Often during economical shift, trends that were beginning to take shape before the real estate market downturn gain strength during and after the shift. Such may be the case with the trend toward urban renewal
reported by Green Builder Magazine in a recent column. Sustainability in new housing has become the buzz word of late especially those in the green building movement hoping not only to differentiate their projects but also to practice what they preach of environmental stewardship. In the Chicago real estate market, largely the bulk of new construction activity is this type of housing: dense, urban style housing walkable to parks, schools, transportation and entertainment. Attractive to the baby-boomer generation and young couple gen-xer and gen-y buyers seeking low maintenance living, the market for multi-family development is still showing some signs of life.
As the article by Cati O’Keefe states, most economists (and consumers for that matter) predict that when the current economic slump ends, energy prices will again rise to even perhaps the levels experienced in 2008. Citing an EPA study of the last 18 years of building trends, of the 50 largest metropolitan areas, most have seen a dramatic increase in new construction in their urban cores and “collar” (read: older, established) suburbs. The city of Chicago saw an increase from 25% from the average of 2002-2007 of the regional market share of permits, to over 40% in 2007.
The pressing question has to be what is it really that is driving this trend? Is it public policy or is this a result of market forces? For starters, consider that cities have seen the lowest crime rates in a generation (Chicago in particular) and the increase of high-paying jobs to urban cores have helped steer many young professionals back to the cities that many their grandparents left in the 1950’s. One stumbling block to sustaining this growth and retaining the young couples that wish to start a family is the continuing failure of inner city public schools. But as the article also points out, families are waiting longer and in many cases, not have children at all which is perhaps another reason for the desirability of urban housing.
Whatever the reason, it is clear that time have changed in residential construction and for the better. Green practices are being embraced by municipalities (see the Chicago Institute for Green Technology) and raw land is becoming more and more scarce. Whether or not consumers overwhelmingly embrace green building strategies, infill development and smarter growth remains to be seen. However, it is undoubtedly the predicted and necessary path of the future for new construction.
Green Builder Magazine Article
Rainbo Village, Uptown Chicago