Downtowns: What’s Behind America’s Most Surprising Real Estate Boom

Morgan Brennan, Forbes, March 25, 2013

One of the main factors businesses consider when deciding on where to relocate or expand is the available pool of college-educated workers. And that has cities competing for college-educated young adults. “The American population, contrary to popular opinion, is not very mobile, but there is one very significant exception, what we call ‘the young and the restless,’” explains Lee Fisher, president of CEOs for Cities, a national not-for-profit organization that helps U.S. cities map out economic growth.

And there’s one place this desired demographic, college-educated professionals between the ages of 25 and 34, tends to want to live: tight-knit urban neighborhoods that are close to work and have lots of entertainment and shopping options within an easy walk. In fact this demographic’s population grew 26% from 2000 to 2010 in major cities’ downtowns, or twice as fast as it did in the those cities’ overall metro areas, according to a CEOs for Cities report based on U.S. Census data. That is one of the reasons city planners have been plowing money and resources into revitalizing their core business districts.

“The cities that capture the mobile, college-educated ‘young and restless’ are the ones who are most likely to revitalize their downtowns and accelerate economic progress in their cities,” says Fisher.

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In Birmingham, Ala., the number of residents downtown has increased 32% since 2000, with 737 planned units in the construction pipeline. A stadium for the minor league baseball team the Birmingham Barons has been built at Railroad Park, a green space created on a former industrial site next to a rail corridor. Office space absorption was positive in 2012, with net 126,000 square feet leased out, and downtown employment density relative to the southern city’s size is comparable to Philadelphia’s business district, local economists are quick to point out.

Yet, the city is still struggling to overcome a reputation for crime. “Despite the positive there are still people who have a negative view about downtown, particularly around the perception of crime,” sighs David Fleming, chief executive of REV Birmingham, a local economic development organization. “But if you look at the statistics, the chance of being a victim of crime in the central business district is actually less likely than in the suburbs.”

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“We are seeing a combination of the economics of infrastructure and the change in demographics give downtown housing markets more of a leg up,” says Jeff Soule, a fellow of the American Institute of Certified Planners and a director at the American Planning Association.

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