Bloomberg News

Blue Atlanta Attracting Investment Away From Red Georgia

July 01, 2014

Atlanta Beltline

Today, a landscaped corridor called the BeltLine carries bikes where the homeless had once set up camp across the road. Photographer: David Goldman/AP

For 25 years, a near-vacant Sears, Roebuck & Co. building symbolized what the rest of Georgia hated about the city that dominates its economy. Owned by the Atlanta government, it was seen as scruffy, wasteful and unsafe.

No more.

Today, a landscaped corridor called the BeltLine carries bikes where the homeless had once set up camp across the road. The nine-story structure is reopening this year as one of the city’s hottest residential and commercial projects. It’s part of a rush of jobs to pedestrian and transit-friendly sections of Atlanta, mirroring developments in Denver, Los Angeles, Miami, Pittsburgh and Portland, Oregon.

“There has been an undeniable employment shift occurring in the state, away from the suburbs and toward the city,” Atlanta Mayor Kasim Reed, 45, said in an interview. “Businesses are moving in a non-traditional direction. It’s not one or two. It’s decision after decision.”

Employers bringing jobs downtown include Coca-Cola Enterprises Inc. (CCE:US), AT&T Inc. (T:US) and Carter’s Inc. (CRI:US), maker of Oshkosh B’gosh (GOSHA:US) children’s clothing. The homebuilder PulteGroup Inc. (PHM:US) is relocating from Michigan. Athenahealth (ATHN:US) Inc., a medical-technology company based near Boston, is shifting 177 employees from the Atlanta suburb of Alpharetta and adding about 500 more to offices in the old Sears building, now called the Ponce City Market, owned by Jamestown Ponce City Market LP.

Metro Jobs

The metropolitan area gained more jobs than the state in the past year, an increase of 2.5 percent compared with 2.1 percent, led by construction, state data show.

Heart of the ninth-largest U.S. metro area, Atlanta is a model of urban development, according to a June 18 study by the George Washington University Center for Real Estate and Urban Analysis in Washington.

The demand for real estate in walkable urban areas can provide a boost to the U.S. economy similar to post-World War II suburban sprawl, the report said. Atlanta’s BeltLine was voted last month the year’s best environmental-rehabilitation project in the world by the International Real Estate Federation, an industry association based in Paris.

The resurgence signals a triumph for a city that has spent decades defending its racial tolerance and investment in public transport against attacks and indifference from the rest of the state. As with many cities in Republican-controlled states, Atlanta has been at the mercy of rural and suburban lawmakers on issues such as gun control, mass transit and higher wages.

Population Divide

Of the 5.5 million people living in 28-county metropolitan Atlanta, only 447,841 are in the city, which is 54 percent black, according to the U.S. Census. Georgia’s 10 million residents are 60 percent white and vote majority Republican. The metro area contributed 71 percent of the state’s economy in 2012, U.S. Commerce Department data show.

“You have two different worlds that just collide: Red Georgia and Blue Atlanta,” said Christopher Leinberger, a senior fellow at the Brookings Institution, a Washington think tank, using the colors that describe the opposing sides in U.S. politics -- red for Republicans, blue for Democrats.

The Georgia legislature passed a law this year allowing guns in schools and churches, over the opposition of every Atlanta lawmaker. State legislators pushed to take Hartsfield-Jackson International, the world’s busiest airport, away from city control at least four times between 2002 and 2009. In 2005, state lawmakers outlawed municipal efforts to raise wages for employees of city contractors.

‘Whipping Boy’

Atlanta “became a political whipping boy,” said George Hooks, 69, a Democrat who represented a rural district in south Georgia and was the longest serving member of the state Senate until he retired in 2011. “People here refer to them as Yankees. They don’t understand how peaches are grown, or peanuts,” he said, citing two of the state’s emblematic crops.

The city’s Metropolitan Atlanta Regional Transit Authority has been a constant source of conflict. Its rail lines stop at the border of the two counties that make up Atlanta, Fulton and DeKalb, as suburbanites thought it would bring crime -- and black people -- to their communities, said Leinberger.

“Metro Atlanta racialized public transit,” he said of the rail system called Marta. “People said it stood for Moving Africans Rapidly Through Atlanta.”

It is the only major U.S. transit system with no dedicated state funding, said spokesman Lyle Harris. Yet the legislature required it to submit a budget for review every year and restricted how much of its revenue it can use to operate.

Tax Killed

Suburban voters killed a 2012 regional tax referendum that would have provided about $4 billion to widen traffic-choked roads in their communities because it allocated a similar amount to city transit improvements.

The defeat was “the most recent, most powerful example of the challenge of being a blue city inside a red state,” Reed said. Had the tax passed, “we would have had our economy come back faster and we would have been taking on what everyone agrees is the biggest challenge in the region.”

While Reed has worked publicly with Republican Governor Nathan Deal to ease the divide -- helping unlock funds for a port expansion in Savannah, for instance -- the tensions are holding Atlanta back, says Alan Berube, a senior fellow at Brookings.

Lagging Recovery

Metro Atlanta ranked behind Boston, Charlotte, Dallas, Denver, Kansas City and Minneapolis-St. Paul in economic performance during the recent recession and recovery, according to Brookings data.

“I have to think that the Atlanta region’s failure to act in more coordinated ways (especially in education and infrastructure) has slowed public investments needed for growth and led to lots of competition within the region for tax base,” Berube wrote in an e-mail.

Exhibit A may be suburban Cobb County luring the Atlanta Braves baseball team from downtown last year with a $672 million stadium less than 20 years after the club owned by Liberty Media Corp. moved into a new ballpark in the city.

Still, more people are coming than going.

The city’s population has increased 6.6 percent since 2010, more than twice the growth in the state. That contrasts with the white flight that helped fuel the sprawl around the city in previous decades. In 1986, suburban Gwinnett County was the fastest growing in the U.S. Atlanta’s population fell from 496,973 to 393,292 -- and its white population from 240,000 to 122,000 -- between 1970 and 1990.

Young Residents

City residents now skew young. While the city grew less than 1 percent between 2000 and 2010, its population ages 20 to 34 grew almost 5 percent, according to Atlanta Regional Commission data. Between 2000 and 2012, the home of Georgia Institute of Technology and parts of Emory University ranked second in the nation as a destination for educated adults, Bloomberg Rankings show. More than 46 percent of city residents hold bachelor’s degrees or higher, compared with 28 percent statewide.

Transit is part of the draw for young, educated workers, and businesses seeking to attract them, said Reed.

“They’ve made a decision that they want public transportation and you can see the impact it’s having on the city. The young knowledge workers, this is where they want to be.”

In an October study, Brookings’ Leinberger found that densely developed areas where people could walk to stores and work were getting a disproportionate share of new development in the region. Most were both inside city limits and served by Marta or near the BeltLine. While these areas represented less than 1 percent of the metro area’s land mass, they attracted 50 percent of new development spending in 2012, compared with 10 percent in 2000.

Other measures, including a 70 percent premium on rents in walkable urban areas near transit, also show the shift to the city, Leinberger said.

“In this real-estate cycle, it has turned on a dime.”

To contact the reporter on this story: Margaret Newkirk in Atlanta at mnewkirk@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Anita Sharpe


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