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Migration To The City

With a larger percentage of the population moving into urban center, there is increasing opportunity for landscape contractors to update their business offerings. While people like the city, they also want the landscape of the suburbs. Green walls, green roofs, and compact patches of green space all are niche opportunities awaiting the forward-looking contractor.

According to The U.S. Census Bureau, 80 percent of the U.S. population now lives in an urban area, and the CB also reported that during the 2010-11 period, the population in 27 of the largest U.S. city centers grew faster than in the surrounding suburbs for the first time since the 1920s.

Experts attribute this movement statistic to, among other things, the housing market collapse and falling appeal of suburban homeownership. This trend offers opportunities for residential-centric landscape contractors to expand their services into the growing commercial and multi-family dwelling property market.

Demographics Driving
Move To The City

The echo boomers, who's number is approximately 80 million, are among the primary drivers for this trend. Commercial real estate services firm Jones Lang LaSalle found from their recent survey that people in their 20s are willing to spend up to 69 percent of their income on rent -- more than 20 percent above the national average -- in order to live in gateway cities, including Boston, New York, Los Angeles, San Francisco and San Diego. Thanks to greater affordability and redevelopment efforts like Midtown Detroit, they have also begun looking at smaller cities, ranging from Raleigh, N.C., to Des Moines, Iowa.

Rent growth for multifamily projects located in Central Business Districts (CBDs) has outpaced rent growth for suburban projects by 3 percentage points, according to the CoStar Group, a Washington, D.C.-based research firm. Today, occupancy at CBD-based multifamily buildings averages a full percentage point higher than in the suburbs.

''On a global basis, you are clearly seeing significant urbanization because the cities are where the jobs and opportunities are,'' says Robert O'Brien, vice chairman and real estate sector leader with global consultancy firm Deloitte. ''I think what we are going to see here is this trend continuing for the foreseeable future, driven by the high cost of gasoline and traffic patterns. You are going to see people moving closer to their jobs, transit systems becoming even more important than they are and companies out in the suburbs looking to move closer to the cities.''

Demographics Driving
Move To The City

Multi-Unit Home Construction, October:
(multi-unit = buildings with 5 units or more)

Building Permits: 280,000 units
- 10.6 % month-over-month
+ 40.7 % year-over-year

Housing Starts: 285,000 units
+ 10.0 % month-over-month
+62.9 % year-over-year

Housing Completions: 226,000 units
+55.9 % month-over-month
+79.4 % year-over-year

Going Downtown: The Changing View Of Home Ownership

Some experts argue that the view of home ownership is changing as a result of the housing crisis, says O'Brien. Previous generations, including the baby boomers, saw homes as an always-appreciating investment, but as housing values fell 34.4 percent over the past six years from their 2006 peak, according to the S&P/Case-Shiller home price index, home ownership came to look like a much riskier bet than previously thought.

Meanwhile, the echo boomers have been graduating from college carrying thousands of dollars in debt in student loans and facing limited job prospects, notes Ella Shaw Neyland, president of Steadfast Income REIT, an Irvine, California-based multifamily investment and management company. Jones Lang LaSalle estimates that year-to-date in 2012, home purchasing activity for people under 44 is down 60.1 percent compared to 2008. Not only can they not afford home ownership, they view renting as offering greater flexibility if they end up getting a job offer that requires relocation.

For the echo boomers, the choice to live in urban areas rather than in the far-flung suburbs also comes down to quality of life, Neyland says. She notes that her three children would rather have time during the week to indulge in activities they like than spend hours commuting to and from work and worrying about things like fixing household appliances. In many instances, renting instead of buying also results in more income left over for discretionary purchases.

''When I started out, an apartment was a transitory shift; you were waiting to buy a house,'' Neyland notes. ''That's not true anymore.''

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August 25, 2019, 5:34 am PDT

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