1. Community Planning Academy Atlanta Metro 2040 FUTURE SHOCK Arthur C. Nelson, Ph.D, FAICP Professor & Director, Urban Affairs & Planning Virginia Tech – Alexandria Center March 23, 2006

2. Front Page December 4, 2004

3. Getting Ahead of the Curve Metropolitan Atlanta 2000-2040 Category 2000 2040___ Population4.2 million9.4 million Housing Units1.6 million3.7 million Jobs2.8 million4.7 million

4. Residential Development Metropolitan Atlanta 2000-2040 Figure2000 to 2040 Growth-Related Units Built 2 million Replaced Units Built 1 million Total Units Built 3 million

5. Nonresidential Development Metropolitan Atlanta 2000-2040 US 2000 to 2040 Growth-Related Square Feet 1 billion Replaced Square Feet 2 billion Total Square Feet 3 billion

6. Life-Span of Building Space

7. What About ….? Telecommuting? Office hotelling? Internet retailing? Emerging technologies? And their effect on future space needs?

8. Retail Trends Share of grocery store, warehouse club, super store, & department store sales, catalog sales, Internet sales Source: US Census Bureau

9. Reality Check Space Class 1992 2003 %Dif Retail & Service5762 +9% Office, Medical, Ed.8887 -1% Total Glamour Space 145 149 +3% Warehouse & Storage 4535 -23% All Other7563 -16% Figures for U.S. Non-percentage figures per capita based on Census estimates. Source: Energy Information Administration, Commercial Buildings Energy Consumption Surveys for 1992 and 2003.

10. Bottom Line New Construction Metropolitan Atlanta 2000-2040 Construction Residential$750 Billion Nonresidential$400 Billion Infrastructure$150 Billion Total$ 1.3 Trillion

11. Where Does It Grow?

12. Market Analysts Finding Changing Preferences National Association of Realtors National Association of Home Builders Nationally Recognized Market Analysts Urban Land Institute Lend Lease/PriceWaterhouseCoopers Joint Center for Housing Policy at Harvard Golfing Buddies and Taxi Drivers

13. The New Urban Economics Old School  People locate where jobs are  The “employment-centric” model New School  Jobs locate where people are  The “homo-centric” model The New Urban Economics  Real estate development follows people  Where are people going? Source: Arthur O’Sullivan, Urban Economics, Sixth Edition (2007).

14. What is the Market Telling Us?  Resale prices of condominiums rival resale prices of single-family homes for first time ever  Appreciation of condominiums is higher than single-family homes nationally and in every region

15. Resale Prices 2002-2005 [SF = detached + townhouse, CC = condominium + cooperative] Region2002 SF 2005 SF 2002 CC 2005 CC US $158 $207 $142 $218 NE $164 $244 $147 $252 MW $136 $166 $149 $189 S $147 $178 $115 $195 W $215 $314 $172 $261 Figures in thousands of dollars. Source: National Association of Realtors 2006.

16. Appreciation 2002-2005 Region SF Percent CC Percent US31%54% NE49%71% MW22%27% S21%70% W46%52% Source: Adapted from National Association of Realtors 2006.

17. “Traditional” Households on the Wane Household Type 1960 2000 2040 HH with Children 48% 33% 27% Single-Person HH 13% 26% 30% Figures for U.S. Source: Census for 1960 and 2000, 2040 adapted from Martha Farnsworth Riche, How Changes in the Nation’s Age and Household Structure Will Reshape Housing Demand in the 21st Century, HUD (2003).

18. People Turning 65  1950-2025 Thousands Source: Rosen Consulting

19. Share of Growth 2000-2040 HH Type2000 2040 Change%Share W/ children 35 41 6 13% W/o children 71 111 40 87% Single-person 26 44 17 38% Figures for U.S. Figures in millions of households. Source: Adapted and extrapolated from Martha Farnsworth Riche, How Changes in the Nation's Age and Household Structure Will Reshape Housing Demand in the 21st Century, HUD (2003).

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

21. Retired Location Preference In a city14% In a suburb close to a city37% Total “urban”51% In a suburb away from a city19% In a rural community30% Suburbs away from cities are the losers Source: National Association of Realtors & Smart Growth America, American Preference Survey 2004.

22. Housing Choices of Elderly Housing Type All Elderly Elderly Movers Detached 69% 35% Townhouse 5% 11% 2+ Units in Bldg 19% 43% Manufactured 7% 11% All Attached 24% 54% Owner 80% 41% Source: American Housing Survey 2003. New movers means moved in past year. Annual elderly movers are about 5% of all elderly households; 75%+ of all elderly will change housing type between ages 65 and 80.

23. Elderly Downsizing Measure Before After House size1,687 sf1,450 sf % Change -14% Lot size 0.35 ac 0.24 ac % Change -31% Source: American Housing Survey 2003.

24. Preference Survey Signals All Households Housing TypeSurvey Range, Unit Type Owner attached Townhouses 17% to 33% Condos 9% to 14% Small lots (<7k sf) Cluster, other 37% to 57% Source: Adapted from Myers & Gearin, “Future Demand for Denser Residential Neighborhoods”, Housing Policy Debate (2001).

25. Future Housing Shares – US Housing Type2003 2040 Apartment 24% 30% Owner Attached 11% 20% Small Lot 15% 30% Large Lot 51% 20% Source: 2003 data from American Housing Survey 2003. 2040 figures derived from preference surveys.

26. US Demand in 2040 50% Attached (apartment, TH, condo, etc.) 30% Detached small/cluster/zero-lot 20% Conventional subdivision 80% = Traditional Urban Density Even in Plano, Texas

27. Atlanta Future Housing Shares Housing Type2004 2040 Apartment 19% 25% Owner Attached 4% 15% Small Lot 15% 25% Large Lot 62% 35% Source: 2003 data from American Housing Survey 2003. 2040 figures derived from preference surveys.

28. Atlanta Demand in 2040 40% Attached (apartment, TH, condo, etc.) 25% Detached small/cluster/zero-lot 35% Conventional subdivision 65% = Traditional Urban Density @ transit- supportive density

29. 2004 Supply & 2040 Demand Housing Type 20042040 Change % Dif Apartments 350 925 575 165% Owner Attach 65 555 490 750% Small Lot 135 925 790 585% Large Lot 1,250 1,295 45 4% Total 1,800 3,700 1,900 106% Figures in thousands and may not add due to rounding. Source: 2004 data from American Housing Survey – Atlanta.

30. What Futurists Tell Us Cheap energy is over. Rising global competition for construction materials. Bio-medical advances will extend lifetimes. Another 20 years added?

31. Wasteful Residential Energy Georgia Energy Lost as % of Energy Used Source: Energy Information Administration 2006.

32. Invest Where the People Will Be 71% of elderly want transit options (AARP) 50% of public want expanded transit investment but only 25% want new roads (NAR) Large-scale home builders want transit options ULI, PriceWaterhouseCoopers, others  Do not invest in suburban fringe Highest rates of return in redevelopment, infill Understand changing preferences  Affluent elderly who want urbane opportunities Young professions who delay child-rearing Some shifting preferences even in families with children

34. Planners Need To … Know implications of demographic changes. Anticipate rising prices in energy, construction. Understand market responsiveness to New Atlanta Metropolis development. Invent new financing tools to earn high long-term gains in the New Atlanta Metropolis investments despite short-term low returns. Create win-win public-private partnerships.

35. THANK YOU!