Tag Archives: smart growth

Malleable

This story was originally published in Henrico Monthly.

regency1Willow Lawn returned to its roots. Cloverleaf was torn down. So what will become of Regency Square?

By James A. Bacon

As a teenager growing up in rural Hanover County, Andrew Moore remembers Regency Square Mall in Henrico as the place to go. He played the trumpet in Christmas concerts there with his junior high school band. Later, equipped with a newly minted driver’s license and the family car, he hung out with friends, circling the two-level shopping promenade and sampling the edgy and exotic wares of places like Spencer’s Gifts. “In a very real sense, Regency was the center of a regional community,” Moore recalls. “For a teenager, it was the cool place to go on a Friday night.”

Today Moore lives in the Westham neighborhood in Henrico, a mere five-minute drive from the mall. He’s been to Sears a couple of times to buy some Craftsman tools; otherwise he doesn’t recall visiting Regency Square in the last seven or eight years. “I have no reason to go there. There’s nothing there that I need,” he says. With all the congestion on Parham Road, he adds: “Frankly, it’s a pain in the butt to get there.”

And that’s a shame, he says. If the southwest corner of the county has a natural civic center, it would be Regency Square. But the mall has been supplanted over the past decade as a retail destination by newer, open-air shopping centers such as Stony Point Fashion Park south of the James River and the super-successful Short Pump Town Center off Interstate 64. Retail sales at Regency Square reportedly have declined by two-thirds.

By 2012 the mall was faring so poorly and bogged down with so much debt that its owner, Taubman Centers Inc., turned it over to its lenders. The lender group has kept the mall open, but the complex continued bleeding tenants. Now the banks are attempting to sell the property at a price said to be at a discount to its $23.5 million assessed value. In late January, the Richmond Times-Dispatch reported that two local real estate companies, Chesterfield-based Rebkee Co. and Thalhimer Realty Partners Inc., were in negotiations to buy the mall by the end of January. Further details weren’t available by Henrico Monthly’s presstime.

So what comes next? Will a new buyer continue to operate the mall on the cheap? Will another developer repurpose the mall, perhaps bringing in a medical facility or an educational center, to generate traffic and anchor the stores? Does the 48-acre property, if redeveloped, have a future as a walkable “town center” that sparks the transformation of the neighborhoods and shopping centers around it?

moore

Andrew Moore, president of the Partnership for Smarter Growth, says Regency Square has struggled to remain relevant as a mall. He envisions the property being redeveloped into a walkable shopping district such as Carytown.

Andrew Moore, president of the Partnership for Smarter Growth, says Regency Square has struggled to remain relevant as a mall. He envisions the property being redeveloped into a walkable shopping district such as Carytown.

As an architect at Glave & Holmes Architecture and president of the Partnership for Smarter Growth, Moore has high hopes for the mall and the surrounding commercial area. Despite the relative walkability of Westham – his children can walk to the local elementary school – he thinks Henrico could be more livable. He is looking for somewhere pleasant to hang out, walk around and spend time with family and friends, with connections that don’t depend solely on the automobile. There are places where he can do that but they’re mostly in Richmond, like Carytown. Henrico desperately needs something comparable, he says.

“It has lots of potential,” Moore says. “But not as a mall.”

In 1977, not long after it opened, Regency Square was a destination – a center of fashion, especially at Christmas, when visitors would come from miles around to see Santa.

In 1977, not long after it opened, Regency Square was a destination – a center of fashion, especially at Christmas, when visitors would come from miles around to see Santa.

Opened in 1975, Regency Square was designed as a classic enclosed suburban mall surrounded by vast parking lots. The business model was predicated on people driving to the shopping center in their cars, parking and spending time inside protected from the elements. Enclosed malls helped define post-World War II American suburbia and the auto-centric lifestyle. They were the closest thing to public gathering places that many suburban communities offered.

Over time, tastes evolved. As Americans became more aware of environmental issues, many became disenchanted with the idea of driving to every destination in their automobiles. Concerned about the lack of exercise in their sedentary lifestyles, they placed a premium on walking and biking. As a practical matter, the suburbs were impossible to redesign as walkable communities. Zoning codes separated land uses – houses here, offices there, retail over there – by distances too vast to walk. Most streets and roads were inhospitable to pedestrians in any case. In the early 2000s, developers emulated walkable neighborhoods by building open-air malls such Short Pump and Stony Point. They are oases of walkability, but they didn’t create organic communities. They are disconnected from surrounding neighborhoods; people still have to drive to get there. The only things to do are shop and eat. Continue reading

A Radical Notion: Paying for Onstreet Parking in Cville

Image credit: Charlottesville Tomorrow

Image credit: Charlottesville Tomorrow

Irony time: Virginia soon may get a test in market-based parking in… the People’s Republic of Charlottesville. The city would start charging for 800 on-street parking spaces downtown, now free, and install a system of smart traffic meters under a proposal advanced by Mark Brown, new owner of the Charlottesville Parking Center (CPC).

The city reverted to a system of free parking two years ago, creating a severe misallocation of parking spaces. Downtown employees grab the free on-street spots, making it exceedingly difficult for visitors and shoppers to find convenient parking spots. The idea is to encourage downtown workers either to park in long-term structured parking, which would free on-street spaces, or to ride bicycles or use mass transit.

“The promotion of free parking on the street is at odds with the promotion of walking, cycling and mass transit,” said Mark Brown, the owner of Yellow Cab and the Main Street Arena who became the sole shareholder of the CPC last summer, reports Sean Tubbs for Charlottesville Tomorrow.

The proposal, very conceptual in nature and subject to revision, is to install about 60 kiosks where parkers would enter their license plate information to pay. There would be two zones, a core zone with more restrictive parking lengths and higher rates, and a peripheral zone, where people could park longer and pay less. On-street parking rates would encourage long-term parkers to use structured parking. A smartphone app would provide real-time information on parking availability and rates. A portion of the parking revenue would be dedicated to transportation alternatives such as a free trolley, park-and-ride-options and cheap monthly bus passes. The remainder would go to a Business Improvement District.

Bacon’s bottom line: I’m sure some of Brown’s ideas will prove controversial. Downtown employees won’t want to give up their free, convenient parking. But there is no compelling public policy reason for subsidizing their hogging of downtown’s supply of on-street parking. Indeed, quite the contrary. Parking spaces have a cost; they are not “free” to the city. Parking is a scarce good that people are willing to pay for. Charging the right price for parking is a critical element of any downtown development strategy. Although the details may need to be modified, Brown has the right idea.

With all the tools available today, every large and midsized Virginia city should be asking the same questions as Charlottesville.

— JAB

Potomac Yard Metro: a Financing Model for Mass Transit

Image credit: North Potomac Yard Small Area Plan

Image credit: North Potomac Yard Small Area Plan. (Click for larger image)

by James A. Bacon

The state will help finance a new Metro station in Alexandria through a $50 million loan from the Virginia Transportation Infrastructure Bank approved by the Commonwealth Transportation Board earlier this week. The loan is a key piece of financing for the station, which is expected to cost between $209 million and $268  million to build. In turn, the Metro station is a key piece of infrastructure to advance development of between 9.2 million and 13.1 million square feet of residential, office, retail and hotel space in the Potomac Yard.

While the Metro project doesn’t pass the Bacon litmus test for 100% user-pays financing, it does better than most  mass transit projects Virginia has underwritten, and it would open up 300 acres for high-density, high-value development only five miles from the core of Washington, D.C.

The Potomac Yard, to be built on an old CSX railroad marshaling yard south of Ronald Reagan National Airport, could be Northern Virginia’s most important urban infill project of the early 21st century. Plans call for the creation of between 4,300 and 7,100 residential units, 3.2 million and 4.2 million square feet of office space, nearly 800,000 square feet of retail and 740 hotel rooms. We’re not talking about development that might happen… some day. There is a strong, demonstrated demand for the kind of walkable urbanism planned at Potomac Yard.

From what I can tell from perusing public documents, the City of Alexandria is approaching this project the right way. The land use plan calls for creating a balanced mix of uses in a walkable environment with the goal of maximizing transportation infrastructure by distributing peak traffic over longer periods, maximizing internal trips and maximizing transit use. The plan also would put most parking underground, reducing the need for parking spaces by creating opportunities for shared parking, such as office buildings using parking during the day and residences during the night. Highest density development will be located around the Metro station.

I will say this: $200 million+ strikes me as an extraordinary amount of money to build a single Metro station. There are complicated trade-offs to be made with the station siting. A final decision and cost have yet to be determined. The problem is that the station must work within narrow confines around the existing rail line. Depending upon the design alternative selected, that entails building pedestrian bridges, retaining walls and/or new Metrorail bridges. The complexity of the construction staging is rated moderate to high, and considerable construction would take place along live tracks.

Complexity comes with the territory in in-fill projects. The key question is whether the project creates sufficient value to justify the higher cost. And there’s really only one way to tell: Are developers willing to absorb the cost of constructing the Metro station, or would doing so price their office, residential and retail space out of the market?

We’ll never know the answer because Alexandria isn’t loading the full cost of the Metro station construction upon the developers who stand to benefit through higher rents and leases on their properties. According to the Potomac Yard Metrorail Station Environmental Impact Statement, the project cost including interest will total $496.6 million. In 2010, the original idea was for developers to contribute $74 million directly, another $194 million through revenues generated through a special tax district, and the rest through regular taxes paid, which Alexandria would use to support municipal debt. But financing plans have evolved since then. Now the City of Alexandria is seeking $67 million from the Northern Virginia Transportation Authority. And the loan from the Virginia Transportation Infrastructure Bank (VTIB) lock in an interest rate of 2.17 percent over 30 years, reducing much of the interest expense.

In a presentation to the CTB, Assistant Transportation Secretary Nick Donohue described the VTIB loan’s complex debt structure. Repayment is secured by a combination of revenue from the special tax district and moral obligation of the City of Alexandria. Not all details have been finalized. “Upon CTB approval,” states the presentation, “additional specific loan terms will be determined as project, schedule and related documents are finalized.”

Bacon’s bottom line: There are still big unknowns to this project. We don’t know how much the Metro Station will cost. A final design hasn’t been selected, and almost every mass transit project known to man seems to undergo mission creep and cost escalation. Further, we don’t know the final terms of the VTIB loan. With those important caveats, it appears that this project comes closer to to paying its own way than any Virginia mass transit project I can recall.

There are no federal dollars. There likely will be state dollars, but they will come from the Northern Virginia Transportation Authority, which means that down-state taxpayers will not be subsidizing the project. The commitment of VTIB funds represents a small interest rate subsidy and there is a small risk that the money may not be paid, so in theory state taxpayers could be on the hook for some portion if things turn sour.

But this project differs from every other Virginia mass transit project in that developers will contribute a $74 million (2010 estimate) through direct contributions, $194 million (2010 estimate) through special tax district contributions, and millions of dollars more through payment of regular taxes used to service City of Alexandria municipal bonds. That’s a far greater contribution than will come, say, from developers/property owners of the Silver line or property owners along the Norfolk light rail line.

This is a preliminary analysis based upon a cursory examination of public documents. I invite closer scrutiny by others. But my impression is that, when it comes to paying for mass transit, this is probably the best deal that Virginia taxpayers have ever seen. The Alexandria Metro station should serve as a mass transit-financing model for the rest of the state.

Henrico Still Building Schlock

west_broad_marketplace

Artist’s rendering of West Broad Marketplace

by James A. Bacon

The developer of the West Broad Marketplace, which will bring a Wegmans grocery store and outdoor gear retailer Cabela’s to western Henrico County, promises Richmonders a shopping treat that “I don’t think you’ve experienced before.” That may be true. Unfortunately, Jack Waghorn, president of Vienna-based NVRetail, will replicate the experience of driving through traffic-clogged thoroughfares and parking in vast, open-air parking lots that Richmonders will find all too familiar.

The Henrico Wegman’s is scheduled to open in mid-2016, with a counterpart in Chesterfield County opening around the same time. Henrico County officials were on hand for a ground-breaking yesterday. No doubt county leaders are pleased that Henrico citizens will have access to the popular, high-end grocery store, not to mention the tax revenues generated by the store and the 550 to 600 full- and part-time jobs created.

As can be seen in the artist’s rendering above, however, West Broad Marketplace will perpetuate the dysfunctional low-density land use patterns of post World War II sprawl that has already made the Short Pump area a congested hell hole. I avoid going there if at all possible, and others do, too, although sometimes they have no choice because that’s where the region’s upscale stores are concentrated. Driving in and around Short Pump is always a dismal experience. When I visited one time last month to do some Christmas shopping, traffic was so gridlocked that cars were backed up onto I-64, causing a slowdown on the Interstate. That may sound banal to Northern Virginians but it’s unprecedented for the Richmond region.

The traffic congestion in Short Pump is the foreseeable consequence of zoning for mile after mile of single-use shopping-center development around the intersection of Interstates 64 and 295. Planners allowed for no other connectivity: shopping centers don’t connect with each other, much less with nearby residential neighborhoods. There are no side streets to divert traffic. All cars pile onto West Broad Street. The area is utterly unwalkable — visitors have no choice but to drive their cars from destination to destination, adding to the congestion — and there is no mass transit.

The county will never have enough money to build its way out of this mess. Indeed, the problem is so bad that congestion is radiating out from the Short Pump area to places, like the Innsbrook commercial park, where traffic conditions once were tolerable. At some point, I predict, conditions will become so atrocious that — Wegmans or no Wegmans — affluent households, corporate offices and high-end retailers will seek somewhere else in the Richmond region to locate. When the 30-year amortization of all those commercial buildings expires, retailers will pack up and follow. Once the newness wears off, there’s nothing to keep anyone there.

No Wegmans for Tysons… Too Bad for Wegmans

wegmans_bakeryCan Tysons have its cake and eat it, too? Perhaps not, at least if the cake is baked in a Wegmans Food Market bakery. Discussions to bring the Rochester, N.Y.-based grocery chain to a transit-oriented development around the McLean Metro station have ended in frustration, reports the Washington Post.

CityLine Partners, developer of Scotts Run Station South, won rezoning approval last year to transform a typical suburban office park into 6.7 million square feet of mixed-use commercial and housing towers with ground-floor retail. The development plans includes contributing to a Tysons-wide grid street network, creating more walkable streets and reducing the parking footprint.

It would be a real coup to bring a Wegmans to the development. The upscale store appeals to exactly the kind of higher-income demographic that CityLine wants to attract to its project. But Wegmans’ business model meshes best with suburban development.  The company normally builds stores of more than 100,000 square feet surrounded by large surface parking lots. In Tysons, Wegmans was considering a new “urban” format of 80,000 square feet, similar to one it opened in Boston this spring, the Post reports. The idea was to place the store on the ground floor of a building with apartments upstairs.

Too bad Wegmans couldn’t make it happen. Some other grocery chain will. A tremendous share of future development in the United States will take place in walkable, denser, mixed-use communities like Scotts Run. Vast surface parking lots do not figure into the plan — the land is simply too valuable to squander on such a marginal use. In contrast to Wegmans, Wal-Mart, once the epitome of land-intensive suburban development and the object of scorn among urbanists across the country, has re-tooled its stores to fit in smaller urban footprints. In fact, a new complex developing around the Tysons West station will be anchored by a Wal-Mart.

For decades, retailers were a driving force behind sprawl. They built their business models around big stores, big parking lots and easy automobile access. They provided amenities in the suburbs that few center cities could match. But the market dynamics have shifted. People are moving to walkable urbanism whether Wal-Mart and Wegmans like it or not. Retailers need to invent new formats to serve the new markets. Inevitably, someone will. And when enough retailers make the switch, they will make walkable urbanism all the more alluring and its rise all the more inevitable.

— JAB

The Market Speaks, and It Likes Reston Town Center

reston_town_center
Reston Town Center got a half-century head start in creating the kind of community where enterprises want to do business in the 21st-century knowledge economy. The original developers were planning for and building walkable, mixed-use development before walkable, mixed-use development was cool. And today property owners are reaping the benefits.

According to Cushman/Wakefield, offices in Reston Town Center are near full occupancy and command among the highest rents in Northern Virginia. The business district’s big competitive advantage? A strong amenity base. Summarizes Virginia Business:

The report notes that in addition to 2.8 million square feet of office space, Reston Town Center is home to 50 retail shops, 30 restaurants and three residential high-rise projects. Even with a suburban location 20 miles outside of Washington, D.C., and a lack of Metro accessibility until at least 2018, the center’s density, mixed-uses and walkability give the center an urban feel that attracts tenants and residents.

Reston achieves high occupancy despite the fact that tenants pay a 30% rent premium to be there. The situation in Reston stands in marked contrast to the other major business centers, Tysons and the Ballston-Rosslyn corridor. Spurred by the arrival of the Metro Silver Line, Tysons is desperately trying to reinvent itself from a case study in suburban sprawl into a paragon of Transit Oriented Development. But the transition to a coherent, walkable place will take place over years, if not decades. Property owners in Arlington’s Ballston-Rosslyn corridor have Reston-style amenities and have been demanding Reston-style rents but have been afflicted by the departure of large government tenants.

Bacon’s bottom line: Could the marketplace be speaking any more clearly? People are demanding walkable urbanism. It doesn’t have to be located in the core of the metropolitan area. It doesn’t even have to have Metro service. People like compact, walkable, mixed-use development. Developers who deliver that product will make money. Localities that foster its development will see their tax base grow.

— JAB

Which Calls for More Regulation, Sprawl or Smart Growth?

How do you get more development like this -- with more regulation or less?

How do you get more development like this — with more regulation or less?

by James A. Bacon

One of the more potent criticisms of the Smart Growth movement is that smart growthers implement policies that restrict development, create housing shortages and make housing unaffordable for the poor and working class. The critics present ample evidence that metro regions with the tightest restrictions on development and re-development have higher housing prices overall than regions with fewer restrictions.

But there is more than one way to achieve Smart Growth, at least in theory. One way is is libertarian in inspiration: rolling back the suburban-inspired zoning codes that segregate land uses, cap density restrictions and impose minimum parking requirements on property owners. Undoing the massive government intrusion in local land use would go a long way to reversing the so-called “suburban sprawl” that is the antithesis of Smart Growth without imposing restrictions on new development. A different approach to Smart Growth is more activist: encouraging mixed use development and re-development, seeking more density and curtailing parking in order to push people out of cars.

Suburban zoning codes and regulations are almost universal across America in places developed since World War II, and even in some traditional urban cities. To what extent have activist city governments offset suburban mandates with Smart Growth and environmental mandates? Michael Lewyn and Kristoffer Jackson set to find out. You can read their conclusions in “How Often Do Cities Mandate Smart Growth or Green Building?” in a paper published by the Mercatus Center.

Lewyn and Jackson examined the zoning regulations of 24 medium-sized cities across the United States with a focus on parking, density and “green building.”

Parking. They found that Smart Growth regulations are not nearly as ubiquitous as sprawl-inducing regulations. Fifteen of the 24 cities had restricted parking supply, but only three had restricted the supply citywide for all land uses. The others limited their restrictions to certain parts of the city or to particular land uses.

Density. While restrictions on maximum density are almost universal across the United States, mandates for minimum density are rare, and when they exist, they are largely irrelevant. For example, San Jose, Calif., imposes a minimum density of one house per acre. But the demand for housing is strong and prices are so high that no one is asking to build at lower densities. Indeed, most cities continue to limit density and mixed-use development — the antithesis of the Smart Growth vision.

Green building. Cities have been willing to experiment with “green building” regulations designed to increase energy efficiency. Only four of the 24 cities surveyed compel developers to meet green building standards. Six others give builders incentives to adopt green building standards, while another eight impose the requirements only upon city-owned buildings.

“Government regulation designed to force smarter, more environmentally friendly growth may face a difficult tradeoff,” the authors write. “If regulations are only slightly more restrictive than what an unregulated market might produce, they may not do very much good. But if regulations are significantly more restrictive, they may encourage development to shift to less environmentally sensitive municipalities.”

Writing in the Market Urbanism blog, Emily Washington provides a useful gloss on the Lewyn-Jackson paper.

Lewyn and Jackson’s study shows that rather than embracing the deregulatory tenets of Smart Growth, regulators in some cities have layered Smart Growth rules on top of their traditional zoning rules, creating a complicated web of regulations. … This paper demonstrates that today Smart Growth policies are unusual relative to traditional zoning rules that restrict density. However, Smart Growth is in some cases complicating the policy landscape rather than providing more freedom for developers to respond to consumer demand.

Bacon’s bottom line: The only thing I would add to Lewyn, Jackson and Washington is that it would be useful to study transportation policy. The Smart Growth movement is also enamored with walkability, bicycles, mass transit and complete streets. The pursuit of these policies is not seen as much in city zoning codes as in their capital investment programs. This is the area, it seems to me, where the Smart Growth movement has made its greatest mark.

Loudoun’s Broken Development Model

If housing stock like this Loudoun County beauty can't cover its costs in infrastructure and services,  the local governance model is badly broken.

If housing stock like this Loudoun County beauty can’t cover its costs in infrastructure and services, the local governance model is badly broken.

by James A. Bacon

Office workers need less space than they once did. Over the years businesses’ space needs per office employee have shrunk from approximately 250 square feet to less than 190 square feet, says Ben Keddie, vice president of Coldwell Banker Commercial Elite, as quoted in the Fredericksburg Free Lance-Star. Office space is expensive, and businesses have learned how to function with less of it. With the rise of the mobile workforce, open work spaces and office hoteling, it is easier than ever to conserve space and rein in lease and rental costs.

That trend has dramatic, if unappreciated, consequences for local governments’ real estate tax base and the management of growth and development. If businesses need less office space per employee, they need less office space overall. Which means the cost of office space drops. Which means developers build fewer new office buildings. Which means local governments are finding it harder and harder to grow their tax base.

Loudoun County in Northern Virginia, it appears, is facing that very problem. “A softening commercial office market has made it difficult for developers to make money on their commercial land, because there are fewer companies interested in large parcels,” reports the Loudoun Times. Indeed, it might be said that outlying counties in the Washington metropolitan region are facing a trifecta of troubles regarding commercial real estate: (1) business enterprises are shrinking their office footprints everywhere; (2) sequestration-related budget cuts have dampened demand even more in the Washington region; and (3) when Washington-area businesses do seek new digs, they show strong preferences for walkable urbanism, a higher-density, mixed use pattern of development that accommodates walking, biking and mass transit. Walkable urbanism is found mainly in the region’s urban core and along Metro lines, not in low-density burbs like Loudoun.

Not surprisingly, Loudoun’s supervisors appear to be adrift in dealing with these trends. According to the Loudoun Times, the Board of Supervisors has been striking down applications by developers to rezone excess commercial land to residential on the grounds that residential incurs high costs for roads, schools and other infrastructure.

Loudoun County estimates that for every $1 spent on housing, the county pays $1.62. Developers dispute the latter number, suggesting that it is closer to $1.20. Either way, says Supervisor Shawn Williams, R-Broad Run, new residential development has a negative impact on the county’s operational budget.

Think about it: There is something severely wrong with a system that incentivizes local governments to limit residential development. If Loudoun County, which has the highest per capita income of any locality in the entire country and presumably has a building stock to match, can’t justify new residential development, then something is severely out of whack! It is precisely this attitude, and the resulting restrictions placed on the building of new residences, that creates housing scarcities and makes housing more expensive up and down the income scale.

In the old old tax model, a 60/40 balance between residential and commercial real estate property tax revenue was considered healthy. If you could get more commercial development, then great. If not, you had a problem. Well, almost every locality in the United States has, or will have, a problem as offices continue to downsize and retailing shifts from malls and shopping centers to online commerce. Local government generally, not just Loudoun County, will face a tax crisis. And if county boards and city councils all try to address it the same way as Loudoun — by restricting new housing construction — they will compound the tax crisis with a housing crisis.

What, then, is the answer? Local governments need to advance the emerging discipline of fiscal analytics. The core premise of fiscal analytics is that different human settlement patterns have different cost and revenue profiles. Some patterns generate more tax revenue per acre than other patterns. Some patterns have lower embedded costs for transportation, utilities and public services than others. Some human settlement patterns provide a much better balance between revenue and cost than others.

As a general rule, walkable urbanism (mixed use, medium density, complete streets, access to mass transit) comes closer to fiscal balance (revenues matching expenditures) than the scattered, low-density, auto-centric pattern commonly referred to as suburban sprawl. Continue reading

Burbs Beware: Office Jobs Moving Back to D.C.

dc_office_spaceNot only are Millennials migrating to the Washington metropolitan region’s urban core, it seems that businesses are, too, in a reversal of the decades-long trend of businesses moving out of the central city to outlying counties.

Vacancy rates have risen in Washington, D.C., due to the contraction of legal services and government contracting tied to federal government spending. But according to commercial real estate firm JLL, private-sector tenants from Maryland and Washington accounted for 300,000 square feet of new leasing activity in the District. Reports Virginia Business magazine:

Doug Mueller, a senior vice president at JLL, noted that the migration is heavily populated by associations, technology companies and professional services firms. “The quality and location of office space with easy access to mass transit, abundant amenities and housing options also has a visible and tangible impact on attracting and retaining top talent,” he said in a statement.

According to JLL’s Office Insight report for the third quarter, since the start of 2014, a total of 21,200 private-sector office jobs have been added to the metro D.C. economy.

In an office market with tens of millions of square feet of space, 300,000 square feet is a rounding error. What’s significant is not the volume of space being occupied — although 21,200 office jobs is nothing to sneeze at — but the trend: jobs migrating back to the urban core. For decades, Virginia enjoyed a huge competitive advantage over the District with its dysfunctional government, poverty, crime and decaying neighborhoods. Now, despite bad schools, high taxes and expensive real estate, D.C. has something that educated Millennials and the businesses that employ them are looking for — walkable urbanism.

Next question: Is this trend unique in Virginia to the Washington metropolitan region or is it occurring in Hampton Roads, Richmond and the smaller metros as well?

— JAB

Building Connectivity in Suburbia

LinkedIn office building in Sunnyvale, Calif. --insulated from the street by a parking lot and a landscaping berm.

A LinkedIn office building in Sunnyvale, Calif. — insulated from the street by a parking lot and landscaping berm — hews to traditional “sprawl” design. The rest of the campus does better but still misses an opportunity to connect with the surrounding community.

Sunnyvale, Calif., wants to reinvent a 60’s-era industrial office park as an innovation district. It’s making progress but suburban sprawl is not an easy habit to break.

by James A. Bacon

LinkedIn Corp. has built a wildly successful business model around connecting business people through cyberspace. Ironically, the fast-growing Silicon Valley corporation gives short shrift to connecting people in the physical world. Its new corporate campus in Sunnyvale, Calif., located in an emerging “innovation district,” misses an opportunity to foster creativity by encouraging employees to interact with others outside the organization.

In some ways, the LinkedIn campus represents an improvement on the traditional sprawling settlement pattern of Silicon Valley. The facility is higher density than neighboring office and industrial buildings in Peery Park, one of the valley’s oldest office parks. The company conserves acreage by replacing open parking lots with a five-level deck. The buildings have interesting architectural features and the landscaping is attractive.

Erik_Calloway

Erik Calloway

But the LinkedIn complex falls short of what it could have been, Erik Calloway told me when I visited the San Francisco Bay area this spring. An urban designer with Freedman Tung & Sasaki, the firm engaged to help the City of Sunnyvale develop Peery Park as an innovation district, Calloway had ridden his motorcycle from San Francisco to show me how urban design can stimulate — or dampen — economic innovation. If only LinkedIn had tweaked the layout, he says, it could have opened the campus to the outside world, contributing to the vitality of the district and perhaps to its own enterprise. Says Calloway: “They weren’t focused on connections to the district.”

For much of American history, major corporations located major facilities in downtown business districts in order to avail themselves of the wealth of professional services, particularly bankers and lawyers, located nearby. Then in the post-World War II era, many corporations fled decaying cities to the suburbs, setting up self-contained campuses or office parks that were seen as serene, tranquil, far from the madding crowd. Now the movement is reversing, as corporations seek to gain competitive advantage by building innovation ecosystems in which they engage in intense interaction with collaborators outside the organization.

Many cities are evolving “innovation districts,” a concept popularized earlier this year by Bruce Katz and Julie Wagner with the Brookings Institution. Innovation districts, they write in “The Rise of Innovation Districts: A New Geography of Innovation in America,” are where “leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators and accelerators.” Typically, these areas are physically compact, walkable, bikeable and transit-accessible, and sport a rich variety of amenities from restaurants to apartments.

Innovation districts are found mainly in cities built in the pre-automobile era because those districts possess the attributes — research universities, walkable streets, higher densities, mixed uses and an inventory of affordable older buildings — required to stimulate enterprise formation. Sunnyvale is notable for its effort to carve an innovation district out of mid-20th century, autocentric suburbia. If the Sunnyvale experiment is successful, it could provide a new economic-development template for suburbia.

As someone who combines the academic viewpoint of Katz and Wagner with a hands-on practice of an urban planner actually working to create and implement an innovation district, Calloway provides a valuable perspective.

Cities are changing from the scattered, low-density pattern derisively known as “suburban sprawl” to more compact forms, he says. Unlike some critics he doesn’t castigate sprawl as a disaster. Citing research he has done for an upcoming book on the subject, he asserts that sprawl arose after World War II in response to social and economic forces such as mass production, the spread of automobile ownership and construction of freeways. Developing cheap land by applying assembly-line principles to urban planning provided affordable middle-class housing to millions of Americans. “It worked well at the time. It provided a lot of wealth and prosperity.”

Silicon Valley was developed along that model: low-density suburbs served by streets designed with automobility foremost in mind. But sprawl created problems, Calloway says. In Silicon Valley traffic congestion and pricey housing were accentuated by sharp growth limits and surging demand created by the extraordinary success of the region’s high-tech industry. Unlike nearby San Francisco, which evolved to greater densities over the decades, the Valley has not. With some of the highest real estate prices in the world, it has largely displaced the poor and working class.

On a more global level, the nature of work has changed as the economy has evolved from a hierarchical, assembly-line model to a digital economy. Selling more stuff cheaper is no longer the primary path to prosperity, Calloway argues. Access to raw materials, transportation and abundant labor are secondary considerations. Now the mantra is innovation. Take shoes, for example, a product that humans have been fabricating for centuries. The challenge for a company like Nike isn’t to keep costs down so it can sell shoes cheaper than anyone else — although cost is a consideration — it’s applying technology to create shoes that have features that shoes never had before, such as, perhaps, the ability of buyers to customize their shoes online.

The question, then, is how to organize companies and their employees to maximize creativity and innovation. Continue reading

The Chuck and Joe Traveling Municipal Salvation Show

The Joe and Chuck Traveling Municipal Salvation Show

Joe Minicozzi (left) and Chuck Marohn

Chuck Marohn and Joe Minicozzi, principals with Strong Towns and Urban3 respectively, travel the country telling cities, towns and counties how to build better communities while remaining fiscally solvent. I have borrowed heavily from both Chuck and Joe in my writing about land use, transportation and community building, and it’s reassuring to see that as their own thinking evolves, it has moved in concert with mine.

Most recently, Chuck has blogged about the paucity of useful information cities have to guide them in make zoning and capital spending decisions. He makes many of the same points I did in my recent post, “How Planners Can Rescue Virginia from the Fiscal Abyss.Writes Chuck:

Despite running corporations (most cities are “incorporated” municipalities) that have billions of dollars in assets and liabilities and annual cash flows in the tens, and sometimes hundreds, of millions of dollars, few ever ponder some shockingly simple questions.

  • What are our total assets, the value of the tax base that constitutes our community’s wealth?
  • What are the long term obligations for infrastructure maintenance associated with sustaining those assets?
  • In terms of geography, what parts of our community have a positive Net Present Value (cash from long term assets minus the cost of long term liabilities) and which have a negative Net Present Value?

The answers to these questions constitute a community’s balance sheet, the most basic of accounting requirements for any family or business but one which cities largely ignore. …

Since we don’t know the answer to these basic questions, we can’t even begin to ponder some more sophisticated, but obvious, things that all cities face.

  • How does that tax base change in response to certain policy decisions?
  • What types of land use patterns create the most wealth for the community?
  • What types of land use patterns experience the greatest degree of volatility?
  • How does a park impact Net Present Value? How far from the park does that effect extend?
  • How does a stroad impact Net Present Value? How far from the stroad does that effect extend?
  • Where can we deploy limited resources to have the greatest overall impact?

Keep up the good work, Chuck and Joe!

— JAB

The Movement Grows

City living -- not just for liberals anymore.

City living — not just for liberals anymore.

Political and philosophical conservatives in the United States are far more likely to live in rural areas or suburbs than in the city  — and that augurs ill for the conservative movement and for America, observes Michael Hendrix, in the inaugural guest blog post in a new blog, “New Urbs.”

Cities are the centers of wealth creation and cultural influence in the modern world. By concentrating disproportionately in small towns and rural homesteads, conservatives isolate themselves from the institutions that dominate the country. “If conservatives feel like they’re on the outside looking in on culture-making now, just wait a decade or so—it’ll get worse,” Hendrix writes. “Both for our culture’s sake and our own, conservatives should learn to stop worrying and love the city.”

If Hendrix’s contribution is any indication, New Urbs is likely to make a lively contribution to the small but growing ranks of conservatives who advocate development of more compact, urbane, fiscally sustainable communities.

The blog is an initiative of The American Conservative. Explains Associate Editor Jonathan Coppage:

This is an emerging discussion on the right, and we’re excited to take a leading role in pushing it forward. Talk of conservative reform can only get so far before it accounts for the actual ways in which people live. Transit, development, zoning codes all shape our culture, and are ripe for conservative engagement. Conservatives have too often neglected cities to their own disadvantage. We aim to fix that.

Keep it coming!

Update: I just came across by a great essay by Matt Lewis (a denizen of Alexandria) explaining why New Urbanism (an urban design movement which bears much in common with Smart Growth) “isn’t just for liberals.” Conservatives, he argues, should embrace it, too.

— JAB

How Planners Can Rescue Virginia from the Fiscal Abyss

This is a copy of a speech that I presented to the Virginia Chapter of the American Planners Association Monday, with extemporaneous amendments and digressions deleted. — JAB

Thank you very much, it’s a pleasure to be here. Urban planning is a fascinating discipline. As my old friend Ed Risse likes to say, urban planning isn’t rocket science – it’s much more complex. Planners synthesize a wide variety of variables that interact in unpredictable, even chaotic, ways. In my estimation, you don’t get nearly enough respect and appreciation for what you do

OK, enough with the flattery. Let’s get down to business.

toastThis is you. You’re toast. Unless you change the way you do things, you and the local governments across Virginia you represent are totally cooked. … Here’s what I’m going to do today. I’m going to tell you why you’re toast. And then I’m going to tell you how to dig your government out of the fiscal abyss, earning you the love and admiration of your fellow citizens.

Why You’re Toast

old_people2Here’s the first reason you’re in trouble — old people. Or, more precisely, retired government old people. Virginia can’t seem to catch up to its pension obligations. The state says the Virginia Retirement System is on schedule to be fully funded by 2018-2020. But the state’s defines 80% funded as “fully funded,” which leaves a lot of wiggle room. The VRS also assumes that it can generate 7%-per-year annual returns on its $66 billion portfolio. For each 1% it falls short of that assumption, state and local government must make up the difference with $660 million. As long as the Federal Reserve Board pursues a near-zero interest rate policy, depressing investment returns everywhere, that will be exceedingly difficult. A lot of very smart people think 5% or 6% returns are more realistic. In all probability, pension obligations will continue to be a long-term burden on localities.

potholesSecond, the infrastructure Ponzi scheme — that’s Chuck Marohn’s coinage, not mine — is catching up with us. For decades, state and local government built roads and infrastructure, typically with federal assistance, proffers or impact fees with no thought to full life-cycle costs. State and local governments have assumed responsibility for maintaining and replacing this infrastructure. Well, the life cycle done cycled, and the bill is coming due. We’re finding that we built more infrastructure than we can afford to maintain at current tax rates, leaving very little for new construction.

accotinkThird, after years of delay, serious storm water regulations are kicking in. Local governments bear responsibility for fixing broken rivers and streams like Accotink Creek, showed here. (Yeah, that’s a creek. It’s having a bad day.) Best guess: These regs will cost Virginia another $15 billion. But no one really knows. And it may just be the tip of the iceberg. I recently talked to Ellen Dunham-Jones, author of “Retrofitting Suburbia,” and she noted that a lot of the storm water infrastructure that developers built in the ‘50s and ‘60s is crumbling. The developers are long gone. Someone’s going to have to fix that, too. Guess who?

property_taxMeanwhile, the largest source of discretionary local tax dollars – real estate property tax revenues – is stagnating. According to the Demand Institute, residential real estate prices in Virginia will increase only 7% through 2018 – the third worst performance of any state in the nation. Don’t count on magically rising property tax revenues to bail you out.

In fact, the tax situation is worse than it looks. Demand for commercial real estate is dismal, too. Consider what’s happening to the retail sector. We’re going from this…

shopping_centerTo this..

amazon_warehouse

Every Amazon.com distribution center represents dozens if not hundreds of chain stores closing. It means more vacant store fronts, more deserted malls, less new retail development. Continue reading

How Charlotte Stays Economically Competitive

Buildings participating in the Envision Charlotte energy-conservation initiative.

Envision Charlotte, a public-private partnership in Charlotte, N.C., has set the goal of reducing energy consumption in the city center by 20%. The initiative has achieved 8.4% savings so far, saving businesses in the central business district an estimated $10 million or more, Envision Charlotte and Duke Energy announced last week.

“We have cracked the code in understanding and measuring how energy is used and wasted within these buildings, and we are implementing programs today that are making a real difference in helping these businesses save money,” said Amy Aussikier, executive director of Envision Charlotte. The program encompasses more than 60 downtown buildings.

Not only does the program save businesses money, local officials see it as a competitive economic advantage for Charlotte. “Envision Charlotte is an economic development differentiator for Uptown Charlotte, where about 40% of the region’s office space is located,” said Charlotte Mayor Dan Clodfelter. “Lowering energy costs and showing a true commitment to sustainability makes us attractive to millennials, knowledge workers and companies that value cost savings.”

Bacon’s bottom line: This is a classic example of how “economic development” has evolved way past the traditional reliance upon industrial and corporate recruitment. Charlotte’s leaders are thinking about how to help make their existing businesses leaner and greener while driving down costs. They are thinking about what it takes to attract forward-thinking enterprises and knowledge workers. Charlotte isn’t the only city doing this — San Diego is pursuing a similar initiative. Why isn’t this happening anywhere in Virginia?

Actually, the opportunity exists to leapfrog Charlotte and do even better. Energy conservation for individual buildings is great, but it only scratches the surface of what’s possible. Cities should be exploring ideas like eco-districts that not only bolster the energy-efficiency of individual buildings but entire neighborhoods through shared energy generation, recycling of heat, installation of green roofs and the fostering of more compact development.

— JAB

Mobility vs. Access, Chesterfield vs. Manhattan

by James A. Bacon

Luke Juday, writing in his personal blog, “Mapping the Commonwealth,” picks up the cudgel against a recent Wendell Cox essay that I inveighed against in, “Subsidize It, and They Will Come.” While I focused on the idea that a metropolitan strategy of building your way out of congestion is fiscal folly, Luke bores in on an even more important point: Cox confuses mobility (lack of congestion) with access. I’ll let Luke take it from here:

Most people perceive the inconvenience of traffic in terms of how fast they can drive on a road, which is ridiculous. They ought to evaluate it in terms of their increased or decreased access to possible destinations. So yes, ten minutes of driving in Manhattan might barely get you a mile. But that mile driving radius gets you access to a million people, several million jobs, and tens of thousands of retail stores and restaurants.  Contrast that with suburban Richmond. Ten minutes of driving in Chesterfield County might get you geographically farther in any one direction (including time on side streets to get to destinations), but that only gives you access to less than a hundred thousand people, and not nearly the concentration of jobs or amenities.

Now, dig this. Luke applies a mapping algorithm to show how much territory you can cover in a 10-minute drive in Manhattan’s congested city streets versus a 10-minute drive in Chesterfield. Using the same tool to display Manhattan and Chesterfield on the same scale (I think Luke’s maps were on different scales), I generated the following. Here’s how far a ten-minute drive in Manhattan gets you:

manhattan

 And here is a 10-minute drive in Chesterfield:

chesterfield

No question, you can cover a lot more ground in Chesterfield. You’re flying along, top down on your car, wind flying through your hair, no crazed yellow taxis cutting you off, no crowds of pedestrians to wade through at every intersection. But at the end of the ride, you have access to a small fraction of the number of people, businesses and amenities that you would get in New York.

(Admittedly, parking is a nightmare in New York compared to Chesterfield. On the other hand, Manhattan provides transportation options — walking, biking, buses and the subway — that are either impractical or do not exist in Chesterfield.)

Cox dwells on the fact that density creates congestion. He is quite correct about that. But he ignores the fact that density also creates access. It’s access, not mobility, that is critical to economic growth and quality of life.