Densification Vs Reurbanization (aka OTP vs ITP)

Silicon Valley's Suburban Growth and Densification due to Large Technology Companies

Recently, I read an article about how Silicon Valley in California was losing its suburban identity to a pseudo-urban environment. Located outside San Francisco, Silicon Valley is an edge city that is home to technology companies such as Apple, Google, Oracle, HP, and many others. With the technology boom of this century, these companies are expanding and causing the economy in Silicon Valley to boom. As a result, the low-rise, one-story office complexes that characterized American suburbs are being replaced with medium-rise office buildings that house hundreds of more employees. These buildings add density and more people to Silicon Valley helping greatly boost its economy, but the edge city now lacks the amenities that make it either a comfortable suburb or a vibrant city.

In Atlanta, a similar situation is playing out. Unlike the economy dependent of the technology companies in Silicon Valley, the Atlanta economy is a diverse mixture of large Fortune 500 companies, small businesses, and start-ups. But Atlanta has developed similar to Silicon Valley in that its edge cities are growing and intensifying in density making them less of a suburb and more of a large city. So in this post, I am going to look at some the merits and faults of companies that choose to locate inside-the-perimeter versus companies that choose to locate outside-the-perimeter.

NCR's Current Suburban HQs in Duluth

Recently, NCR announced that it would move its corporate headquarters from suburban Gwinnett to urban Midtown Atlanta. Before NCR was located in Gwinnett, the company was headquartered in Dayton, Ohio. During the early 2000's, Gwinnett government offered NCR enticing tax incentives to move its headquarters to Duluth, Georgia. NCR took up Gwinnett's offer and moved their HQ's to several newly built medium-rise office buildings on Satellite Boulevard in addition to some older one-story office buildings there as well. This move brought over 3,000 jobs to the area helping fuel the housing market boom and the expanding service economy. The low costs plus the benefits of Gwinnett's excellent schools and suburban climate made the move an overall smart move.

But when the tax incentives began to dry up after the recession, the technology company began to consider moving its headquarters away from its suburban home to a more dense and central location. Reportedly, NCR executives looked at several locations across metro Atlanta including Alpharetta, Dunwoody, and Sandy Springs but ultimately decided to move to Midtown at Tech Square (with a large cash incentive awaiting them there). NCR plans to develop a high-rise for its headquarters and hopes to benefit from the start-up community and Georgia Tech students located around Tech Square. So comparing this move to their Gwinnett move: NCR will be paying for land at a premium, they will have to pay the city of Atlanta's higher taxes, the cost of living is more expensive, and workers will have to consider either commuting in from the suburbs where they currently live or moving intown where the climate is not always best suited for family living. On the other hand, the company will receive a handsome cash incentive from the city of Atlanta to help with the transition (upwards of several millions), they will be located near top-tier talent around Georgia Tech, they will located within a city with a vibrant culture and have access to public transportation (instead of being stuck in suburban traffic), they will own a piece of Atlanta's notable skyline and their signage will be seen by every driver on the connector, and they can provide a better work climate for their employees in the city.  

NCR's plan to move to an urban location or its "reurbanization" signifies a shift in companies and businesses who are now focused on creating an excellent work environment with access to the most qualified workers instead of attaining the lowest costs. And as a result, edge cities are changing their growth patterns to adjust themselves to this corporate shift. For instance, Alpharetta is no longer focused on building the most homes or the best malls. Instead, Alpharetta is investing into drive-to urban destinations such as newly developed Avalon or its developing new town center. These mixed-use developments are home to luxury condos and apartments, street level shopping, small parks, and office-space in the buildings upper levels. Around these mixed-use developments, the new commercial and residential developments are focused on walkability and access to these new "urban" amenities instead of the strip malls or cul-de-sac neighborhoods that typify suburbs. Also, Alpharetta is expanding in the education sector with the building of a Gwinnett Tech satellite campus. In addition, Alpharetta focuses all new development towards completing its city master plan that guides the planning department towards the best land development of the city. All of this means that instead of being the home to Fortune 500 office parks, malls, strip malls, and gated neighborhoods, Alpharetta wants to be the home to a more dense and less suburban edge city.  

Avalon in Alpharetta

Alpharetta's "densification" is a shift from its suburban origins and as a result, Mercedes Benz is relocating its North American headquarters there from its current suburban location in New Jersey. Mercedes Benz cites cash incentives, a need for new talent, and the economic climate in Atlanta and Alpharetta as reasons for its move. So now, Mercedes Benz has bought land in Alpharetta for a premium (due to Alpharetta's location and densification), plans on building an urban-like, mixed-use campus to foster a better workplace community, have a high-rise building that provides signage to GA-400, and have access to Atlanta's finest workers. Sound similar to NCR's move to Midtown? It should because both companies are moving to their new locations for the same reasons. The only difference is the location: downtown vs edge city.

Future Plans for Alpharetta's Avalon Development

So is the current suburban densification any different from the urban revival taking hold of Atlanta. In many ways no: mixed-use developments, high prices, good locations, and the appeal of its workers or residents characterizes both the metro Atlanta's densification and the reurbanization in the perimeter. But there are differences in that the edge cities still lack the culture, public transportation access, or density that the city of Atlanta has while the city lacks the good schools, the safety, and affordable amenities that edge cities are home too.