhouse, CC condominium cooperative

• Region 2002SF 2005SF 2002CC 2005CC
• US 158 207 142 218
• NE 164 244 147 252
• MW 136 166 149 189
• S 147 178 115 195
• W 215 314 172 261
• Figures in thousands of dollars.
• Source National Association of Realtors 2006.

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Appreciation 2002-2005

• Region SF Percent CC Percent
• US 31 54
• NE 49 71
• MW 22 27
• S 21 70
• W 46 52
• Source Adapted from National Association of
  Realtors 2006.

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Traditional Households on the Wane Household
Type 1960 2000 2040 HH with
Children 48 33 27
Single-Person HH 13 26
30 Figures for U.S. Source Census for 1960 and
2000, 2040 adapted from Martha Farnsworth Riche,
How Changes in the Nations Age and Household
Structure Will Reshape Housing Demand in the 21st
Century, HUD (2003).
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People Turning 65 ? 1950-2025
Thousands
Source Rosen Consulting
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Share of Growth 2000-2040

• HH Type 2000 2040 Change Share
• W/ children 35 41 6 13
• W/o children 71 111 40 87
• Single-person 26 44 17 38
• Figures for U.S.
• Figures in millions of households.
• Source Adapted and extrapolated from Martha
  Farnsworth Riche, How Changes in the Nation's Age
  and Household Structure Will Reshape Housing
  Demand in the 21st Century, HUD (2003).

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Neighborhood Feature Preferences
Source National Association of Realtors Smart
Growth America, American Preference Survey
2004.
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Retired Location Preference

• In a city 14
• In a suburb close to a city 37
• Total urban 51
• In a suburb away from a city 19
• In a rural community 30
• Suburbs away from cities are the losers
• Source National Association of Realtors Smart
  Growth America, American Preference Survey 2004.

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Housing Choices of Elderly

• Housing Type All Elderly Elderly Movers
• Detached 69 35
• Townhouse 5 11
• 2 Units in Bldg 19 43
• Manufactured 7 11
• All Attached 24 54
• Owner 80 41
• Source American Housing Survey 2003. New movers
  means moved in past year. Annual elderly movers
  are about 5 of all elderly households 75 of
  all elderly will change housing type between ages
  65 and 80.

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Elderly Downsizing

• Measure Before After
• House size 1,687 sf 1,450 sf
• Change -14
• Lot size 0.35 ac 0.24 ac
• Change -31
• Source American Housing Survey 2003.

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Preference Survey SignalsAll Households

• Housing Type Survey Range, Unit Type
• Owner attached Townhouses
• 17 to 33
• Condos
• 9 to 14
• Small lots (lt7k sf) Cluster, other
• 37 to 57
• Source Adapted from Myers Gearin, Future
  Demand for Denser Residential Neighborhoods,
  Housing Policy Debate (2001).

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Future Housing Shares US

• Housing Type 2003 2040
• Apartment 24 30
• Owner Attached 11 20
• Small Lot 15 30
• Large Lot 51 20
• Source 2003 data from American Housing Survey
  2003. 2040 figures derived from preference
  surveys.

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US Demand in 2040 50 Attached (apartment, TH,
condo, etc.) 30 Detached small/cluster/zero-lot 2
0 Conventional subdivision 80 Traditional
Urban Density Even in Plano, Texas
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Atlanta Future Housing Shares

• Housing Type 2004 2040
• Apartment 19 25
• Owner Attached 4 15
• Small Lot 15 25
• Large Lot 62 35
• Source 2003 data from American Housing Survey
  2003. 2040 figures derived from preference
  surveys.

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Atlanta Demand in 2040 40 Attached (apartment,
TH, condo, etc.) 25 Detached small/cluster/zero-l
ot 35 Conventional subdivision 65
Traditional Urban Density _at_ transit- supportive
density
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2004 Supply 2040 Demand

• Housing Type 2004 2040 Change Dif
• Apartments 350 925 575 165
• Owner Attach 65 555 490 750
• Small Lot 135 925 790 585
• Large Lot 1,250 1,295 45
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• Total 1,800 3,700 1,900 106
• Figures in thousands and may not add due to
  rounding.
• Source 2004 data from American Housing Survey
  Atlanta.

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What Futurists Tell Us

• Cheap energy is over.
• Rising global competition for construction
  materials.
• Bio-medical advances will extend lifetimes.
  Another 20 years added?

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Wasteful Residential EnergyGeorgia Energy Lost
as of Energy Used
Source Energy Information Administration 2006.
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Invest Where the People Will Be

• 71 of elderly want transit options (AARP)
• 50 of public want expanded transit investment
  but only 25 want new roads (NAR)
• Large-scale home builders want transit options
• ULI, PriceWaterhouseCoopers, others ?
• Do not invest in suburban fringe
• Highest rates of return in redevelopment, infill
• Understand changing preferences ?
• Affluent elderly who want urbane opportunities
• Young professions who delay child-rearing
• Some shifting preferences even in families with
  children

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Planners Need To

• Know implications of demographic changes.
• Anticipate rising prices in energy, construction.
• Understand market responsiveness to
• New Atlanta Metropolis development.
• Invent new financing tools to earn high
  long-term gains in the New Atlanta Metropolis
  investments despite short-term low returns.
• Create win-win public-private partnerships.

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• THANK YOU!