Transitioning to Walkable Urbanism: ULI’s 3rd Annual Regional Housing Summit – Real Estate Matters
Development, Urban Planning

Transitioning to Walkable Urbanism: ULI’s 3rd Annual Regional Housing Summit

Minnesota Light RailWhile many of us in the development community are pondering the idea of walkable urbanism, Chris Leinberger of the Brookings Institution knows for a fact that the market is shifting, and he has the data to back it up.  Leinberger, author of The Option of Urbanism: Investing in the New American Dream recently spoke at the Minnesota ULI (Urban Land Institute) 3rd Annual Regional Housing Summit in Minneapolis.

With a goal of revitalizing the US economy, Leinberger cites that 35% of US assets are in the built economy.  It is up to real estate professionals to re-engage the market with compelling demand-based housing and mixed-use products.

The Brookings Institution has been conducting research on how public transportation, such as light rail transit, impacts real estate development and regional economies.  Based on these studies, the Twin Cities has the potential to support 12-21 walkable urban or suburban cores along new rail transit lines.  Currently, there are 4 neighborhoods in the Twin Cities that are considered truly walkable areas.

The reasons behind the need for walkable urbanism are compelling.  Currently in auto-dependent suburban locations, Americans spend an average of 19-25% of their total household income on transportation related expenses; 32% is spent on housing.  In walkable urban neighborhoods, Americans spend an average of 9% on transportation costs, while 32% is spent on housing and 59% of disposable income remains, which gives households greater choice in lifestyle and helps support other areas of the economy besides transportation.

Currently there is strong demand for mid-size urban housing options.  While supply and demand for multifamily condos is relatively balanced, the Brookings Institution estimates that nationwide, there is a shortage of approximately 10.8 million townhomes and 26 million small lot (less than 1/6 acre) homes in walkable urban areas.  Meanwhile there is a 37 million home surplus of large lot suburban homes.

Due to short supply, cost per square foot of walkable urban housing is climbing steadily at a 40% or higher cost premium over drivable housing, but the market is willing to pay.  Considering that only 1/3 of US households now have children (down from half of all households a few decades ago) and with the Baby Boomer generation demanding walkable communities, it will take a minimum of another generation to reach market equilibrium.

Since just 1% of population growth results in developing 4-8% of land to support new citizens, it is essential that regional leaders take initiative to chart out where the walkable urban cores will be and ensure that transportation plans effectively tie in with new urban neighborhoods, facilitating housing and job growth.  Leinberger cites progress in Denver and Seattle, where officials have used strategies such as overlay zoning districts and value capture from local developers in order to complete transportation projects and stimulate growth.

If the Twin Cities can continue its rapid progress on planned light rail lines, this will inevitably spark new development.  These changes will allow our families to spend less on transportation, making the housing market a strong booster for the real estate industry and overall economy.

For more information on walkable urbanism, visit http://www.brookings.edu/topics/walkable-urbanism.aspx.

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