Infill outpaces greenfield development

A federal study confirmed what many in the real estate industry have observed — the share of development in cities and first-ring suburbs has increased significantly since 1990 — and this trend continues in the wake of the real estate recession.

The first comprehensive comparison of urban and suburban building permits in the last two decades finds an “acceleration of residential construction in urban neighborhoods,” reflecting a “fundamental shift in the real estate market.” The report, “Residential Construction Trends in America’s Metropolitan Regions,” was released by the Environmental Protection Agency’s Smart Growth Office.

“Across the country, many urban neighborhoods are experiencing dramatic transformations,” according to the report. “Parking lots, underutilized commercial properties, and former industrial sites are being replaced by condos, apartments, and townhouses.”

US Census residential building permit data for the 50 largest metropolitan regions was examined for an 18-year period — 1990 to 2007. The volume of permits issued by central cities and core suburban communities was compared to permits issued in more distant suburbs. The following are highlights of the report:
• In roughly half of the metropolitan areas surveyed, urban core communities dramatically increased their share of new residential building permits.
• In 15 regions, the central city more than doubled its share of permits.
• The increase was particularly dramatic from 2003 through 2007.
• Data from 2007 shows the shift continuing into the current real estate recession.

The acceleration of residential construction in urban neighborhoods reflects fundamental shifts in the real estate market. Lower crime rates and changing demographics are the driving forces for this change.
The report notes, however, that even with favorable economic conditions, urban redevelopments still face an uphill battle in many instances. “For example, transit-oriented development often requires updates to zoning codes, more flexible parking regulations, assistance with land assembly, or improvements to upgrade water, sewer, and local streets,” the report states. “Brownfield properties often need assistance to evaluate contamination and potentially clean up soil and groundwater.”

Smart growth policies a factor
Smart-growth policies appear to positively influence urban redevelopment, says the report’s author, John Thomas of EPA’s Smart Growth Office. “Regions often cited as leaders in promoting growth management and redevelopment (e.g., Portland, Denver, Sacramento, and Atlanta) are among the medium sized cities where the shift inward has been most dramatic,” he says. Yet in regions with strong ties to the global economy, the shift inward is taking place “even in the absence of formal policies and programs at the regional level.”

The findings actually underestimate the volume of infill that is taking place, according to Thomas. That’s because development is counted as greenfield in areas with both infill and a substantial amount of greenfield development. The report does not take into account urban or smart-growth projects — for example transit-oriented developments — on greenfield sites. “Although major development projects such as Orenco Station in Hillsboro, Oregon, and King Farm in Rockville, Maryland, are often considered examples of smart growth, they are not counted as urban core development in this analysis,” Thomas says.

For 16 of the metropolitan areas studied, the researchers found it difficult to distinguish between infill and greenfield development. These cities, such as Indianapolis and Las Vegas, include substantial greenfield land within their boundaries.