A New Urban Legend

SPECIAL REPORTThe increasing popularity of urban housing presents new and interesting challenges to the nation's architectural and interior design industries.The increasing popularity in major U.S. cities of both for-sale and rental housing in downtown areas presents new and interesting challenges to the nation's architectural and interior design industries as they design high-density homes and apartments for a new breed of buyers and renters who prefer the excitement of a city lifestyle to the tranquility of the suburbs. This was one of several key messages delivered at the Developing Successful Intown Housing Conference sponsored by the Urban Land Institute (ULI) in Dallas, TX. The conference focused on a broad range of topics related to "intown housing," from design to correctly reading the market to fulfilling the need for adequate parking in a more pedestrian-oriented environment. Because of the nation's changing demographics, planners, architects, developers and builders in the United States are facing the dual challenges of rapidly increasing housing costs and decreasing inventories of land for new residential development, especially in areas like Southern California. Conference participants concurred that intown housing development—while not immune to economic downturns—has remained stable and will likely gain strength in the years ahead, due primarily to the continued migration to "downtown" by young professionals and empty nesters. Greg Currens, a principal of Style Interior Design, Irvine, CA, one of the speakers at the conference, presented the results of comprehensive research conducted on the multifamily market. Style Interior Design specializes in multifamily development and has been involved with many of the upscale apartment communities currently being built in urban areas throughout California. Currens pointed out that the development of housing in downtown areas has become a relatively new trend, fueled by demand from childless households seeking a living environment conducive to "hiving," or frequent social interaction and community involvement, rather than "cocooning," in which residents are more isolated. Currens described "hiving" as the quest for a more meaningful sense of community, a social trend identified earlier this year by the Yankelovich market research firm. According to Yankelovich, hiving has three key elements: the home becomes "command central" for social activities; hivers are on a quest for more "connectedness" with family, friends and neighbors; and hivers put family, friends and neighbors first on their social priority list. People Meeting People"Americans are becoming more eager to interact with their friends, family and community, and are more apt to use their home as a base for making these social connections instead of as a hideaway to withdraw from the world," Currens explained. "As we move into the 21st century, the moat mentality is disappearing. People want to be with people, but on their own terms." Currens further cited results from the Yankelovich survey in which 64 percent of the participants identified themselves as "hivers," compared to 33 percent who identified themselves as "cocooners." The majority of the respondents said an ideal characteristic for their home is for it to serve as a hub of activity for friends, family and neighbors, and a majority also said they preferred maintenance-free living. Delving deeper into the respondents' "hiving" psyche, 65 percent said they believed there were real advantages to being part of a larger community, 55 percent said they would like to have more people in their community on whom they could rely, and 49 percent said they wish they had more contact with people in their community. When asked to describe their ideal home, 86 percent said it was a "safe haven," followed by a home in a "desirable neighborhood" (70 percent), a place for "the rest of life" (68 percent), a "good investment" (66 percent), and a "hub of activity for friends and family" (53 percent). "It's vital for architects, interior designers and builders to research and understand these new market forces such as hiving, which can be accomplished through focus groups, surveys of the competition, and obtaining local demographics," Currens explained. "Understanding the meaning and implications of the market research and data from the beginning is crucial. There is more demographic diversity in urban areas and it's important to understand who these people are and what they want." Currens said the Yankelovich survey suggests that more consumers are seeking housing that is closely connected to community amenities, including housing that is mixed with, adjacent to, within walking distance of, or connected by transit to recreation, culture, entertainment and work. Developments offering a more convenient location, strong sense of community, an enriching social experience, and that have ample amenities, have the best chances for success, he said. Multi-family Competition Fierce Focusing on multi-family, Currens said competition is fierce in the apartment industry, and renters' bar of expectation continues to get higher. "Today's renters are more demanding than ever," he stated. "They demand better design and more amenities. It's not enough that people like their own apartment unit or even their own floor plan of an apartment building. With greater importance being placed on lifestyle, flexibility and convenience, today's services and appointments have been upgraded and enhanced to become a vital part of many new multi-family communities, Currens said. These communities are designed to feel like a destination resort and offer residents top-notch amenities and services. He explained that a diverse set of factors drive a renter's decisions today, and that people are seeking a more memorable, more enjoyable "experience." Like many at the conference, Currens stressed that changing demographics are creating new demands for housing in urban areas. The number of households with children—the market segment least likely to prefer downtown living—is steadily declining, while the number without children—the segment most likely to live downtown—is steadily rising. By some industry estimates, by 2010 up to 75 percent of U.S. households will have no children living at home. "We need to respond to these changes occurring in our society by producing more housing options, especially in urban areas where there is increasing demand for more housing," Currens noted. When the "back to downtown" movement started a few years ago, most renters and buyers were young singles or childless couples; however, aging baby boomers—either retired or still working—are becoming a bigger part of the market, conference participants noted. A Simpler Lifestyle"We are seeing empty nesters who want a simpler lifestyle, as well as the children of empty nesters who don't want to live in the type of suburban environment in which they grew up," said Fran McCarthy, president, Daedalus Development, Fort Worth, TX. Given the car-dependent, isolated living environment, rising traffic gridlock and long commutes faced by many residents in outlying areas, "the utopia of suburbia is not panning out," McCarthy noted. "Also, as metropolitan areas grow and become more crowded and traffic impacted, more pressure is placed on getting housing closer to jobs." Despite a slip in some downtown populations following the September 11 terrorist attacks, several urban areas have experienced downtown population increases since 1990. For instance, U.S. Census Bureau statistics show that Houston, Seattle, Chicago, Denver, Portland, Atlanta, Memphis and San Diego all experienced greater percentage increases in their downtown populations than in their entire Statistical Metropolitan Areas (SMAs) over the past decade. Other cities, including Cleveland, Baltimore, Philadelphia and Detroit incurred downtown population increases while losing population as a whole. "The future of cities has changed," said Tom Gilmore, manager of Gilmore Associates LLC, in Los Angeles. "Having people, a lot of people, living in a downtown is what keeps it from being a dead zone," he said. Gilmore pointed out that downtown development has shifted from a focus on industrial uses to residential uses. While city cores once relied heavily on manufacturing and industries as their economic engines, he pointed out that they are now increasingly reliant on residents to trigger a 24/7 atmosphere energized by shopping, dining and entertainment. Moreover, the buildings that once housed downtown industries are now being converted to housing, such as lofts, apartments, live-work units and condominiums, to accommodate the urban population growth. Several of the case studies presented at the conference involved historic preservation/ adaptive reuse projects, including the Subway Terminal building in downtown Los Angeles (a Forest City project to be re-named Metro 417) and the Stuart Pharmaceutical building in Pasadena (a BRE Properties project that will be named Villa at Sierra Madre). growing interest from developers The growing interest in downtown housing is drawing developers from other sectors of the industry, including commercial real estate developers who are interested in including housing in mixed-use developments, as well as residential developers who previously focused solely on outlying suburban development. Pretlow Riddick, executive vice president of JPI Development, Irving, TX, pointed out that although JPI was the "epitome of a suburban developer" when he joined the company 14 years ago, half of its projects are now high-density, intown housing developments. For JPI, the advantages of intown development include the ability to be more creative with the architecture, generally more flexible zoning, steady market demand, and virtually no community resistance related to school crowding or traffic issues—since few families with children occupy the housing and the developments are not auto-dependent—Riddick said. However, he noted that intown development has multiple challenges that can test even the most determined developer: more complexity in construction; the likelihood of environmental waste clean-up; and numerous project delays. Also, the look and feel of higher density, multi-family communities are evolving. The growing sophistication of today's urban residents, combined with rising land prices and the changing demographics of our society, emphasize the need for developers to rethink and restyle their multi-family products. The focus has shifted from basic shelter to increasingly upscale residential choices and lifestyle. "People living in multi-family communities are no longer satisfied with four walls and a parking stall," Currens concluded. "They want all the amenities and appointments of an upscale home, and they want to be proud of where they live. They are much more demanding and they will not be satisfied with less."

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Headquartered in Washington, DC, the Urban Land Institute is a nonprofit education and research institute supported by its more than 18,000 members. It facilitates the open exchange of ideas, information and experience among local, national and international industry leaders and policy makers dedicated to creating better places for people to live, work and play.