Thursday, May 25, 2006

Atlanta: A Surprising Bastion of "New Urban" Living

Below I report an interesting case study of a public/private partnership that appears to have achieved its two goals of greening a big chunk of center city Atlanta and creating urban economic development. The article does not say how much public money was spent on this project so it is impossible to begin to do cost/benefit analysis here. I'm always interested in "demonstration effects". Will politicians from other rundown places such as in Queens, NYC see the Atlanta success story and consider making similar investments? Perhaps they might anticipate the likely gentrification caused by a successful project and be afraid of losing their voting bloc? Would Jane Jacobs oppose this type of "big push" project?

Some economists (see http://www.nber.org/papers/w11790) have argued that on average Superfund site cleanups do not lead to nearby home price appreciation. But, this cleanup of brownfields would seem to highlight the need to model the following kind of "interaction effects". If a center city becomes more a desirable place to live (perhaps due to temperate winter climate and falling crime and high per-capita income creating fancy culture and nightlife), then in such a city cleaning up a brownfield can lead to sharp land price appreciation relative to cleaning up a brownfield in a Buffalo or Detroit. If you disagree with this theory, then how do you explain the following case?


May 24, 2006
Square Feet
Building a City Within the City of Atlanta
By LISA CHAMBERLAIN

ATLANTA — "Make no little plans" was the sentiment espoused by the celebrated architect and city planner Daniel H. Burnham at the turn of the last century, and it seems to be making a comeback at the turn of this one. From Denver to Dallas to downtown Los Angeles, multibillion-dollar large-scale mixed-used developments are taking shape. But Atlantic Station here is Exhibit A.

Atlantic Station is not only extraordinarily large, but it is also being built on a formerly contaminated site that was home to a hundred-year-old steel mill, which ceased operation in 1998. Now, the location has become a city within a city on 138 acres with retail, residential, commercial and public space in Midtown Atlanta, the commercial district. And the development seems to be exceeding the expectations of some people.

It will be several more years before the project, which is about half finished, is completed. If it all happens as planned, the $2 billion investment will create a total of 13 million new square feet — about 50 percent larger than the huge Atlantic Yards project proposed in Brooklyn.

The Atlanta development will ultimately include 6 million square feet of ultramodern Class A office space; 5,000 residential units (from luxury condo lofts to more affordable town houses and apartments); 2 million square feet of retail and entertainment space, including restaurants and movie theaters; 1,000 hotel rooms; and 11 acres of public parks.

"There are other projects like this around the country, but not on this scale with as many complicating factors," said James F. Jacoby, president of Jacoby Development Inc., an Atlanta-based development firm.

In 1996, he had the idea of redeveloping the steel mill property, despite the environmental concerns that had scared off many others. "To have this much property in the hands of one owner in a location like this, it's very rare," he said.

Atlantic Station has three areas: the District is the town center of sorts with commercial, retail and urban-style lofts; the Commons is predominantly a high-rise residential area; and the Village is low-rise housing as well as an Ikea store.

Much of the commercial property within the District — where the second Class A office building is coming out of the ground — is built atop a parking structure that will eventually have 15,000 spaces. (The structure was part of the environmental remediation to cap the area where the steel mill operated and it is built on top of the contained area.)

Since Mr. Jacoby first disclosed his plans for the project 10 years ago, it has been a target of critics and skeptics. Many doubted that the project would ever happen, only to wonder later if it could possibly live up to the hype.

But even Kyle Jenks, principal at Parkside Partners, a rival commercial development company that is not affiliated with Atlantic Station, said the project had been a boon to commercial real estate in Midtown Atlanta.

"Over all, the project has far exceeded expectations," Mr. Jenks said. "The residential component has been very successful, and equally impressive is the amount of Class A office they've been able to do in a tough speculative market.

"Three years ago, people would have said it was a Class B location, and yet they've gotten some very high-profile clients. That has only helped Midtown."

The main problem with the site was that in addition to being associated in people's minds with a polluted steel mill, it was separated from downtown by two merging Interstate highways. When the steel mill was built, this was the outskirts of town. But the city grew up around it, creating an enticing redevelopment spot. It has now been connected to the rest of downtown by a highway overpass and pedestrian bridge.

So far, all of the residences at Atlantic Station have been built by third-party developers. Mr. Jacoby says they have doubled their expected return on investment, and Jacoby Development will take over all future residential development. It intends to create upscale high-rises.

One current criticism of the project involves the retail segment, which opened last October and which has been faulted for relying heavily on national chains that are already in suburban shopping malls.

Yet, being able to walk from shops and restaurants to public parks and movie theaters — a rare experience in Atlanta — has attracted visitors from throughout the metropolitan area who drive in, park and spend the day.

"We're actively recruiting local retailers," said Derrick McSwain, chief financial officer for Atlantic Station. "But we had to have a critical mass first before local retailers could be persuaded to take a risk."

To avoid monotonous design, the developers also insisted that the third-party residential developers hire different architects and builders. Even so, everything is still so new that there is a somewhat sterile feeling, although that is expected to disappear over time as people continue to move in and occupy the space.

"There's a serious attempt to create some form of urbanity out of a relic of another world," said Douglas C. Allen, professor and associate dean of architecture at Georgia Institute of Technology. "But the site in its entirety appears to be overprogrammed. You have apartmentville, retail town and office town. I don't know if that's because of planning, or in order to accommodate all the different investors who were taking out pieces of it, but it falls short in some measure, particularly the architecture. But it will get better over time, especially as it's fully built out."

Susan S. Fainstein, director of the urban planning program at Columbia University, is chairwoman of a panel, "The New Mega Projects and Their Impact on Urban Life," that will be held in July at the World Congress of Sociology in Durban, South Africa. "It's hard to create texture when everything is brand new," Professor Fainstein said. "But given these kinds of sites, like old steel mills, you can't develop them incrementally. You need a whole new address. It isn't just a matter of momentum; you have to create a change in perception. And that requires a lot of capital and patient investors."

Indeed, the site could easily have become a failed large-scale urban redevelopment dream without a big investor — in this case, the American International Group. Mr. Jacoby said that once he was able to show that a cleanup was possible and that he had a master plan in place as well as support from the city in the form of tax increment financing, he wooed A.I.G. as a partner in the project in 1999.

"Many developers passed it up until Jim got it to the point where we could see some economic value," said Kevin P. Fitzpatrick, president of the AIG Global Real Estate Corporation.

The Environmental Protection Agency certified the property as safe for construction on Dec. 11, 2001, after years of environmental cleanup. It is said to be the nation's largest remediation of a brownfield, defined by the E.P.A. as contaminated property, usually where heavy industry once operated. It took another $250 million of infrastructure investment in roads, sewers and utility lines before construction of buildings could begin in 2002.

Brian Leary, vice president for design and development at Atlantic Station, said his company was working with A.I.G. on similar developments, including a large-scale waterfront project in Cincinnati.

"Unless it was hovering above water, Atlantic Station couldn't be more complicated," he said. "But there are other opportunities to export what we've learned to places with the same characteristics that Atlanta has: a growing economy, a high percentage of educated population, opportunity for public-private partnerships.

"It's not about replicating one building; it's about building a whole community."

3 comments :

NoLandGrab said...

Your opening remarks illustrate the same problem we have in Brooklyn.

I came across your post in a Google BlogSearch looking for info on Bruce Ratner's Atlantic Yards proposal in Brooklyn (mentioned in the NY Times article).

I work on NoLandGrab.org, an information portal linking news on the development proposal.

We have an approximate idea as to what subsidies will be involved with the project (probably some Brownfield bucks here too) and a loose idea of how much the project will cost. If you believe the developer that's $1.1 billion of public money for a $3.5 billion project. However, independent analysis places both numbers a bit higher.

The point is that no detailed financial information has been provided, even though over a third of the project is to be built on State property, a railyard. We have no way of knowing what kind of return the public can expect on their investment and these details are not forthcoming.

Add the financial murkiness to the use of eminent domain, extreme urban density in an area that is already a traffic nightmare and close to some neighborhoods with some of the highest asthma rates in the nation, and Brooklynites are staring down an urban planning disaster.

Other environmental issues are impacts of reflected light (it's a Frank Gehry project), 16 highrise towers blocking sunlight in low-rise residential neighborhoods (potentially denying development of solar energy alternatives for those near the project) and thousands of parking spaces welcoming cars into a public-transportation-rich zone that could further increase childhood asthma rates.

The NY Times has been quite mute on the issue -- the same developer is building the new NY Times Tower which they will be co-owners.

Anonymous said...

I live in Atlanta and work a stone's throw from the Atlantic Station development. I was very excited about the project when I first heard about it, but having visited the place a number of times now I'm less than impressed. Sure, I can park my car and walk around, and it's true that there aren't many places in Atlanta that are nearly as walkable. However, I can get the Atlantic Station experience by simply driving to the suburbs and parking at a mall.

Aside from the housing -- which I will comment on in a moment -- the development is nothing more than an outdoor shopping mall anchored by department store chains and a collection of chain restaurants and chain boutiques. In my mind, it is virtually identical to the Easton Mall near Columbus, Ohio.

As for housing, they do have a mix of luxury housing and lower-cost apartments. Now, when the development started it was billed as "mixed use", and when I heard that phrase I pictured homes mixed with businesses and a friendly, neighborhood feel. In reality, all of the housing is physically separate from the businesses. I imagine there are actually some residents of Atlantic Station who drive to the businesses (especially knowing Atlanta drivers). The housing is charmless cookie-cutter construction, with building doors that come right out to the sidewalk and very little green space, encouraging people to shut themselves indoors and never even meet their neighbors. Finally, all of this new housing butts up against the Home Park neighborhood, which is a small "student ghetto" trapped between Atlantic Station and Georgia Tech. I'm worried that this new housing boom in the area will encourage landlords in the area to fix up their properties and price students out of the neighborhood.

Needless to say, I am rather disappointed with Atlanic Station thus far. I am encouraged by the developers' comments in the article indicating they are trying to bring in more local businesses, which is a good thing -- as long as it maintains its current lineup of stores it will be nothing more than a shopping mall with apartments next door.

The far more interesting development stories in Atlanta are the various successes and failures happening in existing neighborhoods like East Atlanta and the Old Fourth Ward (Martin Luthers King Jr.'s old home). East Atlanta seems to be flailing a bit, and other parts of the city have had problems with development being equated to tossing out the poor black people and moving in the rich white people. The Old Fourth Ward, however, is quickly becoming a charming, racially diverse neighborhood and seems poised (to me anyway) to become one of Atlanta's greatest success stories.

Anonymous said...

^^ nice blog!! ^@^

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