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Hearth & Home December 2016

Photo Courtesy: ©2016 Ian Freimuth.
www.flickr.com/photos/ifmuth.

Demographics – The New American Suburb

By Patrick Sisson, Curbed

It’s diverse, dense, and booming, and a magnet for Millennials seeking the benefits of urban living, but in a more affordable setting.

American suburbs are far from a static set of cookie-cutter housing developments, the rows of infamous “ticky-tacky little boxes” popularized as soon as the postwar housing boom started. But a forthcoming new report, “Demographic Strategies for Real Estate,” suggests that this archetypical part of the American landscape, which has constantly been evolving, is in for some massive changes over the next decade that will reshape planning, land-use, and the real estate market.

Compiled by John Burns Real Estate Consulting for the Urban Land Institute (ULI), the report lays out a vision of suburbia at odds with the Betty Draper stereotype of the ’50s. Powered by social and demographic shifts involving young workers, immigrants, working women, and retirees, suburbs will get denser, more diverse, and more urban.

While the urban renaissance that has reshaped U.S. cities isn’t stopping, a massive move by Millennials in family mode to more affordable suburban markets will create an upswing in household formation. Suburbs will need to become denser, in part because demographic shifts forecast for the next 10-15 years will bring many new arrivals. Millennials will begin to form households en masse, millions of Baby Boomers will retire and seek out multi-generational neighborhoods, and immigration will continue to grow and evolve.

Here are some of the key takeaways from the report.

Suburbs will look more and more like cities.

“The world has shifted much from owning a big house toward valuing time,” says John Burns, CEO of the firm that authored the report. “People want to be close to work and exciting things to do. The notion of long commutes, never popular, is falling out of favor.”

While urban areas are becoming more and more expensive, the urban lifestyle is becoming more and more popular, so suburban towns and developers are increasingly catering to those looking for a more walk-able, dense community. A new supply of smaller homes with little or no yards in high-population areas will meet the demand to commute less and live closer to restaurants and entertainment. The report calls this “Surban” development: suburban development that brings the best of city living to more affordable areas.

There’s a wide continuum of suburban development, says Stockton Williams, executive director of the ULI’s Terwilliger Center for Housing, and many vibrant examples of denser design, aligning with these predictions, are popping up.

“Plano, Texas, is an example of a suburban area that’s developing a town center while maintaining suburban residential patterns and affordability,” says Williams. “That’s one of the reasons why the city just convinced Toyota to move its North American headquarters to Plano.”

Robert Bowman, president of the Residential Neighborhood Development Council and a ULI member, believes in a model for walk-able urbanism he’s calling “The Great American Neighborhood.” These aren’t new ideas, he says, but seeing contemporary suburban developers executing on them in an industry filled with typical developments suggests they’re seen as a great opportunity. Laying down the old formula won’t work anymore.

“We’ve seen a substantial shift in people who want the ability to walk to amenities in the suburbs,” says Bowman. “Cities have become the hotspots because people can engage in the areas where they live. Places that have a timeless appeal to them from an architectural and planning standpoint are in high demand.”

In another example of more urbanized living, more suburbanites will rent instead of owning homes. The report forecasts that 58 percent of new arrivals will be rentals, and a larger percentage of Americans than ever before will opt to raise their family in a professionally managed, detached rental home than ever before.

This type of growth will take place across the nation, but the report forecasts the Sun Belt boom continuing to ramp up, especially in the Southeast, where 24 percent of the country’s household growth from 2015-2025 is predicted to occur. That’s even more impressive when you realize Florida is considered its own region in the report.

“The Southeast is filled with pro-growth areas that are attracting great jobs, such as Charlotte, Atlanta, and Raleigh, regions where you can live in a good school district and get a house for $250,000,” says Burns.

Commercial and retail development will downsize, becoming more personal and flexible

The days of office campuses and Big Box stores are waning. Bowman forecasts a jump in office space in the suburbs, especially flexible options geared around service-based industries and built near walk-able commercial districts. He calls them crossroads businesses; think small business America with tree-lined streets, districts that capture the texture and energy of urban environments.

Again, these aren’t new ideas, and many such areas already exist in the suburbs. But they’re increasingly being revitalized, or make up the core of forthcoming suburban developments. Newer retail complexes are already more entertainment oriented, geared toward attracting crowds and civic life as opposed to solely focusing on landing big-name retail tenants.

“Old retail malls are becoming eyesores,” says Burns. “It’s a perfect win-win to pull down retail centers and put in high-density housing and retail.”

Following the social shift toward valuing time and flexibility, suburban office spaces will become smaller and more flexible, according to the report, with a jump in rental spaces akin to the growth in urban co-working.

One of the drivers of this workplace evolution is the continued rise of the working woman, who will earn 58% of this generation’s college degrees and play a bigger role in company leadership (and therefore office site selection), and already feels comfortable with the sharing economy.

“She’s becoming the breadwinner; she’s far more likely to be college educated, and she’s driving bigger household decisions more than ever before,” says Burns.

Huge demographic shifts, especially immigration, will reshape the suburbs

The next decade will see a rise in immigration, as well as a change in the makeup of these new Americans, who will have higher incomes and education and settle in the suburbs. More will arrive via airplanes with higher incomes and educational attainment, as opposed to the perception of immigrants crossing the border in search of low-paying manual labor jobs.

At the current pace, 52 million Americans, or one in seven residents, will be foreign-born by 2025, according to the report. That has huge implications on household growth and business formation, and suggests the suburbs will be a much more multi-cultural place.

Millennial families and empty nesters will reshape the housing market

The pent-up demand for households for young adults will radically reshape land-use policy, according to Williams. The report predicts that a staggering 86% more households will form between 2015 and 2025 than the previous decade. That translates into 13.7 million new homes and apartments being built to meet the demand.

But perhaps just as influential will be the huge impact of retiring Baby Boomers. The 65-plus population will grow 38% from 2015 to 2025, adding 18 million “seniors” (a term most in this age group believe doesn’t apply to them, a sign of shifting social attitudes about age).

“We saw the population of Millennials grow by five million over the last decade,” says Burns. “But we also saw the 55-to-64 population grow by 10 million. And who has more money? In many urban areas, a lot of the growth has been fueled in part by Boomers moving in and renting.”

With the suburbs surging and cities growing, rural areas will shrink

Many of the factors covered in the report suggest rural areas are primed for growth. They’re traditionally popular with retirees – the country is in the midst of a retirement boom – and with the rise in remote working and online shopping, it’s easier than ever to live and work anywhere.

But Burns’ research concludes that rural isn’t coming back; their forecast is pretty bearish on growth outside of urban and suburban areas.

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