The future of Metroplolitan Real Estate in 2030

13th-Avenue-CalgaryArthur C Nelson’s book “Reshaping Metropolitan America” is a enlightening read that lays bare the facts, trends and demographics that will shape real estate in North America. The data targets the year 2030 and describes in detail how our urban environment is destined to appear in the future and identifies opportunities to leverage positive change to create more vibrant, sustainable urban environments. The take away for me was how much obvious data we have that pretty clearly defines our future environment, how near this future scenario is in relative terms (2030), and that planners, builders and developers are still constructing developments that will be obsolete before the time that these homes requires a new roof (say 15 years). This to me, reeks of opportunity for any astute developer who is willing to change their mind.

If you accept his theory, and its hard to dispute the data, then here’s a synopsis of the opportunities that are presented:

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Key Trends:

  • Developers need to invent new products and financing tools that meet the needs of financially strained households.
  • Rising energy costs will drive the demand for locations that provide live-work opportunities.
  • Multifamily Development will be transit-centric. Single use commercial centers will be converted to mixed use.
  • Boomers will downsize to condos in walk-able neighborhoods.
  • Urban redevelopment is shifting to the suburbs where vast supplies of asphalt provide attractive opportunities for re-purposing.

A New Community Planning Paradigm
The large detached homes on large lots, miles from the urban centers that were once highly valued, will become so out of fashion that they may become our next affordable housing supply. Segregated land use has given way to mixed use development. The automobile is no longer the transport of choice and from all of this some major new planning themes emerge:

  • Sustainable and Healthier Communities is a topic unto itself focused on increased residential density, integrating transportation and land use, providing car-free areas, locally owned stores, walk-able neighborhoods, and accessibility. Design communities to link humans to nature including open spaces, and constructing high performance buildings and district energy.
  • Tearing up the Parking Lots and rebuilding Paradise  – the single largest opportunity for developers to participate in rebuilding sustainable, mixed-use communities.
  • Transit Oriented Developments are a leverage point for future successful urban centers
  • Reforming Land Use Regulation allows developers more latitude to construct mixed use developments and higher density developments where appropriate.

Then there are the more rigorous and equally important challenges that require modifying the tools and institutions to be responsive to market preferences. Here are a few highlights: Tear-down-your-home

  • Make Accessory Dwelling Units (Secondary Suites) Legal
  • Eliminate Social Engineering through incentives to home ownership, allowing rentals an equal footing (mostly applicable to the US but a fair warning for Canada)
  • Level the Home Purchase Playing Field to eliminate any discrimination in financing condos v/s single family homes (again, fair warning).
  • Eliminate Social Engineering through Exclusionary Zoning. Urban areas overly restrict housing types and lot size etc with the effect of steering lower income households into the few jurisdictions that allow high density housing and away from others.
  • Instill Permitting Discipline that restricts over-building more than the market can absorb in times of oversupply.

Its is hard to dispute the data  which describes how out of sync the current trajectory for our future urban centers is with our future needs. We could gripe about the discord or marvel at the opportunity. Builders and developers need to stop building yesterdays housing in outdated community models and start building energy and space efficient housing in communities with mixed use and walk-able amenities. Make provisions for a secondary suite to house an extended family or allow a senior to house a student or caregiver that would allow them to age in place. And our Civic and Provincial Governments needs to allow this development and remove the barriers that make it illegal to innovate and build new housing models.  If not, the home you build today may be obsolete before it’s time to replace your roof.

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