John McIlwain, ULI Senior Resident Fellow for Housing, describes the U.S. housing market, and how it will be affected by demographic trends. John’s talk was recorded at a gathering of ULI trustees on Jan. 26, 2010.

Atlanta’s skyline will likely remain unchanged for the next decade or so.

“When will we see the next 50-story building in Buckhead? I would guess that if we see another 50-story building there in the next 10 years, I would be surprised,” said Clark Gore, market director of Jones Lang LaSalle Inc. “The skyline is impacted by where we are in the recovery.”

These is substantial risk in speculative buildings right now and developers are only going forward with projects that have a significant amount of pre-leases in place. There is even talk that LEED certification for buildings will practically be a prerequisite going forward. This makes sense because LEED projects typically are more expensive on the front end, but the back end payoff would appear large because of the points scored for location, reuse of materials and, generally, a more thoughtful approach to a project. LEED certification for buildings seems to be a good litmus checklist for going forward on a project, regardless if the developer’s intention is to be “green”.

As Brian Leary, vice president of design and development for Atlantic Station LLC, points out, these types of projects won’t be exclusively inside the perimeter.

Areas that already offer infrastructure and allow for more dense development will be well-positioned to take advantage of an economic recovery. Those locations don’t just include prominent submarkets such as Buckhead, Midtown and Perimeter Center, but downtowns in Suwanee and Duluth and other suburban areas that offer an opportunity for a higher quality of life.

Another area of strength for the Atlanta market will be the industrial distribution hubs that have been springing up along the interstate corridors for a number of years now. That trend is expected to continue as the Port of Savannah expands.

“When it settles down, we’ll start seeing growth because there’s no new space out there to compete,” said Dave Watson, senior vice president at Grubb & Ellis Co.

It’s also likely to help make industrial real estate here attractive to foreign buyers seeking solid investments.

“There’s going to be a glut of distressed sales and some other opportunities,” said Mike Gray, senior vice president with Panattoni Construction Inc.

Currently, Atlanta’s industrial market has a 17.4% vacancy rate.

So, we’re likely to see, perhaps, something that I discussed in an earlier blog – a move towards social land development. President Obama signaled that he is in favor of this trend. Although, I think his view is overly limited to existing urban centers and fails to see the thriving and successful suburban town centers that are also being created.

In my next blog, we’ll explore the infrastructure side of the future of Atlanta. Infrastructure will be the key to many city’s success or failure in the coming decade. Failure to address the key infrastructure needs of a city will cause it to die. Fortunately, there are some strong voices in metro Atlanta for addressing the area’s sorely lacking infrastructure.

Atlanta is no exception to that. People have been moving back ITP for awhile now. Gwinnett County is seeing a number of its cities develop or redevelop town centers.

Leading the way is Lawrenceville and Emory Morsberger’s efforts to rebuild and revitalize the county seat. Suwanee, which continues to gain national recognition for its livability, has built, and continues to build, what is likely metro Atlanta most ambitious development of a downtown and park system. Other cities in Gwinnett, like Norcross, Sugar Hill and Snellville, are also moving in similar directions, some with more success than others.

Mr. Brooks states that he would like to see the stimulus money that Barack Obama wants to spend on infrastructure spent in helping to build these downtowns rather than projects that are ready to go, just for the sake of getting money into the system.

Barack Obama has said that he would start an infrastructure project that will dwarf Dwight Eisenhower’s highway program. If, indeed, we are going to have a once-in-a-half-century infrastructure investment, it would be great if the program would build on today’s emerging patterns. It would be great if Obama’s spending, instead of just dissolving into the maw of construction, would actually encourage the clustering and leave a legacy that would be visible and beloved 50 years from now.

I think Mr. Brooks’ idea is a good one – stimulus money going into assisting cities build or revitalize downtowns is a noble goal. However, it would take years of planning in order for it to be done correctly. Mr. Brooks laments that the money will go to perpetuating the current modes of transportation.

But alas, there’s no evidence so far that the Obama infrastructure plan is attached to any larger social vision. In fact, there is a real danger that the plan will retard innovation and entrench the past.

In a stimulus plan, the first job is to get money out the door quickly. That means you avoid anything that might require planning and creativity. You avoid anything that might require careful implementation or novel approaches. The quickest thing to do is simply throw money at things that already exist.

Unfortunately, our infrastructure is so lacking in maintenance that we need huge investment just to get it back to an acceptable level. We are years, perhaps decades, away from truly getting to any sort of renaissance in social land development. As Mr. Brooks points out, prior to the recession, we were making great strides as the market moved in this direction.

There are certainly aspects of President-elect Obama’s plan whose outcomes are rather dubious in nature. Putting computers in classrooms, fixing school buildings, retrofitting government buildings to make them more energy efficient. (Although, I have to say, I’d rather see tax dollars go there than to propping up failing companies.) However, fixing the country’s existing infrastructure and allowing states to move forward on transportation projects that are likely desperately needed should be the first focus. As the war in Iraq winds down and, if we’re smart enough not to dump billions in private companies, Mr. Brooks idea would be a great starting point in perhaps moving us where we were already going, just a little quicker, to more social land development.