The suburbs aren’t dying, but real estate experts say they expect the bulk of new development will focus on urban areas in the coming years.
That was the conclusion Wednesday at a forum sponsored by the Real Estate & Building Industry Coalition held in uptown. Demographic factors, especially a shift toward renting and a reduction in how far Americans are willing to drive, are powering the trend.
So what does that mean? Expect fewer new traditional suburbs and strip malls. Instead, look for more new developments like Waverly on Providence Road, where Childress Klein and Crosland Southeast are building apartments, a Whole Foods, offices, shops and a hotel on a 90-acre site.
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Also expect to see more older, traditionally suburban sites redeveloped into similar mixed-use developments. That’s what Synco Properties is doing with the Colony in SouthPark, where plans approved last month will replace a 353-unit apartment complex from the mid-1970s with almost 1,000 new apartments, a hotel, offices, shops and restaurants.
“That’s a major increase in density,” said Tim Hose, president of Synco. The new apartments will also feature more urban features, such as stoops facing the street rather than being fenced off from their surroundings.
And Charlotte officials are still hoping that trend will help them breathe new life into the former Eastland Mall site, which has sat vacant for years since the city bought and demolished the decaying mall, waiting for a developer to revitalize the 80-acre tract.
Behind the shift are changing demographics and consumer preferences, said Chris Leinberger, a developer and real estate consultant who has worked on projects in Charlotte with well-known developers such as the late Henry Faison.
“We used to think walkable urban use was a niche market,” said Leinberger, who is also a professor at George Washington University. “Now, it is the market.”
We used to think walkable urban use was a niche market. Now, it is the market.
Chris Leinberger, developer and real estate consultant
He pointed to long-term trends, such as delays in home ownership and marriage, and a decline in the average number of annual miles driven in the U.S. In the 1950s, about half of households had children present, Leinberger said. Now, the balance is about 25 percent of households with kids and 75 percent without. Going forward, that’s expected to drop more, as only about 14 percent of new households formed are expected to have children at home in the coming years.
“The market’s telling us something, and we in the real estate industry have to respond,” said Leinberger.
There is still significant suburban development activity around Charlotte, of course, including a boom in housing for those 55 and older which is driving construction on major age-restricted suburban subdivisions such as Trilogy Lake Norman, in Denver.
And even in the most urban cities in the U.S., only a small percentage of land area actually makes up the walkable, compact city areas that are in demand. For example, in the Boston region, just 5.6 percent of the developed land qualifies as walkable and urban, Leinberger said, while the rest is occupied by subdivisions, malls and other suburban developments.
But, Leinberger said, higher prices urban properties are fetching shows that’s where investors are looking. Office buildings in urban Boston command a 134 percent premium to their suburban counterparts, while urban apartments get a 54 percent premium and for-sale residential gets a 90 percent premium. And he said the denser developments generate far more tax revenue on a per-acre basis, so that should it more attractive for cities to encourage.
Chris Thomas, a partner with Childress Klein, said other developers looked at their site on Providence Road and considered more traditional, suburban development.
“There were some other out-of-town developers who said, ‘Well, gee a 90-acre parcel – it should be another regional shopping center,’” said Thomas. The developers decided to go a different route, putting a mixed-use center at the interchange of Interstate 485 and Providence.
Now, in a part of the city long dominated by subdivisions, other major developers are now following the same mixed-use, walkable model. Just north of Waverly, Crescent Communities is planning to build hundreds of apartments, shops and restaurants. And across Providence, Lincoln Harris is replacing a former golf course with houses, apartments, a K-8 school, shops and offices.