Beyond Edge City: Office Sprawl in South Florida “This Analysis Robert E
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Center on Urban and Metropolitan Policy Beyond Edge City: Office Sprawl in South Florida “This analysis Robert E. Lang1 shows that South Findings An analysis of office development in South Florida between 1987 and 2002 finds that: Florida is per- ■ Of 13 large U.S. office markets In contrast, office space in Miami’s studied, South Florida had the low- CBD increased just 4.7 percent over est percentage of its office space this time period. haps the most in its major downtown, Miami, in 1999. Only 13 percent of South ■ Out of 13 office markets, South Florida’s office space is located in its Florida has the largest percentage of centerless large central business district (CBD), com- its office space located in “Edgeless pared to a median of nearly 30 percent Cities”—a form of small-scale and for all 13 markets. scattered office development that office market never reaches the critical mass of an ■ Virtually all office growth in Miami- Edge City. In 1999, two-thirds (66 Dade County in the past 15 years percent) of South Florida’s current in the U.S.” occurred outside of Miami’s down- office space could be found in Edge- town. From 1987 to 2002, Miami- less Cities. In Philadelphia—the only Dade’s non-CBD market grew 60.3 other predominantly “edgeless” market percent to include nearly 30 million of the 13—Edgeless Cities contain just square feet of office space. 54 percent of the market’s office space. I. Introduction 1999.2 While office buildings were the last major element of central cities to suburbanize he last 20 years brought a dramatic —following residences and retail establish- shift in the location of office employ- ments—by 1999, 42 percent of commercial ment in metropolitan America away office space nationally was located in subur- from central cities and into the sub- ban areas.3 Turbs. The boom in suburban office The evolving geography of office location development occurred largely in the 1980s, has implications not only for the substantial during which time over half (58 percent) of number of employees who go to work each the suburban office space that exists today day in office buildings, but for the local lead- was built. While the pace of office construc- ers who must grapple with the policy issues tion slowed in the 1990s, the overall trend these new trends bring forth. For example, toward suburbanization continued. In total, the dispersal of new office space can exacer- almost four-fifths (79 percent) of the current bate a region’s jobs/housing mismatch, or suburban stock was constructed from 1980 to widen the distance between economic oppor- Cen March 2003 • The Brookings Institution • Survey Series 1 tunity and concentrations of minority three-county region that includes and Washington, D.C.9 It deploys sev- households.4 Office location can also Miami-Dade, Broward, and Palm eral data sources to provide multiple facilitate urban sprawl. If most new Beach counties. In essence, South perspectives on office space develop- office space is constructed at the Florida really means—given the ment trends in both South Florida as a regional edge, it extends commuter presence to the West of the Ever- whole, and in Miami-Dade County sheds for many miles into undeveloped glades—Southeast Florida. And that specifically, and it compares the mar- rural areas and fuels decentralization.5 encompasses Miami-Dade County and kets to the national sample of 13. In Fi n a l l y , the geography of office location Broward County—which together this fashion, the study first explores figures prominently in transportation comprise the Miami-Fort Lauderdale differences in the distribution of cen- analysis. If most new space is built Consolidated Metropolitan Statistical tral business district (CBD) and in areas with no public transit access, Area (CMSA)—plus the separate MSA non-CBD office space. Then, it devel- then reliance on automobiles will of Palm Beach County. ops a new, more specific, continue to grow.6 All of South Florida has experienced categorization that segments the office The distribution of urban and subur- rapid expansion for decades and con- space market into a downtown seg- ban office space—and hence the tinues this fast population growth. ment, an Edge City segment, and one appropriate policy responses to it—is Most of the building has taken place in that encompasses Edgeless Cities. not uniform across all regions, how- the past half century, making it, along (See the appendix for more detail on ev e r . The majority of office space in with such other Sunbelt boom metrop- data and sources.) the Chicago and New York metropoli- olises as Phoenix and Las Vegas, one of tan areas, for example, lies within their the newest places in America. CBD versus Non-CBD respective core central cities, while The western parts of all three South Office Space the suburbs boast a larger share in Florida counties developed later than The standard business categories for Philadelphia and Detroit. This study those further east. That is because reporting office data are CBD and seeks to provide a better understanding these western lands were once part of non-CBD. CBD space refers to down- of the spatial structure of office the Everglades, which until recently town office buildings. Downtowns vary development in one region—South covered most of Florida’s southern tip. in size and scale, but they typically Florida—and how it compares with The newly developed parts of South contain the largest single concentra- development patterns in metropolitan Florida include the western parts of tion of a region’s office space.10 In areas around the nation. It concludes Broward and Palm Beach counties South Florida, that location is down- with a discussion of how leaders in this that press up against the remaining town Miami. region can address the policy concerns Everglades. Due to a federally man- Non-CBD office space is everything that arise from the report’s findings. dated urban growth boundary, this else. Much of this non-CDB space lies western expansion has now ended. in suburbs, although some offices may II. South Florida Much of the region is now built out, be found within the central city out- with some of the last new greenfield side the CBD. Non-CBD office space nown for it beaches, tourist subdivisions popping up this past year varies tremendously in its size, scale, attractions, and retirees, in Broward County. A regional plan- density, location, age, and land use South Florida has grown into ning movement has emerged around characteristics. The category in this a complicated multicultural the idea of encouraging new growth to sense captures every office location Kcommunity with a major presence in stay to the east—hence its name, type from low-rise, low-density office the international economy.7 South “Eastward Ho!” buildings in the farthest reaches of the Florida differs substantially from the exurbs to high-density “uptowns” that northern parts of the state in that it is III. Definitions and arose as secondary business districts culturally and demographically not Methodology within the central city. “Non-CBD” is part of the American South.8 The thus a grab-bag category that captures region has been settled by two major his report employs a unique all office space outside a CBD. outside groups. The first group con- method for classifying office Cushman and Wakefield, the sists of domestic immigrants from the location that is based on a nation’s largest full-service real estate North, especially the New York region. study of 13 large metropolitan firm, tracks office development in The other includes international immi- Toffice markets: Atlanta, Boston, Miami-Dade County using the grants from Latin America, Chicago, Dallas, Detroit, Denver, CBD/non-CBD divide.11 This study predominantly Cuba. Houston, Los Angeles, Miami, New uses the Cushman and Wakefield data Geographically, South Florida is a York City, Philadelphia, San Francisco, to examine changes in the Miami- 2 March 2003 • The Brookings Institution • Survey Series CE N T E R O N UR B A N A N D ME T R O P O L I TA N PO L I C Y Dade market from 1987 to 2002. The period of analysis captures a market Map 1. Miami Is a Downtown peak in 1987 (a 1986 change in tax laws, which eliminated the passive loss provision, dampened much of the financial fuel for the office boom), a bust in the early 1990s, a recovery in the mid-1990s, and a leveling-off period in the early 2000s. Downtowns, Edge Cities, and Edgeless Cities The complexity of commercial real estate marketplaces, however, ensures that the broad categories of CBD and non-CBD do not permit analysis that accurately reflects the shifts occur- ring in metropolitan regions. For that reason, this report conducts a finer- = one building grained analysis that utilizes a new categorization: downtown, Edge Cities, and Edgeless Cities. Four Source: Black’s Guide maps that accompany this section, taken from Black’s Guide (a leading resource in the commercial real estate industry), illustrate the differ- Map 2. Ft. Lauderdale Is a Secondary Downtown ences in office space concentration that distinguish the various types of office locale. Downtowns lie at the center of the region and are often the original site of significant commercial development. There are also “secondary downtowns,” which often originated in the early 20th century as satellite downtowns of the primary downtown.12 In South Florida, Miami is the primary downtown and Fort Lauderdale a secondary one. (See Maps 1 and 2.) Edge Cities have a specific defini- tion that appears in the literature on suburban office development.