Community Planning Academy

Atlanta Metro 2040FUTURE SHOCK

Arthur C. Nelson, Ph.D, FAICP

Professor & Director, Urban Affairs & Planning

Virginia Tech – Alexandria Center

March 23, 2006

Front Page December 4,

2004

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

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

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

Life-Span of Building Space

RetailOffice

WarehouseEducation

Nonres.Homes

0

50

100

150

200

Ye

ars

What About ….?

Telecommuting? Office hotelling? Internet retailing? Emerging technologies?

And their effect on future space needs?

Retail Trends Share of grocery store, warehouse club, super store, & department store sales, catalog sales, Internet sales

0%

20%

40%

60%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: US Census Bureau

Reality Check

Space Class 1992 2003 %DifRetail & 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.

Bottom LineNew Construction

Metropolitan Atlanta 2000-2040

Construction

Residential $750 Billion

Nonresidential $400 Billion

Infrastructure $150 Billion

Total $ 1.3 Trillion

Where Does It Grow?

Market Analysts Finding Changing Preferences

National Association of RealtorsNational Association of Home BuildersNationally Recognized Market Analysts

Urban Land InstituteLend Lease/PriceWaterhouseCoopers

Joint Center for Housing Policy at HarvardGolfing Buddies and Taxi Drivers

The New Urban Economics Old School

People locate where jobs areThe “employment-centric” model

New SchoolJobs locate where people areThe “homo-centric” model

The New Urban EconomicsReal estate development follows peopleWhere are people going?

Source: Arthur O’Sullivan, Urban Economics, Sixth Edition (2007).

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

Resale Prices 2002-2005[SF = 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.

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.

“Traditional” Householdson 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 Nation’s Age and Household Structure Will Reshape Housing Demand in the 21st Century, HUD (2003).

People Turning 65 1950-2025

1000

1500

2000

2500

3000

3500

4000

4500

Thousands

Source: Rosen Consulting

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).

Neighborhood Feature Preferences

Tra

nsit

Ac

ces

s

Scho

ol

Wa

lk

Sto

res,

Ea

tin

g

Sid

ew

alk

s

Hous

ing

Mix

Eth

nic

Mix

Incom

e M

ix

Lif

e-C

yc

le M

ix

Neighborhood Feature

0

10

20

30

40

50

60

70

80

Perc

ent

Source: National Association of Realtors & Smart Growth America, American Preference Survey 2004.

Retired Location Preference

In a city 14%

In a suburb close to a city 37%

Total “urban” 51%

In a suburb away from a city19%

In a rural community 30%

Suburbs away from cities are the losers

Source: National Association of Realtors & Smart Growth America, American Preference Survey 2004.

Housing Choices of ElderlyHousing Type All Elderly Elderly

MoversDetached 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.

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.

Preference Survey SignalsAll Households

Housing Type Survey Range, Unit Type

Owner attached Townhouses

17% to 33%

Condos

9% to 14%

Small lots (<7k sf) Cluster, other

37% to 57%

Source: Adapted from Myers & Gearin, “Future Demand for Denser Residential Neighborhoods”, Housing Policy Debate (2001).

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.

US Demand in 2040

50% Attached (apartment, TH, condo, etc.)30% Detached small/cluster/zero-lot20% Conventional subdivision

80% = Traditional Urban Density

Even in Plano, TexasEven in Plano, Texas

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.

Atlanta Demand in 2040

40% Attached (apartment, TH, condo, etc.)25% Detached small/cluster/zero-lot35% Conventional subdivision

65% = Traditional Urban Density @ transit-supportive density

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 4%

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.

What Futurists Tell Us

Cheap energy is over.

Rising global competition for construction materials.

Bio-medical advances will extend lifetimes. Another 20 years added?

Wasteful Residential EnergyGeorgia Energy Lost as % of Energy Used

5-Year Periods 1970 to 2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Perc

en

t R

es

identi

al

Energ

y L

os

t

Source: Energy Information Administration 2006.

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

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.

THANK YOU!