From New York to Los Angeles, Minneapolis to Houston, a new breed of more sophisticated urban residents is changing the face of multifamily design. While most of these residents could afford to own a home in the suburbs, they prefer the energy and excitement of apartment or condominium living in the big city.
The New Breed of Residents
By some industry estimates, by 2010 up to 75 percent of U.S. households will have no children living at home. The housing industry needs to respond to these changes by producing more housing opportunities, especially in urban areas where there is increasing demand for more housing.
For sure, many of these residents have high expectations about where they live and what they live in. They want luxury interiors and state-of-the-art amenities more commonly found in four- and five-star hotels or upscale homes. More and more prefer to be near downtown areas where they can walk to shops, movies, cultural events, and perhaps even to work. Younger or older, they consider themselves to be trendy, and they want to live in a place that’s also considered trendy.
Higher density housing in urban areas offer people the opportunity to work, shop, and play right where they live.
It can be a challenging market to satisfy, but with the proper planning and know-how, multifamily developers are successfully appealing to these discriminating residents by providing exceptional floor plan design, distinctive architecture, lifestyle conveniences, and five-star luxuries. However, there are other challenges. Changing demographics, rising cost of land, and diminishing land resources are forcing developers to build on smaller sites that demand new and better designs and construction methods to achieve higher densities.
Higher-density housing in urban areas offer people the opportunity to work, shop, and play right where they live, according to Peter Dennehy with the Meyers Group, a real estate research consulting firm specializing in market feasibility analyses for the residential building industry. He says market demand is growing substantially for housing in urban areas, particularly from young singles, childless couples, and seniors. “City living has become more attractive to people, especially in urban areas that have been revitalized. They offer more lifestyle variety, stores, restaurants, libraries, theatres, entertainment — things suburban life doesn’t offer,” says Dennehy.
Despite a slip in some downtown populations following the September 11 terrorist attacks, several urban areas have experienced downtown population increases since 1990. For instance, U.S. Census Bureau statistics show that Houston, Seattle, Chicago, Denver, Portland, Atlanta, Memphis, and San Diego all experienced greater percentage increases in their downtown populations than in their entire urban areas over the past decade. Other cities, including Cleveland, Baltimore, Philadelphia, and Detroit incurred downtown population increases while losing population as a whole.
Today, the more typical resident profiles are couples with no children, young singles, and empty nesters in search of more convenient housing in cities. Many of these residents prefer homes in urban areas that offer location, entertainment, and a certain quality of life that doesn’t necessarily include crickets.
Today’s Consumers Crave Social Connections
One thing these new city, or “in-town,” dwellers are looking for is a sense of community and togetherness. Yankelovich, a national research firm that studies consumer trends, has identified what it describes as “hiving,” which it defines a peoples’ quest for a more meaningful sense of community through frequent social interaction and neighborhood involvement. This is taking over the “cocooning” of the 1980s and early 90s, when people considered their home as a hiding place to isolate themselves from people and the world.
According to Yankelovich, hiving has three key elements: the home is considered “command central” for social and entertainment activities; hivers are on a quest for more “connectedness” with family, friends, and neighbors; and hivers put family, friends, and neighbors first on their social priority list. Of the people responding to the Yankelovich survey, 64 percent identified themselves as hivers, compared to 33 percent who said they were cocooners. The majority of the respondents said an ideal use of their home is for it to serve as a hub of activity for friends, family, and neighbors, and a majority also said they preferred maintenance-free living.
Delving deeper into the respondents’ “hiving” psyche, 65 percent said they believed there were real advantages to being part of a larger community; 55 percent said they would like to have more people in their community on whom they could rely; and 49 percent said they wish they had more contact with people in their community. When asked to describe their ideal home, 86 percent said it was a “safe haven,” followed by a home in a “desirable neighborhood” (70 percent), a place for “the rest of life” (68 percent), a “good investment” (66 percent), and a “hub of activity for friends and family” (53 percent).
The Importance of “Experience”
The Yankelovich survey further suggests that urban buyers and renters are seeking more than a home or apartment. The want a community and they want an experience. To this end, these city residents want to be closely connected to community amenities… they want to be within walking distance of, or connected by transit to, recreation, culture, entertainment, and work. Developments offering a more convenient location, strong sense of community, an enriching social experience, and ample amenities have the best chance for success.
They are also seeking an experience — an urban experience. The importance of “experience” was underscored in a survey conducted by Style Interior Design last summer. Targeted more toward the hospitality industry, the survey of 250 industry executives highlighted the importance of a “memorable experience” in terms of what people see, feel, and touch, in creating successful hospitality properties, including hotels, restaurants, and clubs.
More specifically, when asked which single factor was most important in designing a hospitality property today, the largest percentage (53%) of respondents agreed that a “memorable experience” was extremely important, putting it at the top of the list of numerous factors cited.
Many of today’s urban residents are looking for the same experience they would have in a five-star hotel or a luxury home. They want to be surrounded by features and amenities; they want to feel special; they want to be proud of where they live. They want a memorable experience and sense of community, but on their own terms. Builders who are interested in urban development have to understand and design for this market.
Changing Demographics Bring New Demands
Changing demographics are creating new demands for housing in urban areas. The number of households with children — the market segment least likely to prefer downtown living — is steadily declining, while the number without children — the segment most likely to live downtown — is steadily rising. With greater importance being placed on lifestyle, flexibility, and convenience, today’s services and appointments have been upgraded and enhanced to become a vital part of many new multifamily communities.
According to Fran McCarthy, president, Daedalus Development, in Fort Worth, Tex., many of these city residents also want a simpler lifestyle. Speaking at a recent Urban Land Institute conference in Dallas on urban housing, McCarthy said his firm is seeing empty nesters who want a simpler lifestyle, as well as the children of empty nesters who don’t want to live in the type of suburban environment in which they grew up.
“Given the car-dependency of the suburbs as well as their isolated living environment, traffic gridlock, and long commutes faced by many residents in outlying areas, the utopia of suburbia is not panning out,” McCarthy stated. “Also, as metropolitan areas grow and become more crowded and traffic impacted, more pressure is placed on getting housing closer to jobs.”
Tom Gilmore, manager of Gilmore Associates LLC, in Los Angeles, told attendees that “the future of cities has changed. Having people, a lot of people, living downtown is what keeps it from being a dead zone,” he said. Gilmore pointed out that downtown development has shifted from a focus on industrial uses to residential uses.
While city cores once relied heavily on manufacturing and industries as their economic engines, he said that they are now increasingly reliant on residents to trigger a 24/7 atmosphere energized by shopping, dining, and entertainment. Moreover, the buildings that once housed downtown industries are now being converted to housing, such as lofts, apartments, live-work units, and condominiums to accommodate the urban population growth. “Cities are great gathering places to share culture, entertainment, and parks,” Gilmore said.
Growing Interest in Urban Development
The growing interest in urban housing is drawing developers from other sectors of the real estate industry, including commercial developers who are interested in including housing in mixed-use developments, as well as residential developers who previously focused solely on outlying suburban development. Pretlow Riddick, former executive vice president of JPI Development in Irving, Tex., pointed out at the ULI conference that although JPI was the “epitome of a suburban developer” when he joined the company 14 years ago, half of its projects are now high-density, urban housing developments.
He said that for JPI, the advantages of urban housing development include the ability to be more creative with the architecture, generally more flexible zoning, steady market demand, and virtually no community resistance related to school crowding or traffic issues — since few families occupy the housing and the developments are not autodependent. However, he stressed that urban housing development has multiple drawbacks that can test even the most determined developer: more complexity in construction; the likelihood of environmental remediation; possible community opposition; and numerous project delays. “Urban housing takes a lot of patience and hard work,” he said. “You have to just go for it.”
The housing world is changing and in many metropolitan areas, it’s finding its way back into the downtown areas. The look and feel of urban located, higher density, multifamily communities are also evolving. The growing sophistication of today’s urban residents, combined with rising land prices and the changing demographics of our society, emphasize the need for developers to rethink and restyle their multifamily products. In America’s downtowns, the focus has shifted from basic shelter to increasingly upscale residential choices and lifestyles.
Greg Currens is principal of Style Interior Design in Irvine, CA, a full-service commercial/hospitality interior design firm that has been engaged by some of the largest multifamily and masterplanned community developers in the Western U.S. The award-winning firm has created innovative design solutions for a wide range of real estate projects including clubhouses, multifamily leasing centers, resorts, conference centers, spas, and community information centers. Currens can be contacted atgcurrens@style-interiors.com.
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