Urban Planning and Shifting Demographics Drives Surge in Twin Cities Downtown Housing

MINNEAPOLIS-There seems to be several factors behind the fact thatone of the fastest growing sectors in residentialdevelopment in the Twin Cities is the downtownhigh-rise or townhome development.Urban planners who have become adept at schemes tounsnarl traffic jams and redevelop the inner city anda rise in households with no kids and big incomes.

First, the facts: Twin Cities permits taken out tobuild urban multi-family housing projects haveskyrocketed to 1,038 last year, up from a mere 60 in1991, according to the National Multi Housing Council.Prices in the once-dormant downtown condo market havedoubled in the last few years, and demand isoutstripping supply, say local brokers.

If the aging Baby Boomer has anything to do with it,the U.S. could be in the early phase of what could bea very long boom in downtown housing. The key marketfor the downtown condo is the empty nester from 45 to64 years old. They don’t have to worry about schools.They want convenience and fun, not long commutes andyard work. They have money. But most importantly, theyare the fastest growing segment of the U.S.population.

“People want to be near the action _ and more andmore people are complaining about drive times,” saidJim Seabold, a real estate broker who representsseveral projects in downtown St. Paul.“What used to take me 15 minutes now takes me 30, andit’s getting worse.”If the demand for downtown condos is going up, then sohas the supply- due in part to urban planners who arebattling urban decay and suburban sprawl.Many cities, including Minneapolis and St. Paul, havespent millions of dollars to clean up their downtownsand stock them full of sporting arenas, theaters,museums, riverfront parks and fancy restaurants. Somevisitors conclude that if downtowns are a great placeto visit, why not just stay.

“Smart growth” strategies popular among plannersthese days call for public transit and densely builthousing as the best solution for grid locked trafficand other metropolitan woes. That means packing homesclose together like in the old days, and buildinghigh-rises rather than big suburban spreads.

Finally, through a combination of environmental cleanup legislation and hands on experience, city plannersare now much more adept at luring private developerswith cleaned up sites, the right incentives and arelatively streamlined redevelopment process, saidGeorge Sherman, one of the biggest multi-housingdevelopers in the Twin Cities.

“Twelve years ago there wasn’t a process,” Shermansays. “Now you have willing participants, financialincentives, state and federal legislation andbrownfield initiatives.”