When examining the Southeast region of the US, Atlanta has represented an impressive history of expansion in regards to population growth, economic growth and real estate development. The recent recession affected the national economy and Atlanta’s local economy was hit with an economic slowdown. Employment slowed, which resulted in the loss of 23,500 jobs in 2001 according to the U.S. Bureau of Labor Statistics.
But 2004 showed tremendous signs of improvement and brought renewed optimism for growth in 2005. Although the state’s economy is lagging behind the nation’s economic recovery, Atlanta’s looking at an impressive comeback from the recent recession. Population growth is an estimated 5,000 per year since 2000 and employment growth was up 19,100 jobs in 2004. Atlanta is betting on its ability to attract corporate headquarters to the area. They are hoping that with companies contemplating business expansions, they will look to Atlanta as a relocation of choice. Recovery plans are now the main focus for the economic future of Atlanta.
Atlanta’s Overall Economy
The city of Atlanta has new incentive programs they plan to implement and have proposed a $100 million dollar fund to finance Urban Development in an effort to further promote economic growth. Atlanta is looking to provide economic growth by creating 60,000 jobs over the next five years, encourage development projects for Downtown Atlanta and the Buckhead area and maintain businesses already present in the area. The city will focus on four industries, transportation and logistics, tourism and hospitality, healthcare and bioscience.
The Quality Growth Task Force is projecting population growth of 2.3 million over the next 25 years and the creation of 1.7 million jobs. Atlanta is in the process of restructuring how the city can grow by redirecting growth more towards the CBD. The biggest goals for economic expansion beside job growth will be more mixed use housing developments closer to the CBD to provide easier access for worker.
The city is working on expansion projects such as the Hartsfield-Jackson Atlanta International Airport, a 5.4 billion dollar expansion. Road construction has been funded with 15.5 billion which includes a 1.3 billion expansion of high-occupancy vehicle lanes in the Atlanta area and 1.5 billion for additional lanes on rural interstates.
According to the U.S. Census Bureau, Georgia had the fourth largest percentage increase in housing starts from 2000 to 2003. But in 2005, a 9.7 percent drop in housing starts and a 36 percent drop in multifamily units are expected. Although the new residents to the area have slowed since the boom of the late 1990s, metro Atlanta remains one of the nation’s most popular destinations.
Atlanta also has a very impressive housing market in comparison to national averages. According to the firm SmartNumbers, 48,000 new houses were sold in 24 counties of metro Atlanta last year, an increase of 7 percent, making Atlanta one of the nation’s best new home markets. New construction represents 33 percent of home sales in Atlanta, compared with just 14 percent nationally. The average price of a metro Atlanta house was up only 3.8 percent last year, compared with double-digit increases in other high-priced markets.
Government officials are making housing a top priority on their agenda. To help promote future growth, they want to make sure there is sufficient affordable housing for middle class residents and encourage developers to build residences in areas already served by sewers and roads. There is enough supply of high end product in the market and developers will have to focus on affordable housing in the future.
The oversupply in the apartment market is a result from a robust development cycle. Housing permits for residential development are easing. Although the housing market is anticipating growth, it will be gradual. Monthly asking rents are expected to rise in 20005, while concessions decline and population increases.
In 2004, several submarkets saw the highest occupancy gains. Buckhead had the highest occupancy with 93.9 percent while Sandy Springs and Dunwoody saw 93.0 percent. But the city would like to see more activity in the Downtown market which is bracing itself for huge changes in office, retail and especially residential. The most highly anticipated project is a new commercial and residential complex called the Ivan Allen Plaza, which will replace parking lots and decayed buildings found in the area.
Threats to Economic Growth
The city is looking at the problem with the lack of affordable housing which is a drawback for middle to low class individuals. Workers who live outside the CBD have to travel long distances for work because there is little affordable housing found within the area. The Quality Growth Coalition is addressing the region’s growing housing challenges and will help implement policies that would bring more mixed-use and affordable housing to downtown areas.
Correcting the wave of growth to be more centralized around the CBD will help spur economic growth to new heights but affordable housing will be a major stumbling block if not corrected. If you do not create housing around jobs, retail spaces and offices, you will miss out on the potential traffic of people you would see if housing were made available and people traffic is the life blood for a thriving community.
The problem, Atlanta has large lot sizes, 3 people per acre and the population growth is spreading out further and further from the CBD. Having a more centralized city where you can live, work and play and providing more affordable housing in the centralized area will absorb much of the cities population growth as well as economic growth.
The public’s mindsets have changed from living in spread out areas to living closer to cities where you can do it all in one central locale and cut down on commuting time.
Larry Gellerstedt, Quality Growth Coalition’s chairman, states, “There are about seven jobs for every resident in the downtown area. That creates a big imbalance between home location and work location.” Gellerstedt adds, “One of our main goals is to find areas in the metro area that haven’t been developed to their fullest potential and get them rezoned in a way that would allow higher density, mixed-use developments. These developments would preserve green space, cut down commute times, and foster smart growth in Atlanta.”
According to a study done by the Atlanta Journal-Constitution, foreclosures in the metro Atlanta area more than doubled between 2000 and 2004. Georgia has one of the fastest foreclosure processes in the nation and the process is not monitored by the government or the courts. This process not only allows lenders to sell homes in as little as 37 days but homeowners have little to no recourse.
The Atlanta Journal-Constitution concludes that most of the foreclosures occur in predominately African American communities in south DeKalb, Clayton County, and downtown Atlanta. Low income homeowners must file Chapter 13 bankruptcy in order to keep their homes, but unfortunately, most homeowners will be unable to live within the court-ordered budget and lose their homes anyway. For this reason, affordable housing is necessary to cut down the amount of foreclosures occurring in the area, decrease the need for government subsidies and spur more economic growth.
For a city, access to transportation is a key component to economic growth and Atlanta is constructing a plan to revitalize the Beltline that is sure to boost the city to new heights. Atlanta is creating a $1.3 to $1.7 billion special tax allocation district bond to back the Beltline, an idle rail corridor that is located 2 to 3 miles from the downtown Atlanta area. The city plans to revive the Beltline which will offer 22 miles of transit and paths around the CBD, with access to parks and over 40 of Atlanta’s neighborhoods.
The tax allocation district bonds can be used to pay for development cost associated with parks, trails and transit along the Beltline. It will also provide tremendous economic development opportunity all within the urban core by creating workforce housing, development in underserved area and other transportation improvements such as new streets, new sidewalks and new streetscapes.
The city is anticipating that over the next 25 years, the development of the Beltline will create 37,500 new jobs, 48,000 construction jobs, development of 28,000 new residential homes (including 5,600 new workforce housing), development of 2.4 million square feet of new retail space, 5.3 million square feet of new office space, 1.3 million square feet of new light industrial space and 1,400 new acres of parks and green space.
There does not seem to be much opposition to this proposal due to the potential economic growth it could bring to the area. It is anticipated that the project would cost $2 to $3 billion dollars but the likelihood of drawing matching federal grants for transit, philanthropic funding for parks and public and private funding there is no denying that the revival of the Beltline could be reality.
There is a strong movement to revitalize housing in the downtown Atlanta area, to improve infrastructures and for getting more attractions, such as The New World of Coca-Cola museum in downtown Atlanta, a $96.4 million dollar facility receiving financial support from the city’s development agency. The city has pledged close to one billion dollars in projects to transform the downtown central business district. The vision: to alter the now downtrodden, crime ridden streets by creating nightlife for tourists and locals and bring back vivacity to the downtown area.
The Atlanta City Council approved the sale of up to $50 million in bonds to support development on the east side of downtown. Bonds sold in the special tax districts are repaid with the additional property taxes the new developments generate. The city is looking to cater to the present office workers and the residential population downtown. Public housing complexes near the state capitol would be replaced with apartments that rent to the poor and middle class. They aspire to create a mix of the present locals as well as tourists who are going to be drawn downtown because of the new attractions such as the aquarium, the World of Coke, the children’s museum, and Centennial Olympic Park.
And other nearby downtown destinations are being transformed as well but the central issue is public safety. The city will have to correct the loitering problem in the area and a partial solution will be a homeless shelter and service center that is to open south of Atlanta City Hall. Mayor Shirley Franklin comments “Public safety is being improved by Atlanta police officers walking beats, in addition to the pith-helmeted crowd of downtown “ambassadors” who offer directions to lost tourists and call authorities when necessary.”