City Living Attracts Many Generations

The 2015 edition of the annual Emerging Trends in Real Estate report from PricewaterhouseCoopers (PwC) confirms what many have seen developing over the past several years — the urban centres of cities are growing faster than the suburban areas.

New development and city planning has seen that for some time but the interest has always centred on whether one variable is driving the other — and, which one is the chicken and which one is the egg? In other words, are more people flocking to live in downtown cores because that’s where all the new housing is going up? Or, are new developments going up because people want to live downtown?

Produced in partnership with the Urban Land Institute (ULI), a global non-profit organization providing research and education into using land responsibly and creating and sustaining thriving communities worldwide, the annual report on emerging real estate trends interviewed 1,400 real-estate professionals to provide a snapshot of where the real estate market is forecast to be heading in 2015 and beyond.

The 111-page report touches on a number of topics, including lending, investing and employment, but of particular interest to this column is the movement of homeowners and the developments to accommodate them.

Urbanization, once seen as a growing trend, is now regarded as the norm with more and more people of various generations moving back to the downtown cores to work and play. That has led to not just an increase in new residential development, but also in mixed development, where residences and office space are often integrated in multi-use complexes, all sitting atop commercial space.

The biggest impact on development has been to accommodate Generation Y, the generation born between 1980 and 2000, as it enters its top-earning years and looks to build families and acquire homes. The report states that this generation is unlike all previous generations in the way they live, work and play, and that will have an impact on new developments in all real-estate sectors.

View from Daniels' One Park Place South in Regent Park

The majority of Gen-Y doesn’t particularly like cars and many individuals don’t want to drive for any prolonged distances, and especially not to work. Whereas Generation X took up homes in the suburbs, exchanging a long commute for space to spread out, Generation Y is willing to live in more compact accommodations in order to be closer to work. Yet, they still insist on being mobile, which means needs for better public transit and perhaps increases in car-sharing programs.

Now, factor in the Generation following “Y.” Generation Z is graduating and entering the workforce and it too wants to be close to the action, both for work and leisure. And it has less of an affinity for vehicles than even the previous generation.

These latest generations have grown up with online shopping, and many will look for retailers who can deliver their purchases faster, which means retailers may be looking to acquire more warehouse space closer to downtown cores.

Added to the mix are aging Baby Boomers, who are selling off their suburban homes in favour of housing in communities of like-minded people (and not exactly the golf-cart communities of the sunshine states). Many of these villages are popping up in urban environments, so they are in effect following the youngest generations into the city cores. Faced with challenges in driving, and with some electing to stay in the workforce longer, they too will look to better public transit for mobility, and perhaps also independent concierge services to allow them to meet their needs without having to travel for extended periods.

As one respondent said, “People want to live mid-downtown. The subway/transit corridor is golden for developers.”

Then you have to factor in the growing environmental movement, and in particular the protection of green space, which is making it more difficult for developers to create new subdivisions outside the city walls.

The above forecasts are backed up by Statistics Canada, which states the population of urban centres has grown by 7.1 per cent from 2006 through 2011.

Cities are booming and city living seems to be what most people are aspiring to. As the report concludes, “We can expect to see more and more retail and services along the streets of Canada's city cores and along major transit arteries, especially where new developments predominate.”