37. Living in the Center: What Explains the Downtown Housing Boom?

What explains the residential boom in city centers? Dr. Eugenie Birch at the University of Pennsylvania has identified this unprecedented phenomenon, examples of which from her research are in the following table. While the data are confined to the 1990-2000 decennial census, the boom continues unabated.

There are identifiable reasons for those who are adding to the populations of these commercial districts as well as reasons for those who don’t move from the suburbs. These life style cohorts include:

  • Young people, singles as well as couples, with preschool children or without children or without the expectation of children
  • Older people without children (“empty nesters”) rnainly living in suburban places
  • Those with school-age children or contemplating children (families and family planners)

Households in the third category may start their farnilies in city centers but many come to believe that they need quality, tax-supported suburban schools for their offspring and a bit of green, private space on which they may play. When the oldest child is about six, the exodus from the city centers is pronounced. While cities may have the best schools in the region – ones that have small classes, excellent teachers and specialized curricula (e.g., performing arts) — the reputation of city schools is poor or private schools are not affordable and these represent major factors in the exodus.

While this loss is real, it is not cause for defeatism. Two thirds of all American households have no school age children, a substantial market for which the city centers now prove appealing.

For the second group, the pressure to live within good school districts and to maintain a green expanse around the house no longer applies. When their children leave home, this group can now select a location that appeals to their adult lifestyle preferences. While that place may mean living near a golf course or a boat, it can also mean having the main residence where there are movies, art galleries, restaurants, theatres, music and other elements ofthe good life. These experience opportunities are increasingly appealing. The Baby Boom generation is entering this phase now.

The first cohort consists ofthose who may have attended a university in a central place and opted to stay where they have enjoyed themselves. Not married, and with the age of marriage far later than in earlier years, this group wants to live where it’s more fi.m than in the suburbs. They may now stay in cities for more years or may stay permanently to enjoy the diversity of experience opportunities not found in low-density suburbs.

Location choices lead either to child-oriented or adult-oriented places. Cities are currently seen as lively places with attractive real estate in safe locations. These generalizations should help orient repopulation policies in cities.

Why bother? The typical middle class household will spend more than $25,000 a year on the kinds of goods and services that are available in a dense central place with plenty of shops, dining, entertainment and food stores. If only one hundred new households are attracted in a year – a modest number in many of the fast-growing Downtowns – this will yield $2,500,000 in purchases of groceries, apparel, lunches, movie tickets and the like.

Philadelphia’s Paul Levy, head of Central Philadelphia Development Corp., makes a persuasive case that employment opportunities are essential for attracting and retaining those in the first category. Survey responses from Philadelphia’s Downtown office employees indicated that the “primary lure for living downtown ( would be) the ability to walk to work.” This favorable rating may be partly the result of substantially reduced less fear of crime and the dramatically improved appearance of Philadelphia’s commercial blocks. In fact, 25% of the residents of central Philadelphia do walk to work and another 20% use transit, which Levy sees as among the core area’s major economic advantages. Levy says, ”the housing boom is sustainable only so long as Center City remains a competitive place for professionals to work … In 2003, CPDC surveyed 25-34 year olds at selected locations throughout Center City. 81% were employed full time and halfwere working in Center. City. Levy makes the case that downtown jobs “stand behind Center City’s housing boom.”

And yet this traditional connection between where you work and where you live cannot entirely explain the rapid and continuing growth of conversions and new construction in Downtowns across the country. Most Downtowns are losing office market share in their regions, yet their residential populations continue to grow and developers continue to launch new residential projects. Further, Downtown living is appealing to older people approaching or reaching retirement, households no longer concerned about employment. Like the younger group, going to or staying in the city represents amenity-driven, rather than employment-driven, decisions.

The National Association of Realtors (NAR)1 contributes the useful observation that adding more people and households per square mile contributes positively to greater livability. Higher densities bring people together, whether to work or play; low densities reduce human contact and thus social experience. The common suburban 60-foot front lot places neighbors at considerable distance from each other, a negative arrangement that lessens human contact. The auto is another isolating instrument. A driver using an automated garage door opener moves from the car into the house without any exterior experience. Driver and neighbors have no contact. Many suburban residential areas even lack sidewalks. The odds against chance encounters are high; experience opportunities low.

The experience continuum can be illustrated by the opportunities for human contact. From higher to lower densities, the following illustrative social opportunities apply:

  • Nearby households socialize together, a common feature in high-density city neighborhoods;
  • They chat when they meet on the sidewalk;
  • They nod in recognition; or
  • They view one another from a distance.

The National Resources Defense Council (NRDC) compared two Sacramento neighborhoods, one considerably denser than the other. Where densities are 20/acre, commerce, schools, transit, parks and jobs were substantially closer to more residents than where densities are six to the acre. NAR notes that density by itself will fail to provide livable communities; mixed use is a second essential design element. NAR proposes that new development place residential units within five- to ten-minute walks to shops, restaurants and schools, sometimes combining residential and commercial uses in the same structures. Convenience is an essential component of experience opportunities and is most likely to be found in City centers. Propinquity pays.

Experience Opportunities

Cities have an intangible advantage over suburbs in that they provide something that more and more people seek and can afford – experience opportunities. Experience opportunities are most prevalent in the urban centers of metropolitan areas. Moves to these centers for many represents a flight from boredom, an appetite for moving on foot, for diversity of shopping, for busy sidewalks and a plethora of entertainment and dining choices. Cities’ inherent competitive advantage for residents is their limitless experience opportunities, including interesting architecture, concentrations of store windows, throngs of people to look at, myriad clubs to belong to, places to shop and dine, choices of gyms to exercise in, as well as diversity of jobs. Concentrations of universities tend to enhance and increase these amenities, offering many seniors and young adults learning opportunities within walking distance. Indeed, the cities with the greatest central populations – New York, Boston and Philadelphia are probably the ones with the greatest concentrations of experience opportunities, drawing and retaining residents because of this advantage.

For most family households with school-age children, the most frequent locational choice will remain the house with the yard and access to good and affordable schools. Families generally sacrifice adult convenience and amenity as a tradeoff for a child-oriented context. Today, however, the large and growing segment not bound by these lifestyle requirements is seeking more and better experience opportunities. Some will find this in the old fashioned, settled towns like Media, PA and Westfield, NJ, with traditional commercial centers of shops and restaurants, occasionally a theatre and established networks of clubs and civic organizations. Some will join the parade to the older city centers, choosing an environment that provides the greatest diversity of experience opportunities. In contrast, the traditional single-use, post WWlI tracts offer the fewest.

The lure of city life is so strong in Chicago that the reverse commute is reportedly worse than the traditional commute to and from downtown, according to Steve Fifield, a developer of high-rise condominium projects, quoted in ULI’s Multifamily Trends (Winter, 2004). “Major corporations based in the suburbs are now opening offices in downtown because they’re having a hard time recruiting workers, and those that thought of moving to the suburbs are staying put.”

Downtown New York is another transit-rich location; from dazzling apartments in the old financial district, occupants may walk to work or they may and do reverse commute by subway to Brooklyn and Hudson County, NJ workplaces. Denver, St. Louis and Boston are other places benefitting from experience opportunities in their Downtowns. In Central Philadelphia, the new Downtown growth is spilling over into a half dozen adjoining neighborhoods. The tallest apartment tower in the City’s history has opened, a half dozen are in the works and there is a steady flow of office and industrial buildings being converted to residential buildings. Rich in the restaurants, shops, theaters and entertainment that engage grownups, this is mainly amenity-driven growth, although, as Levy writes, for those in the workforce, a healthy office-based economy can be essential.

This article was written in a home office, part of a small, eight-room row house in Central Philadelphia. The invisible characteristics of convenience and sociability, both products of density, are among the elements that contribute to high livability here. With a street less than eight feet from curb to curb, plus two four-foot sidewalks, this arrangement works remarkably well in approximately a hundred blocks created in the early 1800s. At roughly 40 dwelling units to the acre, residential Center City represents a level of density that fosters social contacts and produces diverse amenities within an environment that distinctly favors walking over driving. A food store, a hardware store, several restaurants, cleaners, a barber, shoe repair, a copy shop, a deli with an enormous selection of beers and many other useful enterprises are with a five-minute walk. A coffee shop furnishes breakfast and a cast of neighbors who will sit and chat on their way (on foot) to work. One walks a little farther to three, mostly foreign, movie houses, to the opera and to several playhouses, gyms, department store-anchored shopping, new and old bookstores and City Hall. All these are experience opportunities that add convenience as well as charm.

Probably the most difficult reorientation required of those who have spent a generation or more in auto-oriented suburbs is the ability and need to frnd places for a single car. New residential projects in cities typically offer one parking space in a coverage garage per housing unit. Older homes tend to rely on on-street parking. The car can be a nuisance and rarely adds convenience. The ratio of autos per household is low, an important savings.

Without question, how places look, their curb appeal, is a forceful determinant of real estate success or failure. Daily sidewalk cleaning and graffiti removal frnanced by improvement districts are the new norms. While a sea of parking lots is can be a drag on the market, handsome old buildings, brighter lighting and well-maintained landscaping contribute to the urban revival and are now part of the romance of city life.

Density can be seen as concentrations of experience opportunities. Without density, the incentives for walking, biking and transit trips are faint. Without density, diversity is curtailed. Without diversity – of commerce, of residences, of public spaces, of entertainment and culture – the assets and appeal to home-seekers and existing residents are correspondingly reduced. The more density, the more experience opportunities and the greater the market appeal, a proportional relationship that is a foundation of the downtown residential boom.

Understanding what is driving much of this new residential concentration should help guide marketing investments by cities seeking to attract more dwellers. More experience opportunities produce more residents. Is it a solution to population loss by entire cities? Probably not. As one moves farther from city centers, there is a corresponding loss of density and diversity with a corresponding loss of experience opportunities.

In an era of population decentralization and ever lower density spraw~ what explains the counter trend evident in dozens and perhaps hundreds of American cities and older towns? The clustering reflects both the demographic shift to a greater share of childless and small households plus the additional household wealth that enables those with the luxury of choice to enjoy the vast menu of experience opportunities offered by central places. To a generation raised in a consumer culture, living in the midst of retail and services is not an unlikely locational preference.

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