The Next Slum?

The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.

Builders and developers tend to notice big price imbalances, and they are working to accommodate demand for urban living. New lofts and condo complexes have popped up all over many big cities. Suburban towns built in the 19th and early 20th centuries, featuring downtown street grids at their core, have seen a good deal of “in-filling” in recent years as well, with new condos and town houses, and renovated small-lot homes just outside their downtowns. And while urban construction may slow for a time because of the present housing bust, it will surely continue. Sprawling, large-lot suburbs become less attractive as they become more densely built, but urban areas—especially those well served by public transit—become more appealing as they are filled in and built up. Crowded sidewalks tend to be safe and lively, and bigger crowds can support more shops, restaurants, art galleries.

But developers are also starting to find ways to bring the city to newer suburbs—and provide an alternative to conventional, car-based suburban life. “Lifestyle centers”—walkable developments that create an urban feel, even when built in previously undeveloped places—are becoming popular with some builders. They feature narrow streets and small storefronts that come up to the sidewalk, mixed in with housing and office space. Parking is mostly hidden underground or in the interior of faux city blocks.

The granddaddy of all lifestyle centers is the Reston Town Center, located between Virginia’s Dulles International Airport and Washington, D.C. Since it opened in 1990, it has become the “downtown” for western Fairfax and eastern Loudoun counties; a place for the kids to see Santa and for teenagers to ice skate. People living in the town can stroll from the movie theater to restaurants and then back home. A 2006 study by the Brookings Institution showed that Reston’s apartments, condominiums, and office and retail space were all commanding about a 50 percent rent or price premium over the typically suburban houses, office parks, and strip malls nearby.

Housing at Belmar, the new “downtown” in Lakewood, Colorado, a middle-income inner suburb of Denver, commands a 60 percent premium per square foot over the single-family homes in the neighborhoods around it. The development covers about 20 small blocks in all. What’s most noteworthy is its history: it was built on the site of a razed mall.

Building lifestyle centers is far more complex than building McMansion developments (or malls). These new, faux-urban centers have many moving parts, and they need to achieve critical mass quickly to attract buyers and retailers. As a result, during the 1990s, lifestyle centers spread slowly. But real-estate developers are gaining more experience with this sort of building, and it is proliferating. Very few, if any, regional malls are being built these days—lifestyle centers are going up instead.

In most metropolitan areas, only 5 to 10 percent of the housing stock is located in walkable urban places (including places like downtown White Plains and Belmar). Yet recent consumer research by Jonathan Levine of the University of Michigan and Lawrence Frank of the University of British Columbia suggests that roughly one in three homeowners would prefer to live in these types of places. In one study, for instance, Levine and his colleagues asked more than 1,600 mostly suburban residents of the Atlanta and Boston metro areas to hypothetically trade off typical suburban amenities (such as large living spaces) against typical urban ones (like living within walking distance of retail districts). All in all, they found that only about a third of the people surveyed solidly preferred traditional suburban lifestyles, featuring large houses and lots of driving. Another third, roughly, had mixed feelings. The final third wanted to live in mixed-use, walkable urban areas—but most had no way to do so at an affordable price. Over time, as urban and faux-urban building continues, that will change.

Demographic changes in the United States also are working against conventional suburban growth, and are likely to further weaken preferences for car-based suburban living. When the Baby Boomers were young, families with children made up more than half of all households; by 2000, they were only a third of households; and by 2025, they will be closer to a quarter. Young people are starting families later than earlier generations did, and having fewer children. The Boomers themselves are becoming empty-nesters, and many have voiced a preference for urban living. By 2025, the U.S. will contain about as many single-person households as families with children.

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