The paradigm shift

Financing of New Urbanism amounts to a drop in the bucket compared to the hundreds of billions of dollars that annually pour into conventional real estate projects, according to Robert Chapman’s report on page 1 of this issue. Judging by the dollars invested in traditional neighborhood development (TND) to date — an estimated $1.1 billion — one could conclude that New Urbanism is not having a significant impact. But that conclusion could not be farther from the truth. There is plenty of evidence of a major paradigm shift, away from conventional suburban and modernist development models to New Urbanism. The emerging Smart Growth Network is one example. Although proponents of “smart growth” are somewhat vague in their definition of the term, they talk about compact, pedestrian- and transit-oriented development. The physical manifestation of “smart growth” is likely to be New Urbanism. “The Smart Growth Network looks to the Congress for the New Urbanism as the partner that provides much of the physical design expertise,” says Harriet Tregoning of the U.S. Environmental Protection Agency (EPA). Environmentalists meet developers The first Smart Growth conference, cosponsored by EPA and the Urban Land Institute (ULI) in December (see article on page 17) drew more than 700 attendees, two and a half times the number expected. Environmentalists and developers were well represented among attendees, and that illustrates a shift in mindset among both interest groups. Environmentalists are beginning to realize that an extreme NIMBY (not in my backyard) response to development is self- defeating. In order to say “no” to certain types of development, environmentalists have to say “yes” to something. In standing behind the “smart growth” concept, environmentalists have begun to support New Urbanism. Developers, for their part, are recognizing viable alternatives to sprawl. Jim Chaffin, new president of ULI, the primary trade group representing developers, reported at the conference that ULI is devoting its entire policy and practice research agenda to “smart growth” for the next two years. ULI’s members profit enormously from sprawl, but clearly Chaffin believes that the future lies in more compact, mixed-use models. The TND phenomenon Emerging Trends in Real Estate: 1998, the highly respected annual report on real estate trends by ERE/Yarmouth (formerly Equitable Real Estate), provides further evidence of a paradigm shift. Emerging Trends touts TND as “the newest phenomenon to catch on in suburbia. ... TND projects try to provide what has been sorely lacking in the typical American subdivision in the past 40 years — a defined residential community built around a town center with parks, shops, offices and schools; all within easy walking distance.” Furthermore, the U.S. Housing and Urban Development (HUD), has embraced New Urbanism as its design philosophy of the 1990s (see the page 1 article on HUD’s Hope VI program), much as Modernism provided the model for public housing in the 1940s, 1950s and 1960s. It’s hard to imagine HUD being too far out of step with the dominant design philosophy of its age. Paradigm shifts are detected through bellweather indicators — one does not read about them in the financial pages of newspapers. Conventional real estate investors may be the last to know that the rules of the development game have changed — away from sprawl and to New Urbanism. When they do find out, the bucket will overflow.