New Urban Dream Stalled by Employers' Move to the Suburbs

new urban dreamIn the comments on my earlier post on Gen-Y and the housing market, Travis Robertson makes a number of excellent points. One of them I've heard time and time again when it comes to the Millennials and the new urban dream.

Travis writes, "I think we'll see a rise in smaller, urban-style, walkable communities. Lower-income families will move outward toward the suburbs that once signified the American dream post-war. We'll see many cities shift focus to urban renewal (many already are)."

This is very much in line with the New Urbanism movement sweeping through certain circles of urban planning and architecture communities. The vision of cities of the future, powered by renewable energy, widely available public transportation, and a variety of mixed-use buildings to create smaller, more intimate neighborhoods inside a large metropolis is an attractive one. I should know; I spent ten years in New York City, where walkability, public transportation, and intimate neighborhoods (SoHo, Tribeca, Hell's Kitchen, etc.) all reside inside the largest city in America. It was a great place to live as a young man.

Unfortunately, actual evidence suggests that the New Urbanism vision of the future is not likely to be reality.

Joel Kotkin of New Geography writes in Forbes that "The ongoing Census reveals the continuing evolution of America's cities from small urban cores to dispersed, multi-polar regions that includes the city's surrounding areas and suburbs." (Emphasis mine.)

Turns out, the major failing of New Urbanism is jobs. People might want to live in a nice 2BR Search Homes for Sale See photos of homes for sale in your area and across the country on AOL Real Estate condo in Tribeca, where they can walk to the cool and hip graphic design job in the East Village, but they move where the jobs are. And the jobs are being created, more and more, in the urban periphery.

Again, Kotkin:

"Sure, being cool is nice, but the obsession with hipness often means missing a bigger story: the gradual diminution of the urban core as engines for job creation. For example, while Chicago's Loop has doubled its population to 20,000, it has also experienced a large drop in private-sector employment, which now constitutes a considerably smaller share of regional employment than a decade ago. The same goes for the new urbanist mecca of Portland as well as the heavily hyped Los Angeles downtown area."

He goes on to point out that these new suburban communities are not your traditional "bedroom" communities filled with commuters to the Big City. The suburbs of New York and New Jersey (where I grew up and lived for years) are exactly those. But even there, when I moved to Millburn, N.J., I was commuting the other way, away from New York City, to my job in Parsippany, N.J. And guess what? Traffic was awful, suggesting that quite a few of my neighbors were going the same way, away from New York City, to their jobs.

Kotkin isn't making some sort of a "this is what we need to do" argument; he's simply interpreting the actual data from the actual Census.

This is New Suburbanism. Sprawl happening not on the basis of simply some low-income family's inability to live in high-rise apartment buildings in the glittering downtowns of major cities, but happening based on the fact that employers continue to move jobs out to these urban peripheries. And Travis's "smaller, walkable, urban-style" communities are getting built more and more outside the City in these peripheral suburban centers.

I'm sure Travis is right that many cities will reinvent the urban core to be more walkable and neighborhood-like. And the elites who have the money and the jobs in the urban core will of course flock back into cities where entertainment, dining, and lifestyle options are far more numerous.

But for the majority of future homeowners, future households, who need to get to work in the suburban office park where their employers have chosen to setup shop -- away from the enormous expense and hassle of running a major business in most of America's big cities -- the future is not New Urbanism, but New Suburbanism.

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March 18 2011 at 11:16 AM Report abuse rate up rate down Reply

Thanks Travis - and I completely agree with your conclusion, which is why I called it New Suburbanism. I see it here in Sugar Land, TX, an edge city of Houston. There's a walkable Town Center with restaurants, retail, office, etc. And major employers have setup shop right inside that complex. Those employees are not living in downtown Houston and "reverse-commuting" the roughly 30-40 minutes a day. You find the same setup in many of the more vibrant growth areas, like Ballantyne that Lori mentioned (which I've visited and seriously considered as a place to relocate to).

I do think, however, that most people would not define 'sprawl' as you do: large homes on large lots. I think most people, particularly those enamored with New Urbanism, like so many of our federal overlords, er, I mean public servants, think of anything requiring a car to be 'sprawl'. And New Suburbanism does definitely require a car -- if only to drive into the "town center" to park it and walk around.

Plus, we'll have to wait and see how it plays out, but I actually think residences will get larger (or stay large, depending on your point of view) in New Suburbanism, but lot size will get smaller. In other words, McMansions on the rise. Because if you have good public space -- whether in planned communities, or in these suburban "downtowns" -- you don't need a giant backyard as much. There is really very scant evidence that people prefer less space if the cost is the same, even in metro cores: not too many people would want to pay same rent for a 400 sq. ft. studio apartment as for a 1,200 sq. ft. 2BR apartment.

Looking at some of the new developments around here, I'm seeing 3,000 sq. ft. homes, but on small lots with small yards. They compensate with very large, elaborate common areas, which includes retail, entertainment and dining options. I personally think that's the future of housing.

March 17 2011 at 2:03 PM Report abuse +1 rate up rate down Reply
1 reply to @robhahn's comment
Travis Robertson

You may be right on the size of the homes. I'm hearing differently, but I think a lot of things could change as family sizes grow. Time will tell.

I've been hearing Millennials express a desire for smaller spaces. Now, "smaller" is relative and that may mean 2,000 sq ft which is big historically - just smaller than the 3,000 ft. McMansions you reference. I've got a study somewhere that references this. I'll have to track it down.

I'm not convinced Millennials will hold firmly to everything they say they want. Home size may be one of those areas they change direction on. Especially if that's what's available and the cost is relatively inexpensive. :)

March 17 2011 at 2:41 PM Report abuse +1 rate up rate down Reply
1 reply to Travis Robertson's comment

Yeah, I'm not convinced Gen-Y wouldn't want smaller housing. But I do think that Millenials would be very very sensitive to costs. Which may mean smaller housing as a function of cost.

I'm familiar with the studies showing that younger folks want hip, urban, smaller housing; but the key is that they're "younger" and usually without children.

All I'm suggesting is that given the choice between smaller housing near entertainment districts vs. larger housing near their jobs, if the cost is the same, I think Millenials would opt for the larger. We'll see how it plays out though. :)

March 17 2011 at 3:42 PM Report abuse rate up rate down
Travis Robertson

Great post, Rob! I appreciate the shout out. :)

I think we have a couple of things at play here. I stand by my statement about the desire for urban lifestyle and I'll supplement it a bit here as well (it's hard to fit all of this in 3,000 characters, AOL).

We have to keep in mind psychographic and demographic trends. Psychographic trends (what people desire or want) point to urban, walkable, smaller style housing. Currently, the majority of that is found in the inner cities or urban centers. The demographic data is as you've suggested in both this article and the last post.

I think we reconcile those two by expecting a continued urbanization of the suburbs which began in more recent years. The desire is for walkable, urban-style living. The cost and the reality of making this happen at the urban core is bleak for Millennials given income and job opportunities. That's what I was referring to when I wrote that we'd see the face of housing change. Urban centers will likely continue to be revived and renovated since that's where I believe higher-income families or retired Boomers will end up. The lower-income families (Millennials in this case) will push outward toward the burbs but with different demands than their Boomer parents had.

Theres a great piece on the urbanization of suburbs which can be found here:

Here's a quote from the piece:
"Well-known analysts Joel Kotkin, Robert Lang, Richard Florida, and Christopher Leinberger offered different views on what’s ahead, but they all agreed that most of the growth in U.S. urban regions (more than 100 million will be added to the population by 2050) will occur not in downtown cores, but in the suburbs.

The catch: The suburbs will grow differently than they have in the past, reflecting a trend toward denser development and smaller homes on smaller lots, and less dependence on cars. The winners: close-in suburbs with an urban feel, featuring town centers as a focal point, with ample recreational, shopping and entertainment opportunities, and which are near employment centers. The losers: big houses on big lots in isolated suburbs on the edge. The reason: three major demographic groups, all of whom place high value on time and convenience, none of whom want long commutes or long errands, and at least some of whom have soured on homeownership."

The three demographic groups? Aging Baby Boomers, Younger Baby Boomers and Millennials. It gets back to the point about "saving real estate." Real estate is not likely to continue the trend of sprawl as we saw in the later half of the 20th century that favored large homes on large lots. The cost and upkeep is prohibitive and not desired by those three groups of people (who make up the lion share of the US population). The trends are shifting.

Again, spectacular piece! This is why I'm buying you a beer at RETSO. Always great to talk with politically like-minded people who make me work to defend my positions. :)

March 17 2011 at 1:50 PM Report abuse +1 rate up rate down Reply
Outdoor Lori

I know here in Charlotte many of the jobs being created are located in planned suburban neighborhoods such as South Park and Ballantyne, and even just across the border into South Carolina, due to land prices & availability,and less restrictions. Considering the commute from many of those areas into Uptown Charlotte is 1/2 hour plus, and that the costs for businesses to locate in Uptown is so much higher, I definitely agree with your analysis that the migration will lead back to the Burbs.

March 17 2011 at 12:50 PM Report abuse rate up rate down Reply

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