Bye, Bye, ‘Burbie

Out: Nerdistans

Out: Nerdistans

Here’s a trend that ought to set government officials in larger suburban counties across Virginia on edge. U.S. businesses, declares the Wall Street Journal, have entered a new era of “corporate urbanism.” In a reverse of the post-World War II flight from the city to the suburbs, Motorola, United Continental Holdings, Hillshire Brands and other corporate giants are relocating their headquarters to urban centers or setting up high-profile satellite offices there.

“The showcase headquarters of the past, the beautiful suburban campuses — that’s a very obsolete model now,” Patrick Phillips, CEO of the Urban Land Institute, told the Journal.

The driving force: Corporations are going where the talent is, and Millennials with skills, talent and education increasingly prefer to live in urban centers. Plenty of corporations are staying put. The movement has not become a reverse exodus. But it seems clear which way things are moving. In the economic development game, the balance between city and suburbs has shifted.

In: city life

In: city life

Once upon a time, when the suburbs were new, they offered Americans an escape from the turmoil of inner cities with their crime, poverty, terrible schools and high taxes. But crime has declined dramatically; the fear factor is not driving people out of the central cities any more. Poverty is dispersing, too. While much of it remains concentrated in inner cities, poor people are being displaced by gentrification and they’re moving to the cheapest (because they’re the least desirable) neighborhoods in their regions, which tend to be the aging, ’50s- and ’60s-era neighborhoods in suburban counties. As poverty suburbanizes, it brings the social pathologies of poverty to suburban schools. Decades into the Post World War II suburban experiment, many ‘burbs have lost their disposable newness. Meanwhile, a generation of young people is discovering an appreciation for the authentic and walkable urbanism of the older cities.

Lesson to Virginia’s urban-core localities: Hang tough, things are going your way. Build on what you’ve got. Scrap those stupid suburban-inspired zoning codes you adopted in the ’70s and foster more walkable, bikeable urbanism. Don’t screw things up by raising taxes, your primary competitive disadvantage.

Lesson to Virginia’s suburban counties: Whether you recognize it or not, you have a big problem. Your traditional advantages are eroding. People like your lower taxes, but that’s not all they’re looking for. People do like your public schools, but the majority of new households being created are childless. You’ve got to reinvent yourselves.


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13 responses to “Bye, Bye, ‘Burbie

  1. well you know………. the suburbs never really executed a “strategy” to attract commuters and become bedroom communities.

    the irony is the same codes that some rail again in urban areas are what give property owners in suburbs the “right” to sell their land to suburb-seeking commuters no matter what the local govt likes.

    and the more “Smart Growth” the suburbs create near the transportation arteries, the more new-home seeking commuters will drive right past it and further out to where the traditional 1/4 acre subdivisions are built.

    Everything is about Millennials these days and it’s certainly true but it’s also true that down Fredericksburg way we are approaching a half million people who are apparently not those Millennials who want urban but, for want of a better word, post-Millennials who changed their minds as they got older and now want a subdivision.

    No one down our way devised any strategy what-so-ever to attract these folks – they came on their own seeking something the urban area did not provide.

  2. I tend to think that most corporations are still locating where the executives want to live.

  3. Yes, we are seeing many businesses move to where their customers and workers live. There has been a significant trend in Virginia to see defense and security contractors move west and south. McLean used to be full of them, but no so much anymore. Many employees live west and south of Fairfax County. Many contractors are located there, at least for some of their operations.

    In late 2012, Intelsat made a major commitment to new urbanism by deciding to move much of its operations to Tysons. I think the access to the Silver Line and major highways played a big part, as well as Tysons being about equally distant to Reagan National and Dulles Airports. I may be an outlier here, but I think the Tysons demographics will be more empty nesters than Millennials.

    And Larry has hit the ball out of the park with his recognition that, when couples have school-aged children, the love affair with the city often pales to the desire to have access to the best schools and a backyard. Sometimes, those are closer to Fredericksburg than to the District. If I had a nickel for every time I’ve heard 30-somethings say “schools are the most important factor to me,” I could have retired early. (Not really, I love working.)

  4. when I see Millennials down Fredericksburg way saying they had to move down here because the “restrictive zoning” had priced them out of a place to live.. I might buy that argument…..

    When the Millennial gets married and has kids. they’re no longer satisfied with the typical Millennial housing option/settlement pattern and they look for a subdivision or similar and that’s when they get priced out… but you cannot create more subdivisions by removing restricted zoning… I don’t think.

    Is there a lot of undeveloped land in NoVa that COULD be developed into affordable subdivision homes but NoVa restricts it from being developed?

    the narrative about this is a bit self-contradicting in my view.

    you can remove the alleged restrictions, and make NoVa as dense as you want but people do not move to the suburbs in pursuit of density…

    we should try to develop a narrative that makes more sense and is self-consistent because we keep going back and forth on this and I’m not convinced the problem is “restrictive zoning” at all.. but rather the lack of land available for “affordable” subdivisions.

  5. I listened to a CEO of a financial firm in Charlottesville talk about why they located downtown. He said in the current economy, talent attraction is everything. To get the young (and therefore lower-paid), highly-educated, bright workers they need, they find being downtown in Charlottesville is the best place for them. Several other companies are doing the same.

    I wonder if the rising marriage age and lowering birth rates are having a significant effect on this? There is a growing segment of the population that didn’t always play as big a role – unmarried professionals in their 20’s and early 30’s who don’t need good schools, don’t care as much about safety or backyards, need to be able to walk home from the bar, and want the frequent social interaction that the city provides. Many of them still change after having kids, but my (anecdotal) hunch is that some of them get used to living that way and like it enough to keep it up after having kids. The increasing safety of cities and the suburbanization of poverty only help that decision.

    larry’s right that there is still a solid contingent of even more suburban suburbanites than ever before (Fredericksburg is a great example). There is still a huge market for exurban development of expensive homes on large lots at the outskirts for supercommuters.

    To tie suburbanization and smart growth to another conservative issue… schools really are the biggest factor for most suburban families. They consume a huge proportion of property taxes. I wonder what effect a real comprehensive state-wide school choice program like Sweden’s (not the half-hearted versions we create and then attach albatrosses to) would have on people’s choices about where to move?

    • Fairfax County is one of the better performing schools in the country, has 180,000 students.

      I don’t know that Fredericksburg area schools are better than Fairfax, in fact likely not as good overall but I think Fairfax maybe has some individual schools that are less than stellar.

      Our schools down this way are not as diverse in neighborhoods as more urbanized areas like Fairfax and Henrico seem to be… though we do have some schools that are primarily rural still.

  6. In Houston (in certain areas) I’ve seen what were okay, but older homes (60+ years and up) being torn down … on side-by-side lots; and then one bigger house than either house that was torn down being built. So yeah, in Houston, you can go buy a condo in downtown if you so desire. But we’re still Texas and we’re still doing BIG down here.

    The majority of people that I meet (short of a small segment of young people who think it really hip to live downtown) really don’t like dealing with downtown. Down here the corporations are all STILL moving out of the central core area.

  7. Accurate, I thought Houston was one of those places with little or no restrictive zoning.. no?

  8. The lack of a zoning code is part of Houston’s schtick, but its sort of a misrepresentation. Houston has lots and lots of the building codes that foster automobile-orientation – including high parking requirements, large setbacks, minimum lot sizes, etc.

    Where it has less of a zoning code – in land use – it has agreed to enforce a dense web of private covenants put on property by developers and landowners, which are ironically even more restrictive and inflexible than many city’s zoning codes. The lack of direct zoning has also incentivized developers to build on large tracts of land where they can build controlled subdivisions, office parks, and strip malls that keep unwanted land uses from cropping up within a close distance. This further exacerbates its automobile culture.

    Private covenants are an interesting issue to me. The free market folks say they’re a private, market response to people’s desire to keep unwanted uses away. And sure – if you buy a home in a new subdivision with a homeowners’ association, you have privately agreed to follow a set of rules. But that HOA then has power over that particular area of land for eternity, much like a government. If everyone who bought houses in the neighborhood dies and their children all inherit them – children who didn’t want to live under an HOA or follow the covenants – how is that different from a government that restricts land use?

    • Private covenants are fascinating and of growing importance. My first work of consequence and impression as a newly graduated lawyer was buying the raw land for and putting together from ground up an office park for 11 different corporate clients that were moving from downtown DC to Reston.

      That work began in 1971. It was a soup to nuts job, acquiring raw ground, conceptualizing the layout of the park then developing and financing its common improvements on the ground then the implementing the financing and construction of the park one headquarters building at a time.

      This was a young real estate lawyers dream, but what I remember the most were the drafting and negotiation of the covenants that bound the project and its owners together. For here 11 owners of equal interest and concern had to come together as a business and professional community on which they all were each investing substantial money for their own headquarters building. So the negotiation and drafting of those covenants showed me the power and importance and difficulties of that particular tool and how its ambition to regulate the power sharing and communal relations between corporate neighbors and their employees into the future was strewn with opportunity, misunderstanding, unintended consequence and obsolescence.

      Rarely do so many buyers of equal power mutually draft and agree to such covenants before their project is built or land is acquired. The more typical case is the developer drafts the covenants before the buyers join the party. Here of course the power is not equal, and the interests of those many buyers subsequently bound typically converge substantially from the drafter who developed the project, often in its many parts and later iterations. Yet, far too many buyers, typically homeowners smitten to buy a dream home, buy into a community without regard to the covenants controlling their investment and also without any knowledge as to what has, or what can, or what may now be going on between owners and/or developers under those covenants, even years after the projects been up and running. Here the possibilities are often endless to the point that only Shakespeare would sort them out and do them justice. How things can so easily come apart even years afterwards, resulting in endless frictions and fights akin to dysfunction among kin. Wasn’t it Tolstoy who said: “all happy families resemble one another, each unhappy family is unhappy in its own way.”

      Then there is the question of private covenants and public policy. Here again the field is littered with opportunity, misunderstanding, unintended consequence and obsolescence. But the benefits also can be many.

  9. well it’s different because the original contract was voluntary.

    You agree to the HOA authority and you agree that your heirs will be bound by it also..

    but the key question about Houston is – does it have restrictive codes itself that prevent anyone and everyone from building what they want?

    If someone owns 10 acres of land in Houston – are they free to develop it into 40 single family homes if they want?

  10. I sought and rented real estate for a technology company. The number one factor was cost. If you assume that an average employee consumes 250 sq ft of office space (including allocations for conference rooms, kitchen, etc), the difference between $25 / sq ft and $50 / sq ft = $6,250 annually. That’s about the difference I was seeing between being in the Reston Town Center and being 3 miles down the road in Nerdistan. For a 100 person operation that’s more than half a million a year – of pure, unadulterated pre-tax profit. The second consideration was location. And, regardless of what Jim Bacon says, there is no one right answer – even for the hoodie crowd. Some want Chinatown (in DC), some want the RB corridor in Arlington, some want Reston. Meanwhile, the 30-somethings (who actually do all the design, all the sales, etc) agree on one thing – NOT DC. They have kids or they have a spouse who wants to have kids soon.

    The answer?

    Somewhere where you can walk to the subway and walk to lunch, dinner, gym, etc. The hoodies can live downtown and commute out on the subway. No traffic to keep them from their Macs. The 30-somethings can drive to the office and park. They can also take the Metro downtown if necessary.

    Guess what that means?

    The Silver Line and RTD are exactly the right answers!

  11. Reed makes a very important point on the relationship of covenants to public policy. Many people look to a locality to change what they don’t like about their covenants, only to be told there is nothing the locality can do.
    Lately, that answer is not good enough (see any landfill case in Henrico or Chesterfield) I could ramble on forever about the role of covenants and public policy…but I’ll spare you all.

    My point to the story…There are some suburbs that are starting to recognize this problem, and their fix for it? Create a “city” within the county.

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