Share of res development in urban centers growing, says study

“Fundamental shift” in market

Wendy Natt, Mar 09, 09.

More than half of the US’s 50 largest metro regions are undergoing a “dramatic” increase in the relative number of residential construction projects in their central urban areas vs. their outer suburbs, according to a recent EPA study of residential building permits. The study compared Census Bureau residential building permit data over a period of 18 years (1990-2007) for central urban/suburban core areas and exurban areas of each city. “Inward shift” trends accelerated most sharply over the past five years, says the study report, and they appear to be continuing into the current real estate slump.

The most dramatic surges in residential redevelopment occurred in medium sized cities commonly know for their “smart growth” management and redevelopment strategies. Large cities with culturally diverse centers and strong ties to the global market also experienced marked inward growth trends, even in the absence of formal policies and programs to encourage urban redevelopment.

While there were a number of obstacles to accurately defining the location and nature of building activity, the authors of the report maintain that this acceleration of building activity in urban centers is real, and “represents a fundamental shift in the real estate market.” They attribute this shift to several possible factors, including decreased crime and changing demographics in urban cores, and a well-documented increase in demand for housing in walkable, economically thriving, urban-style neighborhoods.

“For years, there was just one model - homes in auto-dependent suburbs,” says David Goldberg with Smart Growth America in a recent USA Today article on the EPA report. “The development industry finally began to create the kind of in-town products that people were looking for. It also reflects the investment that a lot of metro areas have made in rail transit systems,” Goldberg says.

A dozen of the largest metros, including Houston, saw little to no change in the relative share of urban vs. exurban residential permits, usually because even as urban redevelopment projects increased, so too did suburban expansion, says the report. Because of the way that permits are issued and “city” land is defined, Houston was also listed among those metropolitan regions where it sometimes was difficult to distinguish between urban redevelopment and suburban expansion projects.

See the full EPA report, Residential Construction Trends in America’s Metropolitan Regions (pdf).

Our 2007 research on building permits data in the Houston region.

(photo credit: alex-s)