Walk This Way

Fact: the population of the U.S. is growing at a faster rate than any country other than China and India.

Projection: Between the years 2000 and 2030, the U.S. will need 100 billion square feet of new residential space.

Challenge: This construction must simultaneously satisfy a more diverse base of homeowners, sustain the economy, and protect the environment.

HOME ALONE: Virginia Tech professor Arthur C. Nelson tells builders and developers to adjust to changing demographics that will produce far more households with childless couples or single occupants.

Solution: That's what 40 housing and development experts from academia and the public and private sectors attempted to divine when they huddled at the Washington headquarters of The Brookings Institution for a two-day conference in April that Hanley Wood, BUILDER's parent company, cosponsored. Auspiciously titled “America Next,” this meeting sought to “pry open the box,” according to Brookings fellow Rob Puentes, by bouncing diverse views about the future of the “built environment” off of each other to see if any land on common ground.

The discussions focused on how acutely demographic forces are reshaping America and raised pointed questions about retrograde planning and zoning regulations. While no Eureka moment was summoned, there was consensus about the magnitude of these forces and calls for a sharp break from the status quo. “Change always wins,” said Frank Anton, Hanley Wood's CEO, “and what's happening now is that the monolithic way that developing occurs is changing.”

Brookings wants policymakers to reposition urban areas as “engines of prosperity,” to revalue cities' assets, and to rethink the challenges that suburbs face, said Bruce Katz, director of the think tank's Metropolitan Policy Program, who moderated the conference where like-minded New Urbanism proponents were well represented, but which also made room for panelists with strongly held opposing views to vigorously defend alternative and even contrarian ideas.

An open exchange can only help builders and developers to make their case that significant population shifts are going to transform the built environment, one way or the other, so hard choices must be made about how business and government should respond.

“The industry needs to know a lot more about demographic drivers than we do today,” observes Arthur C. Nelson, a senior resident fellow at Virginia Tech University's think tank, the Metropolitan Institute. Such information is essential for planners in whose hands future development rests, but who, in Nelson's estimation, are woefully lacking in their understanding about these trends and their implications.

Nelson was one of the conference's four “provocateurs,” whose presentations triggered discussion and debate. Nelson contended that communities across the country desperately need “a new planning and zoning template” that acknowledges “fundamental shifts in demand for certain types of homes.”

He projects that the U.S. population will increase by one-third, to 400 million, over the next three decades, and double by 2099, with immigration accounting for roughly one-third of that growth. Households with children are expected to account for only 12 percent of the net change between 2005 and 2025, while single-person households should contribute 34 percent of that change in those years. Those shifts, along with the aging of America, are creating greater demand for condominium and townhouse living that's closer to urban centers, as well as a growing preference for smaller-lot detached homes.

LARGE-HOUSE GLUT: Comparing census data of occupied housing types with his own survey of owner preferences, Arthur C. Nelson concludes there's a mismatch between what municipalities allow and what buyers prefer, which could lead to an oversupply of large-lot detached homes.

Photo Credit: Journal of the American Planning Association

If, as Nelson estimates, the construction and development sectors will need to spend $25 trillion through 2030 to keep pace with population growth that will require nearly 59 million new and replacement housing units; and if only between one-quarter and one-half of total residential and commercial development will occur within “conventional sprawl,” than builders better start adjusting their land acquisition and production strategies or they're going to get stuck with a surfeit of large-lot houses, which would “collapse” home prices, Nelson warned.

Several panelists could relate to Nelson's scenario. Bernie Glieberman, president of the Novi, Mich.–based builder/developer Crosswinds Communities, said his company has long enjoyed higher appreciation for homes it builds closer to urban areas. And Conrad Egan, president and CEO of the National Housing Conference, pointed to the willingness of officials in Fairfax County, Va., to approve denser, transit-oriented neighborhoods, “sometimes over intense local opposition,” he said.

But other panelists thought Nelson had misread the statistical tea leaves.

RISK AND REWARD: University of British Columbia professor Lawrence Frank states that achieving an 80 percent reduction in CO2 emissions by 2050 can happen only if cleaner fuels and improved vehicular efficiency are combined with walkable community development that lets more people drive less.

“There is no correlation between demographic trends and the built environment,” asserted Robert Bruegmann, professor of art history, architecture, and urban planning at the University of Illinois in Chicago. “People aren't moving back into cities in large numbers.”

Anton noted that only around 5 percent of the 17.3 million homes built over the last 10 years are in urban or “first ring” areas. And Anthony Downs, a senior fellow with Brookings, asserted that any analysis of population migration must first ask, “Where are the jobs located?”

These comments touched off a broader dialogue about the future of cities, where Bill Struever, CEO of urban developer Struever Bros. Eccles & Rouse, sees a “juggernaut of growth” (even as he disparages New Urbanist communities as “fake cites”). And John Norquist, the former Milwaukee mayor who is now the president and CEO of the Congress for New Urbanism, predicted that cities have a “shot” to re-emerge as “lifestyle places,” to which Barry Berkus, president of the design firm B3 Architects, added that cities could evolve into “resorts” for second-home buyers.

Bruegmann threw cold water on this urban enthusiasm by noting that exurbs—those areas beyond suburban neighborhoods—are the country's fastest-growing regions. Nelson, though, didn't think exurbs would ever contain more than one-fifth of the nation's population, and therefore would remain on the outskirts as far as their impact on the built environment.

There is no question, however, that the spread of suburbs and exurbs around urban centers has created horrific traffic congestion. Residents of sprawling Atlanta collectively drive 160 million miles each day, or nearly the equivalent of a roundtrip to and from the sun.

Congestion has also sparked demand for and investment in mass transit, as well as residential development around transit centers. But subways, trains, and buses will never be options for everyone, whether it be for lifestyle reasons, because they don't reach where people reside, or because their service is subpar. Mariia Zimmerman, vice president for policy with the Center for Transit-Oriented Development, noted, too, that existing transit infrastructure “is badly in need of repair.”

So more cars jam onto overcrowded roads, spewing exhaust. Cars and light trucks are responsible for more than three-fifths of transit-related carbon dioxide emissions, and CO2 accounts for three-quarters of all greenhouse gases that are causing potentially calamitous changes in the global climate. Lawrence Frank, a professor at the University of British Columbia, isn't convinced that technological solutions can ameliorate this problem, because they aren't being developed fast enough and “ignore the root cause of transport emissions—land-use patterns that practically require driving, over long distances, for common destinations such as jobs and shopping.” He cites estimates from the Center for Clean Air Policy stating that even if fuel efficiency were to improve fourfold, “we'd still have to reduce driving by 20 percent” to achieve an 80 percent reduction in CO2 emissions by 2050. In his presentation, Frank championed land-use policies that reduce greenhouse gases by encouraging development of walkable neighborhoods, where driving becomes less imperative. He pointed specifically to Seattle, where, he said, higher densities have curtailed that market's CO2 emissions.

Frank goes so far as to advocate distance-related impact fees and “pay as you drive” insurance policies to promote less driving. But some panelists, evaluating Frank's plan on its own merits, were skeptical about its practicality and efficacy. Berkus noted that many people who drive long distances every day are employed in lower-paying service sector jobs and can't afford to live nearer work, which, he added, is why inclusionary zoning must be a prerequisite for future growth.

Bruegmann thought Frank too readily discounted the probability that soaring fuel prices would lead to the discovery and application of cleaner, cheaper energy alternatives. “So much technological change seems to be ready to explode onto the scene.” He also rejected Frank's “hypothesis” because “it is not empirically proven that higher densities lead to less pollution.” Indeed, Bruegmann thought urbanization, which is occurring on a global scale, might prove equally toxic.

In the U.S., buildings consume 40 percent to 45 percent of America's energy output and produce 60 percent of CO2 emissions. “They are our greatest opportunities for change” through energy-efficient design and construction, said Greg Kats, managing director of Good Energies, which invests in renewable energy companies. “The market is saying something very clearly,” asserted Kats, when 1 billion square feet of green construction are committed to be built over the next two years, and when green building is growing at a 40 percent to 50 percent clip within a construction sector that increases only 1 percent to 2 percent per year.

PUSHED OUT: A survey of nearly 700 developers nationwide finds that in many regions they prefer higher densities than local planners are allowing, which University of Michigan professor Jonathan Levine (right) contends thwarts buyer choices.

“There's more emphasis on green building in the suburbs, too,” said Gary Garczynski, the former NAHB president who now runs National Capital Land & Development. “It's part of the way we do business today, where it wasn't 10 years ago.” But no one knows yet what buyer demand will be for greener or even higher-density neighborhoods. Geoff Anderson, director of EPA's Smart Growth Program, said his agency polled builders earlier this year and found that only one-third of their buyers ever ask about smart-growth options. And Tim Eller, CEO of Centex Homes, said his company can build zero-energy houses right now, “but the marketplace is more about cost and benefit. If one area required zero-energy homes, people would just move someplace else.”

Frank concedes that what he's recommending is only one piece to a complex puzzle that ultimately connects future development with environmental protection. But he's also impatient with many of the caveats voiced at the conference. “We need to get rid of these ‘or' arguments, that we can either do this or do that. ‘Or' has got to become ‘and' because we need to do everything.”

Centex's reluctance to roll the dice on a product few buyers might want mirrors Wall Street's perennial attitude about investing in the built environment, which is the largest asset component in the country. Investors for decades have directed capital mostly to drivable, low-density, suburban development that “are real estate products Wall Street knows, understands, and can be traded in large quantities,” said Chris Leinberger, a professor and land-use strategist at the University of Michigan.

That investment strategy misses the boat, Leinberger asserted, because it doesn't recognize “the emerging reality of walkable urbanism,” which other panelists estimated is now attractive to between 20 percent and 40 percent of all buyers. Leinberger noted that within Washington there are now 17 regional walkable communities, versus two 20 years ago.

But Wall Street's aversion isn't surprising when such developments can cost up to 40 percent more to complete than conventional suburban communities and take longer to repay investors (which is why Leinberger said developers should target “patient equity” that's less anxious about an immediate return). Developers and builders also must do a better job explaining why these communities are worth investors' time and money. “They need to prove that walkable communities are what buyers actually want,” said Pres Kabacoff, CEO of HRI Properties, which specializes in sustainable urban developments.

That Wall Street still doesn't “get” walkable urbanism could be because the free market doesn't determine what gets built where. “The belief that sprawl is caused primarily by market failures is based on the false assumption that there is a freely operating land-use market,” Downs wrote in 1999, and not much has changed since, according to Jonathan Levine, a University of Michigan professor specializing in urban and regional planning.

Levine's presentation characterized municipal planning as a “highly regulated” mechanism that “lowers development densities, separates land uses, and mandates large roadways and parking facilities;” in other words, “a template for urban sprawl, rather than being an inevitable product of Americans' transportation, land-use, and housing preferences.” Levine illustrated his point with photos of Fruit Heights, Utah, a community of single-family homes on large lots north of Salt Lake City, which initially had been planned for attached multifamily houses that would have sold for half the price. “Zoning does not allow enough smaller-lot, higher-density product to be built,” he tells BUILDER, adding that planners often seem oblivious to housing alternatives, their relative demand, or their communal benefits. Levine's research compared compact Boston, where 83 percent of people preferring transit- or pedestrian-friendly neighborhoods are living in them; with Atlanta, where only 48 percent live in neighborhoods that match their preferences. Levine sees this as evidence of how land-use policies thwart demand.

One of Levine's solutions is regional and state oversight of local planning and zoning decisions, and he found an ally in Eller, who said Centex's experience in Minnesota, which has regional zoning, “was much easier to deal with” than either Houston (with no zoning) or Portland, Ore., (with lots of zoning). But government intervention makes developers and builders nervous, even as one panelist—Roger Platt, senior vice president for The Real Estate Roundtable—wondered about the industry's “selective libertarianism” when it comes to supporting whatever land-use mandates advance its immediate business prerogatives. On the other hand, Parris Glendening, the former Maryland governor who is president of the Smart Growth Leadership Institute, saw progress in “form-based” zoning experiments that establish municipal standards “and then allow whatever kind of building the developer wants.”

Photo Credit: University of Michigan

Policymakers and the public may opt for refinement or reinvention of the built environment. But if the America's Next conference affirmed anything, it's that change happens faster than people and governments can comprehend it. “Rather than being excited, many people seem withdrawn, afraid, and fearful,” says Bruegmann, “sure that whatever comes will be somehow worse or more expensive than what we have now. So the reaction is to pull back.” Katz believes the country “is still at the shallow end of the pool” in coming to grips with its own metamorphosis and falls back too often on land-use formulas from a generation ago.

Still, the panelists were mostly sanguine about the country's ability to adapt, even if it takes longer than they'd like. But they also said builders and developers are kidding themselves if they believe altruism drives buyers' decisions about where they live. “Global warming is not going to be enough to make people want to live in walkable communities,” concedes Levine. “If they choose a transit-friendly neighborhood, it's because they like it. I just want them to be able to have that choice.”

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