Last fall, Irvine, Calif.–based Trumark Homes was preparing to launch an urban division, which would kick off in San Francisco with about 600 condos that Trumark plans to start in early 2014.
Since its inception five years ago, Trumark has been “following the jobs,” says company CEO Michael Maples. In San Francisco, Trumark’s condos will “borrow” from local amenities like restaurants and health clubs instead of including mixed-use components of its own. The company is looking at several other urban markets—including Los Angeles, San Diego, Seattle, and Portland, Ore.—where job growth is strengthening but the supply of for-sale housing is inadequate to meet that employee influx.
Urban is getting second looks from a lot of builders, including Toll Brothers, which attributed significant gains in net contracts and deliveries through the first nine months of its fiscal year “primarily” to its recently opened high-rise buildings in New York and New Jersey.
But the debate still rages among academics and economists over whether urban or suburban markets hold more promise. Those debates lately have revolved around how these markets get defined.
“Convenience is the ultimate amenity,” says Gregg Logan, managing director with Robert Charles Lesser & Co. (RCLCO). “Whether they drive or walk, people want to be near jobs, shops, and services.” Logan notes that the country’s most successful master-planned communities often are those closest to employment centers.
Last June, William Frey, the noted demographer and senior fellow with the Brookings Institution, made waves when he pointed out that in 2011 the major cities of the country’s largest metro areas grew faster than their combined suburbs for the first time in more than nine decades. Of the 51 markets it looked at with populations over 1 million, Brookings found that 43 showed faster primary city growth in 2010–11.
Brookings’ findings were challenged by a number of sources that claimed the think tank had based its assumptions on a new way the Census Bureau estimated 2010–11 growth rates for subcounty areas—which includes cities and suburbs—that “were assumed to be the same as the growth rate for the whole county,” says Jed Kolko, Trulia’s chief economist. “In reality, the new patterns were no more than an artifact of the temporary change in the Census Bureau’s methodology for this data,” added Chris Briem of the University of Pittsburgh’s Center for Social and Urban Research, posting on NewGeography.com.
Using U.S. Postal Service ZIP code data as its guide, Trulia concluded that there had been “essentially” no difference between city and suburban growth. When it segmented markets that are “more suburban” and “more urban” based on respective densities, Trulia found that both grew but the “more suburban” grew faster.
Still, all of these analyses may be missing a bigger point, suggests Chris Leinberger, a developer, Brookings fellow, and leading advocate of urbanism who currently is teaching at George Washington University. He has long been convinced that walkable urban places, or “WalkUPs,” are the future of America’s housing sector. But figuring out where growth will occur requires more sophisticated analysis than simply dividing the country into “urban” and “suburban” regions.
He prefers the more nuanced distinction between walkable urban and drivable suburban. He divides WalkUPs into “regionally significant places” such as New York or Washington, D.C.; and “locally serving walking places,” which could include denser suburbs near an urban core, supported by supermarkets, schools, retail, and so forth.
Leinberger calls these locally serving walking places the “penumbras” of WalkUPs “offering the best” of urban and suburban living. People who want to know if a community they live in or are considering living in is walkable can turn to the website WalkScore.com. (A score of 70 or better means an address fits the site’s walkability criteria.)
As there’s a shortage of walkable land in most urban cores, developers and builders must create “place-based” communities beyond downtowns. There’s an incentive to do so, Leinberger says, as builders and developers of such communities have been realizing price premiums of anywhere from 40 percent to 100 percent, compared to non-WalkUP communities.
He points to the 22-square-mile Belmar neighborhood in Lakewood, Colo., which converted commercial strips into apartments and shopping within a town village setting, and is fetching a 60 percent price premium for its housing. “A lot of the place-based stuff is going to replace the 10,000 dead or dying strip and regional malls around the country,” Leinberger predicts.