Construction booming in Tysons despite 17.5% office vacancy rate.
Three articles today may help us divine the future of residential and commercial development in Virginia:
Rebound of the exurbs? For many years, I was committed to the proposition that metropolitan development had reached a tipping point in which the forces favorable to urban re-development were stronger than the forces driving suburban sprawl. The exurbs — low-density tract development on the metropolitan fringe — seemed to be in full retreat as market preferences shifted toward walkable, mixed-use development in central cities and inner suburbs.
There still seems to be an unfulfilled demand for walkable urbanism, but I may have been to quick to write off the exurbs. Jonathan Fox, a principle at the Fox Group, argues in the Washington Post that median home prices in Washington’s inner suburbs flat-lined in 2016 while prices in outlying communities such as Marshall, Warrenton, Lorton and Middleburg have experienced double-digit increases in median home prices and strong gains in cost per square foot.
“As home prices and the cost of living continue to increase in Washington,” writes Fox by way of explanation, “there will be more demand for affordable housing which is often found in farther out regions of the counties.
My question for Fox: Is he focusing on real estate prices in the oases of small-town walkability in outlying communities — Warrenton, for instance, is highly walkable — or does his analysis include the surrounding tract development? If so, are walkable communities out-performing tract communities?
Tysons redevelopment is booming. But… The Tysons area may have a 17.5% office-vacancy rate, but re-development is going gangbusters. Traditional supply-and-demand logic does not seem to apply, says Gerald Gordon, president of the Fairfax County Economic Development Authority, as reported by Inside Nova.
Tysons tenants are engaged in a “flight to quality,” moving from older buildings to new ones with the latest amenities. “The new space is more expensive, but it sits right on top of a Metro station,” Gordon said.
But redevelopment away from the Metro stops may prove a challenge. “We’re going to have to work hard just to stay in place,” Gordon said. “When I first got here, office users were taking an average of 265 square feet per employee. Today, it’s anywhere between 80 and 140. So you have to bring in twice as many jobs to fill the same space.”
Moral: As employers figure out how to use less office space — more collaborative space, more mobile office technology, more “hoteling” — high commercial vacancy rates will continue to be an issue. There will be a lot of obsolete office space on the market.
Bifurcation of retail. Everyone knows that Amazon.com and other online retailers are gutting the traditional retail industry. But that doesn’t mean everything will be purchased online. People still like to shop as part of an entertainment or social experience. My wife’s cousin calls it “retail therapy.” A related phenomenon is what I call “girlfriend shopping” — shopping as a bonding experience. While Amazon.com makes shopping ridiculously easy, it’s not what you’d call an enjoyable experience.
Tom Goodwin, head of innovation for Zenith Media, argues in Bloomberg that physical retailers can create a competitive advantage that trumps price and convenience.
“Shopping is the world of adding experiences,” he writes. “It’s the interactive perfume lab in Selfridge’s, the selfie opportunities in Harvey Nichols, the Hardware club experiences in Harrod’s or the extravagant laboratories of Le Labo. Coffee shops seem to have learned this, it’s the unnecessarily long wait, the drama of the brew, the theatre of the leather bound menu in Intelligensia coffee.”
Market forces will push retailers in one of two directions — more frictionless, low-cost shopping online or more experience-rich shopping in the physical world.
Bacon’s bottom line: I don’t get the sense that local governments in Virginia have absorbed two important lessons. First, technology has rendered obsolete the space-intensive offices of yesteryear, and the demand for commercial space is shrinking. Old office parks will rapidly lose their market appeal. Counties will see their tax bases shrivel. Second, retail activity continues to move moving online, which is rendering shopping centers obsolete and redundant. Again, counties will see their tax bases shrivel.
The future belongs to those who can adapt. Office activity will shift to centers of walkable urbanism; access to mass transit is a major bonus (although, in an Uberized world, I’m not persuaded it is absolutely essential). Retail activity likely will do the same. When people want to enjoy shopping as an experience, they want to enjoy the experience outside the store as well. Strip shopping centers and aging malls don’t have much to offer.
Nobody knows where all this heading. (That includes your humble futurist and prognosticator). Things are changing too fast for planners and politicians to figure it out. How will self-driving cars alter the equation? How will Transportation-as-a-Service change the way think about where they live, work and play? There’s lots of speculation, but nobody knows. We won’t know until the market figures it out. The communities that prosper will be those that are the most flexible, adaptable and willing to experiment with new forms of transportation and land use.
Virginia, Maryland and Washington, D.C., will miss a February deadline for setting up an independent Metro safety oversight group. A realistic time frame for the panel’s launch is another six months, according to Virginia’s Transportation Secretary Aubrey Layne.
Somebody Must Think We’re Stupid
This is usually the figure at the heart of the occasional stories about the amount spent by an individual company, or the gross amount spent on lobbying by all who file these forms. But in practice almost nobody reports in full what they are paid, and they of course do things other than lobbying with their time. So they pro-rate their fee and salary and report only a portion of it.
Who draws the line? Who picks the formula for pro-rating the time? The lobbyist or the principal do so for themselves and are never asked to report their rationale. That’s why comparisons are impossible – some report 5 percent and some 100. Partly there is the natural reluctance everybody has to reveal their income, but there is also a reluctance to stand out as a big spender on charts like those produced by VPAP or in a news story.
A Peek Inside the Process
Years ago, one of the best lobbyists I ever worked with, a fine lawyer, instructed me that only the time I spent talking or writing to a legislative or executive branch official about a specific bill or vote was lobbying. The time I spent researching the issue, drafting legislation or talking points, driving to the meeting, sitting in the anteroom – none of those hours, the bulk of the time, constituted lobbying. The ten or fifteen minutes in the room, that was the only actual lobbying.
This all flows back to the very narrow definition of lobbying in Virginia law, which does not get into indirect lobbying or grassroots lobbying or lobbying preparation, all things that come up when companies are deciding what is and isn’t lobbying for federal tax compliance purposes. This situation is too ridiculous to be accident or oversight, and extremely convenient for both the lobbyists and the lobbied.
Compensation is not that relevant. What matters far more, the real glaring gap in the reports, are the details about what specific subject matters, bills, budget amendments, gubernatorial appointments or procurement decisions are being influenced. The shameful gaps in the reports include loopholes that allow expensive dinners, gifts or entertainment to be given with no recipients named, or money to shuffle between various entities under the guise of some unregistered coalition.
Also, the full extent of grassroots or indirect efforts needs to be revealed. More and more issues now spark television, direct mail, phone bank and other campaign style communications efforts, and every dime spent on those should be just as transparent as if they were being spent on a candidate.
One area where compensation should be reported in full is when the client is the government. Beyond that, we need to focus on those other more important failings in the current non-disclosure disclosure regime, although this contribution by VPAP is useful in demonstrating that somebody out there thinks we’re stupid.
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Posted in Commentary, General Assembly, Open Government, Transparency
Tagged Stephen D. Haner