Society's Effects on Development
The life span of commercial, industrial, and institutional buildings is 50 years, on average, and less than 20 for many. All too often, reuse seems financially infeasible, with the result that new demand is met by new construction. This is beginning to change, as driven by three factors.
FIRST, society is changing dramatically, and along with it, people's preferences. In the 1950s, half of American households had children, and only about one in 10 was a single-person household. In 2030, only about a quarter of all households will have children, and about one in four will be a single-person household. Suburbs built to meet the demands of children no longer serve that purpose, and unless they retool, they will suffer economically. About 85 percent of the new demand for housing will come from childless households.
SECOND, energy prices and congestion will force millions of households to reconsider whether living in distant suburban and exurban areas makes sense. It will to many, but to many more it may not.
THIRD, households are reconsidering what they want out of where they live. Because many professionals are having children later in life, they may not want to give up an urban lifestyle just to move to the suburbs where the “good schools” are, only to return to urbanity when the kids are gone.
And because adults will likely live 20 or so years longer in the next generation than in the last one, many realize that child rearing will consume only about a quarter of their adult lives. Moreover, many will choose a different child-rearing lifestyle from that of their parents. Millions—and conceivably most of these Generation Y and Z households—will want walkable neighborhoods where coffee and pastries can be a principal social experience; and as they go through life, they will want to remain in the same neighborhood.
While these patterns may appear to affect mostly residential development, think again: Millions in the next generation, and perhaps a majority, will want to live in communities with shopping, services, restaurants, and places to work.
The Less-Than-World-Wide Web
Some may think that telecommuting and Internet retailing will have a dampening effect on new nonresidential construction. Yet federal data indicate that office and retail space per capita rose nationally between 1992 and 2003—a time of growing Internet activity. Although these influences may have a moderating effect, they are not considered significant factors. Why?
For one thing, people are social creatures, and usually in need of a little variety. Yes, Internet retailing is growing, but after a decade it still amounts to just 3 percent of all sales. Moreover, its rate of growth is slowing down. For comparison, consider that over the past 10 years in-store retail sales growth has outpaced inflation-adjusted personal income growth by more than 25 percent, suggesting that people still like to shop in person.
A generation ago, public-policy experts saw telecommuting as the solution to problems such as congestion, pollution, and the declining nuclear family. Yet just about the same percentage of people in 2005 telecommuted as did a generation ago. Why? Again, humans are social creatures. People who telecommute by staying home three to five days a week will often get “cabin fever,” and productivity will begin to fall unless there are social or workplace regulatory adjustments, such as remote monitoring of one's work computer at home.
The Promise of Redevelopment
Much activity will be focused on the redevelopment of suburban shopping centers and malls, as well as office and business parks. Why? There are five important reasons.
FIRST, these properties are usually under single ownership. This makes it easy to “assemble” the land and negotiate development deals.
SECOND, suburban malls and shopping centers have lots of land—more than 1.1 million acres spread across America's suburbs, most of which is parking.
THIRD, infrastructure is already in place; no new water or sewer extensions are needed, and the roads already exist. This does not mean that infrastructure need not be upgraded—but it would probably have to be ripped up and replaced anyway because of age.
FOURTH, these properties already enjoy significant accessibility advantages, being located along at least one major road; many have bus and/or rail transit that already exists or is in the works.
FIFTH, they are already the “centers” of local communities and, if redeveloped wisely, may help improve a community's sense of place, not to mention its market position.
Redeveloping suburban retail and low-rise office centers at 2.0 FAR (roughly the conversion needed for financial feasibility) could technically accommodate all nonresidential new development needs and then some. More likely, a third would be good candidates for redevelopment at this scale (equivalent to projects with four levels, leaving half the land area available for parking and open spaces), and these could meet the needs for about 40 percent of all future nonresidential development, plus a sizeable share of all future residential development.
Many challenges loom in coming years, not the least of which are changing local government attitudes about planning and zoning, getting financial institutions to be more progressive, and, above all, educating the American public about the sea change that is about to occur on the built environment.