Downtown dwellings bring new life to urban core

Part 1: A return to cities
By Glenn Roberts Jr.: Inman News
Editor's note: Downtown living is no longer taboo, and residents and developers are increasingly drawn to urban areas in many cities across the nation. Experts say demographics and lifestyle choices are driving the trend. More people are getting fed up with long commutes, immigration and population are surging in some areas, and a niche group of people – including young professionals and empty nesters -- are bored with living in the suburbs. In this three-part series, Inman News peels back the buzzwords associated with inner-city rebirth to find out what's really driving the new trend of downtown digs.

Lucy Killea, a former California senator and councilwoman, and a former member of the San Diego City Council, has lived for nearly six years in a high-rise downtown condominium in San Diego. She lives alone there and enjoys the downtown lifestyle.

As a politician and resident, Killea has watched the downtown transform from a largely retail district that was geared toward the local military population. Today, wealthy suburban-area people are coming in, and young professionals and retirees like herself are now living there, she said.

"When I first moved in, my friends would say, 'Don't you feel it's dangerous (to live downtown)?' Now it's, 'Oh, you live downtown? You lucky thing,' "she said. "It's been fabulous for the restaurants. We just have more wonderful restaurants now. It's wonderful for the cultural life."

Living in a high-rise condo downtown, Killea, who is retired, doesn't have to worry about home maintenance as much. "It's great because I can keep very active without being distracted."

The residential resurgence took root more than a decade ago in San Diego, Killea said, and the local boom may be settling. "There is a tremendous amount of building. We're hitting the saturation point and I think demand will level out a bit," she said.

Downtown living is no longer taboo, and residents and developers are increasingly drawn to urban areas in many cities across the nation. Experts say demographics and lifestyle choices are driving the trend. More people are getting fed up with long commutes, immigration and population are surging in some areas, and there is a niche group of people -- among them young professionals and empty nesters -- who are bored with the 'burbs.

In several examples, it was the bohemians who rediscovered city life. They were the pioneers who found residential potential in vacant warehouses and long-stagnant commercial buildings. They made their homes and practiced their craft in loft spaces and other odd places.

The following phase of urban dwellers typically has included young professionals, empty-nesters and baby boomers with money to spend. Developers have watched this trend gurgle and then spout up at different times and in different places, tapping this burgeoning market of city-seekers by converting mouse-infested eyesores into housing and stores, or starting from scratch with new buildings that boast luxury high-rise condos or modernized lofts. In some cases, housing is springing up in downtown areas previously devoid of residential districts.

Urban infill and renewal, adaptive reuse, redevelopment and revitalization, high-density, mixed-use, transit-oriented, smart growth, and new urbanism: Such buzzwords for inner-city rebirth are now well established in real estate industry vocabularies. Builders and planners say that these new forms of downtown digs, which come in many shapes and sizes and break the mold of traditional developments, have finally come of age as a viable niche in housing market. And infill experts say there is ample room to grow in many of the nation's city centers.

"We've really just seen the first wave. I think because of the demographic factors -- more households without kids, fewer of conventional suburban families, a whole lot more empty nesters and a lot more immigrants...people are looking for more town-like living arrangements and less of the one-size-fits-all suburbia," said David A. Goldberg, a spokesman for Smart Growth America. The agency is a coalition of local, state and national organizations that advocate for neighborhood revitalization, environmentally friendly construction, and the preservation of farmland, open space and historic buildings, among other aims.

"This willingness to look at the central city and inner suburbs as a place to live has been driven in part by the long commutes and the limited choices that you find in the newer suburbs, where your choices are limited to several shades of beige single-family homes," Goldberg added.

Suburban housing developments have been a fixture in the nation's real estate landscape since World War II, and this trend heightened in the 1990s, he also said. "In the '90s we consumed land a lot faster than we ever had before, per unit of population. Commute distances were growing to the point where cost in time and money to travel to where the jobs were really began to offset the lower cost of the land for a lot of people." Some savvy developers began to explore the potential for housing much closer to job centers.

Don't expect to find an abandoned suburbia, though. At this time, urban infill is still just a sliver of the nation's overall housing stock, and suburban development continues to grow and thrive. "It's still tougher to do an infill project or a loft conversion than it is to go to a suburban jurisdiction and build on a greenfield," Goldberg said, though that generality does not always hold true for some land-strapped and preservation-minded communities. "I do think in some places there is something approaching a leveling of the playing field."

City living is not for everyone, and in fact most people prefer to live in the suburbs, said R. John Ochsner, division president for Centex Homes, Northern California. "Every time we do a survey at the homebuilder level, it constantly comes up that buyers prefer single-family detached homes in suburban settings," he said. Suburban development is getting farther afield, and outlying areas once considered emerging housing markets are now considered to be prime markets, Ochsner said.

Downtowns are not the place where most Americans are raising their kids, he said. "What we see in urban living -- the buyer profile is anybody with no kids: singles, couples, couples in alternatives lifestyles, move-downs, the portion of the population that really can't afford a single-family home but wants to get in the for-sale market."

But Centex hasn't missed out on infill -- the company is the third largest general contractor in the country and has worked on several urban infill projects. "There's a lot to be learned here. Nobody has figured it out. Each deal is unique," Ochsner said.

"In general there's still a hard-wiring of the American development machine to the periphery, getting farther and farther away," said Mark Muro, director of policy for the Metropolitan Policy Program at The Brookings Institution. But there is also a major push inward in many cities, he noted. "Sprawl is going to hit the wall in some places. It already has in Los Angeles.

"You have both a heating up in centers that is beginning to warm urban real estate markets that have been slack for a long time, but you also have yet another movement outward, fueled by low-cost interest rates. The move to the periphery is a search for home affordability." A runaway housing market, which has seen record-breaking price appreciation and sales in many markets, has aided on both fronts, he said. "The extreme real estate environment has accelerated both sprawl and (urban) regeneration."

Muro noted the migration trend of 20-something and 30-something young urban professionals moving to some city centers, along with some seniors and empty nesters, and said that the lack of quality education remains a roadblock for families who might otherwise move downtown.

These new waves of urban residents can gentrify established neighborhoods, driving up real estate prices and driving out low-income residents, though urban infill does hold the promise, he said, "of diversifying what has often become a low-income and often racially isolated population."

In his 2003 book, "House by House, Block by Block: The Rebirth of America's Urban Neighborhoods," Alexander von Hoffman focused on five cities that have experienced urban renewal. He noticed some general patterns in how a city center is reborn. "There is the phenomenon of urban pioneers -- people who like and adopt particular neighborhoods," he said. Von Hoffman is also a senior fellow at the Harvard University Joint Center for Housing Studies.

"People who move in (first) often are artists, bohemians of one sort or another. They fix up properties as residential areas and they start a new dynamic as something that is valued. It's a gradual process starting with a few people building momentum, and then you get to a point of critical mass," he said.

Some cities experienced this resurgence in the 1970s and 1980s, and by the 1990s it was a recognizable trend in many areas, von Hoffman said. "It used to be people with money and wherewithal did not want to live in the city. They wanted to live in the suburbs. Everything about the city had a bad image. Hardly anybody lived in downtowns at all 40 years ago. If they did they were living in shelters or possibly luxury apartments on the waterfront."

But city living "now is quite fashionable," he said. City-goers are typically seeking a more rich cultural experience, with museums, theater, symphony, restaurants, and night life all around, he said, while suburbanites tend to favor big lots, open spaces and schools.

Overall, the population in suburbs and farther outlying communities, sometimes called "exurbs," continues to grow faster than the population living in inner-city areas, but it's clear that "inner cities are becoming vital, growing places," he said.

Robert Lang, director of The Metropolitan Institute at Virginia Tech University, has said that about 50 percent of the U.S. population now resides in suburban areas, while 30 percent live in central-city areas and about 10 percent live in smaller urban centers with populations of about 10,000 to 50,000. The population in suburban areas is expected to grow to about 60 percent of the total U.S. population by 2030, Lang also has said.

Is inner-city residential development just a passing fancy, a trend that is bound to end? Lawrence Bond, chairman of Bond Cos., a development company based in Santa Monica, Calif., said that is not likely. "I don't think it's a phenomenon. I think it's an accepted product type at this time."