800_cisneros

Henry G. Cisneros, founder and chairman of CityView and former secretary of the U.S. Department of Housing and Urban Development speaking the recent ULI Housing Opportunity Conference in Minneapolis.

For the first time in history, more people are living in urban centers than in rural areas. “It is an amazing thing that is happening around the world,” said Henry G. Cisneros, founder and chairman of CityView, a developer and investment management firm focused on urban residential real estate in the western United States.

“The jury is still out on how this plays [out], but we do know where people are going to be. They are going to be in these urban settings, and they are going to be very powerful places,” said the former secretary of the U.S. Department of Housing and Urban Development (HUD) in a keynote at the recent ULI Housing Opportunity Conference in Minneapolis.

Related: 13 Urban Trends to Watch | Urban Real Estate Investment: A New Era of Opportunity

That secular shift to urban living has been prompted in large part by the new world economy that is very urban in character. In the United States, the old manufacturing economy has been replaced by an economy driven by sectors such as media, telecommunications, hospitality, big medicine, higher education, business and professional services, international trade, and logistics and transportation. “That is the American economy, and it is a very urban-friendly economy,” Cisneros said.

That “urban renaissance” is accelerating amid a stronger economy. Cities are evolving and changing the landscape for urban planning and development. Cities are places where people work, gather, pray, and learn, said Cisneros. “But fundamentally, they have to be places where people live. So, the residential function is a key function of any city, and a great city requires a mix of housing types,” he noted.

Cisneros highlighted a number of key themes that everyone associated with cities in both public and private sector positions—from government leaders and city planners to architects and lenders—needs to be thinking about as it relates to building cities for the future.

Building high-rise and affordable housing: Affordability is a key dimension of urban housing. “There is not a single metropolitan area in America where a family earning the minimum wage can afford the market-rate rent on a two-bedroom apartment,” said Cisneros. The high cost of housing in many cities has pushed workers farther and farther away from their jobs within cities. However, cities need workers near their places of employment, or the potential exists for major dysfunction, he added.

Addressing mixed-income housing positively: The term mixed-income often makes developers worry that they will be subjected to forced mandates to include affordable housing. However, a number of successful examples exist in cities such as Chicago and San Francisco of 80/20 sharing. “One of the epiphany moments for me as secretary of HUD was to see the effect when we broke up the worst of the public housing and turned those sites into mixed-income sites, as well as making it possible for residents to live off site with Section 8,” Cisneros said. “The importance of people being able to live in mixed-income settings is a huge theme as we think about this.”

Taking on density: Density is another theme that goes hand-in-hand with affordability. “If we are going to build things that are affordable, we are going to build them on expensive land, which means denser floor plans and smaller square footages in order to get lower rents,” said Cisneros.

Preparing for demographic trends: Who will live in cities? Cities need to accommodate more than just young millennials and artists who want the stimulation of urban life. Cities also need to build housing for empty nesters who want to come back from the suburbs, and improve schools for families with children.

Cementing public sector partnerships: Good city leaders will need to bring together many layers of resources. “They are like orchestrator conductors of public and private resources and philanthropy all coming together to add to the 2 + 2 = 5 equation that is the way a modern city operates,” Cisneros said.

Developing new approaches to finance: It will be imperative for financing to leverage public and private strategies. Atlanta’s Buckhead area is an example of how such strategies can succeed to create a strong urban core outside of a downtown with transportation and a mix of commercial and residential uses and a separate economic node.

Building for sustainability: Cities will need to relate to the realities of our time, such as adapting buildings to account for climate change and energy efficiency through the intelligent use of materials and technology.

Harnessing advanced industries and anchor institutions: Name any major city and it is home to at least one major university or college that is likely a dominant employer in the area, Cisneros noted. Universities and teaching hospitals such as Johns Hopkins in Baltimore or Cornell University in New York both provide jobs and foster business growth through innovation and research.

Other points to consider when building cities for the future include key themes such as the following: 

  • Modernizing urban infrastructure;
  • Making walkability real;
  • Adding transit-related value creation;
  • Incorporating public spaces and amenities;
  • Encouraging design excellence; and
  • Embedding technology in real estate.

The United States is an increasingly metropolitan nation, and the future depends on how its cities function. “There are some big-wave themes working in our direction,” said Cisneros. Taking cities to the next level will require paying close attention to a variety of issues, such as sustainability, climate change, energy, and demographics, as well as providing housing to people with a mix of incomes. If we do all those things, we not only are going to ensure that this wave continues, but also make sure that it creates a better environment for people to live, a more just country, and a greater chance of including more Americans in the quality of life that we want, he added.