Demand for attached and multifamily housing in Twin Cities will continue to grow, report predicts

Posted In: Communities,Housing,Planning
Date: 6/18/2014

Sweeping demographic changes forecast for the Twin Cities metro area between now and 2040—in particular the growth of households without children—will result in growing demand for more attached and multifamily housing, as well as small-lot, single-family housing in walkable, urban neighborhoods.
St. Anthony Village transformed the area of an old enclosed shopping mall into a vibrant mixed-use center of shops, large-scale retail, and housing, known as Silver Lake Village. Demand for this type of housing will grow in coming decades.Moreover, the region already has enough medium- and large-lot detached housing to meet the demand in 2040, according to a new report, "Metropolitan Council Area Trends, Preferences, and Opportunities: 2010 to 2020, 2030 and 2040" (86 pages, pdf).
The Council commissioned the study as part of the preparation of a new regional Housing Policy Plan.

The report was authored by Dr. Arthur C. Nelson, Professor of Urban Planning and Real Estate Development at the University of Arizona.
Nelson explored the implications of the Council’s population, household, and job forecasts—and  Minnesotans’ stated preferences about housing types and locations—for the region’s current housing stock. The report also addresses the region’s nonresidential development needs to 2040.

Baby boom ‘time warp’ has ended

To get a picture of just how much housing demand will likely change, consider this:

  • Between 1990 and 2010, households in their peak demand years (residents aged 35 to 64) accounted for about 80% of the growth in housing demand.

  • Over a comparable 20-year period, from 2010 to 2030, peak demand households will account for just 9% of the growth.

  • From 1990 to 2010, downsizing households (with residents 65 and older) made up 20% of new housing demand.

  • Over the next 20 years, senior citizens will account for 85% of the growth. Market research shows this segment prefers smaller homes on smaller lots or attached options.

“For the past half-century, housing demand in the Twin Cities was driven by baby boomers’ parents who wanted to raise their children in suburban, single-family, detached homes on larger lots, and then by boomers themselves as they became parents,” Nelson writes in the report. “Planning throughout the metro area continues to be based on the baby boom ‘time warp.’”
The next generation for homes may be driven by different and emerging preferences. More than half of Minnesotans would prefer to live in a walkable, mixed-use neighborhood offering a variety of amenities, according to surveys conducted in 2011 and 2013 by the National Association of Realtors. But no more than one in five households has this option now, the report notes.

Nelson predicts that by 2040:

  • About 41% of metro area households will want the option to live in attached housing units.

  • About 33% will want the option to live in homes on small lots, but only a quarter have this option now

"Many of these trends are slow in emerging, moving at a glacial pace,” Nelson said at a June 16 lecture at the University of Minnesota. “We know the direction the glacier is moving. And you have opportunity now to bring forward policies and incentives that signal what housing the region needs for 2040."

Amount of nonresidential development in our future called ‘staggering’

Nearly 1.2 billion square feet of nonresidential space in the metro region will be repurposed, redeveloped, and otherwise recycled between 2010 and 2040, the report says.

“The future of nonresidential development…will be the redevelopment of existing structures and the parking lots on which they sit,” Nelson said in the report. “The amount of nonresidential development may be nothing less than staggering.”
Graphic shows key elements of the Penn American District Plan in Bloomington, where low-density, retail-oriented land gradually will be redeveloped into a high-intensity, transit-oriented activity center with retail, multifamily residential, office, and hotel uses. 
Suburbs will be a prime location for this kind of redevelopment, which is already happening in communities around the metro area. For example, Bloomington is planning the redevelopment of the Penn American District, located at the southeast corner of Penn Avenue and American Boulevard.
For decades this area has been largely low-density, retail-oriented land. But the Penn American District Plan envisions a high-intensity, transit-oriented activity center with retail, multifamily residential, office, and hotel uses that will be an amenity for the surrounding neighborhoods and the city as a whole. The future METRO Orange Line (bus rapid transit service traveling between downtown Minneapolis and Burnsville) and arterial BRT on American Boulevard will serve the area, which is also adjacent to I-35W and I-494. 
Other examples include:

Collaboration is key to future regional success

Nelson recommends a number of policy changes at the local, regional, and state levels to accommodate emerging market needs efficiently, effectively and equitably. Among them:

  • Updating land use plans and codes to get ahead of the curve, mostly by “getting beyond the baby boom time warp”

  • Expanding housing choices

  • Using existing public sector tools and inventing new ones to leverage private redevelopment

  • Investing in modern regional transit systems that connect key centers and other nodes along existing commercial corridors

  • Enabling all communities in the metro area to plan for and implement policies that broaden housing choices responsive to sweeping demographic changes

“The challenge for the Twin Cities is to create public-private-civil partnerships that can facilitate approaches to meet future housing needs and simultaneously reshape the massive commercial redevelopment that will occur,” Nelson said. “If successful, the future Twin Cities will be more walkable, bikeable, vital, and responsive to change than is currently the case.”


Posted In: Communities,Housing,Planning

Tags: Housing,housing trends,Nelson,Penn American

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