Changes in the marketplace create new chances for communities to transform themselves. With fewer first-time homebuyers, higher interest rates and a growing number of empty nesters wanting out of their large-lot homes, developers and municipalities turn to new products to meet market demand.
It’s a time when the market’s uncertainty
has many would-be homebuyers sitting tight, sellers worried and prominent
developers rethinking sure-fire investments. But with the booming population
growth and increasing household incomes in the south and southwest suburbs—and
the
just-opened I-355 tollway now a
reality—there’s still a lot of development potential in Will County and beyond.
So said
planners, economic developers, architects, and real estate professionals who
presented their perspectives on the marketplace and
what’s underway in South
Cook,
Will, Kankakee, and Grundy counties at a recent
Land Development Conference and Golf Tournament
in Tinley
Park,
Ill.
The development community may just be
finding it a little slower going than what they’ve been experiencing in recent
times—and realizing they need to respond to a changing demographic, especially
in the residential and mixed-use markets.
Yesterday’s growth trends may
still be driving home sales in the exurban areas, but the fast pace of new
rooftops has slowed in response to the overall softening of the market. For
residential home builders, that means some developers are walking away from
1,000-acre
greenfield
options and instead moving on
smaller parcels or in-fill sites as the high costs of raw land and
infrastructure needs impact the bottom line. It also means they’re diversifying
their housing stock and developing multifamily projects and apartment buildings
as individual buying power has changed. With fewer first-time homebuyers, higher
interest rates and a growing number of empty nesters wanting out of their
large-lot homes, developers are turning to new products to meet market
demand.
That should suit local
communities just fine. Many have been inundated with hordes of incoming
residents and overwhelmed with development proposals, so a slowdown in their
exponential growth could be welcome. Rather than calling for building
moratoriums, the pause in developers knocking might better serve to give towns
the chance to catch their breath, re-examine community plans and needs, and
respond to congestion and other by-products of a “hot” location. A break from
the relentless pace also provides the opportunity to re-assess the market and
grow their downtowns with sustainable development—something that may have been
overlooked as subdivision after subdivision went in.
Responding to the softening
housing market, retail projects have contracted, as well. Big box development
demand is still strong, but commercial and retail developers are recalculating
performance projections and pushing back on desired “power” and “lifestyle”
centers, as the economics for those don’t work in most places. While waiting for
land values to correct themselves and home building to fire back up, investors
increasingly are looking with interest at mixed-use and transit-oriented
development opportunities. Built-in densities and a growing consumer demand for
urban settings make these “new” old-fashioned developments a hotter commodity.
Indeed, as Baby Boomers age and
their newly independent children – “Generation Y” – enter the marketplace, many
want to live in communities modeled after towns of yore. A growing number of
renters and buyers are attracted to places where they know their neighbors, can
walk to the corner grocery store for a loaf of bread and a gallon of milk, or
have a “night on the town” in
their
town. With their increased incomes, they are often choosing places to live based
on amenities and location, in neighborhoods where they won’t need a car (or
two…or three). Until recently, these options had been limited to locations
around commuter train stations, where transit-oriented development provided one
of few alternatives to living on a cul-de-sac.
But more and more, savvy local
leaders and developers are responding to these “New Urbanist” demands. As
communities fill in and out, residents are looking for various housing options,
shopping experiences, and great places to play
and
work. Some places have already
capitalized on this – even before the “benefit” of a market recession.
Tinley Park
and New Lenox,
cited at the conference as examples, have found success by planning for higher
densities and transforming their zoning codes for a mix of commercial and
residential units in their downtowns and along their transit lines. Other
communities, including those along the I-355 south corridor, with escalating
land values that warrant more intense developments, are bringing in residential,
commercial and office properties in multi-use centers along with the super
shopping meccas and job centers that are planned. With an often long timetable
for entitlement, financing and getting to market, these investments are made
only with careful evaluation and planning.
Strategies that take
this long-term view were brought home by panelists at the Land Development
Conference
in Tinley
Park
They not only offered a snapshot of how fast growth, increasing incomes, and a
softening housing market within the south and southwest suburban landscape are
impacting “on-the-ground” development; but they also provided insight into how
the change in the marketplace is creating new chances for communities to
transform themselves. With an abundance of prime locations still available in
many towns and lucrative deals to be had, this is welcome news
indeed.
**This article was previously published by Illinois
Real Estate Journal (November 2007).