North Carolina

Home Building and Developing in The New Normal

Rick Harrison — Tue, 27 Dec 2022 20:28:58 -0500

In a recent YouTube video Avoid These Cities (Housing Crash 2022) EPB Research provides an analysis of the national market. In general, West Coast is bad and East Coast is OK, especially the southeast. The overly regulated western states with higher raw land prices and huge city fees result in higher home prices. The 25% rule: Historically the financial model is 25% (or less) of a final home price is a ‘finished’ lot.

For those interested in developing land you could derive that it might be a wise move to move the operation in the better performing areas.

However, there is a larger problem the study does not address – the lack of character of both the home and neighborhood.

As costs rise and homes must be competitive – developers often think the quality of their offerings must be reduced to make up for rising costs (and interest rates). In other words, the home as a product can become far less desirable, thus home sales plummet.

This would be a typical new major builder example (above). An 1,800 square foot home in a cookie-cutter California project, for just over $500,000. It’s essentially a garage door and a door. A characterless 30’ wide and deep box on a narrow lot with little space to view.

Compare the above to a home in Aqualina at Tres Lagos in McAllen, Texas, a spacious neighborhood within an incredible Master Planned Community with lake views.

Let’s look at the Minneapolis (Twin Cities) market. Unlike other major markets, the Twin Cities is facing problems larger than the rising interest rates – post George Floyd dislocation combined with Minneapolis social engineering changes to punish car traffic and promote biking (in 20 below zero weather) the once vibrant city is in shambles.

More than 1,400 businesses have fled the core city in the past two years. We can assume many if not most have either closed for good or moved to the safer suburbs. Some may have left the State for regions less taxed and with less social engineering policies (the ability for customers park near the business). So, in the Twin Cities, unlike the other major markets there are many other factors in play that would likely impact new home sales.

This is what that $500,000 budget ($527K) will buy in the suburban Twin City market by a major builder. It’s a nice looking 4 bedroom, 2,700 sq.ft. home with a 3-car garage and full front porch. A nice home and a good value.

The EPB Research study indicates the eastern coast is doing quite OK. Let’s look at a new home in Charlotte area in North Carolina by a Major Builder. For $450,000 this 2,300 sq.ft. home could be yours. We can only assume that raw land values are less east coast states than west coast states.

EPB Research study creates an accurate snapshot of what the market trends have recently done, but there are other factors that may be at play here. Developing in a downward trending region may not be the best idea.

As part owner of Noble Development, a few years ago (before increased interest rates) we were seeking land in Texas or the Carolina’s avoiding the Twin City market for the above reasons.

Two years ago, we tied up a 520-acre tract in Rochester, Minnesota with city services 10 minutes from the world famous Mayo Clinic. Today, Phase One of The Ponds at Highland Hills, is open for lot sales.

We turned down many sites in many locations before this one came up that checked all of the right boxes:

Is the site in an economically growing area? (YES)

Is that area likely to continue to grow? (YES)

Was the cost of the raw land realistic? (YES)

Is there a need for the home types being proposed? (YES)

Does the site have immediate services? (YES)

Are cost of city fees reasonable? (YES)

The above are criteria we used to determine moving forward with a development. If the site had checked NO on the above criteria we would have passed.

In a generally downward market, status quo no longer applies, to succeed the end product has to be more competitive. These are the steps we took to accomplish it:

All other regional development utilizes standard suburban land use transitions. They all place the highest density and lowest cost products at the entrance to their projects. We placed the lower priced housing at the back of the neighborhood. This showcases the neighborhood better.
All other Rochester projects have homes that ‘rear’ the arterial streets which places main living spaces and bedrooms along noisy corridors. Our neighborhood showcases home fronts – a far more attractive and inviting solution, while providing more serene places for the residents.
All other projects have homes aligned at the exact same setback. Ours have an open and spacious park-like streetscape that eliminates monotony, provides expanded viewsheds from within the homes, and invites a stroll along beautiful meandering walkways connected to all home porches.
In our neighborhood, a full front porch can be built within the front yard setback so that the builder does not have to sacrifice home interior space.
The main trail system was designed first –guaranteeing better pedestrian connectivity when the full 520 acres is fully developed.
For maintenance free living we offer Garden Villas (also known as BayHomes) that obsolete luxury townhome alternatives.
All lots are sold with advisory services to make sure the builder’s architect is taking full advantage of the expanded views each home setting offers.

The above ‘value-added’ elements can be typical of any development, but are ‘typically’ never included. Instead without innovative alternatives, as price pressures increase, home ‘value’ can decrease.

Let's revisit that narrow home in California

This type of product is a direct result of either extremely high land prices or overly jealous developers seeking maximum profits – or a combination of both.

Developing land is not an instant product. This EPB Research study is a snapshot of ‘now’. If someone wanted to tie up a tract of land, design a development, submit the layout, engineer the project, get it approved, and ultimately built to sell lots to builders, in a perfect world it takes a few years, more than likely quite a few years. Certainly, that EPB Research study snapshot of trends will change in some areas for the better – others perhaps worse.

What will not change is that a bland development lacking character has less chance in a down market to succeed.

When the cost of raw land (i.e. West Coast) rises so high that the 25% rule mandates extreme density, this reduces money that could be applied to architectural character to maintain some level of affordability the market ultimately responds.

In the more attainable areas with beautiful housing – it’s the more reasonable priced raw land that allows more funds to be applied to delivering ‘more house’. This also influences the flow of population to other areas.

It’s not only a case of costs that will drive housing growth, but the degree of comfort, safety and functionality offered to the buyer.

Richard Harrison is president of Rick Harrison Site Design Studio & Neighborhood Innovations, LLC. Rick is known for his innovations in methods and technologies for the design & construction of sustainable land development and architecture that have economic, social and ecologic benefits over conventional design. Harrison’s career spans 53 years in Land Planning, Civil Engineering, Land Surveying, Land Development, and over 43 years in Computer Software Development. His book Prefurbia: Reinventing Land Development: From Disdainable to Sustainable, has received many favorable reviews, and has been updated for Post-recession economy.

Can the South Escape its Demons?

Joel Kotkin — Mon, 04 Oct 2021 15:08:23 -0400

Out on the dusty prairie west of Houston, the construction crews have been busy. Gone are the rice fields, cattle ranches and pine forests that once dominated this part of the South. In their place sit new homes and communities. But they are not an eyesore; the homes are affordable and close to attractive town centres, large parks and lakes. These are communities rooted in the individual, the family and a belief in self-governance.

The new American Dream has its heart in the states of the old Confederacy. But its allure does not merely lie in a conservative embrace of lower taxes, less regulation and greater self-reliance, although these surely matter. More important are the opportunities that come from building businesses and owning new homes, not for the privileged few but for an increasingly diverse, and growing, populace.

As Marianne Pina, who came to Dallas as a young adult before founding a five-million-dollar business specialising in minority recruitment and job placement, told me: “The American Dream stereotype still exists here. If you work hard, you can make it. It’s still up to you as an individual.”

But lurking in the background, the South’s rebirth remains threatened by its historical demons: racism, white nationalism and overzealous religious fervour. This is partly because, as the political scientist V.O. Key noted, the South remains the only region of America that has been conquered and subjugated. It is, he wrote in 1949, a prisoner of its racial legacy in its politics and social structure; only when that problem has been addressed can the region ascend to its potential. Indeed, the economic consequences of slavery persisted well into the 1960s.

Even today, despite its ascendance, the South still lags somewhat behind the nation both in income and education levels. It is still castigated by progressive academics (increasingly a redundant concept) for being wedded to “racial conservatism”. It was only in 2013 that liberal chief justice Steve Breyer compared the region’s racial climate to “a plant disease”.

Anyone who has spent time outside academia knows this is increasingly no longer the case. Ever since the 1960s, business leaders in the South have worked overtime to embrace racial diversity, if not for moral reasons, but economic ones. Perhaps that explains why people from outside the region are pouring in: the Southern states account for six of the top ten gainers in interstate migration, led by Texas and Florida. In contrast, the biggest losers are the progressive strongholds of New York, Illinois, and California.

Significantly, while the African-American population has declined in San Francisco, Los Angeles and Chicago, it is expanding in cities such as Dallas-Fort Worth (DFW), Atlanta, Houston, and Nashville. Immigrants, mostly from developing countries and Asia, are also moving in. According to research by demographer Wendell Cox, the fastest growth in a city’s foreign-born population over the past decade was in Nashville, where it exceeded 40%, while those in DFW, Houston and Austin increased by more than 25%. Once seen as a dominant immigrant melting pot, Los Angeles, by contrast, saw their foreign-born populations shrink.

“In the past, you would go to New York, but people have found life was very challenging there,” developer La Lou Davies, who moved to Houston from Nigeria, explains. “It’s hard to find a place to live. By the 1990s, people started going to places like Houston, which have lower entry costs for housing and better business environments. Getting that first apartment, or a lease for a business, is so much easier.”

Read the rest of this piece at UnHerd.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo credit: Wesley Hetrick via Flickr under CC 2.0 License.

Two Decades of Interstate Migration

Wendell Cox — Sun, 13 Sep 2020 20:29:01 -0400

America is still a mobile nation. Back in the 2000-2010 decade, 12.9 million people moved interstate, nearly five percent of the total population. In the 2010s the population has been a bit less mobile, with net domestic migration of 11.7 million residents, slightly under four percent. Nonetheless, 11.7 million is a large number. This is nearly equal to the population of Ohio, with only five states being larger (California, Texas, Florida, New York, Pennsylvania and Illinois). This article describes net domestic migration trends by state from 2000 to 2019 (Note).

Top Domestic Migration Population Gainers

As has been the case with population growth for decades, states in the South and the West had the largest numbers of net domestic migrants. Six of the top ten states were in the South, and four were in the West. However, unlike in the middle to late decades of the 20th Century, California no longer ranks among the leaders.

Florida: Number 1 in Net Domestic Migration

Florida and Texas attracted by far the largest number of new net domestic migrants over the past two decades (Figure 1). Florida added nearly 2.5 million residents from other states. This is more people than live in each of 18 states and the District of Columbia. Florida also placed fifth in its proportionate net domestic migration gain,—15.5%—in relation to its 2000 population (Figure 2).

Back in 2000, Florida had 15.3 million residents, and grew to 21.5 million by 2019. This 6.2 million increase propelled Florida to third place, ahead of New York, which grew from 18.3 million in 2000 to 19.4 million in 2019.

Texas: Number 2 in Net Domestic Migration

Texas, the nation’s second most populous state had the second largest gain in net domestic migration, at just below 2 million. During the two decades, the two largest Texas metropolitan areas, Dallas-Fort Worth and Houston moved from below the top five to positions four and five respectively.

Arizona and North Carolina: Over 1 Million Gains

Arizona had a net domestic migration gain of 1.2 million, the third largest gain. In proportional terms, Arizona was the second largest gainer, at 22.8% relative to its 2000 population. North Carolina nearly equaled Arizona’s population increase in numbers from domestic migration and had the sixth largest percentage gain (14.3%).

Other Top Population Gainers

Six other states added more than one-half million residents through net domestic migration. These included Georgia (820,000), South Carolina (680,000), Nevada (610,000), Washington (570,000), Colorado (560,000) and Tennessee (520,000).

Top Proportionate Gainers

Nevada had by far the largest proportionate gain in net domestic migration, at 30.5% relative to its 2000 population. Idaho and South Carolina placed third and fourth respectively, behind Arizona and ahead of Florida. Colorado, Oregon, Delaware and Georgia followed North Carolina (above), with proportionate gains of from 10.0% to 13.1%.

Again, all of the top proportionate gainers were in the South or West, with five from each region. Delaware, perhaps best seen as a border state, may be a surprise, because of its location in the Northeast Corridor (Washington to Boston), and its northernmost county (New Castle, with county seat Wilmington) in the Philadelphia metropolitan area. However, the net domestic migration gains in Delaware were all in its two other counties (Kent and Suffolk), which are well-positioned to attract relatively large numbers of movers from the nearby Washington, Baltimore and Philadelphia metropolitan areas, which shed nearly 600,000 net domestic migrants over the last two decades.

The Losers: Moving from New York and California

Five Northeastern states were among the 10 losing the most net domestic migrants from 2000 to 2019. In addition, three of the 10 greatest losses were in the Midwest, one in the West and one in the South.

Three states lost more than one million residents through net domestic migration. New York lost the most at 3.1 million (Figure 3). This is as many people as live in the states of Nevada or Arkansas. New York was also the largest proportional loser, at 16.2% of its 2000 population (Figure 4).

California was not far behind, losing 2.4 million residents by net domestic migration. This is more people than live in Houston, the nation’s fourth largest city. Due to having more than twice as many residents as New York, its proportional loss was much less, at 7.1%, ranking the tenth greatest in the nation.

Illinois lost the third most net domestic migrants (1.5 million) and had the second largest proportional loss, at 12.1% of its 2000 population.

New Jersey, which is largely split between the New York and Philadelphia metropolitan areas, suffered the fourth net domestic migration loss, at nearly one million. New Jersey placed third in proportional decline, at 11.3%.

Two other states lost more than 500,000 net domestic migrants, Michigan and Ohio. Massachusetts, Louisiana, Pennsylvania and Connecticut lost over 300,000 net domestic migrants. Louisiana’s huge loss can be largely attributed to the impacts of Hurricane Katrina, in the middle 2000s.

Other Proportional Losses

Four of the largest proportional losses were in Northeastern states, three were in the West, two in the Midwest and one in the South.

Outside of New York, Illinois and New Jersey, Alaska had the largest proportional loss, at 10.8%. Louisiana lost 9.4% of its population to net domestic migration, while Connecticut, Hawaii, Michigan and Rhode Island lost more than eight percent.

Trends

The future could see an acceleration of the trends noted above. The COVID-19 has produced all sorts of evidence that people are moving away from overcrowding and density (both residential and employment) and relying more on telework than on physical commutes, especially to the largest central business districts. This has shown than many people do not have to live within convenient daily commuting distance from employment locations, because their commutes are from one room to another. In 2019, more than one-third of intercounty net migration moves were employment related, according to the Current Population Survey. In the future, fewer people are likely to need to move to be closer to their jobs, because of a probably much higher rate of teleworking.

The biggest losses have taken place in the largest legacy downtowns: New York, Chicago, Philadelphia, San Francisco and Boston.

At the same time, housing considerations drove about one quarter of net domestic migration. Three of the states losing the most net domestic migrants from 2000 to 2020 have severely unaffordable metropolitan areas, according to the Demographia International Housing Affordability Survey. These include California (with Los Angeles, San Jose, San Francisco, San Diego, Riverside-San Bernardino, Sacramento, and Fresno), and New York and New Jersey, which includes nearly all of the New York metropolitan area.

The large net domestic migration losses in these states could well continue, due to increased teleworking and overly expensive housing. After COVID, Americans are again on the move, a trend that will impact our economy, politics and social future. It will be fascinating if new migration numbers surpass those of the past decade.

Note: The Census Bureau estimates net domestic migration trends, which are released with the annual population estimates. In both the 2000s and 2010s, data is provided from April (the decennial census date) of the “00” year through June of the “09” year (the end of the annual “estimate year”). As a result, no data is available for January through March 2000, July 2009 through March 2010 and June 2019 through December 2019.

Photograph: Chicago Loop, second largest US central business district, in the state with the second largest net domestic migration loss rate from 2000 to 2019 (by author).

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.

Superstorm Sandy & The Beachfront Bailout

Matthew Stevenson — Tue, 30 Oct 2012 21:47:19 -0400

Deadline reporters, especially in weather broadcasts from the surf line, have been wailing about “this enormous storm” or “the unfolding tragedy.” What they might also say is that hurricanes are a munificent windfall for newspapers, television stations, the federal government, construction unions, and politicians seeking reelection. In addition to classifying storms from one to five on the Saffir-Simpson scale, going forward it might also be possible to grade hurricanes as profit centers, or by the surge levels that they generate in reelection campaigns.

By all (usually breathless) accounts, Hurricane Sandy delivered a wide band of damage and destruction to areas stretching from North Carolina to Maine. Along with a death toll now approaching 50, a 13 foot storm surge in New York harbor inundated parts of lower Manhattan and Brooklyn, and millions of residents around New York, New Jersey, Maryland, and Pennsylvania lost power in their homes. The aftermath, unlike the legacy of Hurricane Katrina, however, is that the waters which flooded Manhattan's streets, tunnels and subways are receding with ebb tides, although the damage from surging waves and fallen trees is widespread, especially across New Jersey.

Although the storm will have cost the Mid-Atlantic region some $45 billion in cleanup costs, not to mention the loss of work days for many, even this perfect storm not seen in “a millennium” did not rack up the apocalypse that was predicted as Sandy “barreled” up the coast on its “rendezvous with destiny” in Atlantic City. From the teeth of the storm in New Jersey, my sister reported only an epic loss of cable and Internet.

The reasons storms rarely appear as they are cast on television is because, instead of acts of nature with a lot of wind and rain, hurricanes are now best understood as political spectacles, somewhere between nominating conventions and state lotteries.

Take the federalization of the disaster business. Previously storm damage and the costs of clean up were the responsibilities of states and municipalities, who in the first place made the decisions to allow homeowners to build houses and businesses on barrier islands, sand dunes, and low-lying waterfront property.

For much of the twentieth century, insurance companies refused to write flood or hurricane policies for stilted houses perched precariously on Cape Hatteras or wherever, which angered wealthy political donors, who equate their life successes with owning beachfront property.

Enter the federal government into the realm of disaster indemnification, when Congress passed the National Flood Insurance Program in 1968, to mandate that vulnerable home owners in potential flood zones purchase adequate insurance that private companies were refusing to cover. Think of it as Obamacare for beachfront homes.

Although the legislation was designed to cover the undue risks of shore properties, it also gave the political parties a mechanism that would allow (for all those waterfront contributors) a building boom on hurricane-exposed barrier islands.

At a time when global warming has increased the intensity and frequency of major storms and hurricanes (which are nature’s teapots blowing off steam), we are living with the fallout of an earlier era, when the federal government doubled down by writing insurance for beachfront condos from Maine to Texas.

After the 2000 recount election came the transformation of Florida into a swing state in presidential elections, insuring that claim adjusters would reach hurricane damage zones as fast as FEMA’s first responders. Before the 2004 election arrived, four more hurricanes had passed over Florida. In their wake came billions in federal aid relief, just to insure that neither awnings nor chads would be floating in the wind.

As powerful as hurricanes may be, they are no match for the construction lobbies, something I learned in the 1980s when writing about the National Hurricane Center in Coral Gables, Florida.

The then-director, Neil Frank, a man of ebullience and integrity, showed me a slide show on the back of his office door, explaining that it was folly to allow construction on Gulf and Atlantic barrier islands. That was thirty years ago, and since then cities of flimsy beachside construction have risen along the dunes.

What I admired about Frank was his passion for hurricane preparedness. He had walked the beaches of Biloxi, Mississippi in 1969, after Hurricane Camille, and measured that surge at 25 feet—something he then extrapolated to other beaches around the United States, including Atlantic City. But in urging a ban on beachfront buildings, he was shouting into an ill wind.

Not only was the federal government complicit in allowing places like Myrtle Beach to become housing projects (the poet Robert Watson called it “white Harlem by the sea”), it also assumed that its job performance could be measured by the number of blankets and water bottles that reached those crazy enough to “ride out” a major storm in their seaside mobile homes.

No doubt this is the Katrina Effect in American politics: The truism that if a big storm hits, the best place for the president probably isn’t dockside in San Diego, playing Otis Redding tunes on a guitar. Nevertheless, it means that the federal government (not exactly a profit center these days) is on the hook for the rescues, the clean up, and the insurance claims.

The sad reality of Hurricane Sandy is that, despite all the Weather Channel epithets that it was “the storm of the century,” a lot of it was ordinary. It wasn’t even technically a hurricane when it came ashore near Atlantic City. What made it destructive was its size, and that it arrived late in the hurricane season and, by chance, merged with other Atlantic and Canadian storm systems. Imagine, however, if it had been one of Neil Frank’s dreaded Category 4 storms?

Undoubtedly, President Obama would love to turn Hurricane Sandy into a backdrop for reelection spots that show him compassionate to his fellow Americans in times of need. The problem is that neither Wall Street underwater nor the flooded roulette tables in Atlantic City makes an ideal photo op or headline (“President Vows: We Will Not Let This Stop Us From Gambling!”). And I doubt he wants to campaign as the Claims-Adjustor-in-Chief.

Photo: MTA New York City Transit, Bus on the Move. Morningside Heights, 125th and Broadway, October 28, 2012, as Hurricane Sandy approached New York City.

Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is "Whistle-Stopping America".

Is It Game Over for Atlanta?

Aaron M. Renn — Wed, 19 May 2010 01:48:09 -0400

With growth slowing, a lack of infrastructure investment catching up with it, and rising competition in the neighborhood, the Capital of the New South is looking vulnerable.

Atlanta is arguably the greatest American urban growth story of the 20th century. In 1950, it was a sleepy state capital in a region of about a million people, not much different from Indianapolis or Columbus, Ohio. Today, it's a teeming region of 5.5 million, the 9th largest in America, home to the world's busiest airport, a major subway system, and numerous corporations. Critically, it also has established itself as the country's premier African American hub at a time of black empowerment.

Though famous for its sprawl, Atlanta has also quietly become one of America's top urban success stories. The city of Atlanta has added nearly 120,000 new residents since 2000, a population increase of 28% representing fully 10% of the region's growth during that period. None of America's traditional premier urban centers can make that claim. As a Chicago city-dweller who did multiple consulting stints in Atlanta, I can tell you the city is much better than its reputation in urbanists circles suggests, and it is a place I could happily live.

Yet the Great Recession has exposed some troubling cracks in the foundations of Atlanta's success. Though perhaps it is too early to declare “game over” for Atlanta, converging trends point to a possible plateauing of Atlanta remarkable rise, and the end of its great growth phase.

Growth Is Slowing

As with many other boomtowns, in Atlanta growth itself has been among the biggest industries. Construction particularly played a big role in its economy. The housing crisis cut the legs from under Atlanta's real estate machine. Though prices didn't collapse, new home building did. From 2005 to 2009 Atlanta's number of annual building permits fell by 66,352, the biggest decline of any metro area.

Atlanta grew strongly in the 2000s, with growth of over 1.2 million people, a 29% rise that beat peer cities like Dallas and Houston. But look at the recent past and see a very different dynamic. Domestic in-migration has cratered, only reaching 17,479 last year, or 0.32%. While migration did slow nationally last year due to the economy, Dallas and Houston continued to power ahead. Dallas added 45,241 people (0.72%) and Houston added 49,662 (0.87%). Even Indianapolis added 7,034, but that's 0.42% on a smaller base, meaning Atlanta is actually getting beat on net migration by a Midwest city; its in-migration rate is about on par with Columbus, Ohio, another healthy Midwest metropolis..

The collapse in in-migration should be very worrying to Atlanta’s leadership. No new people, no new housing demand, thus no construction jobs. It should come as no surprise that Atlanta's 10.8% unemployment rate is well ahead of the 9.7% national rate.

The Infrastructure Brick Wall

Last July, Judge Paul Magnuson ruled that Atlanta had been illegally taking water from Lake Lanier, the principal source of the region's water supply. The ruling may not stick but it nevertheless has brought into focus the long term insufficiency of the water supply for Atlanta. Lake Lanier almost ran dry during a recent drought, but has since recovered in the recent wet years. The problem is more political than environmental. Atlanta has not appreciably expanded its water sources in 50 years despite all that growth.

Atlanta has a myriad of infrastructure problems. It suffers some of the highest water and sewer rates in the nation, double those of New York City. And these are only going to get worse as the city embarks on a multi-billion dollar Clean Water Act Compliance program. This is an ominous sign for a city whose attractiveness is in large part due to its low costs. As Councilwoman Clair Muller put it, “I’m not sure being No. 1 in the country for water and sewer rates is a good selling feature for Atlanta.”

But the biggest infrastructure issue for Atlanta is transportation. Atlanta is famous for its bad traffic and attendant pollution. Its freeways are among the world's widest, but this disguises the extent to which the roadway infrastructure is woefully insufficient. Atlanta has a simple beltway and spoke system similar akin to Indianapolis and Columbus, much smaller cities. Other big cities like Houston, Dallas, Minneapolis, and Detroit have much more elaborate systems. In particular, rather than relying on a single ring road, these cities have webs of freeway with multiple “crosstown” routes.

But Atlanta's greatest road problem lies in the lack of arterial street capacity. Atlanta's suburban arterial network is mostly former winding country roads, many of which have never been upgraded to handle the traffic demands on them. Most upgraded streets are radial routes, not crosstown ones, which forces even more traffic onto the overloaded freeway network.

For those who prefer transit, Atlanta hasn't invested there either. It built the MARTA heavy rail system as an extremely forward looking transportation investment, mostly in the 1970s and early 80s. This was built before Portland's system and is far better than light rail to boot. But there has been almost no expansion of the network. The state of public transport has been largely frozen for some time. Meanwhile, Dallas, Houston, Phoenix, and others have invested billions.

Competition Is Here

Bad traffic congestion and other infrastructure ills didn't matter much when Atlanta was the only game in town. For a long time, anyone who needed a presence in the Southeast found Atlanta the easy default answer. In many cases it was the only real possibility.

That's no longer true. Atlanta is now surrounded by upstart, much faster growing cities such as Charlotte and Raleigh-Durham in North Carolina, Nashville, Tennessee and Charleston, South Carolina – all in many ways now have the ambitions once characteristic of Atlanta.

Atlanta's problem lies in its insufficient differentiation from these other places. Other than the airport, a clear major asset to Atlanta, what do you actually lose by moving to Charlotte or Nashville? Your commute is likely to be less. Except for certain groups – African Americans or gays – the city seems to be losing allure.

These other cities also have the talent to compete for a lot of the business Atlanta used to pick up without working for it. The new head of the Atlanta Regional Commission declared Atlanta's love affair with the edge city high rises all but over. Planners always talk like this, but it is still a startling sentiment to hear in Atlanta, formerly the most boosterish of cities. That's the sound of a city losing its mojo. Meanwhile, Charlotte chamber of commerce chief Bob Morgan says, “To understand Charlotte, you have to understand our ambition. We have a serious chip on our shoulder. We don’t want to be No. 2 to anybody.” That's the way Atlanta used to talk.

Caught in the Middle

Atlanta does seem to realize it's in a different competitive world. It must elevate its game and upgrade its product. Like Chicago and other growth stories before it, as Atlanta got big and rich, it decided it needed to get classier as well. To go for quality, not just quantity. And to embrace a more urban future for its core.

But it might be too little, too late. Atlanta is urbanizing, but despite the huge influx of people into the city, it's not there yet. Atlantic Station got built and attracted lots of press, but numerous other mixed use projects were killed by the poor economy. Ambitious projects like the Beltline park and transit project lack funding.

Atlanta is left as a sort of “quarter way house” caught between its traditional sprawling self and a more upscale urban metropolis. It offers neither the low traffic quality of life of its upstart competition, nor the sophisticated urban living of a Chicago or Boston.

Here too, Dallas and Houston continue to power ahead of Atlanta. Both are seeing significant urban infill and are also making major investments in cultural infrastructure that far outstrip those of Atlanta. For example, Dallas just opened a showplace performing arts complex, with buildings by the likes of Norman Foster and Rem Koolhaas. Houston has emerged as a dynamic multi-cultural city. Both have a long way to go, but are in a much stronger growth position to pull it off.

Atlanta at Maturity

Cities, like companies, go through a life cycle. There's the youthful founding, the explosive growth phase, then maturity and, for some, decline. Chicago and Detroit were two of the huge growth stories of the industrial era, for example. Atlanta, Houston, and Dallas have been three of the boomtowns of the current age. Like other cities before them, that growth will come to an end one day. It is then that we'll see if, like Chicago and New York, they will succeed as mature regions and truly take their place in the pantheon of great American cities, or, like Detroit or to a lesser extent Philadelphia, will decline or stagnate.

Atlanta is far from dead, but it may be facing the beginning of the end of its growth cycle. If so, this will be the true test and measure of the greatness of that city. Will Atlanta make the grade? And how?

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

Photo by james.rintamaki