Real Estate's Next Big Thing: Walkable Communities
Demographics will drive growth of human-scale developments.
Human-scale homes and communities feature amenities that you can walk, bike, or take public transit to without getting in a car. I live in such a development in Grayslake, Illinois, where I can walk or ride to Starbucks, the supermarket, bank, dry cleaner, library, and hardware store. I wouldn't want to live anywhere else right now.
You won't generally find human-scale communities in sprawling urban areas dominated by highways, or what I call "spurbs." Investing in human-scale development is a relatively new and enlightened way of buying real estate. You may be able to profit in real-estate investment trusts, or REITs, or find communities that feature this kind of construction.
Christopher Leinberger, a research fellow at the Brookings Institution and real-estate developer, says human-scale or "walkable" communities command a premium of 40% to 200 % in cost per square foot over properties in car-centric neighborhoods.
Demographics is destiny when defining the growth of human-scale developments.
Places with sidewalks, bike paths, trails, and public transit will continue to prosper while spurbs will wither. That's because millions of empty nesters among the Baby Boomers -- born from 1946 to 1964 -- are selling their large, four-bedroom-plus suburban family homes and downsizing to condos, town homes, co-ops, and apartments half the size.
While the majority of Baby Boomers won't abandon their suburban enclaves quite yet, their sheer numbers will ensure significant migration to more pedestrian-friendly areas.
There were 52 million Baby Boomers aged 55 or older in 1990. By the end of this year, that number is forecast to grow to about 77 million and to 85 million in 2014, according to the National Association of Homebuilders, a Washington-based trade group.
Empty nesters are often moving to urban enclaves in Brooklyn, Philadelphia, Chicago, Seattle, and Portland, Oregon.
In his research on this subject, Leinberger has found that the supply for these kinds of neighborhoods lags the demand in major cities.
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