The Allure of First-Tier Neighborhoods

• June 16th 2011

by UrbanTurf Staff

At the National Association of Real Estate Editors’ annual conference this week, Urban Land Institute (ULI) CEO Patrick Phillips said that “first-tier neighborhoods are emerging in the post-recession era as magnets for urban growth.” (First-tier neighborhoods are defined as those areas between “downtown cores and outlying suburbs.”)

From a ULI press release:

As urban areas have become more congested, the convenient location of first-tier suburbs is increasingly appealing to consumers seeking to rent as well as buy, Phillips noted. “We’ve learned that there is a market for compact, mixed-use design, smaller housing space, and development that minimizes the need to drive. The demand for this has stretched beyond downtown cores and into the suburbs, and first-tier suburbs are the best positioned to accommodate this type of development.”

Other factors that Phillips said will reshape design and development going forward include:

• A growing number of smaller households — For the long term, household size will shrink steadily, due to more people living alone, delaying marriage and childbirth, and having fewer children.

• Increased urbanization — More people now live in urban areas than rural ones.

• Population growth — The U.S. is expected to add an additional 150 million people over the next 40 years.

UrbanTurf readers might remember back in January when we wrote about Cooltown Beta Communities founder Neil Takemoto’s theory that members of Generation Y** (or Gen Y) are much more interested in living in a neighborhood that they like rather than a home that they love. Takemoto’s reasoning hinged on the theory that this generation is “motivated by experiences not consumption or home size” and they will opt for smaller homes and apartments that are less expensive, so that they might have more money to enjoy those experiences.

**(Generation Y is a loosely applied label to people who were born between 1980 and 1990.)

This article originally published at https://dc.urbanturf.com/articles/blog/the_allure_of_first_tier_neighborhoods/3670.