GRAND RAPIDS — Dense is better. It’s even virtuous.
In fact, as far as Smart Growth is concerned, being as dense as possible is the goal — at least when it comes to the market potential for housing in urban centers. And that means renovating old buildings into new lofts and condominiums, and building new townhouses in the old 1950s neighborhood style where homes were close to the street and to each other.
Laurie Volk, a principal with Zimmerman/Volk Associates of New Jersey, told a group of municipal planners and residential builders recently that the housing market potential for downtown and the city’s neighborhoods was 9,400 units.
Using migration data from the Internal Revenue Service to research the market for the Grand Valley Metro Council, Volk pegged the annual potential for downtown at 355 dwellings, with neighborhoods, like Eastown, capable of absorbing 887 units each year.
“You can create housing types to bring people to your area,” said Volk, who added that the IRS data revealed that 18 percent of new residents came here from other locales. “You actually have a significant number from throughout the United States, specifically Detroit and Chicago.”
And according to Volk, developers and builders can lure consumers to the urban core and its surrounding centers if they get real dense and put in compact livings units such as lofts, condos and townhouses. Somewhat surprisingly, those potential renters and buyers fall into a pair of distinct demographic groups: empty-nesters and the millennials.
Volk noted that there are 82 million baby boomers born between 1946 and 1964 across the nation who are approaching retirement and are tired of shoveling snow, mowing lawns, and doing maintenance on a house and its property. So Volk said they’re looking for a place to live where they don’t have to do those chores and don’t have to climb into a car every time they want to go somewhere.
“They are the driving force behind the redevelopment of downtowns,” said Volk of retirees and the boomer generation.
“They’re looking for mixed-use developments where they can walk to places.”
The millennials, of course, are younger. Some are much younger than the boomers and aren’t old enough today to live away from mom and dad.
But Volk is looking into the future at this group of 77 million Americans born between 1977 and 1996. Even though millennials are decades apart from boomers in age, she said they share a passion with that older group — they, too, want to live in an urban setting.
Volk said many of the older millennials grew up in the suburbs and have grown tired of that lifestyle.
Like the empty-nesters, they don’t want to drive everywhere and prefer areas that let them walk.
The main difference between the two groups is the millennials are more likely to rent than buy, at least until they get more established in their careers.
That means roughly a quarter of all housing units in downtown and the neighborhoods should be rental lofts, with monthly rents starting at $625 for wide-open lofts that offer 500 square feet of space.
Best of all for developers and builders, Volk sees the consumer groups merging in about a decade and creating an unusually strong demand for urban residences.
“You can see there is going to be a convergence in 2015,” said Volk about the upcoming housing demand. “That is why it’s important to start planning for this now.”
Almost all those future households will consist of only one or two people, so a unit can be more compact and a development can be more dense than usual. Volk said density is a virtue, and building 35 to 50 units on each acre is really being virtuous.
Volk also noted that mixing rental and for-sale units in a residential development usually means better results for a developer. She said homes in a compact development have sold for 5 percent to 25 percent more than those in a conventional one, and the units have a resale of about 15 percent more than the conventional house.
“There really is a substantial market for new housing. Based on market preference, new housing in the study area could satisfy a significant majority of the housing growth projected within the Grand Valley Metro region over the next 30 years,” said Volk at the council’s last quarterly luncheon.
“The market is here.”
City Housing Market Potential
GRAND RAPIDS — The chart compares the price and size of the housing types with the most potential for downtown and city neighborhoods, like Eastown. Rents and sales prices should be slightly higher for downtown units, and downtown townhouses should be larger than those in the neighborhoods.
|Housing Type||Monthly Rent/Price Range||Size Range||Rent/ Price Per Sq. Foot|
|Size Range||Rent/ Price Per |
Source: Residential Market Potential, Grand Valley Metro Council, Zimmerman/Volk Associates, October 2004.