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Life at the Edge

A half-century ago, the little town of Yorkville, Ill., population 3,000, was like small communities everywhere. The local farmers milked Holsteins when they weren't tending to their corn and soybean crops. Some of the residents commuted to union jobs at a nearby Caterpillar plant to assemble tractors. Chicago was a vague ephemera 50 miles to the east, and nobody gave it much thought.

After five decades of leaping past one outer ring after another of new subdivisions and shopping centers and industrial warehouses, Chicago's migratory outreach has finally landed in the lap of Yorkville, which currently is besieged with nearly three dozen residential developments along with multiple shopping center projects. The population of 16,000 is expected to grow to 50,000 within the next decade, eventually peaking at 200,000. Yorkville is the county seat of Kendall County, the second-fastest growing county in the U.S.

“People have been moving steadily west from Chicago toward us for years,” says Mayor Valerie Burd of Yorkville, who bought a prime five-acre parcel along the Fox River near downtown for $40,000 two decades ago. She figures it's worth at least $500,000 today. “We never felt like a suburb here before. But we have grown into a suburb today.”

This same scenario of urban sprawl has played out repeatedly since the 1960s. Development has pushed from city into suburbs, and then beyond into exurbs, in search of cheap land and tidy new neighborhoods free of crime, graffiti, congestion, dirty air and lousy schools — the conditions they left behind in the cities.

The irony, of course, is that all of those urban ills are soon transferred to small-town refugees who can't build schools and sewer treatment plants and new roads fast enough to accommodate the onslaught.

Traffic through Yorkville's overloaded, two-lane main street today moves as slowly as Chicago's clogged State Street does at rush hour.

Data dependency

The wildcat shopping center developer who picked a cornfield in the 1950s for his next mall “just because it felt right” has been replaced by the social scientist who can pick a corner and then go sell it to Target with the promise that 200,000 people earning average family incomes of exactly $86,000 will be living inside five miles of the store within 24 months of the grand opening.

It is this new breed of planner who has helped make sprawl possible by tracking and validating population movements block by block. Commercial development today is lost without the kind of data collection and analysis that is becoming routine at the biggest corporations. Laptop-toting real estate CEOs get comfort from statistics, and risk-averse lenders demand them.

The computer may be the most important cog in the sprawl machine. Up until 1970, U.S. Census Bureau data was maintained on paper, in massive card files that were virtually impenetrable to outsiders. Beginning in the 1970s the information was available on big magnetic tape reels that required mainframe computers to digest. In the late 1990s, the data was posted on the Web.

As the census data became available, entrepreneurial firms arose to analyze the information, led by companies like New York-based Nielson Claritas. Nielsen has programs that can take every bit of data on all 8 million “blocks” of population compiled by the Census Bureau and regurgitate it for developer clients in any form and geographical footprint they want.

Based on growth trends, it can also use computers to forecast the population of towns like Yorkville years into the future. Since 2005, when the Census Bureau launched its American Community Survey project that interviews citizens continuously around the country in between decennial censuses, this process has become increasingly precise and up to date.

“The interest used to be just in population,” declares Ken Hodges, chief demographer at Nielson. “But now clients want information about the characteristics of population, like incomes and education levels and employment rates. And a developer may want that for a radius of three miles, or even less, around a site that's been selected.”

‘Flying blind’

In the 1950s, Norman Kranzdorf was a shopping center pioneer who ran the development arm of Food Fair supermarkets in Philadelphia and later owned shopping center builder Amterre Development Inc. He says that in those simpler times 50 years ago, he never heard the term “sprawl.”

“To build a center back then we relied mostly on gut instinct,” says the retired 78-year-old Kranzdorf. “I'd go out to a traffic light and a crossroads, and then go ask a grocery and a variety store if they wanted to join us. If we had census information, it was often out of date. We were flying blind back then, but we didn't do too bad of a job because many of those old shopping centers are still operating successfully today.”

Hessam Nadji, managing director of research at Marcus & Millichap Real Estate Investment Services based in Encino, Calif., believes that the old way of planning development had many advantages lost on the current generation of industry pros.

“Development 50 years ago was based on genuine demand. It was all very fundamental,” according to Nadji. “Too much development in recent years has not been based just on demographics, but also on tax incentives and financial engineering. Offer a shopping center developer-owner some free land and a repeal of his tenants' sales taxes, and he may forget all about his demographic needs. That's gotten people into trouble.”

From sparse to sprawl

Often expansion to the exurbs is difficult to time. In Loudoun County, Va., Dulles International Airport opened in 1962, and empty cornfields marked a large stretch of the expressway leading to Washington, D.C., for two decades. Then came an explosion of new settlement.

From 25,000 people in 1960, Loudoun's population rose to 57,000 in 1980, then 170,000 in 2000. Today it's at 280,000 — close to the size of Pittsburgh. What's more, forecasters expect Loudoun to balloon to 385,000 people by 2020, eventually reaching 500,000.

Lawrence Rosenstauch, Loudoun's director of economic development, ties much of the surge to a period when companies such as WorldCom, which later became Verizon, purchased land for new facilities in the 1990s. The Howard Hughes Medical Institute erected a 750,000 sq. ft. campus employing 400 scientists a year ago outside Leesburg, former home to thoroughbred farms. The county once had hundreds of dairy farms, but just one is left.

“Airports are as important to many companies as demographics,” according to Rosenstauch. “Hughes made it clear to us they wanted to be close to an international airport. But they also took a close look at our workforce. They had to be able to recruit here.”

Richard Rosan, president of the Urban Land Institute, preaches “smart development” that concentrates new housing in older urban centers where infrastructure, including mass transit, already exists.

“Developers build far out largely because there are fewer restrictions on land use in rural areas,” he says. “Greenfields are easy to build on. It's almost a Wild West mentality in places.”

Back in Yorkville, the city has been handing out incentives to attract both commercial and residential development. In recent months, the 800,000 sq. ft. Kendall Marketplace opened. Another 1 million sq. ft. shopping center has been proposed next door — the equivalent of two regional malls settling into a community with just 16,000 people. Developers clearly are betting on the future.

It could be the wrong bet. Inland Real Estate Group in nearby Oak Brook has owned 1,000 acres in Kendall County near Yorkville for 10 years. Tony Casaccio, president of Inland's development division, says that the firm followed train lines and highways from Chicago when deciding where to invest.

Through most of the 1990s, he notes, Chicago's suburban periphery expanded at a predictable half-mile per year in all directions. But now he has doubts about the future. Residential construction in Yorkville has slowed, and the Kendall Marketplace is having trouble attracting more tenants.

“The problem with demographics is that you take a trend line and draw it out indefinitely into the future and expect the expansion to go on for a long time,” Casaccio says. “Considering what's happened to our economy, that may be a mistake.”

H. Lee Murphy is a Chicago-based writer.

Burning a little shoe leather still has value

Some research firms are stretching beyond U.S. Census Bureau data to conduct unique, proprietary surveys. ESRI Inc. of Redlands, Calif., uses sampling to inform developers about local shopping habits and whether a pediatrician or a dentist is likely to be more successful in a new professional center.

“We forecast lifestyles, telling clients whether a place is a milk-and-cookies Denny's neighborhood, or a tea-and-latte neighborhood,” says Simon Thompson, ESRI's commercial industry solutions manager. “Forty years ago, to analyze a neighborhood you went paging through the Yellow Pages. Even 20 years ago people were still using pins on a map and reading the local newspapers.”

Much of the same information today is available with a few keystrokes on a computer. However, shoe leather hasn't entirely gone out of fashion. There are still researchers who work the old-fashioned way — on the ground. John Melaniphy III, executive vice president of consultancy Melaniphy & Associates Inc. in Chicago, still sits in shopping centers counting cars.

If a forecast calls for growth in a town, he becomes skeptical. “I'll talk directly to residential developers to get the most current sales trends in their subdivisions. I find out where their homebuyers are coming from,” Melaniphy explains.

If a new highway or bridge is essential to a forecast, Melaniphy interviews local politicians to assess the timing of construction. If a municipal administration is changing, he handicaps who a new mayor will be and sizes up his or her views on zoning. “Numbers are one thing, but a lot of our clients value us because we dig deeper.”
H. Lee Murphy

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