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Arrested Urban Development

Sam Newberg / Aug 24 2012

For Release Friday, August 24, 2012
Citiwire.net

Sam NewbergAlmost everywhere you look, it seems, you’re stumbling over studies or journalists saying cities are in demand, and suburbs on the outs. And that may, in fact, be happening: According to the Brookings Institution, cities are “thriving” and suburbs are “sputtering.” . Long-range demographic analysis shows demand for city living is increasing. So if the long-range forecasts are accurate and the Census Bureau’s American Community Survey (ACS) results are more than just a blip, we urbanists should be giddy.

So why am I so gloomy?

Articles in the Minneapolis Star Tribune in July offer a glimpse into the problem, describing where an urban infill project hit a “snag” while suburban projects are reviving.

The infill project in question, a proposed mixed-use development that would contain 500 mixed-income dwellings for a variety of ages, is immediately adjacent to the Lake Street light rail station and perhaps the best transit-oriented development opportunity in the upper Midwest. After three years of planning and neighborhood buy-in (not an easy thing), the project was effectively scuttled by the Minneapolis Public Schools, the site’s owner, which did an about face and decided not to sell its vastly underutilized site.

What is so galling is that just next to that article (yes, I still read the print editions of newspapers) was the piece describing how suburban Eden Prairie’s housing market is recovering, as evidenced by all 23 housing permits issued so far in 2012. (Somehow, the Star Tribune managed to conclude that 23 permits is more than last year’s 32. Wishful thinking, or just sloppy math?)

The article indicates the 52-unit Eden Prairie Woods development is the final piece of a larger project ongoing since 2001 and has momentum. In other words, the land was already owned by the developer and already entitled by the city. The developer indicates they have an “interest list” of 100 people, so you could reasonably expect perhaps a handful of homes will be built this year. It was only a matter of time before these homes got built.

Contrast this to the TOD site in Minneapolis, where you could probably lease all 500 units within a year or two, given that half were to be targeted as affordable, a quarter were for seniors and a quarter were market-rate. It’s an excellent location for housing and commercial development and would have offered a permanent home on a new public plaza for an existing, popular farmers market.

What is troubling is how these events can be applied nationwide. Infill development is almost always more difficult to acquire, clean up, design, finance and build. So if we take as fact the changing demographics (the huge increase in single-person households, for starters) and changing desires for housing, do we as a nation have anywhere near the resources or tools to accommodate this demand for urban living? If the recent experience in the Twin Cities is any indication, the answer is a resounding no.

Consider A. C. Nelson’s forecast that there already exists a sufficient supply of large-lot, single-family homes to satisfy demand for that type of housing over the next 20 years. Think about it – there is no need to add any more suburban homes.

Even if people don’t necessarily want the houses themselves, and older suburban homes get torn down and replaced by new ones, that’s no net gain. Other new homes will be built essentially at the cost of existing ones elsewhere in the market. Some of those existing homes will become rentals (as is already happening in many places) and some will languish, vacant. This, too, is already occurring around the country. Still others will be lived in and proudly maintained (both owned and rented), even if they weren’t the buyers’ first choice of location or housing type.

In cities there is an apartment boom that, according to the Urban Land Institute, “has legs.” Yet we all know there is only so much demand for luxury apartments. The real demand will be for moderate-rate and affordable apartments. There is also significant opportunity to develop housing for seniors (though not necessarily “senior housing” as we now think about it). And not all urban markets are attractive, as many low-income, urban neighborhoods keep emptying out.

But in many ways the two examples in the Twin Cities are a microcosm of current and future housing demand. Sure, there is a sliver of demand for high-end suburban homes, and the developer is ready and waiting. The wheels are greased. But there is also real and genuine demand for a variety of housing types in a transit-rich and urban location. And if those projects don’t or can’t materialize we may never know how deep that market is. That is why I’m gloomy. We may not be able to say “time will tell” about all these forecasts of demand for urban housing. Brookings reports cannot speculate at what could have been, if the best-laid infill plans never get built.

Before you dismiss the Brookings findings as a mere blip, understand and accept that demand for urban living is higher than in recent memory. We must have a much more concerted effort to make it happen. Otherwise we’ll just forge on in a state of arrested urban development.


Sam Newberg is a Twin Cities-based writer and real estate consultant. His e-mail address is sam@joe-urban.com.

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2 Comments

  1. Thomas Gougeon
    Posted August 24, 2012 at 9:41 pm | Permalink

    Interesting, but I think it is a leap to extrapolate these two Twin Cities projects to be a “microcosm” of what is happening nationally. Infill is hard and messy. And it is still outpacing suburban stuff in most markets. I live in Denver, and there are thousands of apartment units under construction, some TOD and some not. But what you describe is only sort of true. It is hard to do infill development, but it is happening, and happenign disproportinally to the standard suburban stuff,

  2. Sam Newberg
    Posted August 25, 2012 at 10:40 am | Permalink

    Thomas,
    Your point is well taken. Across the country apartment development is strong and outpacing, Twin Cities included. I would be interested in how regulatory tools in Denver are encouraging infill apartments. If I’m not mistaken, Denver has a new zoning code, a TOD land acquisition fund and generally more progressive planning, so perhaps Denver is worth looking at.
    Bottom line is through road/infrastructure and lending policies the US encouraged and satisfied demand for suburban living for decades and now must find ways to better satisfy demand for infill and urbanity.