AMERICA'S CITIES ARE MAKING A COME-back. Looking to shed their tarnished reputations in favor of something more stylish and attractive, many of the nation's great cities are actively pursuing redevelopment of downtown areas. Through the creation of new spaces and the renovation of old, these cities hope to shape new identities for their communities. And new housing infill projects are fueling the redefinitions of urban living. Builders are taking note.
From Washington to Boston, from San Diego to Seattle, and in countless cities in between, the market is ready. While many buyers are attracted to city life's proximity to jobs, shopping, and urban amenities, others look to cities because of their great energy, history, and sense of place. And still others seek an escape from the long commutes associated with suburban living. Regardless of the reasons, it is clear that the market for urban housing is back.
New, market-rate housing also helps cities retain and attract more families while broadening cities' tax bases. And such redevelopment often is followed by the growth of new businesses—the coffee shop, the local grocer, the corner deli—which provide many services and jobs that in turn help attract more residents and businesses.
But despite interest in infill projects, many challenges remain. For example, many barriers to growth—such as natural topography, government land ownership and acquisition, harsh regulatory environments, and the no-growth attitude of regulators and lawmakers—have restricted the supply of buildable land and driven up the cost of home sites.
Urban advocates also often impede infill projects by insisting that builders take advantage of existing infrastructure. However, the reality is that aging infrastructure often makes redevelopment costly, difficult, and time consuming. In older cities, it's common for an urban builder to encounter infrastructure that is more than 50 years old. Patching old, decaying infrastructure almost always is harder than starting from scratch.
Many cities have not seen significant new housing in many years. As a result, their permitting processes all too often have atrophied while their regulatory requirements and procedures have grown increasingly complex. If a city puts up bureaucratic barriers, then it is not going to see as much construction activity as in a city that takes sensible steps to reduce these burdens.
To increase the supply of urban housing, cities need to work closely with the housing industry to overcome major impediments. For example, not permitting the removal of aging infrastructure makes redevelopment costly and difficult, and federal liability laws increase risks for builders involved in the redevelopment of abandoned industrial sites. These issues, along with making cities safe from crime, improving the quality of schools, and creating employment opportunities, are prerequisites for rebuilding the nation's inner cities.
As builders, we must help facilitate these infill project ideas. We need to strengthen innocent third-party protections for responsible builders who restore brownfields, work cooperatively with cities to properly define redevelopment areas, and apply eminent domain fairly. In addition, we need to meet with local officials to explain how cities can speed urban redevelopment by streamlining permitting processes, creating flexible development regulations, building and expanding infrastructure, providing creative financing, and identifying potential sites for development.
While infill development often is thought of as a small builder's game, big builders are positioned to take advantage of this growing market. Financial security, experience, and a broad product array can make a big difference in some cities. For big builders that are nimble, sensitive to the market, and willing to take the time to learn the urban bureaucracy, infill housing can be a very lucrative niche indeed.
Editor's Note: This column is a forum provided to the CEOs of America's largest home builders in cooperation with the NAHB. Address responses to Big Builder's editor at email@example.com.