Walkable urban trend strengthens struggling Upstate NY downtowns

Upstate New York cities have been among the most economically hard-hit — suffering from long-term decline of industry, a location outside of the prospering Northeast corridor, and relatively high taxes.

If these small- to mid-sized cities (Buffalo is the largest at 261,000 population) are feeling positive effects from the trend toward walkable urban places that researchers have reported (see article on page 1) — they provide evidence that this trend is widespread and reaching beyond major cities with global markets.

In early October I spoke at a conference of the New York State Conference of Mayors and the Urban Council in a panel with developers from Syracuse, Rochester, and Watertown. Developers all reported that the downtown residential market had gained strength in recent years — in some cases for the first time in decades.

Then I examined recent market studies in three other Upstate New York cities — Buffalo, Albany, and Ithaca. Here’s what I found:

• Downtown rental occupancy is exceedingly tight.

• Rental demand is up substanially.

• Younger singles and couples represent a growing share, and the lion’s share, of the market. In Albany, for example, the downtown market consists of 74 percent younger singles and couples — up from 52 percent in 2006.

• Baby Boomers — now largely empty nesters — are also a significant potential market. But the impact of the Boomers has been delayed “until finance is readily available and sustained consumer confidence returns,” notes Zimmerman/Volk Associates (ZVA), who conducted 2011 studies for Buffalo and Albany. When this happens, “older households will again become a larger share of the potential market,” ZVA says.

The Danter Company, in its Ithaca report, notes that, nationally, “an increasing number of seniors and empty nesters are responding to the urban lifestyle,” but they prefer larger multifamily complexes with a full amenity package. The senior market has potential and more could be done to appeal to this market in Ithaca, Danter says.

Shift is underway

The shift away from single-family detached houses and toward higher-density, transit-served neighborhoods is well under way. “This fundamental transformation of American households is likely to continue for the next decade, representing an unprecedented demographic foundation on which cities can rebuild their downtowns and in-town neighborhoods,” reports ZVA.

In Albany, the rental multifamily market rose by 83 percent in the five years from 2006 to 2011. The multifamily for-sale market also rose significantly — by 47 percent. The overall downtown market rose by 54 percent. But restrictive development financing and mortgage underwriting will constrain the development of new for-sale units, ZVA says.

The overall market for downtown Buffalo rose 37 percent from 2004 to 2011. Renters represent a higher share of the market — 45.5 percent compared to 30.1 percent in 2004.

A challenge, ZVA and Danter both note, is providing affordable downtown housing with the high land and construction costs inherent to the urban core in 2012. However, there may be ample affordable housing in in-town neighborhoods adjacent to the urban core. The developers in the panel discussion reported this same dynamic.

Financing constraints have forced projects that were previously announced as condominiums to switch to rentals, “as has occurred in most cities over the past two years,” ZVA noted in the Albany report. 

ZVA recommends a “gap financing pool” for Buffalo, a tool that can help in many municipalities that have small, challenging properties to redevelop. (The Greater Downtown Partnership of Detroit assembled a $23 million fund to provide gap financing). ZVA describes this tool as “A revolving loan pool for subordinated, low-interest gap funding” that will help urban properties compete with those in the suburbs.

Urban assets

At the Congress for the New Urbanism in West Palm Beach, Florida, in May, Richard Florida argued that the key assets that bind people to place are: 1) Openness to diversity; 2) Quality of life. The latter includes walkability, history and historic buildings, arts and culture, and a connection of the built environment to nature. ZVA made a list of primary assets for downtown Albany that closely tracks with Florida’s ideas:

• Historic buildings: There are numerous civic, commercial, and residential buildings that are architecturally and/or historically significant, that would be impossible to recreate with new construction, and that provide a distinctive identity for the city.

• Employment: Downtown and the adjacent Empire State Plaza comprise a significant regional employment center. The growth in nanotechnology businesses in the region enhances the Downtown as a residential neighborhood.

• Culture and entertainment: Many of the cultural institutions, as well as the Times Union Center, a premium entertainment and sports venue, are located in or near the Downtown Study Area.

• Walkability: The Downtown is compact enough to walk from one end to the other, although, due to the number of open parking lots, the pedestrian experience could improve significantly.

• The Hudson River: The Hudson River is adjacent to the Downtown Study Area, providing significant opportunities for public access.

• Tourism: Venues such as the museums, theaters, and the Times Union Center bring thousands of tourists to Downtown Albany and are also great assets to residents.
Buffalo and Ithaca have a similar set of assets, although in these cities the waterfront is on a lake not a river.