Skip navigation

Edge cities are standing at a new crossroads.

As commercial real estate markets crashed across the nation in the late 1980s, some industry experts jested that the best strategy was to "stay alive until '95." That bitter advice is now paying off.

After years of licking their wounds, banks, insurance companies and pension funds now are making loans on commercial real estate or are acquiring these properties for their investment portfolios.

More surprisingly, speculative real estate development may be coming out of cryogenic suspension. In some communities, modern well-located industrial space is hard to find. Even the long-glutted office market finally is recovering.

But before insurance companies and pension funds leap on the investment bandwagon or developers think about developing, they must take a hard look at the long-term future of the nation's "edge cities" or "suburban downtowns."

Throughout the 1970s and 1980s, a large portion of commercial real estate investment and development occurred in the dozens of suburban downtowns which emerged throughout the nation's metropolitan areas. Some of these high-density employment, retail and entertainment centers (such as White Plains, N.Y., and Stamford, Conn.) grew in or near existing towns. Other complexes (including Tysons Corner, Va., outside Washington, D.C.; Buckhead and Perimeter Center in Atlanta; and Costa Mesa in Orange County, Calif.) sprouted seemingly overnight out of open fields or low-density suburban sprawl near one or more highways, a regional shopping mall, and high-end single-family housing.

By the mid-1980s, suburban downtowns were a great success. These complexes were newer, safer, closer to executive housing and closer to many workers' homes than traditional downtowns. In Atlanta, Buckhead and Perimeter Center both boasted more Class-A office space than downtown. The vast South Coast Plaza shopping center in Costa Mesa rang up greater retail sales than downtown San Francisco's Union Square shopping district.

The golden record of the '70s and '80s will not always be repeated in the '90s.

Some suburban downtowns, including White Plains, N.Y.; Stamford, Conn.; Southfield, Mich.; the Greenspoint area of Houston; and the Sherman Oaks/Van Nuys area in Los Angeles' San Fernando Valley, appear to be struggling.

In these locations, many prime corporate tenants are moving out. Office buildings are slipping from Class-A to Class-B status, no matter what improvements the owners make. Nearby malls are losing their best retailers and suffering troublesome vacancies.

In many metropolitan areas, die traffic congestion, high costs and crime, which corporations thought they left behind in the center cities, now have migrated to many suburbs. Gangs have invaded shopping malls as widely scattered as suburban Detroit, Houston and Los Angeles.

Racial and ethnic change also have impacted the neighborhoods around some suburban downtowns. When yuppies left the apartment complexes in Houston's Greenspoint district a decade ago, lower-mcome blacks and Hispanics took their place. Crime and drug trading also increased. As a result, many Houstonians perceive Greenspoint Mall to be unsafe, and businesses are leery of the nearby office buildings.

In addition to location-specific neighborhood changes, sweeping upheaval in the American workplace is dramatically impacting all suburban downtowns. Many corporations no longer want, or need, 1980s-style office buildings with vast 20,000 sq. ft. floors because they are making greater use of cutting-edge technology and are restructuring themselves to compete in the world economy. Others are doing more work in less office space through alternative officing strategies.

Some corporations and professional firms already are deserting existing suburban downtowns for other locations. Some are moving to the next frontier: the newest edge cities at the outermost fringe of our metropolitan areas. Sears' Merchandise Group relocated from downtown Chicago's Loop to a 1.9 million sq. ft. facility in exurban Hoffman Estates. J.C. Penney Co. Inc. moved its headquarters from Dallas to Plano, Texas.

Other corporations and professional firms are expanding their offices in still-vibrant traditional downtowns rather than moving to suburban downtowns.

Still other businesses are relocating to attractive small towns that are geographically remote but technologically convenient to the rest of the country. Thrifty Payless Inc. transferred its headquarters and several hundred jobs from Los Angeles' mid-Wilshire district to scenic Wilsonville, Ore., south of Portland.

How can 10- and 20-year-old suburban downtowns survive all of these critical changes?

Suburban downtowns already have jobs, shopping and, sometimes, entertainment in place. By redeveloping the vast surface parking lots, suburban downtowns could become mixed-use "places" which attract people day and night and on weekends. Through this evolution, these complexes would become modern-day Main Streets or "new towns" with long-term value.

That scenario is appealing, but questionable. Additional in-fill development, which might transform and save some suburban downtowns from slow decline, is unlikely in many communities due to strict new zoning regulations and nearby neighborhood associations which are successfully pursuing no-growth agendas.

Most suburban downtowns also lack strong political or business leadership to work for beneficial growth and change. For example, Tysons Corner, a 6,000-acre unincorporated section of Fairfax County, is part of three county supervisory districts, three county planning districts and a state planning district.

As their final drawback, most suburban downtowns lack the historical, cultural, educational and sentimental associations that have enabled many of our traditional downtowns to change, survive and even prosper in recent years.

Of course, many well-located, well-planned suburban downtowns appear to have secure long-range futures, such as the "new town" of Reston, Va., outside Washington, D.C., Perimeter Center in Atlanta, and Century City adjacent to Beverly Hills.

But it does seem clear that many other suburban downtowns are, or will soon be, in trouble. Therefore, banks, insurance companies, pension funds and developers should exercise caution in considering these locations. The nation which invented the throwaway central city after World War 11 may now be perfecting the disposable suburban downtown.

Charles Lockwood is a public relations consultant to real estate companies and architectural firms. Another version of this piece Tan as the guest editorial on the Dec. 21, 1994, Wall Street Journal editorial page.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish