Is It the Beginning of the End for Suburbia

[Anonymous]

Interesting: instability in the Middle East has forced a cut production for several OPEC countries (e.g. Libya). Saudia Arabia has for a long time claimed to have a ton of extra capacity. They also [url=http://online.wsj.com/article/SB10001424052702304569504576405552639221080.html
]agreed[/url] to increase production to make up for the shortfall. Now it turns out that they're incapable of increasing production to bump overall production up. Now we've got Western governments opening up their strategic petroleum reserves. It's starting to sound like the skeptics who claimed SA didn't actually have the production capacity were correct.

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

So what happens to suburbia in the case that world production capacity cannot be scaled up as more and more of the third-world population enters the middle-class? Any thoughts on what $6 / gallon gas is going to do to the suburban landscape? Or suburban housing prices, for that matter?

[Anonymous]

I don't think that in itself will change much. American auto manufacturers have already changed their business model to smaller, more fuel efficient cars. I do think the days of huge SUVs are probably gone (thank goodness). What I don't know is how the delivery of goods to suburbs will change, if at all, as transportation prices increase to bring things like food to grocery stores.

Plus, not all suburbs exist to house urban workers. I live and work in Rockville. I only fill my gas tank once every two weeks. Burbs that have their own industry/business sectors will likely be just fine.

[Anonymous]

Suburban life is not going to change. People are still spread out in countries where the price of gas is already that high due to taxation. Behavior might change, such as car purchases, telecommuting, use of public transportation, etc. And companies might locate nearer to where people live - ie, the suburbs.

But an extra grand of gas does not make people want to move into already overcrowded cities, with real estate prices between 2 and 4 times the suburban equivalent.
.

[Anonymous]

Anonymous wrote:I don't think that in itself will change much. American auto manufacturers have already changed their business model to smaller, more fuel efficient cars. I do think the days of huge SUVs are probably gone (thank goodness). What I don't know is how the delivery of goods to suburbs will change, if at all, as transportation prices increase to bring things like food to grocery stores.

Plus, not all suburbs exist to house urban workers. I live and work in Rockville. I only fill my gas tank once every two weeks. Burbs that have their own industry/business sectors will likely be just fine.

I think you're overly optimistic. The vast majority of suburban residents commute. If not downtown, then to other suburbs. The number of folks who live and work in the same place is very small. Go out to Rockville Pike, or Viers Mill Road on a weekday morning if you don't believe me.

[Anonymous]

Anonymous wrote:Suburban life is not going to change. People are still spread out in countries where the price of gas is already that high due to taxation. Behavior might change, such as car purchases, telecommuting, use of public transportation, etc. And companies might locate nearer to where people live - ie, the suburbs.

But an extra grand of gas does not make people want to move into already overcrowded cities, with real estate prices between 2 and 4 times the suburban equivalent.
.

This is, I think, one of the more unintentionally hilarious examples of wishful thinking out there. While you're right, more people live "in the suburbs" that's because "the suburbs" are spread across an incredibly large area. Companies don't move "to the suburbs"; they move to Reston. Or Gaithersburg. Or Centerville.

Instead, what's likely to happen as the twin pressures of skyrocketing fuel costs and population growth ramp up will be that a central location is more and more likely. That central location will be either DC or one of the close-in suburbs like Silver Spring or the like. There will probably continue to be a consolidation around secondary centers like Tyson's Corner.

[Anonymous]

actually, companies tend to relocate closer to the houses of their CEO. that is the biggest factor when studying company relocations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Suburban life is not going to change. People are still spread out in countries where the price of gas is already that high due to taxation. Behavior might change, such as car purchases, telecommuting, use of public transportation, etc. And companies might locate nearer to where people live - ie, the suburbs.

But an extra grand of gas does not make people want to move into already overcrowded cities, with real estate prices between 2 and 4 times the suburban equivalent.
.

This is, I think, one of the more unintentionally hilarious examples of wishful thinking out there. While you're right, more people live "in the suburbs" that's because "the suburbs" are spread across an incredibly large area. Companies don't move "to the suburbs"; they move to Reston. Or Gaithersburg. Or Centerville.

Instead, what's likely to happen as the twin pressures of skyrocketing fuel costs and population growth ramp up will be that a central location is more and more likely. That central location will be either DC or one of the close-in suburbs like Silver Spring or the like. There will probably continue to be a consolidation around secondary centers like Tyson's Corner.

In case you are completely new to DCUM, Reston, Gaithersburg, and Centerville are the suburbs. And the suburbs have always had business districts. Even farm communities have that. People want to live close to work. With the OP's $6 gas, no one needs work to be a few blocks down the street.

[Anonymous]

and there is PLENTY of oil left. just need to go get it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't think that in itself will change much. American auto manufacturers have already changed their business model to smaller, more fuel efficient cars. I do think the days of huge SUVs are probably gone (thank goodness). What I don't know is how the delivery of goods to suburbs will change, if at all, as transportation prices increase to bring things like food to grocery stores.

Plus, not all suburbs exist to house urban workers. I live and work in Rockville. I only fill my gas tank once every two weeks. Burbs that have their own industry/business sectors will likely be just fine.

I think you're overly optimistic. The vast majority of suburban residents commute. If not downtown, then to other suburbs. The number of folks who live and work in the same place is very small. Go out to Rockville Pike, or Viers Mill Road on a weekday morning if you don't believe me.

I don't think it's overly optimistic. People change their lifestyles out of necessity. They give up certain things in order to maintain others. Some may choose to continue the commute. Some may choose to find a job closer to home.

[Anonymous]

Anonymous wrote:actually, companies tend to relocate closer to the houses of their CEO. that is the biggest factor when studying company relocations.

During the 90s this was the case. But I think it's a bit of an urban myth to extrapolate what was surely an historical blip to a "law" of company relocation:

http://www.chicagobusiness.com/article/20110528/ISSUE01/305289984/crains-special-report-corporate-campuses-in-twilight

The growing trend is for a return to the city centers--at least for industries that are looking to hire sought-after younger workers in high-skilled positions. As a class, Millennials want nothing to do with the burbs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Suburban life is not going to change. People are still spread out in countries where the price of gas is already that high due to taxation. Behavior might change, such as car purchases, telecommuting, use of public transportation, etc. And companies might locate nearer to where people live - ie, the suburbs.

But an extra grand of gas does not make people want to move into already overcrowded cities, with real estate prices between 2 and 4 times the suburban equivalent.
.

This is, I think, one of the more unintentionally hilarious examples of wishful thinking out there. While you're right, more people live "in the suburbs" that's because "the suburbs" are spread across an incredibly large area. Companies don't move "to the suburbs"; they move to Reston. Or Gaithersburg. Or Centerville.

Instead, what's likely to happen as the twin pressures of skyrocketing fuel costs and population growth ramp up will be that a central location is more and more likely. That central location will be either DC or one of the close-in suburbs like Silver Spring or the like. There will probably continue to be a consolidation around secondary centers like Tyson's Corner.

In case you are completely new to DCUM, Reston, Gaithersburg, and Centerville are the suburbs. And the suburbs have always had business districts. Even farm communities have that. People want to live close to work. With the OP's $6 gas, no one needs work to be a few blocks down the street.

Sure. But your point was that "companies might locate nearer to where people live - ie, the suburbs". I was simply pointing out that there is no such thing as "the suburbs"; at least in the sense of somewhere Company A is going to relocate to. The most common scenario is that you live in Reston, your co-worker lives in Laurel, and another co-worker lives in Alexandria. You all live "in the suburbs", but simply saying "we need to be near where our employees work so we'll move to The Suburbs" is meaningless. If fuel prices hold, the rapidly increasing population growth in the region will make suburb-to-suburb commuting intolerable. The only thing that might mitigate that effect is an intolerable rise in fuel prices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think that in itself will change much. American auto manufacturers have already changed their business model to smaller, more fuel efficient cars. I do think the days of huge SUVs are probably gone (thank goodness). What I don't know is how the delivery of goods to suburbs will change, if at all, as transportation prices increase to bring things like food to grocery stores.

Plus, not all suburbs exist to house urban workers. I live and work in Rockville. I only fill my gas tank once every two weeks. Burbs that have their own industry/business sectors will likely be just fine.

I think you're overly optimistic. The vast majority of suburban residents commute. If not downtown, then to other suburbs. The number of folks who live and work in the same place is very small. Go out to Rockville Pike, or Viers Mill Road on a weekday morning if you don't believe me.

I don't think it's overly optimistic. People change their lifestyles out of necessity. They give up certain things in order to maintain others. Some may choose to continue the commute. Some may choose to find a job closer to home.

Unfortunately, that's not really an option for a significant number of the region's workers--two income families are overwhelmingly likely to have each worker heading off to a different neighborhood, each job far-removed from the other.

[Anonymous]

Yes that makes sense in the cities that contracted after tgedeclineof manufacturing. They have space. But here? Dc area is what 2.4 million people and only 500,000 fit within the district. And only a fraction of business is in the district.

There is no place to grow here without the suburbs.

Of the eight jobs my wife and I have held in the last 20 years between us, only one was in the District. If we have to shorten our commute it will be to move somewhere in fairfax.

[Anonymous]

Anonymous wrote:Yes that makes sense in the cities that contracted after tgedeclineof manufacturing. They have space. But here? Dc area is what 2.4 million people and only 500,000 fit within the district. And only a fraction of business is in the district.

There is no place to grow here without the suburbs.

Of the eight jobs my wife and I have held in the last 20 years between us, only one was in the District. If we have to shorten our commute it will be to move somewhere in fairfax.

Excellent point: of course, the answer is that places like Tyson's, Rockville, and Gaithersburg are going to grow more and more similar to Silver Spring. That's already happening. To the extent that they can pull off the transformation, these new satellite "cities" are going to do quite well. If they don't make the transformation, they'll be in trouble.

[Anonymous]

Anonymous wrote:and there is PLENTY of oil left. just need to go get it.

The world oil supply peaked in 2005. The sources that are left and yet untapped can indeed be accessed, but only at higher and higher prices. And as the supply becomes less free-flowing than it used to be, there will be more and more rooms for speculators/derivative traders to artificially cause temporary spikes in the market to make a quick buck at the world's expense, just as they did in 2008 with staple crops while purshing 100s of millions of poor people in developing countries closer to starvation.