Not too long ago in Washington, D.C. – and still today in plenty of other cities – “walkable urbanism” was a niche real estate market. Developers weren’t all that interested in mixed-use, compact projects, of the kind where carless urbanites might live, work and grocery shop in strolling distance. And people didn’t seem to want to live in them anyway. But things have been changing in the capital. Now, argues real estate developer and George Washington University professor Christopher Leinberger, walkable urbanism is becoming the real estate market.
Washington’s evolution hints at what will happen in this next real estate cycle in cities everywhere, Leinberger concludes in new research to be presented at a conference on the topic next week. His findings build on an earlier study conducted at the Brookings Institution. In all, the Washington region now leads the nation with 43 distinct neighborhoods Leinberger has identified as “regionally significant walkable urban places” (in other words, those walkable places that also help power the metro economy as jobs centers). A mere .9 percent of the land in the entire Washington region is currently devoted to such places. But 34 percent of the region’s jobs are located there. And these places, Leinberger argues, represent the future of cities everywhere – for the coming wave of development in residential construction, in office space, in entertainment and in retail.
“Less than 10 percent of the entire metropolitan land mass is where development wants to go over the next generation,” Leinberger says. “We don’t need to add another square foot – or, in the case of sprawl, another square mile – of land to the metropolitan area. We’ve already urbanized as much as we need to.”
This is a pretty radical pronouncement: if Washington continues to grow over the next generation, without continuing its voracious spread into the Virginia and Maryland countryside, that development pattern would defy decades of history since World War II. And just because the region’s existing urbanized footprint can handle all of this new development (Washington is a fraction as dense, for instance, as low-rise Paris), that doesn’t guarantee that policymakers and real estate developers will be able to switch gears as fast as this demand is shifting.
Leinberger, however, points to real estate data dating back to the early 1990s that suggests this transition is already well underway. During the 1990s real estate cycle (from 1992 to 2000), 38 percent of the new office space built in the Washington area was constructed in these walkable places. In the next cycle, from 2000 to the beginning of the recession in 2008, that number went up to 49 percent. Since 2009 – the onset of this latest real estate round – that figure has gone up to 59 percent. New rental apartments have similarly trended in this direction. In the 1990s, just 12 percent of new rental apartment space built in the region was constructed in these walkable places. Since 2009, 42 percent has been. And Leinberger calls that a wildly conservative calculation. (Retail construction lags in this regard, perhaps a result of the fact that many big-box retailers are still figuring out how to wedge themselves into urban settings).
Leinberger is basing his analysis not on projections of where consumer demand may go next, but on these trends that have been gaining steam for some time. You can also detect this shift, he adds, in the price premium the market now demands for a walkable home or office over a comparable outlying one (“and we’re not comparing a dump to a mansion,” he adds).
Full Story: The next major real estate cycle: walkable urbanism?
Source: The Atlantic Cities, September 5, 2012