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Globalization, technology, changing demographics, shifting populations, climate change, and other factors are requiring cities to transform themselves in order to thrive. Members of ULI’s Urban Development/Mixed-Use Councils discuss challenges that cities face in reinventing themselves, exemplary projects, the role of municipalities in encouraging transformation, the potential pitfalls of attempting reinvention, and other trends.

What are some of the biggest challenges cities face in reinventing themselves?

Paul Layne: All the major cities have major traffic issues. Some have good mass transit. Some have almost no mass transit at all, but are looking to build mixed-use centers where people can live, work, play, and learn all within a walkable environment. Commutes are getting longer, and millennials in particular are not interested in putting up with that. They will move into a small apartment close to work until their life changes. Not all of them get married and have children, but those [who] do tend to leave the urban core.

Bob Lieber: People like being in denser environments, so how are cities going to remain competitive and accommodate growth? New York City has gone from a population of more than 7 million in the 1960s to about 8.5 million now. Forecasts say we could be north of 10 million people within the next 15 or 20 years. With the population in the Northeast expected to grow [by] some 20 million people by 2050, where are they going to live? How are they going to get around? How far will people be willing to commute to work?

Adam Ducker: It is really difficult to change the density and infrastructure in most of America to create walkable environments. The time and investment involved in large-scale transformative projects, like Tysons Corner near Washington, D.C., are daunting, and we need to be realistic about the fact that there will be winners and losers. Another challenge: we need to figure out how to make cities more family-friendly, providing [families with] places to live and good schools and recreational options. It’s difficult, because urban real estate is expensive to build, and people with families simply need more space.

Tom McCarthy: One challenge is: how do we reimagine existing built space? In downtown areas, often we are dealing with existing buildings that cannot be demolished, so they need to be retrofitted, reimagined, taken apart, and put back together for potentially very different uses. Also, the population growth in our urban areas is coming from not only young people, but also immigrants and baby boomers. How do you meet the demands of each of those market segments? People who have not historically been urban dwellers are coming to the urban center and are faced with problems like homelessness, poverty, and underperforming schools. The good news is you have people who are coming in with investment capital, and the optimistic side of me says those of us who are moving back into urban cores have the energy and the wherewithal to potentially address some of these issues.

What developments offer good examples of how to address some of these issues?

Marty Burger: The Time Warner Center has become the crossroads between Lincoln Center, the Carnegie Hall area, and Times Square. The Mandarin Oriental Hotel is always full; the offices are demanding a premium; and the residences get the highest prices in New York City. Another project I was lucky to be involved with in the 1990s when I was at the Related Companies was CityPlace in West Palm Beach, Florida. The mayor at the time, Nancy Graham, bought a blighted area with city funds, then got developers to submit bids. The Related Companies won and built a huge mixed-use project there, CityPlace. People go to CityPlace to get coffee in the morning; they go there to see a movie; they go there for lunch. There’s a Macy’s, a performing-arts hall—there’s so much life there. It reshaped West Palm Beach and became the center of town. When you invest enough money and have a good design and good uses, you can change a city.

Ducker: The redevelopment in and around Union Station in Denver is very sophisticated in terms of the quality of the urbanism—on par with anything in Europe or elsewhere. Mission Bay in San Francisco is another example—it feels so good when you walk around there. Even more interesting, we’re starting to see sophisticated mixed-use development in historically overlooked markets. In West Hartford, Connecticut, there’s Blue Black Square, a mid-rise, suburban-density, but high-quality development that is transformative in terms of the rents it’s commanding and the energy it’s creating. There are similar projects in places like Birmingham and Nashville. The lessons learned in high-cost markets are being applied creatively in smaller cities and urban suburbs.

Layne: In the Woodlands, we are building Hughes Landing, a 66-acre [27 ha] mixed-use development on Lake Woodlands. It includes high-end apartments built over ground-floor retail, five office buildings, a restaurant row with indoor and outdoor dining, a band shell, a Whole Foods, 150,000 square feet [14,000 sq m] of retail, and an Embassy Suites hotel. The Woodlands’ shuttle will take people from Hughes Landing to other shopping and restaurant venues in the Woodlands. There also are 200 miles [320 km] of hike and bike trails that connect to the Woodlands. Our goal is to keep people from driving out of the Woodlands to go to work.

What strategies should municipalities pursue to encourage transformative projects?

Ducker: One thing municipalities can encourage is the creation of urban walkable places in close-in dense suburbs and mixed-use areas outside the traditional business district. These places represent great opportunities for multigenerational housing, with higher-density townhomes, step-downs, and low-rise condos. Municipalities should think about different typologies of urban neighborhoods—from high-rise neighborhoods to ones with two- or three-story buildings—and set strategies for layering them throughout the city and metro area.

Burger: Municipalities can create tax increment financing districts to encourage development in those areas. There may be other tax breaks, sales-tax breaks, or other zoning or permitting expediting that could be beneficial to development. But we need smart growth, not just growth. You don’t want to put an office building up in a market that doesn’t need another office building. If you’re creating retail, you don’t want to put four banks at the base of a building, because that’s not going to add to the 24/7 environment you’re trying to create. You want restaurants and other tenants who will stay open later. So it’s not just about providing financial incentives, but also guiding developers.

Lieber: New York City did something very novel. Silicon Valley and Boston and other places were being highly successful at attracting technology companies, and New York realized it didn’t have a great incubator for these kinds of businesses. So the city held a competition, offering to contribute land and facilities to a university that would create a world-class science, technology, engineering, and math program that would be competitive with Stanford and MIT and Harvard. Cornell teamed up with an Israeli university, Technion, and won the competition and is building a facility out on Roosevelt Island. This is going to help New York City incubate businesses and remain a competitive environment for technology companies.

What are some of the pitfalls of attempting transformative projects?

McCarthy: As we bring new residents into cities, there are inevitable conflicts with existing residents. If there is strong leadership, those problems can be addressed, but otherwise it’s very difficult to reach all those different constituencies. The Bloomberg administration did an excellent job at various times in New York City. At times in San Francisco, strong leadership from the business community and the local government has allowed for new, well-planned development. We’re seeing backlashes in San Francisco now, where at least some residents do not want to see continued densification and gentrification. It is a real challenge to find cities where political leaders are willing to work with the private sector to consider significant new development that is different from what they’ve seen before and that may not be popular with some residents, but, if built, will attract new residents to areas with declining populations.

Ducker: As an industry, we’re still in a mind shift from suburban to urban. Urban thinking means understanding how difficult district-scale redevelopment is—starting small, working incrementally, and staying focused. There might be 20 blocks of redevelopment potential, but we need to start with four and get those right before we move on to eight and eventually 12 and 20. It takes a long time for very large projects to come to fruition, and an initial missed step is so hard to walk back. Then there’s the problem of working through economic cycles. The new neighborhoods that really sizzle today, such as downtown Los Angeles, have now been under redevelopment for going on two decades.

Burger: A lot of things can go wrong. You can’t just find a piece of land, throw a lot of money at it, build something, and expect it to change the city. It’s got to be the right fit for that city. The way you service your tenants has to be thought through, and the mix of tenants has to be right for the area. The way the parking works, the way the traffic flow works, the way the uses intermix—they all matter. You can put retail and restaurants on the second and third floors, but if you don’t have the right traffic patterns and the right flows of people, those spaces will never get used. Those tenants will go out of business, and you’ll have vacant spaces for years to come.

What are some other relevant factors to consider?

Lieber: We learned a lesson from London’s Canary Wharf back in the 1990s: you can’t start a transformative development with just a promise from government that [it is] going to provide mass transit, because if [it doesn’t] deliver, you can’t create the right environment for the tenants. As a key part of the Hudson Yards Redevelopment Project in New York City, the city is building the mass transit first in order to attract developers and companies to locate there. The city actually paid to add its first new subway extension in more than 50 years, using a method of tax increment finance incentives that assigned density bonuses to developers in exchange for paying the debt service on the bonds used to finance the cost of the extension.

Layne: ExxonMobil bought 385 acres [160 ha] 25 miles [40 km] north of Houston to construct an office campus for 10,000 people. In contrast, Chevron Corporation chose to build its new campus in downtown Houston. Chevron’s goal was to attract the best and brightest kids right out of school, because they tend to want to live where the action is—downtown, midtown, bars, restaurants. ExxonMobil’s idea is that when the millennials mature, get married, and have their first child, they may move to the suburbs and want to work at Exxon. The campus has all the amenities, cafeterias, fitness centers, medical care, everything you need. Both companies are looking at how to attract and retain the best. It’s two very different approaches, and it will be interesting to see which one proves more successful.

Burger: About 65 percent of New York City’s buildings are 50 years or older, and the bulk of those are downtown. A lot of those buildings are obsolete and cannot be used for their highest and best use as an office building. Law firms, for instance, still need big conference rooms, but they don’t need the file space that they used to, because files are digital. Many tenants now have open office plans. Advertising agencies want very big trading floors to put all their creative people in a communal atmosphere. So many tenants are densifying their space, with less square footage per employee. These older buildings—even buildings that were built in the 1980s—were not meant to handle this concentration of people. At the Bloomberg Building, one of the most densely populated buildings in the city, there are lines for the bathrooms and elevators.

McCarthy: What’s exciting about the future is that, in major urban areas, real estate development is more and more being viewed as a mosaic. Many new projects combine uses—such as office, retail, hospitality, and community space—and are designed to accommodate future changes in use. The proportion of those uses can be modified to some extent over time. This dynamic is breathing life into the design process. That’s a real opportunity for real estate entrepreneurs.

Ron Nyren is a freelance architecture and urban planning writer based in the San Francisco Bay area.