Joe Urban | Sam Newberg, Urbanist

Now is Not the Time for Cities to Aim Lower

Dateline: 2:31 pm August 5, 2011 Filed under:

A number of things bothered me about a recent article in the Minneapolis Star Tribune . The article discusses how suburban municipalities in the Twin Cities are being forced by multiple forces affecting the real estate market to scale back “utopian” dreams of large-scale mixed-use developments and accept single-use projects, often driven by large corporations. The article didn’t really address two important things: 1) Much has changed in terms of demand for real estate development, particularly housing, and 2) mixed-use urban developments are difficult to fully achieve in a suburban setting.

The article made me think about the large mixed-use suburban projects of the past decade, locally and nationally. Take Excelsior and Grand in St. Louis Park, Minnesota. This project was conceived and executed in a different world. Sure, Excelsior and Grand was groundbreaking for the Twin Cities, but it also was backed by several years of upfront planning and charrettes, funded in part by the Metropolitan Council, which placed a higher priority (and funding) on projects like these. (the Met Council is appointed by the governor, so give credit to Jesse Ventura, an independent, and Arne Carlson, a moderate republican before him for placing a higher value on regional government in their respective terms. The results on the ground are significant.) Tax Increment Financing laws in Minnesota were also stronger at the time, and the ability to use eminent domain more easily was also a factor prior to 2005. Couple that with the recession and real estate crash of 2007 and 2008, which forever altered the landscape (truly), and yes, I can understand why suburbs in the Twin Cities and elsewhere around the country are shifting their focus to planning and real estate development that is easier to complete. Excelsior and Grand is nearly impossible to achieve in today’s world. It is much easier to work with a national corporation with deep pockets and financing to come in a build a single-use project, and many cities are choosing to do this. Who can blame them?

But the article failed to address the demonstrated demand for apartments in the core city, and the suburban context that urban mixed-use projects have difficulty overcoming.

First the urban apartment market. As of early 2011, according to the Cassidy Turley 2011 Annual Twin Cities Market Report, fully 73% of all proposed apartment projects were in the two core cities of Minneapolis or St.Paul. There is a demonstrated demand for not just apartments but also for urban living (a 2.4% vacancy rate in the Twin Cities but just 1.2% in downtown Minneapolis, for example), as most projects are proposed or under construction in the two downtowns, near the University of Minnesota and along the light rail lines (the existing Hiawatha line and the Central Corridor, under construction). That said, the market for apartments is also strong in key suburban locations near employment clusters and interstates, and cities that have built out with predominantly owner-occpuied housing and now have market demand for more balance.

The article also noted a slow to develop mixed-use project in Eagan once called for condos now is proposed to contain apartments instead. I have addressed this in a previous post, but the NIMBY-ism of both suburbanites and urbanites alike and their preference for owner-occupied housing is particularly troubling in a country in which the market is moving to rent more and more.

The second obstacle for mixed-use development unmentioned in the Star Tribune is a little more complex. Many suburban sites proposed for mixed-use development are not in urban contexts in which mixed-use development can really thrive. Again, take Excelsior and Grand. The project itself was well-excecuted in terms of design and density, but critical to the project were two things – the taming of the adjacent suburban arterial by adding a traffic signal, crosswalk and improved pedestrian realm, and the connection through the project to the city park behind. Those two pieces are important for good urbanism to thrive, and even the best mixed-use projects cannot overcome a car-dependent, overbuilt road environment around them. Development and transportation must go hand-in-hand, and a walkable environment within and outside the project is critical.

So what can we make of this? I believe a fundamental shift has occurred, making development harder in both city and suburb. The difficulties are not trivial, and the issue of financing mechanisms for mixed-use development need to be addressed. However, it is important to follow the market momentum. Demand for real estate is moving toward the urban core due to demographics, employment, the price of gas and the ability to get financing. Thus, development will likely continue to be strongest in the urban core for some time. Some suburban locations will do well, too, but there simply isn’t enough demand to go around. Some locations will have to accept that they are indeed best suited for a gas station or big box retailer. It is how the context reads and what the market demands.

The article also mentioned an idea that New Urbanism is a utopian dream beyond the ability of most developers to build. I think that point is off. For the Seaside’s and Celebration’s that get so much attention for standing out as being attractive and walkable in a sprawling setting, new urbanism occurs every day in the urban core because the proper context exists of streets, sidewalks, transit and a mixed-use setting. This has continued through the recession and will do so in the future. Forget utopia, new urbanism is real world, honest everyday urban development that is occurring.

The truth is, there will simply be fewer development opportunities in the future compared to the past two decades. We must accept this. Public money will not likely come rushing back for planning, economic growth will likley occur at a slower pace for some time, and the financing toolkit will have to be restocked. We will have to live on less, and cities and suburbs alike will have to be more honest with ourselves when it comes to development and where demand is coming from in the marketplace.

Now is not the time for cities to aim lower. The world has indeed changed, and we must raise the bar to address the challenges. We must be more creative. We must include transportation planners and engineers in decisions on housing development, design more context sensitive streets, be more elastic with our planning and financing, find ways for the private sector to help finance transportation, educate the public on real estate planning, markets and financing, and quite simply, make do with less.

We don’t need utopian dreams to build the livable cities necessary for a sustainable future.

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