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Loudoun’s Broken Development Model
With the rise of the mobile workforce, open work spaces and office hoteling, it is easier than ever to conserve space and rein in lease and rental costs.
That trend has dramatic, if unappreciated, consequences for local governments’ real estate tax base and the management of growth and development. If businesses need less office space per employee, they need less office space overall. Which means the cost of office space drops. Which means developers build fewer new office buildings. Which means local governments are finding it harder and harder to grow their tax base. …
…. outlying counties in the Washington metropolitan region are facing a trifecta of troubles regarding commercial real estate:
(1) business enterprises are shrinking their office footprints everywhere;
(2) sequestration-related budget cuts have dampened demand even more in the Washington region; and
(3) when Washington-area businesses do seek new digs, they show strong preferences for walkable urbanism, a higher-density, mixed use pattern of development that accommodates walking, biking and mass transit. Walkable urbanism is found mainly in the region’s urban core and along Metro lines, not in low-density burbs like Loudoun …
In the old old tax model, a 60/40 balance between residential and commercial real estate property tax revenue was considered healthy. If you could get more commercial development, then great. If not, you had a problem. Well, almost every locality in the United States has, or will have, a problem as offices continue to downsize and retailing shifts from malls and shopping centers to online commerce.
Full post here.
