New York City

Urban City Real Estate Is Thriving And Growing 

In his recent report, Daniel McCue, a senior research associate at the thinktank Joint Center for Housing Studies of Harvard University, notes that “urban areas around the nation are seeing more demand. With the new remote work trends, some of the highly desirable city neighborhoods that were only convenient to a few commuters are now more accessible to a larger group of residents.”

Mollie Carmichael, principal at real estate data firm Zonda, also shares data from 2021 that shows that “net migration back to urban cities is already positive in many large cities like New York, where a net of 1,900 people were added in the first two months of 2021 versus a loss of 7,100 in the same two months of 2019.”

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“It wasn’t that long ago when we transitioned to a world when there were more people in cities than not in cities, which happened in 2010 or 2011. That’s the trajectory that we will continue to see. There will be growth in cities all over, but we are seeing trends to Sunbelt states,”  said Alison Novak, the head of Sidewalk Urban Development at Sidewalk Labs, an urban innovation company. 

Novak also identified “several very important trends that are impacting urban revival right now – sustainability and inclusivity.”

“Development projects are hard – there are a lot of risks – you have to find the right market, the right product, and manage a lot of actors to produce a building where people will live, work and shop. Developers need to eliminate risk. We need more models to look at that can be de-risked, while at the same time, we need to take some risk to innovate, experiment and bring benefits to everyone,” Novak explained.

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Jeff Foster, a principal at design firm GGLO which focuses on urban design, claimed that certain urban incentives encourage developers to be more open to including aspects of social equity. 

“Some of the tools that he sees can be enticing for developers include multifamily tax exemptions and inclusionary zoning. The incentives have to be valuable. It has to be attractive enough for developers to make it work in their pro forma. We see all too often that municipalities think that there is more value in what they are offering than what there really is,” Foster explained. 

More policyholders and developers are also focusing on property and real estate opportunities that have a focus on sustainability. 

“The approach to sustainable design is primarily from the perspective of carbon reduction and tracking it as part of a 2030 commitment. We’re all looking for more elegant, desirable design solutions. We’re seeing more interest in mass timber for what would have been a typical wood frame and it’s starting to make financial sense. Other solutions include grey water recycling, green roofs, density, integrated storm infrastructure and district energy,” Foster said.