Innovation & Design

Bringing Community to the City


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Jean Hee Park, who doesn't like driving, prefers to walk to the grocery store. So when she graduated from Georgia Institute of Technology in 2003 and landed a job at a government agency in Atlanta, her choices were limited. Atlanta isn't a city with a lot of sidewalks. Or wasn't, that is, until the opening of Atlantic Station, a 138-acre community smack-dab in the middle of the city. Park promptly got a one-bedroom apartment for $950 per month in May, 2005, and today takes the metro train to work. "I don't have a car, and I walk for groceries -- I love it," she says.

Atlantic Station is the latest example of "new urbanism," a trendy antidote to the suburban and exurban sprawl that has defined the American way of life for the past five decades. It's a shiny new town, complete with city blocks, sidewalks, street parking, a train station, parks, schools, offices, town houses, and even loft residences right above the retail stores. It officially opened in October, 2005, though the condos and townhomes started selling before then. Its storefronts boast many well-known retailers, including a Banana Republic (GPS), a West Elm (WSM) furniture store, the country's first urban Ikea, a Coldstone Creamery, and a Publix grocery and pharmacy.

"There is a desire to regain some of the types of communities that Americans lived in decades ago," says Leonard Bogorad, managing director at Robert Charles Lesser & Co., a real estate advisory firm.

SUBURBAN BACKLASH. Atlanta officials hope the $2 billion project will help reduce traffic: Residents can walk to restaurants and entertainment, and use mass transit or walk to work. Wachovia (WB) bank and several law firms have already leased office space there. "It's the perfect answer to a suburb, where there's no defined place for a community to get together," says Anita Kramer, director of retail development at Urban Land Institute, a nonprofit research and education organization.

Indeed, mini-towns like Atlantic Station and Main Streets are sprouting up all over America. Sometimes even located in the middle of a suburban sprawl, these developments give residents an identity -- and a place to go for entertainment, shopping, and people watching -- whether it's at Santana Row in San Jose, Calif.; Easton Town Center in Columbus, Ohio; Centerpoint on Mill in Tempe, Ariz.; or the revival of Crossroads in downtown Kansas City, Mo.

New urbanism emerged a couple of decades ago as a backlash against the cookie-cutter suburban way of life, with its social isolation, its reliance on cars, and the traffic congestion they caused. Led by Elizabeth Plater-Zyberk, dean of the University of Miami's School of Architecture, the architects involved proposed reverting back to towns, with centers of activity where people can walk to and neighborhoods that foster social contact rather than deter it. "Traffic congestion is growing a lot faster than the growth of suburbs -- it's highly stressful and erodes people's quality of life," says Andy Kunz, director of NewUrbanism.org.

MIXED DEVELOPMENTS. Such town centers are truly picking up steam and will soon change the landscape of America. Nowhere is the trend more visible than with mall developers: Out of 147 new retail developments that started construction last year, only two were the big-box, enclosed malls of yesterday. Developers are dramatically shifting gears, making retail centers that include residences, libraries, art centers, boulevards, ice-skating rinks, and other public amenities. Many are located around suburbs of larger cities.

"The idea that a metropolitan area with only one center is no longer the functioning model for most cities -- today we have a galaxy with multiple high-density nodes," says Thomas D'Alesandro, senior vice-president of Chicago-based General Growth Properties, a large mall developer, which is currently in the process of building several such mixed developments.

Many counties across the U.S. see this as a great opportunity and are rewriting or adding new clauses to ease zoning laws that previously prohibited mixing residential areas with retail and office space. Virginia's Arlington County adopted "parallel codes" for the Columbia Pike district, allowing such multiple development in one area of the county while leaving the rest of it unchanged. And Cranberry township in Pennsylvania changed its zoning regulations in late 2004 to encourage a mix of commercial, retail, and residential use. Simon Property Group is now preparing to develop a township there covering 80 acres.

VARIED DEMOGRAPHIC. "Clearly, townships are promoting the idea of preventing sprawl, in clear contrast to the past when developers had to battle city hall for zoning changes," says Roy Higgs, chief executive of Development Design Group, an architecture firm in Baltimore. This comes at a time when developers are under a lot of pressure to maximize use of both land and construction, costs of which have spiraled in the past decade.

Furthermore, many counties and townships find that the sprawl has stretched their own finances. "Communities want to trim their budgets for new roads and schools," says Terry W. McEwen, president of Memphis-based Poag & McEwen, a developer currently making six master-planned communities, one with condos over retail shops.

Who moves to these communities? Not only young singles like 28-year-old Park, but newly retired baby boomers and empty-nesters looking to downsize yet still live near their friends. "People are also getting married and having children later in life, and don't want to leave urban settings," says Bogorad of advisory firm Robert Charles Lesser.

GO, TEAM, GO. Some of these developments have been highly successful. For instance, The Woodlands, situated to the north of Houston, is a master-planned community on 280,000 acres, with a man-made canal, along which there are homes, office buildings, a Marriott (MAR) hotel, an outdoor theater, and the town library. The single-family detached homes have been selling for $350,000. Condos right in the city center, initially priced at around $250,000, are now selling for $400,000. "Even the Marriott on the Waterway is one of the highest-occupancy hotels in Houston," says D'Alesandro of General Growth, the lead developer of the project.

The Reston town center in Virginia has a similar story. Condos were constructed on an existing retail center, and they started selling in the late 1990s. The builders were surprised that many of the homes sold for higher prices than originally anticipated. The development also attracts a lot of diners: Clyde's Restaurant Group, which operates 12 restaurants in the Washington (D.C.) area, has its busiest restaurant in Reston, beating out its city eateries.

That's not to say these projects are easy. Most developers in the past have been experts in one field -- residential, office, or retail. Combining them all is not a simple task, and many opt for partnerships.

Atlantic Station was first set in motion by AIG Global Real Estate, a division of giant insurer American International Group (AIG). It soon teamed up, however, with several developers of condominiums and hotels, such as Beazer Homes (BZH) and Novare Group. "We wanted to mitigate the risk, so we started by first selling the most marketable portion, the residential land, to other developers," says Kevin Fitzpatrick, president of AIG Global Real Estate.

CLASHING TENANTS. But others are taking chances. General Growth Properties (GGP), traditionally a mall developer, is expanding the Natick Mall near Boston to include around 250 condominiums.

Despite some success stories, it isn't necessarily a proven model. Given the huge expenditures, some developers may not recoup their investment. It's still early, and many of these townships are under construction. "It's certainly not for the faint of heart. It's not like rents are going up in proportion of construction costs, which are rising at 20% per year, along with land costs," says McEwen of Poag & McEwen. Access to lending is also tough. Historically, banks have developed expertise in only one of the disciplines and are reluctant to branch out.

In addition, once the buildings and city blocks are built, developers have found that not all of their renters get along. Residential, retail, and office users compete for parking. Retailers complain about support columns that are essential in a multistory building, but interfere with their open-store formats. Loft residents complain about noise from delivery trucks for restaurants and grocery stores.

THE MORE THINGS CHANGE... What's more disconcerting is that these towns give the impression of having less character, with an eerie sense of monotony, as the same pattern of storefronts, townhomes, and condos multiply across America. In a sense, their uniformity mirrors the very suburbs they escape.

Consider Seaside, one of the first towns using principles of the new urbanism: Built in Florida two decades ago, Seaside was ridiculed for its perfection in the satirical movie The Truman Show. General Growth's D'Allesandro counters that many of the towns stick to historical architectural styles of the area -- Mission style in California, for example, or Classic European brick in New England.

Still, the fact remains that it's an attractive option for many people. Atlantic Station's Park, for instance, says apartments like hers are already being advertised for higher rents. "I'd rather have the activity of a town center, which might have less character than a dreary suburb," says Park. Indeed, such reflections are getting more people thinking. At least four counties in greater Atlanta -- Gwinnett, Lakewood, De Kalb, and Fort McPherson -- are contemplating their own developments, with Atlantic Station as their model, to pump some life into their part of town.


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