The times they are changing.
One near-sighted group not getting the drift is truck drivers. Another category missing the looming reality comprises folks still moving to edge suburbs for economical lifestyles. High oil prices and large bills for maintaining and improving U.S. roads and transit systems mean vehicle miles will become increasingly costly; in fact, costly enough to change behaviors.
High gassed truckers: For decades truck drivers have had nearly a free pass, operating on cheap gas and using freeways (all those non-tolled interstates). Their heavy rigs, meanwhile, pound roads into disrepair at many multiples the impact of cars. Now that fuel costs have spiraled, truck drivers are all upset -- their profit margins shrink -- so they hold mini tantrums, slowing traffic on major roads like the New Jersey Turnpike on Tuesday. They want the Feds and state governments to lower gas taxes (which by the way are only 10% of countries in Western Europe) and give them a break. Okay, smart guys -- what happens when state and local governments have no funds to repair potholes and fix all those aging bridges and overpasses? Without a gas tax increase, the Federal Highway Trust Fund will go into the red next year. And how do they think all those roads, which are now deteriorating, were built in the first place? Hint: taxes, including gas taxes! High polluting trucks also don't fit into aspirations for greener carbon footprints. For Americans shipping goods and produce will become more expensive unless we find energy alternatives fast. One retro alternative -- railroads will take a greater share of freight transport in the future, eating into trucker shares.
Congestion Pricing Gains: And more bad news for truck drivers -- New York City moves closer to instituting congestion pricing --Truckers will pay $21 every time they enter the Manhattan congestion zone. Regular drivers will get charged $8. Other cities like San Francisco may follow suit. Next, watch those HOV car pooling lanes turn into HOT congestion toll lanes in many metros. Like the truckers, many ordinary drivers grow outraged over paying to use roads or drive into certain districts. Well, do they want to pay higher income or sales taxes or enact bond issues which mean higher future income or sales taxes? It would be nice if the tooth fairy pays for roads, but alas the tooth fairy is not the road fairy.
Fringe living's not so cheap: Living at the suburban edge gets costlier thanks to high fuel costs and lost time driving on congested suburban roads. People will start to figure out that infill lifestyles have increasing dollar and cents advantages, especially when governments start imposing all those user fees (tolls, congestion pricing). Big homes on acre and a half lots also cost a ton to heat and cool. And just wait to see what happens when local governments raise taxes to maintain roads and sewer lines at the suburban edge. Federal subsidies for those systems went the way of "no new taxes." Well, no new federal taxes never meant no new local taxes. It only meant shifting the burden as we are all finding out.
Infill homes may be smaller and more expensive, but convenience benefits and reduced driving costs start balance the pricier real estate. Especially in markets with decent mass transit, metro area cores start to look more attractive when people pencil out their budgets.
The suburban free ride is over. Truckers know your pain.
© Miller Ryan LLC 2008
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
