Comments on: Suburbs Passe? http://michaelcarliner.com/blog/2008/06/30/suburbs-passe/ Musings on Housing and the Economy Fri, 12 Mar 2010 10:33:03 +0000 http://wordpress.org/?v=2.5.1 By: The Bellows » NB http://michaelcarliner.com/blog/2008/06/30/suburbs-passe/#comment-755 The Bellows » NB Mon, 07 Jul 2008 14:28:26 +0000 http://michaelcarliner.com/blog/2008/06/30/suburbs-passe/#comment-755 [...] Thoughts about suburban slums; I don’t agree 100%, but it’s an interesting read. [...] [...] Thoughts about suburban slums; I don’t agree 100%, but it’s an interesting read. [...]

]]> By: Chris Leinberger http://michaelcarliner.com/blog/2008/06/30/suburbs-passe/#comment-734 Chris Leinberger Tue, 01 Jul 2008 13:09:27 +0000 http://michaelcarliner.com/blog/2008/06/30/suburbs-passe/#comment-734 Mr. Carliner, You site has some astute comments in reaction to the recent articles about the oil price/suburban connection. In particular, I agree with your comment that the Baby Boomers are a secondary influence on this; this is being driven by the Millenials. Also I completely in agreement with your forecast that the bulk of the demand for walkable urban development will be met in the suburbs (I am guessing 70%); this will probably concentrate in suburban town centers (e.g., Pasadena, Bellevue or Bethesda), redeveloped strip commercial (Arlington County outside DC, Belmar outside Denver) or green field development (Reston Town Center outside DC, Valencia Town Center in southern California and other mixed-use "lifestyle centers"). While downtowns and downtown adjacent walkable urban places are doing very well throughout the country, during the early phases of redevelopment, particularly in downtown adjacent places, population can actually drop. As broken up rental townhouses and other rentals get converted to for-sale housing, the square footage size go up per household and population therefore drops (a circa 1900 townhouse with 4-5 households being gentrified back to a single family unit with only two empty nester occupants is an example). Only when new high density rental apartments and condos get built, generally in middle phases of redevelopment, will population start growing again. We all have to keep in mind that the built environment, where 35% of all American assets reside, only adds 2-3% to its inventory in a good year. Therefore, these changes are very slow. However, the market demand can change more rapidly, which it has over the past decade, so that there is pent up demand for a limited supply of walkable urban product. The net result is that walkable urban product (housing, office, etc.) on a price per square foot basis is the highest in the metropolitan market in successful walkable urban places; 20 years ago it was among the lowest in these same places, testifying to the sea change in market demand. What we have is a "supply side problem"; there is pent up demand (30-40% of the market as best I can tell, maybe more) and most metro areas only have 5-10% walkable urban supply; hence an affordable housing challenge for the next generation given how slow we add inventory. Thanks for your very thoughtful web site. Chris Leinberger Mr. Carliner,

You site has some astute comments in reaction to the recent articles about the oil price/suburban connection. In particular, I agree with your comment that the Baby Boomers are a secondary influence on this; this is being driven by the Millenials. Also I completely in agreement with your forecast that the bulk of the demand for walkable urban development will be met in the suburbs (I am guessing 70%); this will probably concentrate in suburban town centers (e.g., Pasadena, Bellevue or Bethesda), redeveloped strip commercial (Arlington County outside DC, Belmar outside Denver) or green field development (Reston Town Center outside DC, Valencia Town Center in southern California and other mixed-use “lifestyle centers”). While downtowns and downtown adjacent walkable urban places are doing very well throughout the country, during the early phases of redevelopment, particularly in downtown adjacent places, population can actually drop. As broken up rental townhouses and other rentals get converted to for-sale housing, the square footage size go up per household and population therefore drops (a circa 1900 townhouse with 4-5 households being gentrified back to a single family unit with only two empty nester occupants is an example). Only when new high density rental apartments and condos get built, generally in middle phases of redevelopment, will population start growing again.

We all have to keep in mind that the built environment, where 35% of all American assets reside, only adds 2-3% to its inventory in a good year. Therefore, these changes are very slow. However, the market demand can change more rapidly, which it has over the past decade, so that there is pent up demand for a limited supply of walkable urban product. The net result is that walkable urban product (housing, office, etc.) on a price per square foot basis is the highest in the metropolitan market in successful walkable urban places; 20 years ago it was among the lowest in these same places, testifying to the sea change in market demand. What we have is a “supply side problem”; there is pent up demand (30-40% of the market as best I can tell, maybe more) and most metro areas only have 5-10% walkable urban supply; hence an affordable housing challenge for the next generation given how slow we add inventory.

Thanks for your very thoughtful web site.

Chris Leinberger

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