It’s no surprise that business, and the economy as a whole, is becoming increasingly urbanized. Since 2010 the population of the City of Atlanta has grown by more than 8%, ahead of the growth rate for the MSA as a whole. This shift certainly has ramifications for cities and the people who live and do business in them, but the trend toward urbanization won’t only affect traditional cities. Suburbs and outlying areas can expect to see a shift in the way people live and work as well.
According to a report recently produced for the Urban Land Institute (ULI), household formation is expected to increase by 86% over the next decade, nearly twice the level of growth seen in the past ten years, with well over half of those new households choosing to rent. That includes those who never owned their home as well as those choosing to move from owning to renting. As a result of this, the national homeownership rate will drop to its lowest point since the 1950s, even as rents surge.
Contrary to much of the recent buzz, the study predicts that the majority of households formed in the next decade won’t be in urban areas, but in areas which bring “the best of urban living to a more affordable suburban environment.” In fact, the report predicts that 79% of new households will settle in the suburbs.
But not just any suburbs.
The ULI report points out that urban areas tend to have higher costs of living and less room to build, leading people as they start their families to seek out suburban locations, where more often than not housing is more affordable and the schools are perceived to be better. These workers will bring with them a desire for:
- walkable communities
- quality restaurants and retail experiences, and
- workplaces within a reasonable commute distance.
In Atlanta, we have seen this dynamic already in areas like Brookhaven, Smyrna, Avalon in North Fulton, and the new SunTrust Park development in Cobb County is surely intended to create and nurture this kind of environment.
As this trend becomes more widespread, we can expect to see an increase in mixed-use developments in suburban environments, with an emphasis on high-quality rental units, creative office space, and experiential retail. Older office and retail properties will thrive where they adapt to this trend and offer the lifestyle opportunities workers demand. Already, many suburban municipalities are taking note of this and changing zoning to allow for a mix of retail, housing, and jobs.
While many businesses and workers are pursuing a more urban way of life, there is limited room in the city center and many could be priced out of these neighborhoods as demand pushes rents upward. Suburbs can offer a more affordable alternative for workers, families, and businesses if they plan wisely and offer the best of both worlds.
– By Keith Pierce, Director of Research, Atlanta, Georgia