Demographics, other factors helping to spur suburban revival

//October 15, 2018//

Demographics, other factors helping to spur suburban revival

//October 15, 2018//

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Migration from the suburbs to urban areas — a pattern that’s ruled for more than a decade — may finally be turning around, according to a report from the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

Migration from the suburbs to urban areas — a pattern that’s ruled for more than a decade — may finally be turning around, according to a report from the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

Following a period where most growth took place in the “urbanized regional core,” a new pattern emerged between 2016 and 2017 with the “suburban ring” reasserting itself, the study noted. And this migration modification could have big implications for developers, cities and suburbs, some experts say.

According to the Rutgers Regional Report “The ‘Burbs’ Bounce Back: ‘Trendlet’ or ‘Dead Cat Bounce’?” the suburban ring of 27 counties in four states — Connecticut, New Jersey, New York, and Pennsylvania — experienced “explosive growth, nearly doubling its total population.” Those counties gained more than 5.3 million people, even as the regional core of eight urban counties in New York and New Jersey was contracting sharply, the report noted.

But all of that changed in the post-2008 era in the wake of the Great Recession, as small towns and “non-metropolitan areas” registered unprecedented population losses, according to the Rutgers report and another by the Brookings Institution.

Shifting trends

Census estimates from 2017 reveal suburban population growth in the region “has again surpassed that of the urban core,” according to the Rutgers study. While acknowledging it can be risky to commit capital based on data from only a year or two, “my gut feeling is that there is a suburban comeback,” said Bloustein School Dean Emeritus and report co-author James Hughes. “It’s not yet a powerful wave, but it does appear to be a new direction.”

Part of it is driven by demographics, he said. “The oldest millennials are now in their mid-30s, and the job losses stemming from the Great Recession delayed marriage and family formation. But now, as they are forming families, more millennials want to have more space and a backyard, so some are moving back to the suburbs.”

Market economics also play a role. “New York City and New Jersey’s Gold Coast are victims of own their own success,” Hughes observed. “Demand in hot urban areas pushed up prices, and the lack of affordable housing there has made it difficult for the middle class.”

But suburban locations that want to attract and retain millennials have to take some steps to reinvent themselves, he added. “We’re already seeing some suburban differentiation, as suburbs with walkable downtowns are bringing in coffee shops and restaurants that millennials want; they’re no longer sterile places. Montclair is a poster child for this trend, especially with its transit station.”

Recycling space

Communities without a town center have to take advantage of any opportunities to redevelop vacant and obsolete space with multiuse development — residential, retail and office.

“This is occurring in places like Holmdel, with Bell Works,” said Hughes, referring to the 2 million-square-foot redevelopment of the former Bell Labs facility that features offices, retail, dining, hospitality and residential activity. “Another example is the On3 project,” he said, referring to the former Hoffmann-La Roche campus in Nutley and Clifton that’s being redeveloped with office, residential, retail and other projects.

Some experts don’t see the issue as “urban vs. suburban,” but instead as a kind of fusion.

“I call it ‘urban lite,’ where some suburbs and towns — like Red Bank, Westfield, Madison and others — are redeveloping their downtown areas with a balance of walkable retail, residential and entertainment to attract more people. But the housing component in these areas is different than in an urban one,” said Debra Tantleff, the founding principal of real estate development and advisory firm Tantum Real Estate.

Her firm is involved with developing The Element at Red Bank, a 35-unit complex at 55 W. Front St. “We’re offering the amenities of Red Bank, which include living in a vibrant community with open space near the Navesink River, as well as a train station and other downtown conveniences,” said Tantleff, who’s also on the executive committee of the Rutgers Business School’s Rutgers Center for Real Estate. “We’re looking to leverage ‘bookend demographics’ of millennials and older empty-nesters who want a downtown residence with minimal maintenance.”

She said municipalities that want these residents — and the investment from retailers, developers and others that comes with them — will have to “revisit their master plans to help create a dynamic environment.”

Other forces

Also playing a role in the transformation of these communities are factors such as court-mandated affordable housing requirements, changes to retailing models and efforts to legalize recreational-use marijuana.

“To meet their affordable housing requirements, communities will have to create a mix of residential developments at a variety of price points that attract millennials to empty-nesters,” she said. “Other changes, like the rise in pop-up (or short-term) retail spaces and shops that will sell legalized forms of marijuana, will also spur municipalities to review their permitted uses, parking, density and other requirements.”

The changing demographics also mean that municipal officials need to “take a close look at how they interact with their constituents and understand what is driving their market,” according to Charles Latini Jr., a land-use planner and principal owner of L&G Planning. He’s also president of the American Planning Association’s New Jersey Chapter.

“We’ve been advising clients to take a look at areas that could lend themselves to a center of gravity,” he said. “Asbury Park is a perfect example of this, along with locations like South Orange, Maplewood and Morristown, which have added urban characteristics like employers, entertainment and public spaces. Every town is unique, so each one has to adapt an approach that works best for it.”

The reinvention of the suburban models will mean additional infrastructure and other costs, noted Ted Zangari, a member of the law firm Sills Cummis & Gross PC and chair of its Real Estate Law department, who also sits on the executive committee of the Rutgers Center for Real Estate.

“Municipalities must recognize that the unique added costs of redevelopment — structured parking, environmental remediation, vertical construction, affordable housing requirements and others — often create legitimate project financing gaps that require public incentives for the redeveloper to be able to achieve a reasonable rate of return and break ground,” he said. “Also, where parcels are too small for redevelopment of any meaningful size or scale, municipalities must consider designating clusters of parcels as redevelopment areas, which allows for land assemblage, overlay zoning and tax abatements.”

As a state, he added, “we need to view potential large-scale redevelopment projects from a regional perspective, evaluating their ability to transform an area well beyond the borders of the municipality in which it happens to be located.”

Meeting the demographic changes won’t be easy for developers, municipalities and others. But as Hughes noted, the changes bring plenty of opportunities too.

“During the suburban growth years, New Jersey had one of the most intensive activity in the nation,” he said. “Some municipalities suffered during the subsequent move to the cities, but the swing back to suburban development will help us.”