Over the next few years, your houses may look different (smaller); how much you get for them may be different (less); but where you’ll be putting them will most likely track a trend that was gaining momentum long before the downturn: hot locations in walkable areas close to urban cores.
“Crises historically tend to accelerate existing trends rather than change them,” says John McIlwain, senior resident fellow at the Urban Land Institute in Washington, D.C. “And building permits [are trending] toward urban areas,” he says, citing a January report from the EPA, “Residential Construction Trends in America’s Metropolitan Regions,” which tracked building permit data for the 50 largest metro regions over an 18-year period. In many regions, there has been a dramatic increase in the share of new construction built in central cities and older suburbs. (See charts, pages 39 and 41.)
What’s driving this trend? Lower crime rates in central cities and changing demographics, along with a demand for homes in walkable, mixed-use communities close to high-paying jobs. Add to that rising energy and gas prices, and you’ve got many demographic groups, from empty-nesters to young adults, looking for more efficient places to live.
“I think anybody who is smart knows that when economics pick up around the world the gas prices will shoot up again,” says McIlwain. “Anyone who can [do so] knows moving in will save time and gas. You will see a lower homeownership rate and a new focus on rental—and I don’t think that is bad.”
President Obama’s stimulus infusion for education may even accelerate this trend as one of the big stumbling blocks to families returning to closer-in suburbs and cities has been the poor state of city schools.
Nature Versus Nurture
But to what extent, ask the report authors, is the migration to cities and first-ring neighborhoods driven by real estate market fundamentals versus public sector policies? Green, after all, has been embraced by many municipalities, spurred by the many green codes available for adoption. Do buyers really want this?
From region to region the response may vary, but planners and developers in the trenches say yes, and offer some supporting anecdotal evidence. (See the three case studies highlighted in this article.)
Andy Kunz, principal of sustainable urban design and planning at GGA, an architectural design firm in Washington, D.C., recalls being at an Urban Land Institute meeting a few months back and listening to big developers talk about their plans. “Right in the height of the meltdown, these developers said that when the dust settles, every single new community will be urban, mixed-use, walkable, and near rail stations.”
Kunz believes that the rail systems, particularly intra-city rail, as opposed to high-speed rail connecting cities, will determine development patterns.
Developers are following the cues of multiple demographic groups that have demonstrated that more urban, mixed-use, and walkable neighborhoods are where they want to be. “We were already seeing cities coming back to life,” says Kunz. “All demographics and housing types were returning—except maybe families with young children.”
But young families with kids aren’t really the market developers are courting. Arthur Chris Nelson, presidential professor at the Department of City and Metro Planning at the University of Utah, noted in a recent speech: “While in the 1950s half of all households had children, that number has steadily declined. By 2040, only 25% will have kids.” He forecasts that 86% of demand from 2005–2040 will be from childless households—some 47 million homes.
But to Kunz, it’s really about peak oil. “We have reached the max supply of oil. Experts, geologists, and bankers who know about oil said we have reached world peak oil. By 2030 we will have half as much oil as we have now. And we are the most dependent on it.”
He points to the housing collapse in California as a stark reminder of what could happen throughout the country. “Far-flung suburbs crashed and burned. There were a half million houses abandoned, and the houses that lost the most value were the farthest out and needed the most oil to get to.” Kunz points out that the homes closest to cities retained more of their value.
“America is in a real pickle. We spent years building wasteful communities, and we had cheap oil. It’s coming to an end, and it will be difficult to fix,” Kunz says.
But we have to fix it, and he suggests that communities and the developers in them rearrange priorities, turning focus from cars to rail and bikes: “You know, Paris put in 20,000 bikes and has 4 million riders not in buses or cars moving around the city. Chicago is looking into this. If the top 50 cities did it, it would be the easiest, cheapest way to reduce energy fast.”
While developers are carefully watching developable land close to cities or rail for their next projects, “precious” properties—such as land with breathtaking views or adjacency to green space, nature, or water—are also in demand. Differentiation will still be a strong selling point over the next few years.
The Green Framework
But even with a demonstrated buyer interest in sustainable communities, changes in local regulations and public infrastructure investments must happen first. As an example, adding a transit element means that zoning codes and parking regulations need to be changed, and upgrades must be made to water and sewer infrastructure.
Firms with planning experience are emerging as a source of help for developers and municipalities interested in breaking out of old development patterns.
“There is a growing market for three key things: community, a green/sustainable component, and the economics behind it—it has to work in today’s market,” explains Tom Lowe, director of town planning for DPZ Charlotte. DPZ recently unveiled its Light Imprint Handbook which Lowe describes as a handbook or a “smart code” that you can use to calibrate your projects, whether they be urban, surburban, or rural.
“As opposed to the ‘Eco-Elite,’ this is for the average Joe, the broadest spectrum of the industry,” Lowe says. While DPZ is proud of the Cub Scout–type handbook that is easily brought to town meetings, the company has also put this information online where builders simply plug in their project’s parameters and in 30 seconds can calibrate the project, which, Lowe claims, makes communities more green and marketable, better designed, and less expensive.
As an example (and one of Lowe’s pet peeves) stormwater management is one of the areas addressed by the Light Imprint Handbook. “Typical development uses inlet pipe and pit approach. Engineers and developers understand this. They are awful, unappealing, and in the wrong place,” Lowe says. “If you start celebrating water, you won’t have water pipes shooting it outside the neighborhood. Instead, bring it down, spread it around, and put it in the ground,” Lowe says. “We need to recharge our watersheds and aquifers at the origination point versus sending it away.”
While Lowe encourages transit development, he points out that not every community can be transit oriented. The Light Imprint model, therefore can be used on a rural or farming community, provided that it satisfies the requirement of “laying lightly on the land.”
Another theory for development is embodied in Form-Based Codes, written by a team of experts, including Daniel Parolek, which is an alternative to city and county zoning codes. The code regulates development on the scale of an individual building and creates predictable public realms to achieve a more unified community vision based on time-tested forms of urbanism.
Parolek, principal of Opticos, says we are at forefront of form-based coding, an alternative to conventional zoning that promotes walkable and urban development. “It addresses a couple of different things,” he says. “Creating regulations for TNDs with the ‘missing middle’—a mix of housing types ranging from single-family to duplexes to apartments in a walkable neighborhood with a main street.”
Parolek believes that current zoning doesn’t allow walkable urban development to happen. “With form-based codes, you can have blended housing types and uses, more transit-supportive design, and a complete street for people and bikes not just cars,” he says.
Municipalities are interested in preserving the unique character of their towns and cities, which works in favor of Form-Based Codes. “Design is important in the design of new communities,” emphasizes Parolek. “Communities are not engineered, they are designed. Form-based coding promotes good design because inherent is a visioning phase—developers and builders work with community to establish a vision that gets implemented.
“Now is the time to plan,” Parolek urges, pointing out that his firm is working with many cities to get their visions on paper. “Flagstaff [Ariz.] knew this, and now there is time to set the regulations in place for the right thing to happen when the economy recovers.”
There are a host of firms that serve as consultants for builders. GGA’s Kunz notes that his firm has stepped into the role as a consultant to help builders walk away from sprawl and oil-based transportation. As opportunities to develop green communities emerge, builders can use the assistance of consultants to integrate green aspects throughout their projects. Kunz points to successful communities as aspirational models that all builders should be working toward, particularly in Europe where they seem to have mastered the art of non-oil-based transportation and density.
“If we get moving, the new way of living is better than we have now,” Kunz promises. “In Amsterdam they are happier. They have more time, great trains and bikes, fresh air, exercise, healthier food. Once we get through transition, the other side is a better life than we have now.” GB
Case Study 1
Westport Waterfront: Green Harbor
Baltimore’s Inner Harbor dramatically changed the landscape of the waterfront city decades ago, but the area’s metamorphosis is not over. A 50-acre mixed-use brownfield development to include residential units, office space, retail venues, and extensive open space is slated for construction this June with buildout over the next 10 years. (See photos, above) Surrounded by more than 100 acres of protected parkland, this transit-oriented community features an existing on-site light rail station, easy access to major highways, and an extensive system of biking and walking paths.
Indicative of its popularity (the community got no pushback from citizens and got a go-ahead from the EPA that its development wouldn’t harm the environment) Westport has received unprecedented funding from the City of Baltimore in the form of a $160 million TIF (tax increment financing), the largest ever in Baltimore’s history.
Pat Turner, president of Turner Development Group, developer of Westport Waterfront, describes the brownfield scene he came upon: “This was industrial waterfront south of central business district on the waterfront. A light rail line station was dead center on the property. Industrial was there. The city sees it as the next Inner Harbor—Green Harbor—and [dictated] that the site was to be green and transit oriented.”
Turner came in as the master planner, having years of experience in adaptive reuse. “This is a lifestyle community with high-performance buildings, transit and bike trails, a 27-acre park, and a special pier that launches crew boats and discourages powerboats.
The company is currently working out final details on a plan with an unnamed national home builder to build the townhouse portion of the site.
“The [builder] will offer green sales upgrades,” Turner says. “Energy-efficient appliances and light fixtures, heat recovery systems, and super contemporary floor plans.” All this will come with an affordable price tag starting at around $300,000.
Turner notes that the proximity to Baltimore and Washington, D.C., along with the green angle, is the selling point of this community.
But just as with every land buy, it’s about the deal. “You have to buy the property right,” says Turner. “We don’t do presales. We price it where the price should be. If you price it right they sell. You make money when you buy the property—not when you sell it.”
Case Study 2
paradise reserve: precious site
Not all future development will be dense and centered around rail. But those that stray far from that formula will most likely have a unique characteristic or amenity that buyers simply can’t do without.
Paradise Reserve in Phoenix answers buyers call for homes that are within the downtown but that also boast a beautiful surrounding (see renderings, this page). The community—dubbed a desert retreat in the heart of Phoenix—borders Paradise Alley and the Phoenix Mountain Preserve with 7,000 acres that are part of the Sonoran Desert.
Scott Shiabor of Scott Patrick Homes in Albuquerque, N.M., picked up the parcel in 2004. “We’ve always developed unique natural sites that took a lot of detail and dedication and cost to develop. It’s what we’re known for,” Shiabor says.
Shiabor let the land dictate how the community would unfold, and ended up with 14 estate lots from one to three acres, running from about $2 million to $5 million. “There was a hillside ordinance that allows up to 18 lots, but we thought that was too cramped,” Shiabor says. “We decided with the city that 14 was a better number to preserve views and bring them lower on the hillside so they would be less obtrusive yet maintain tremendous views of Camelback Mountain.”
While the lots are big, the building envelopes on the lots are approximately 24,000 to 28,000 feet. Shiabor expects the homes placed on these lots to run from $7 million to $15 million and he’s expecting a four-year sell-out. “We’ll have a collectible-type community, which holds value. When you have very few of something you can get a better price and you can sell even in bad times.”
Shiabor calls the subdivision a “horizontal high-rise” because there are a lot of active systems on site. “We get our water from city but we pump it up the hill and we have a separate system for fire system. … We have a pump house that needs to be maintained and underground drainage.”
The community will have a steward on site who will manage and oversee the land, as well as a concierge. “Instead of building amenities on site, we use the ones that are around us—that’s the beauty of infill, You have these existing structures [in Phoenix] and we have given buyers the key to all of that—there are ten spas within ten miles,” he notes.
High-end sustainable gets its knocks, but it certainly beats high-end unsustainable product. Shiabor considered getting the community LEED certified but because it was gated and the density was too low, they deferred. “We have to let our site, not [green] requirements guide us. You have to respect and use them, but you also have to make adjustments.”
The company spent money to make this high-end project work, spending $2 million on a one-million-gallon water storage system and an additional $1.5 million on restoring an existing natural wash.
Shiabor isn’t daunted by the up-front expense. “We came out with such a rare product, and nothing like it is available in the middle of the city,” he explains. “If you respect nature and work with nature, you end up with the best.”
Case Study 3
design competition: green for the masses
An Opticos project (renderings above) was a recent winner of the GreenWorks Design Competition in Santa Fe, N.M. Tasked to create an affordable, green housing project for the historic city center, Berkeley, Calif.–based Opticos designed six units on a quarter-acre lot. The one- and two-bedroom units cluster around a courtyard space and a shared community room, which is the heart of the plan with its kitchen, library, and large communal hall.
One of the biggest challenges for such a project is often the local building code, “This design is an example of how well-designed density can play a role in the evolution of existing neighborhoods to meet the growing market demand for attached housing,” says Daniel Parolek, founding principal of Opticos. “The project demonstrates how cities can rethink their zoning regulations, such as parking requirements, setbacks, densities, and other elements that are often obstacles, and replace them with an approach based on reinforcing walkability; a specific, appropriate form, and building types endemic to a region.”
Some of the green features of this project include:
- passive solar heating and cooling
- shading devises that block high summer sunlight
- maximization of cross ventilation through site orientation and shallow building depths
- advanced ICF construction
- 44 180W solar panels, which provide 25% of electricity needs.
- green living roofs
- a rainwater catchment system
Not only did the project keep costs in check but it also adhered to existing local building codes, is scalable, and respects the character of the existing community.
The project will be built in the city’s Westside Guadalupe Historic District in the near future.