Posted by Leonard Steinberg on May 22nd, 2014
An interesting article in the Wall Street Journal this morning addresses the possibility that urban growth may be slowing, with renewed interest in the suburbs. Two demographics continue to drive Urban growth: the ‘young’ and the ‘old’ either for life-style reasons or to downsize their living arrangements. Is the ‘middle’ heading to the suburbs? Cities are still growing slightly faster than the suburbs, a historical anomaly after decades of American migration to the suburbs.
In New York we are certainly seeing a growing trend of young buyers and retirees moving here for jobs or the energy of the city. The ‘young retirees’ are a potent force as they usually are bored with their suburban lives and they are often wealthier…..the kids are off to college and a large house and lawn and pool are great for the weekend, but require lots of maintenance and do not provide the stimulation that can only be found in a large urban environment. Often these ‘young retirees’ are not retired at all: they may own their own companies that in the past required daily 12-hour work loads, but are now thriving on their own with more limited oversight. They may be switching careers into something they love doing because they have made their nest-egg. While we talk mostly about the very rich version of this demographic, there are many versions. I have sold apartments to some very middle class couples whose kids were all grown up and they wanted to be back in the city: they are having the time of their lives! Many of these people used to live in the city, and returning at an older age reminds them of their youth…..thats fun! More importantly great medical facilities and culture are easily accessible in a big city, not to mention the one thing often hard to find in suburbs….people.
Cities in metro areas larger than 1 million people grew at a 1.02% annual rate in 2012-2013, down from 1.13% in 2011-12. Suburban areas grew at a rate of 0.96%, roughly on par with the 0.95% the prior year. I spoke with a broker in Westchester last week and she said business in the suburbs was booming again after a long hiatus.
Single family housing starts have been sluggish recently……the trend towards multi-family living has been more prevalent recently. Maybe from a big-picture perspective the trend is towards more efficient living in walkable environments? Maybe the single most important driving force for this renewed suburban growth is the fact that Cities keep getting more expensive and are pricing people out to the suburbs.
When it comes to understanding the luxury consumer, the one thing that remains the ultimate luxury is TIME: The convenience of a big city that cuts down commuting time, that simplifies and streamlines a whole host of functions that are simply more time consuming in the suburbs will always be highly appealing to the very wealthy. For the young, no suburb will ever provide the energy, vitality and opportunity that a big city provides.