Demographic Trends Now Favor DOWNTOWN!

by Jonathan Weber, courtesy of msnbc.com "The Big Money" blog.

“Location, location, location” has been the mantra of the real estate industry for as long as anyone can remember. Still, as the national economy transforms in the wake of the economic crisis, the power of place will prove to be ever more important for a broad range of small businesses.

Most demographic and market indicators suggest that growth and development across the country are moving away from the suburban and exurban fringe and toward center-cities and close-in suburbs.

What's behind this shift? Empty-nesters don't need the big house and don't want to mow the big lawn. High gas prices are making long commutes less practical. The urban renaissance in big cities ranging from New York to Portland, Ore. — and the revival of charming, vibrant downtowns in small cities like Missoula, Mont. — is making the bedroom suburb and the strip mall seem positively dull.

Retailers are the most obviously affected by these trends. For decades, locating a store in a mall on the fringe rather than downtown had a lot of obvious advantages: plenty of easy parking, tons of drive-by traffic from big-box neighbors, and newer buildings with better infrastructure.
These benefits won't disappear overnight. Over the long run, though, they will diminish in importance, especially if more big retail chains and shopping-mall operators go out of business. Downtown shopping districts, meanwhile, will benefit from increased investment and more proximate residents. If we assume, as many economists do, that the country is "over-retailed," some downtown development plans based on more shopping will stall, but the center will still prosper relative to the fringe — and more businesses might find the downtown storefront affordable.

Indeed, the advantages of a good downtown location extend to many businesses that are not dependent on walk-in traffic. At NewWest.Net, our alley storefront with a prominent sign is probably one of our best bits of marketing. Every month, we host an art show as part of the downtown "First Friday" art walk, which brings a lot of people into the office and gives us a chance to chat them up about NewWest.Net. Most meetings don't require getting into a car. Our very effective Downtown Association offers kinship (which can lead to deals) with neighboring businesses.

Locating downtown is sometimes associated with the "buy local" movement — the idea that the community benefits if businesses and consumers spend their money with independent, locally owned businesses. But you don't have to buy into this ideologically to position yourself as the friendly, local alternative to the big national chain, and part of the way to do that is to locate in a cool space — in a historic building, say — rather than a sterile strip mall or office park.

Downtown Real Estate Bypasses Housing Crisis: Gas Prices Are Making City Centers More Attractive

This was written by Robert Krueger, communications associate at the Urban Land Institute.

An article in the Wall Street Journal, it was reported that despite the mortgage crisis and falling house prices, downtown properties have seemed to be unaffected by the housing downturn.

The article explains that in the bigger cities, the closer that residential properties are to the center of the city, the better they are maintaining their value. Of the three metro areas the article examines, all show resilience to tumbling prices and may serve as a great option for those buyers who are looking for an investment that is already gaining value and sure to surge even more once the economy begins to recover.

What are the reasons for this phenomenon? Many speculate that gas prices have something to do with it. Yesterday, CNN reported that according to AAA, the national average of gas is up 9 percent from a month ago and 19 percent from a year ago. Yesterday, the nationwide average for regular unleaded hit $4 a gallon.

As the price of crude oil continues to affect the price Americans are paying at the pump, it is also having a direct affect on the charm of living in the suburbs. In the Washington, D.C. area, like many other metropolitan areas, the average house price has plummeted. While the average of the area is an 11 percent decrease, the price decrease in parts of the housing bubble magnet, Ashburn, Va. of Loudoun County, has seen a much steeper plunge. Ashburn’s 40-mile distance from the center of D.C. is a good reason that foreclosed houses in northern Virginia and the Maryland suburbs of D.C. are not getting many bidders for auctioned homes.

In addition, NPR reported that the median home price for inside the city of Washington is actually up 3.5 percent from a year ago. Economists are seeing this trend in others cities as well, such as Los Angeles, San Francisco, New York, Chicago, Miami, and Boston.

According to CEOs for Cities, a Chicago-based pro-urban nonprofit, the price of gas tends to get overlooked as a factor when evaluating the reasons behind the mortgage crisis. In their recent report, Driven to the Brink, the decline of home prices have been more severe in the metropolitan and suburbs that require lengthy commutes, and where there is a lack of public transportation alternatives. The same conclusion was drawn from ULI's report on U.S. infrastructure investment, Infrastructure 2008: A Competitive Advantage.

What this means to buyers and investors is that gas prices are changing the urban housing market. Now, people are not only looking at where a house is located, but they are also taking the price of gas, commute time, and the amount of lost time of driving into consideration before purchasing. No longer will buyers be taking their commutes for granted as living further out from the city has become an additional expense rather than a luxury.

One way for city planners to deal with this problem is merge land use planning with transportation investing in order to create master-planned communities that offer a mix of retail, office, and housing that is close to transit stations. This will allow residents to cut down on both commute times gas money instead of spending both driving on highways. The 2005 ULI publication, Developing Around Transit, offers advice and examples for community planners to help cut down on growth and sprawl and retain the attractiveness of their residential neighborhoods.

Among the other factors that are driving people to downtown areas are the array of amenities, retail, restaurants, arts and culture, and fast-paced lifestyle that downtowns offer. This is not only attractive to younger generations, but also empty nesters and baby boomers who are beginning to retire that make a person feel young, despite your age.

Whatever your reason for wanting to live downtown. Contact the City Living Team at Real Living, Inc. and let the pros help you make the big move to downtown Cleveland... After all, we are your future neighbors.

Scott Phillips is a licensed Realtor with Real Living, Inc. Equal Opportunity Housing.