The shifting geographic patterns and real estate demands of economic development

Over a year ago, I remember reading an article in the Atlantic magazine on the demographic shifts that were taking place across the country. The article explored how the outer reaches of suburban development were likely to become the next slum, while older urban areas could be experiencing a renaissance. These outer reaches of suburban development are characterized by large lot homes and often shoddy construction.

The article came to mind as I read how developers are converting old warehouses into the incubator space in Greenville, South Carolina. Read more. 

If you're it just did in the Atlantic article, I dug it out here.  The forecast for the outer reaches of suburbia are not promising:

Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, has looked carefully at trends in American demographics, construction, house prices, and consumer preferences. In 2006, using recent consumer research, housing supply data, and population growth rates, he modeled future demand for various types of housing. The results were bracing: Nelson forecasts a likely surplus of 22 million large-lot homes (houses built on a sixth of an acre or more) by 2025—that’s roughly 40 percent of the large-lot homes in existence today.

For 60 years, Americans have pushed steadily into the suburbs, transforming the landscape and (until recently) leaving cities behind. But today the pendulum is swinging back toward urban living, and there are many reasons to believe this swing will continue. As it does, many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s—slums characterized by poverty, crime, and decay.

At the same time, real estate prices in some urban centers are commanding a premium:

Pent-up demand for urban living is evident in housing prices. Twenty years ago, urban housing was a bargain in most central cities. Today, it carries an enormous price premium. Per square foot, urban residential neighborhood space goes for 40 percent to 200 percent more than traditional suburban space in areas as diverse as New York City; Portland, Oregon; Seattle; and Washington, D.C.

 Now take a look at the newly developed Innovation Center in Greenville:

Most of the companies that have leased space in the building, or plan to, are members of the Greenville Chamber of Commerce's Next group for technology entrepreneurs. They have long wanted to share office space under the theory it would foster collaboration and creativity.

Developer Bob Hughes of Greenville designed the Next Innovation Center with the techie crowd in mind. Amenities include skylights over stained concrete floors, a center atrium with grand staircase, Wii rooms for relaxation, a 50-megabit Internet pipe and digital signage in the lobby that tenants can program.

The  real estate demands of knowledge-based businesses and the entrepreneurs who run them are fundamentally different. EDPros will need to think about how to create innovation "hotspots" within their communities and regions. Close proximity to a college or university will help.

So, for example, the revival of Youngstown, Ohio is taking place around the Youngstown Business Incubator.  In Kokomo, Inventrek, located in a converted office building, is the epicenter for new development being planned by the newly launched Kokomo Development Alliance.