Find out what people want, then sell it to them.
Throughout history, that’s been a pretty good rule of thumb for economic achievement. Every great company, every profitable small business, every celebrated business executive and every prosperous city or region can trace its success to its ability to gauge market demands, often before the market itself even knows what it wants, and then meet those demands.
Certainly, that was metro Atlanta’s key to success during its boom years. The market was looking for suburban and exurban SunBelt communities built on large lots and cheap land, subsidized by heavy investment in highways and interstates and encouraged by government policies that favored low-density development.
In metro Atlanta, it found exactly that. The near-perfect alignment of market demands with the region’s resources and governmental mindset produced remarkable growth, turning the metro region into a major national success story. Other regions looked to Atlanta as a model, trying to copy our formula for growth.
Those days are over. They are over in part because of the Great Recession, which devastated areas such as metro Atlanta that were particularly reliant on real estate. It’s an exaggeration to say that we were a one-industry town, but that one industry did account for a lot of the region’s dynamism and identity.
But the recession explains only a part of our problems. We didn’t notice it through much of the 2000s, running as we were on the fumes of a credit-fueled boom, but the underlying market was changing.
For example, whether in response to higher fuel prices, frustration at the intransigence of traffic or simply a change in culture, Americans began driving less. Vehicle miles traveled per person peaked back in 2004, almost a decade ago and well before the recession, and have been declining every year since then. More ominously, the rate of young people who bother to get a drivers’ license has been dropping for more than 30 years now.
In addition, the longtime historic pattern of suburban growth far outpacing urban growth appears to be reversing itself as well. “In 2010-11, big cities in the nation’s largest metropolitan areas grew faster than their suburbs for the first time since the 1920s, a trend that prevailed again in 2011-12,” writes William Frey, a well-respected demographer for the Brookings Institution. Frey goes on to note that “metropolitan areas exhibiting the largest city growth advantages included Atlanta, Charlotte, Denver, and Washington, D.C.”
According to Jed Kolko, chief economist at the real-estate site Trulia.com, housing values in dense urban areas are rebounding more quickly than in suburban areas dominated by single-family homes. In 16 of 20 top real estate markets, including Atlanta, housing values per square foot rose more quickly in urban than suburban areas over the past year, he reports.
Why? Younger people are getting married later and having smaller families; older people are looking to downsize from the homes in which they raised their own families, and both groups are looking to be less auto-dependent. The market is shifting, and as a state and region, we’re not shifting to accommodate it.
None of this means that suburban areas face inevitable decline. To the contrary, such trends represent a particular opportunity to those communities with a downtown core to exploit and leverage, and smaller cities in metro Atlanta and elsewhere are seizing that chance. They can see where the market is headed, and they are trying to align themselves to meet its needs.
However, metro Atlanta as a whole faces a significant handicap. It lacks any tangible form of regional self-governance, and state leaders appear culturally, generationally and ideologically incapable of adapting. Their continued hostility to transit investments and their inability to think of economic development in any terms other than cutting taxes and extending special deals represent an important handicap.
Instead of responding to market signals, Georgia’s leaders have adopted a strategy of trying to keep market share by perpetually lowering costs. That’s a classic sign of a company that has given up trying to innovate and re-invent itself, and instead is satisfied with trying to manage its relative decline.
