There is certainly no obvious reason why the city of Atlanta would be better off if its affluent Buckhead section were to succeed in its current bid to “de-annex” — secede — from the larger city.
From a tax and revenue base, no city would wish to lose almost a third of its real estate valuation ($11 billion of $35 billion), 40% of its local revenues and a section in which the median income for its 103,000 residents’ households is $140,000. There is no doubt that Atlanta would, in the short term, have to cut back on city services, yet provide them for a poorer population. Buckhead might be better off not sharing its revenues but it’s hard to make the cases that a smaller Atlanta would be.
And yet, for the longer term, the picture might be different. Cities, especially dynamic cities like contemporary Atlanta, can change dramatically. What makes Buckhead affluent today might not do so in a few years — and new trends in older parts of Atlanta may be laying the groundwork for non-Buckhead prosperity.
Credit: contributed
Credit: contributed
To understand why, one must look at the Buckhead economic model. It is essentially a suburb within the city — replete with luxury apartments, an extensive mansion district and, notably, a collection of shopping malls, office buildings and high-end hotels. Large-lot single family homes dot the streets outside its compact downtown area. These have all been winners in the economy as it has been structured, as well as consumer tastes in residential choice.
But, as the COVID pandemic has made clear, the times they are ‘a- changing. Shopping malls across the country are losing star tenants, as online shopping crowds out “bricks-and-mortar” stores. Even a long-high-grossing mall such as the Lenox Square, where security concerns have arisen, may not be immune from this fate. Data from the consulting firm Deloitte shows that the vacancy rate in malls rose to 11.4 percent in 2021 and some 50 retailers associated with them declared bankruptcy. As Deloitte Insights puts it:
“The rise of e-commerce, shrinking foot traffic and changing consumer shopping preferences threatened a way of shopping that existed for decades.”
Nor is the future necessarily bright for Buckhead’s high-end commercial office space. As the Collier’s real estate research service has reported, occupancy has fallen, as of November, for seven consecutive quarters. “The submarket’s vacancy rate increased as a result of the vacancy and is above 20% for the first time in almost a decade”. In other words, more and more Buckhead offices are empty. The work-from-home wave may not remain at the same high level at which it stands while the omicron variant persists — but we are not likely to go back to pre-pandemic models in which white-collar workers came into the office five days a week.
Nor are Zoom meetings going to simply disappear, as businesses continue to question whether travel justifies its costs. Buckhead’s hotels can’t count on a ready stream of road warriors with expense accounts. There is little doubt that business travel will recover from 2020 lows — but no guarantee it will rebound completely. Again, Deloitte has observed that “travel use cases have been reevaluated based on their impact on the bottom line and the environment, as well as how well they can be replaced by now widely adopted tech platforms.”
Crucially, as Buckhead faces potential decline in the wake of changing preferences around work and play, core parts of Atlanta — especially Midtown — contemplate a bright future. The Beltline, generally, simply must be viewed as the most creative and potentially impactful urban planning initiative in the U.S. For younger workers and prospective newcomers to the city, neighborhoods in which one can walk to work or shopping and be able to run or cycle are the new Buckheads. That Blue Cross moved from Buckhead to Midtown is itself an indicator, as is Google’s announcement that it will take space in the area. There’s room in Midtown, as well as under-occupied parts of the city, to welcome new residents without pushing out those already there.
It’s hard to think of the preening Buckhead of “A Man in Full” as a potential drain on the city of Atlanta — but tastes, trends and habits change and neighborhoods change along with them. Buckhead could conceivably demand more in services than it provides in revenue.
It’s something for both sides of Atlanta’s heated debate about “de-annexation” to ponder.
Howard Husock is a senior fellow in domestic policy studies at the American Enterprise Institute (AEI), where he focuses on municipal government, urban housing policy, civil society and philanthropy. He is the author of the recent study, “Buckhead, Atlanta, and the future of urban governance.”
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