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Have We Reached Peak Sprawl?

Have We Reached Peak Sprawl?
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Several real estate researchers met in Atlanta on Wednesday to announce a milestone nearly as significant, they believe, as when historian Fredrick Jackson Turner declared the closing of America's frontier after the 1890 census. Metropolitan Atlanta, long a symbol of car-dependent American sprawl, has recently passed a threshold where a majority of its new construction spending is now focused in high-density, "walkable" parts of town.

Since 2009, 60 percent of new office, retail and rental properties in Atlanta have been built in what Christopher Leinberger calls "walkable urban places" – those neighborhoods already blessed by high Walk Scores or on their way there. That new construction has taken place on less than 1 percent of the metropolitan Atlanta region's land mass, suggesting a shift in real estate patterns from expansion at the city's edges to denser development within its existing borders.

"This is indicative that we’re seeing the end of sprawl," says Leinberger, a research professor with the George Washington University School of Business, who led the study in conjunction with Georgia Tech and the Atlanta Regional Commission. "It does not say that everything turns off. There will still be new drivable suburban development. It’s just that the majority will be walkable urban, and it will be not just in the redevelopment of our downtowns, but in the urbanization of the suburbs."

As further evidence, he cites the price premium on rent in these walkable places relative to the region's more car-dependent corridors. The average rent per square foot in the most established walkable places – the study counted 27 of them in the city and suburbs, averaging around a half square-mile in size – was about 112 percent higher than in homes, offices and stores in more classically suburban areas. For retail, the premium was 147 percent. For homes for sale, it was 161 percent. (Leinberger has previously run some similar calculations in Washington, D.C.)

The fact that people are willing to pay so much more – and that landlords can charge such a premium – to open a store or buy a home in a denser neighborhood suggests that demand is shifting direction (and that there's not enough supply of walkable development to go around).

"If it’s happening in Atlanta, it’s happening in a lot of different places," Leinberger says. Although he acknowledges that he hasn't checked in, say, Texas. His sweeping theory is that walkable development is the new normal, and that pent-up demand for it could drive the next generation of construction. As a result, he forecasts that the vast majority of new square footage built in America in this new real estate cycle will be developed on less than 10 percent of land that's already occupied.

Think there's not enough land there to go around for all these new homes and high-rises? This is one of Leinberger's favorite factoids: Metropolitan D.C. has half the population of metro Paris, but it is four times the physical size.


Many of the emerging and potential "walkable urban places" identified in this new report are located in the suburbs.

Really, though, Frederick Jackson Turner?

"People might be saying, 'Oh, get real Leinberger.' But we invest 35 percent of our wealth in the built environment," he says. That refers to both infrastructure and real estate. "So, it’s a pretty significant sea change in how we build the country. The country’s going to look fundamentally different over the next generation than it has over the past two generations."

Plenty of other people will inevitably argue that it's too soon to declare sea changes of any kind while the recovery is still ongoing (we have, after all, been having the exact same conversation about trends in the decline of driving). Won't we go back to building how we've been building for decades once the economy picks back up? Perhaps it's the economy, and not changing consumer tastes, that's holding sprawl at bay?

Leinberger looks at his data, and then looks at this question differently.

"I think there’s a cause-and-effect issue here," he says. "I think that when the economy picks up steam, it's going to be because we learn how to build walkable urban places. Real estate caused this debacle, and real estate has always acted as a catalyst for economic recoveries."

He figures we're sputtering along at 2 percent growth precisely because we're not building enough of the walkable urban product that the market wants. "And it's signaling with pretty flashing lights," he says, "to build more of this stuff."

Top image: trekandshoot/Shutterstock.com

Emily Badger is a former staff writer at The Atlantic Cities based in Washington, D.C. She now writes for The Washington Post. All posts »

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