Beyond COVID-19: New Opportunities in Land Use

Vacant storefronts — a challenge and an opportunity

by James A. Bacon

The stay-at-home orders prompted by the COVID-19 epidemic accelerated a trend that was already reshaping the American economy: the shift of commerce from bricks-and-mortar retail to online delivery. Traditional retailers are retrenching; malls and shopping centers are hollowing out. If current trends continue, we’ll be seeing a lot more UPS and Amazon trucks cruising through our neighborhoods… and a lot of vacant retail space.

This seemingly irreversible trend will create dramatic challenges and opportunities for Virginia communities. Local governments rely upon the property taxes generated by malls and shopping centers. As those properties empty out and lose value, local governments will see an important revenue source erode. That is a problem, to be sure. But the decline of bricks-and-mortar also presents Virginia localities with once-in-a-generation opportunities. The potential exists to address two of Virginia’s chronic issues: affordable housing and traffic gridlock.

The scarcity of affordable housing in Virginia, especially in high-growth counties, has become increasingly acute in recent years. Construction of new dwelling units has not kept pace with household formation, and housing shortages have pushed up rents and sales prices faster than incomes have risen. Home builders would be more than happy to build more houses, if only they could find the land and gain zoning approvals from local governments to do so. Meanwhile, congestion is reasserting itself on Virginia’s Interstates, highways and arterials. There is not enough money to build our way out of gridlock.

While no solution is perfect, the least imperfect is to recycle old retail districts into “walkable urbanism” resembling pedestrian-friendly places such as Arlington, Reston, or downtown Richmond and Norfolk.

Building mixed-use projects will create new housing stock, ameliorating the scarcity. And by shrinking the physical distance between destinations, mixed-use development can take pressure off local roads and highways. With walkable urbanism more people can walk to their destinations; even if they must get in their cars, they driver shorter distances. By reducing the number of vehicle miles driven, transportation-efficient land use may not eliminate congestion, but it can ease the strain .

Thanks to the e-commerce revolution, land once dedicated to low-density retail buildings and parking lots is becoming available. Even better, many properties are located on high-traffic transportation corridors that lend themselves to mass transit. Recycling shopping centers into walkable, mixed-use projects would increase the housing stock and ease the strain on local transportation networks.

The immediate problem is that local zoning codes, which segregate residential, commercial, and industrial land uses, typically restrict the use of old shopping centers. To redevelop property at higher densities with mixed uses, developers must apply for special use permits, which can be expensive, time-consuming and risky. Local governments must rewrite their zoning codes to allow land uses to evolve in concert with market demand.

Undoubtedly, many Virginians will resist what they see as an attempt to impose “smart growth” on their communities. But localities can protect existing single-dwelling neighborhoods by funneling growth into areas already zoned commercial. There should be enough land, if redeveloped at higher densities, to accommodate the next generation of growth with few negative effects. The idea is not to empower planners to remold communities according to some progressive “green” vision. A conservative version of smart growth would free developers from restrictive codes and plans, inspire innovation, and ensure that developers can build projects that match market demand. Such a future would be greener, but only to the extent that people voluntarily embrace it.

For the past two or three decades, there was considerable pent-up demand for walkable urbanism. Thanks to zoning codes, developers couldn’t build enough of it. There is a risk that COVID-19 will re-write the supply-and-demand equation. Many Americans have decided they no longer wish to subject themselves to the infection risks associated with elevators, mass transit, and denser urban living. Realtors have noted a surge in the number of families abandoning center cities. If this trend persists, the walkable-urbanism strategy could unravel. I believe, however, that urban flight is temporary and that the advantages of urban living — mainly proximity to mating markets and job markets — will reassert themselves. Even if I’m wrong, localities lose nothing by allowing developers to recycle old shopping centers if and when the market permits.  

Eventually, the COVID-19 threat will recede, and old problems like affordable housing and traffic congestion will reassert themselves as priorities. Virginians should take full advantage of the opportunity that now exists to literally build a better world.

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25 responses to “Beyond COVID-19: New Opportunities in Land Use

  1. James Wyatt Whitehead V

    Rural King has a sharp business model. This company targets dead shopping centers and leases out the vacant Sears, K Mart, Leggetts spaces. This one anchor store brings the entire complex back to life. It is a one of a kind place too. Everything under the sun is here and at rock bottom prices. You can even buy a live chicken! The one in Front Royal is packed all the time no matter the weather or day of the week.
    https://www.ruralking.com/storelocator/index/index/

  2. I think bricks/mortar retail was already undergoing massive changes even before COVID19.

    It never really made any land-use sense to have 50 different stores all selling the same items – in terms of the amount of land and transportation infrastructure it took to enable it.

    And retail business does not PAY taxes – it collects them! They’re actually stealth taxes we all pay that adds to the other taxes we pay directly!

    We still have to pay – no matter the method if we want public schools, public safety and public roads – just figure out the method.

  3. businesses treat taxes as expenses – no different than what they have to pay for electricity, rent, overhead, etc.

    whatever the collect in taxes just becomes part of the cost of doing businesses – all of which is passed on to the customer.

    Restaurants don’t pay meals taxes – they add that tax onto the price of the meal, collect it, then send it to government.

    Ditto with gas taxes, alcohol, cigarettes, etc, etc..

  4. businesses treat any cost over it’s own cost (and profit) as an expense – from a practical perspective. Some taxes are detailed to the customer, others are not. For instance, taxes are collected by retail gasoline but not shown explicitly. Beyond that , customers also pay a tax that goes into a fuel storage remediation fund… and that’s not shown either.

    The point here is that businesses do not “eat” the tax. They incorporate it into the price of whatever they sell.. sometimes detailed and sometimes not.

  5. This is a wonderful idea. Not because its new, because it is already being done lots of places.

    OK, these successes have their downsides – they go by names like “Smart Growth”, have been done by a bunch of environmental friendlies, aka “greenies”, involving things like planning and zoning and design and intent and govment intervention and initiatives and such. Two examples come to mind, just across the Potomac River – Rockville MD (think Rockville Pike vs Broad Street in Richmond) and Silver Spring, MD, and many other places.

    So really all the GOP needs to do is re-brand this and re-introduce it into VA and I am sure it could work – call it “Libertarian Growth” or “Innovative Growth” or “Conservative Growth” or “Not-Liberal Growth” or “Post-Pandemic Growth” – you will need to work on that, but really, that’s all that’s needed. Take existing white papers and strategies, change the sponsor’s name, tweek it with all the properly sounding libertarian and conservative buzz words, and campaign on it – then go win an election to make it happen.

    It’s possible, I encourage you to do so because it has value and is needed.

    http://smartgrowth.org/building-a-better-maryland/

  6. Mixed use is cool. It’s what makes urban living fun. But my favorite example of mixed use is on State Rte. 122 in Moneta. The 2nd and 3rd floors of these 3 buildings are apartments… downtown Moneta, Va.

    https://www.google.com/maps/@37.1806248,-79.6197949,18z/data=!3m1!1e3?hl=en-us

  7. How feasible these conversions are depends on existing infrastructure. Are there adequate water supplies and sewer and sanitation capacity? If new facilities are required, a project goes from affordable housing to luxury price levels, even if expansion is possible. Some areas in Virginia do not have enough water supply now for 50 years out.

    As long as those factors are recognized and addressed from the beginning, the projects could solve more than one problem.

    • yep. agree. water/sewer are needed for density and not only are the water/sewer lines needed but they have to lead to fresh water and wastewater plants. Somebody has to put the money up for this infrastructure and get the state permits for discharges.

      That’s where local govt planning comes in. You can put water/sewer anywhere a developer wants it, it would not be cost-effective so local govt typically designates where they will approve that kind of development.

      Local govt will also approve self-contained gated communities with their own water/sewer – there are dozens (more?) in Virginia and they typically have a non-govt entity (like Aqua Virginia) that manages and operates the system.

  8. Good ideas. Don’t know much about but I doubt infrastructure will be that big a deal since it is already in place

    • Water supplies may be adequate for a retail complex, but not for residences. Depending on location, some treatment facilities are near capacity too. Figure about a million dollars a mile to run new lines plus other details like pumping stations. Just something to be aware of.

  9. Here is another article discussing and validating this idea. I forgot to mention Reston, in VA. and did not know about Waldorf, MD’s project. The article for some reasons leaves out Rockville and Silver Spring.

    https://www.washingtonpost.com/realestate/city-living-in-the-suburbs-drives-housing-trend/2020/06/24/e7e52b6a-6de3-11ea-aa80-c2470c6b2034_story.html

    • yes. the things that people want where they live and work – can be done in the suburbs also – provided there are jobs there.

      The power of the urban centers is jobs. If you live anywhere around the “ring” – you have access to many jobs – and inversely employers on that belt, have access to that many potential workers.

      Beltways have fundamentally changed the way we develop, work, shop and play – and not uniformly in a good way.

      When I look at most regions – I see city centers surrounded by beltways then ringed with exurbs…

      The govt calls them MSAs and larger are combined MSAs – CSAs.

      They are probably 50 or so of them in the USA.

      now… the water systems are not monolithic by any stretch of the imagination even though the transportation infrastructure is.

      Everyone is looking for the same thing. A “place” where they can live, shop and recreate when they are not at their job.

      I don’t know how many live in a place, where they can work, shop, live and recreate – within walking and/or transit distance.

      I’m sure there are some lucky folks who can but I guess I doubt that this is a realistic goal… or an achievable one for government and developers.

  10. Larry, you’re overlooking the number of people who are telecommuting now, and who may continue to do so. If the communications infrastructure and water and sewer capacity are adequate, and enough business entities buy in to provide the amenities (coffee, gym, restaurants, etc) asnd there are grocery stores that will deliver to the complex, this could work.

  11. Perhaps… the thing about water/sewer is that they have to size it when they initially put it in the ground so capacity cannot easily be expanded later unless they go back and tear out/replace pipes that turned out to be too small.

    An example – when they plan – they look at zoning and land-use and that goes in to determining how big the initial pipes should be. Later, on, they can’t easily change their minds to approve a lot more development if the initial pipes won’t support it.

    It’s actually that way for water plants also. They size them according to how much total development they expect over some time frame. If they decide to open up more land for development than original or more density than original – they may not have enough capacity for it unless they expand the plants – which is a long process that starts with DEQ determining if the receiving stream actually can process more sewage.

    What I’m essentially saying is that the extent and density of development has to be planned ahead of time. Just can’t point to a map and say “we’re going to build a massive mall right here.

  12. Larry, when was the last time you actually looked into sewer infrastructure? Systems are planned for a certain degree of development over a long period of time. Not just what’s in place. For example, HRSD is changing a 6 inch line to an 8 inch line and adding a new pumping station in Mathews from the nursing home to the Courthouse. Doesn’t change the force vacuum main line that runs to Yorktown. There’s enough capacity there for the immediate Courthouse area, but if they wanted to add a new area like Gwynn’s Island, they could. It would require new lines and new pumping stations all the way to Yorktown because it would exceed the 100,000 gal/day capacity of the current line. The cost is in the neighborhood of a million dollars a mile. That’s for HRSD, for here.

    Every area is different, and without a specific location, you have no way of knowing what the local capacity is. Whether there’s enough of a water supply depends on where a site is in the Commonwealth and whether alternative sources are available. Some areas have adequate water. Some don’t.

  13. Carol – we agree.. not sure what you’re thinking.

    I live in an exurban area that has grown tremendously and water/sewer has been and continues to be the issue in terms of where development occurs. And yes, I pay attention to it. We designate, in general, where there is availability – and call it the Primary Settlement Area. Stafford to the north calls theirs Urban Services District.

    The point is, it just can’t occur anywhere – where they put the water/sewer is where it can occur and that comes from planning and zoning.

    Average citizens and would-be developers don’t know where or the capacity – they have to talk with the water/sewer/planning people to know what is available and where.

    In our area, water-supply is not such an issue unless there is a drought. Wastewater is and right now they need a 60 million dollar plant addition… to stay in compliance with discharges. That’s going to lead to increases in hook-up and monthly fees.

    water/sewer up our way is done separate from the rest of the county budget. Their entire system – capital, maintenance and operations is funded solely from user fees – so trying to borrow 60 million+ is an interesting exercise that involves anticipated hook-up and monthly fees over some number of years.

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