Many Americans seem surprised when I speak about the rejuvenation of urban centers and the reimagining of the American suburb. But those of us who have been working in cities for the past decade or longer are not so surprised. In fact, among my friends I even hear some grumbling that, like a favorite hole-in-the-wall restaurant suddenly overrun with tourists who discovered it through a Yelp review, “everyone has figured out our secret” and “the millennials are taking over” now that cities have been “discovered.”
The reason we longtime urban dwellers are not surprised by this rejuvenation is manifold. For a long time we have been enjoying an amazing quality of life relatively unnoticed—with ten- to 30-minute commutes (often on foot or bike or via transit), a relatively reasonable cost of living (particularly when the higher transportation costs for living outside the city are subtracted), and the energy and stimulation afforded by a diverse population in a dense environment. This means that exciting new businesses, interesting restaurants and bars, and the culture provided by museums, music, and more are all within a walk or a bus or taxi ride.
Those of us who are students of history and cities have also known that the fluke is not that cities are making a comeback. The fluke is that cities for four or five decades became only a place in which to work. No longer were they places to live and raise a family. This mistake in planning, building, and transportation was actually temporary. The psychology goes like this: Let’s say you were born in 1950 (which makes you 64 years old) and grew up in a suburb of a city, as most people did in that era. You likely never saw the buzz of a healthy city, with streetcars running and kids riding their bikes to school. For you, it would be reasonable to see suburbanization as the trend rather a blip in a longer-running trend of vibrant city life.
Now, cities are again exhibiting confidence as primary living spaces, playing to their inherent strengths and, as a result, growing rapidly. Many are trending toward reaching their pre-1970s population peaks within the next ten years. I believe this population growth will speed up exponentially. I also believe that many places we now call suburbs will reinvent themselves as urban villages, thereby competing with established cities that, for a plethora of reasons, have priced people out of living there and will continue to do so.
From “Me” to “We”
One cultural shift we have seen is the change from the “me” economy to the “we” economy. In the 1950s, the American Dream changed. No longer did many people want to live on top of each other in cities, often in tenements. They were sold (and embraced for good reason) a dream of moving out to upward mobility in the suburbs, where you could have a quarter acre (0.1 ha) or more of land and power your way back to the city in a luxury automobile—an automobile that projected your status and made up for the two hours or more you might spend commuting and away from your family.
Whether it was streetcars, food, or child care during wartime, out of necessity our grandparents and their parents who lived in dense cities did a tremendous amount of sharing of space and resources in those simpler times. The early 2000s saw the rebirth of the “we” economy for a related set of reasons—financial, social, and as a matter of convenience. With the founding of Zipcar 13 years ago (where I was a vice president), sharing of private transportation steadily grew and entered the mainstream in cities as a complement to traditional transit. Fast forward, and many other companies in the past few years have created platforms for sharing anything that is a “lazy asset”—which I define as a capital investment that is underused and of high value. Airbnb, Lyft, Divvy bike sharing, and Car2Go are all examples of this movement toward collaborative consumption.
I spoke on this subject at the ULI trustees meeting in Vancouver, and the response, depending on the hometown and development focus of the individual, ranged from “You’re nuts, Gabe,” to “Oh yeah, we’re seeing those trends taking hold now.” Of those reading this who believe things are not going to change, I ask how many in earlier days thought the following:
- Google is a nondescript website—an empty page with a search box with little value-add.
- Amazon is a crazy idea that will never sell more books than brick-and-mortar bookstores do (remember, it started out as just a bookseller).
- Zipcar is never going to fly when gasoline costs $1.50 a gallon (in 2003) and the SUV is king of the streets.
- No one needs an app to call a black car. Why would you even ride in a black car? (I was among those who thought this, by the way.)
What many of these companies realized when others did not is that these changes are inevitable, and that a technology platform that provides a marketplace to leverage sale or use of many products or services (or, in the case of Zipcar, types of vehicles) can scale up rapidly to serve an exponentially larger customer base once it hits the tipping point.
I believe that just as these services have scaled up at an incredible pace to power and support the lives of today’s urbanites, leaving in their wake disrupted industries that we took for granted only ten years ago, cities themselves are going to grow exponentially over the next few decades. And the current suburbs that become more urban and embrace livable, walkable, transit- and transportation-oriented design will also see this level of growth. It is unavoidable.
Housing More People
Consider population growth. The world had 1.8 billion people in 1900 and 6 billion in 2000. In a 2010 report, the United Nations projected that world population will hit 9 billion to 10 billion by 2050, even with a slowing overall growth rate. (The U.N. report also said world population, on the high end, could hit 16 billion, or, on the low end, decrease to 6 billion, which is as good as saying “I have no idea,” which is why some common sense is needed here). Still, a net 100 million people (give or take a few million) will be added to the earthly rolls each year even as older members of the population die.
As of 2011, 82 percent of the U.S. population and 52 percent of the people worldwide live in “urbanized areas,” consisting of cities, or suburbs that are urbanizing. The United States alone is looking at growth topping 10 percent that will bring its population by 2025 to more than 350 million people. One need not be a mathematician, economist, or even a student of history to see that this many more people, plus job concentration in urban areas, is, by necessity, going to lead to massive reurbanization of society during this century. This, combined with a cultural shift in post–baby boom generations from “me” to “we”—from ownership to shared access, from living somewhere separate to joining the energetic mix, from time alone in the car to time with family and friends—indicates that the market is demanding it.
The question now is whether the market, and the real estate industry in particular, will recognize the demand fast enough to build affordable, smaller-scale, high-density housing with smaller-scale units that meet the needs of young people, young families, and empty nesters who desire place and experience over raw space?
It will be impractical, unaffordable, and environmentally unsustainable for the bulk of urban dwellers to own a 2,000-square-foot (190 sq m) house, parking space, and a car. It may seem crazy now to trade that for a 200- to 1,000-square-foot (19 to 93 sq m) rental unit (depending on the resident’s age and household size), along with a unified transit pass and membership in a “share club” for bike, auto, and mobility services in a place where everything residents need on a daily basis is within a 15-minute walk. But I predict that “crazy” will be coming to a city near you faster than you can imagine. Governments will want more density for a broader and larger tax base, which will fund better infrastructure, schools, and public safety in the smart cities—which will in turn draw more people. I also predict that developers who embrace the new “we” model in cities and lead this market shift will find it very profitable compared with lower per-square-foot sale prices of single-family homes and the cost of subsidizing expensive-to-build underground parking spaces.
Welcome to the not-so-distant future.