My work with the Primrose Schools Real Estate Team takes me all over the country. One thing I am noticing more and more lately is how many cities are revitalizing their downtown neighborhoods. Even Primrose schools are being built in the commercial spaces of downtown office buildings and underutilized space in mixed-use projects to support the needs of surrounding communities. In my 30-year career in real estate, I have never seen such interest in transforming these previously neglected urban neighborhoods.
These start out as the trendy part of town, but the only way they can become truly sustainable communities is by continuing to attract young renters while holding on to families. That family atmosphere helps property values increase, and the younger population attracts retailers and restaurants. Everyone benefits economically.
So how can commercial real estate brokers and developers help create these communities? I’ve found that a sustainable urban community has three things in common:
1. A variety of housing options
Not every Millennial wants to live in an apartment, and current renters probably don’t want to live in high-rise apartments forever. Balance is needed. A good community features a mix of rental and for-sale housing in a variety of configurations.
In October 2017, I attended a walking tour of downtown Los Angeles as part of the ULI Fall Meeting. DTLA, as it is called, is one of the hottest parts of the city right now. But of all the housing under development there, more than 33,000 rental units are under construction compared to more than 6,000 for-sale units. A snapshot of the neighborhood’s demographics reveals this may not meet future needs.
- Only 14 percent of residents have kids now, but one-third are married and the median age of residents is 37, meaning a lot of residents are in the family formation stage of their lives.
- Metro Charter Elementary School, downtown’s first charter school, went from 80 students when it opened in 2013 to 260 students today.
The same survey shows that 45 percent of respondents who live in DTLA now said they will either “probably not” or “definitely not” live there in the future. Combine that with the 23 percent who said “maybe” they’ll stay, and you have more than two-thirds of the population who doesn’t feel a strong connection with the neighborhood.
Developers can play a vital role in keeping a neighborhood’s current residents from leaving. When assessing a deal, first take a look at the community’s current residential inventory and identify the gaps in product types. Then, do your due diligence not with the highest density possible in mind, but with the community’s needs at the forefront
2. Fun (and free) things to do
Civic and entertainment amenities make any community a better place to live. In DTLA, Itis one thing to have great restaurants and entertainment options like like FIGat7th and The Bloc, which have breathed new life into a neighborhood where the sidewalks used to roll up after 5 p.m., but residents and families also need public spaces — think L.A.’s Pershing Square — to truly create that sense of community.
Some real estate developers have caught on to this need, creating programmable public spaces at mixed-use developments that can be used for outdoor concerts, food trucks or simply hanging out. While these spaces aren’t technically making you money in rent, they are making you money in visitors and building a more favorable opinion of your project.
3. Businesses that take care of people’s basic needs
People don’t want to drive far to go grocery shopping or drop off their kids at daycare. If you can create a self-contained community that meets everyone’s basic needs first, residents are way more likely to remain in the community for the long term.
If asked, people will tell you exactly what they want. DCBID found in their 2015 survey that DTLA’s most desired retail category was supermarkets (67 percent). A smart developer or retailer will look at key demand drivers when deciding whether to expand in an urban area.
This led Primrose Schools to build locations in Atlanta’s booming Midtown submarket as well as the Center City central business district of Philadelphia. Both areas are upscale and trendy, making them appealing to retailers. What we saw, more than business opportunities, were chances to provide a high-quality preschool option that would make both neighborhoods better places for families.
Want to chat more about what it takes to revitalize urban neighborhoods? Have a top-three of your own? Connect with me, and I would be happy to talk more about this important topic.