Region Forward Blog

Real Estate Trends Favor Smart Growth: Reflections from Charlotte Part Two

Feb 4, 2011
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COG’s John Mataya is attending the 10th Annual New Partners in Smart Growth Conference in Charlotte North Carolina. The conference is organized by the Local Government Commission a forward-looking nonprofit that assists local governments in addressing community problems and leveraging environmental and economic resources.

One of the most interesting sessions I attended at the New Partners for Smart Growth Conference yesterday focused on real estate trends and proposed that investing in smart growth is a good business strategy. The session examined some key demographic changes and preferences the future economic condition coming out of the recession home-building trends and cost comparisons highlighting the resiliency of smart growth.

To best understand future of smart growth Christopher Leinberger and other speakers framed the discussion by positing that there is a fundamental change taking place in our economy. Initially our country was founded as an agrarian economy and transitioned into an Industrial –drivable suburban economy. The speakers suggested our economy is in a transition period and when we emerge from the recession we will be functioning in a knowledge and experience economy. This transition mirrors how other regional economists such as Richard Florida view the Great Recession and suggest that metropolitan areas that adapt to this new economic framework will be the first to emerge strengthening America’s economy.

Richard Florida’s assessment of the American economy in his recent book the Great Reset was remarkably similar to Christopher Leinberger’s presentation at the conference. Both summarize the industrial economy’s growth after WWII as a growth movement built around highways and suburban sprawl creating new jobs and markets. The speakers at the New Partners session argue that this type of growth has led to the oversupply of suburban development patterns that hinder our economic recovery. As the country recovers from the recession speakers suggested that future metropolitan development patterns will push home building toward central cities and metropolitan centers – similar to our Regional Activity Centers – accelerating the revitalization of cities and forcing auto-oriented development to conform to denser walkable and transit friendly neighborhoods.

A number of trends were discussed during the session; however two key trends stood out with the potential to shape our development patterns and housing and transportation choices for years to come. These two trends include housing accommodations for aging baby boomers and new community and lifestyle preferences for generation Y. Leinberger sums up these two trends best in the excerpt below from his recent article in the Washington Monthly.

“The baby boom generation defined as those born between 1946 and 1964 remains the largest demographic bloc in the United States. At approximately 77 million Americans they are fully one-quarter of the population. With the leading edge of the boomers now approaching sixty-five years old the group is finding that their suburban houses are too big. Their child-rearing days are ending and all those empty rooms have to be heated cooled and cleaned and the unused backyard maintained. Suburban houses can be socially isolating especially as aging eyes and slower reflexes make driving everywhere less comfortable. Freedom for many in this generation means living in walkable accessible communities with convenient transit linkages and good public services like libraries cultural activities and health care. Some boomers are drawn to cities. Others prefer to stay in the suburbs but want to trade in their large-lot single-family detached homes on cul-de-sacs for smaller-lot single-family homes townhouses and condos in or near burgeoning suburban town centers.

Generation Y has a different story. The second-largest generation in the country born between 1977 and 1994 and numbering 76 million millennials are leaving the nest. They may sometimes fall back into the nest but eventually they find a place of their own for the first time. Following the lead of their older cousins the much smaller generation X (those born between 1965 and 1976) a high proportion of millennials have a taste for vibrant compact and walkable communities full of economic social and recreational opportunities. Their aspirations have been informed by Friends and Sex in the City shows set in walkable urban places as opposed to their parents’ mid-century imagery of Leave It to Beaver and Brady Bunch set in the drivable suburbs. Not surprisingly fully 77 percent of millennials plan to live in America’s urban cores. The largest group of millennials began graduating from college in 2009 and if this group rents for the typical three years from 2013 to 2018 there will be more aspiring first-time homebuyers in the American marketplace than ever before—and only half say they will be looking for drivable suburban homes. Reinforcing that trend housing industry experts like Todd Zimmerman of Zimmerman/Volk Associates believe that this generation is more likely to plant roots in walkable urban areas and force local government to fix urban school districts rather than flee to the burbs for their schools.”

The speakers argued that certain regions like metropolitan DC are already leading the way for other regions. Our region already exhibits key demographic changes and is beginning to accommodate consumer preferences around transit-oriented walkable neighborhoods that other regions will experience in the future. Speakers suggested one of the best ways for suburban areas to adapt to these changes and economic landscape is for them to invest in some type of fixed-rail transit.

Shyam Kannan of Robert Charles Lesser and Co featured their research of national case studies suggesting fixed-rail transit is the most promising transit option for areas to create future property value. In his presentation Kannan used a number of examples in the DC region where private property owners have recognized the value of transit and are taking proactive approaches to build new infill Metro stations such as the new station in NoMa (New York Ave-Florida Ave-Gallaudet U) and proposed infill Metrorail station at Potomac Yard in Alexandria Virginia. Kannan’s presentation also featured other areas are seeking to totally retrofit their suburban centers by adding new fixed-rail transit capacity as is the case in Tysons Corner.

The speakers did warn planners and local government officials that the oversupply of single-family homes and the pent up demand for walkable transit-oriented neighborhoods will present problems such as new slums in the suburbs and accelerated gentrification in inner cities. The speakers suggested communities look for proactive measures to preserve affordable housing before transit infrastructure is in place and innovative ways to accommodate suburban poverty. They also suggested that if central cities cannot reform their school systems before Generation Y is ready to nest suburban communities that are first to adapt and offer compact walkable transit-oriented neighborhoods will hold an advantage of attracting families by the time their children are ready for school.

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