Urban Boomers: New Wave of Buyers Heads to the City
By Peter F. Dennehy, Sullivan Group Real Estate Advisors
Urban housing is booming across the nation as builders discover development opportunities in downtown areas and in-town neighborhoods. Increasingly, 50-plus households are driving this growing market as they move back to urban areas to enjoy the full range of city living.
The resurgence of urban areas as residential neighborhoods is a nationwide trend. Vibrant cities like Chicago, New York and San Francisco always have appealed to those who seek housing with access to cultural and entertainment options. Over the past decade, Atlanta, Dallas, Denver, Las Vegas, Phoenix, San Diego and Seattle have emerged as thriving urban housing markets.
The history, architecture and density of central areas create a “sense of place” that outlying suburban areas simply can’t match. Public and private investment to increase the quality and safety of cities — tied to generating tourism and commerce — has made urban areas more comfortable, secure and interesting.
The media and marketing professions have portrayed the urban lifestyle as appealing, not only in home designs but in the design motifs of trendy restaurants, clothing stores and houseware companies (i.e., Pottery Barn, Crate & Barrel).
Today’s “senior” buyers, particularly the oldest boomers, readily will accept urban housing options for retirement homes, second homes and investment properties. Many consumers are shifting their priorities, fueling the demand for more diverse housing options for affluent, active retirees. These buyers favor the restaurants, shopping, cultural offerings, quality medical care, views and ease of lifestyle found in cities.
Downtown Market About to Explode
Everyone understands that boomers are individualistic and act young. For many, this means embracing the renewed vitality of city living and moving back to the urban core.
According to data from Sullivan Group Real Estate Advisors, an affiliate of The Ryness Company, a sales, marketing and research company, more than 6,000 urban housing units have been developed in downtown San Diego since 2000, with empty nesters in their 40s to 60s accounting for 30% of all new households. This figure jumps to as high as 50% in some projects with view-oriented settings and/or larger units.
According to United States Census data, the peak year for births in the boomer generation was 1957, putting most of these consumers in their mid-to-late 40s. The popularity of urban housing will continue to soar as more households rethink their housing options and as new residential developments continue to transform cities.
Urban Housing Trends
Today’s buyers are choosing urban housing for the following reasons:
- Senior households want to scale back as they enter new career phases or retire.
Boomers expect to stay in the workforce longer than their parents did — because of better health, a sense of “staying younger” longer and out of financial need.
People in their 50s and 60s don’t see this life stage as “retirement” to a non-active lifestyle. Instead, they view this as downshifting to a time when they can either choose to keep working because they want to, pursue new endeavors or devote more time to personal interests.
For all of these reasons, older consumers prefer to stay close to professional and business resources, contacts, airports, etc. Urban housing offers buyers the opportunity to stay connected and to transition to a different lifestyle, often near to where they have lived all along.
- Today’s seniors look to urban housing to provide a simpler lifestyle.
For those who have reared families and/or owned a single-family home, the easy lifestyle provided by urban units, not to mention building services, will free up time to do the things they want to do. At this stage, these households are ready to start enjoying life, and a condo unit requires little or no maintenance. Owners can lock and leave the unit without having to worry about upkeep. Building staff and services can handle day-to-day tasks and provide peace of mind that someone will be there if there is a medical emergency.
Urban housing is typically in neighborhoods that offer dining, shopping, services, cultural activities and entertainment within easy distance. With ever-worsening traffic congestion in most American cities, it is a relief to be able to leave the car in the garage and either walk or take public transportation. Finally, with hot housing markets across the nation, this is a good time to cash out equity in a prior residence in exchange for condo living.
- In today’s strong housing market, boomers buy urban housing units for the investment potential or as vacation homes.
Many boomer households are in their peak earning years and have the income and desire to purchase second homes and investment properties. City housing offers an exciting lifestyle contrast from the suburban areas where many households previously have lived.
Thanks to redevelopment in recent decades, cities are more interesting places to visit, with a wider array of restaurants, theaters, sporting events, shopping and more.
A prime example is downtown San Diego, which always has been a hot vacation spot because of its weather, but where until recently, most of its visitors flocked to the beaches. The construction of a new urban ballpark district, however, has transformed the city, bringing thousands of new residences, hotels and restaurants downtown. Second-home buyers from across the nation, most of them boomers in their 50s and 60s, are snapping up these homes.
- Those seeking urban housing are bored with the suburbs and want a greater sense of personal connections.
A recent survey of new residents in downtown San Diego surprisingly revealed that many urban buyers found a strong sense of community in their new home. Because of sprawl, suburbs routinely were criticized for a lack of community and personal connection. The compact nature of cities creates more opportunities to interact with other residents and local businesses.
- Today’s senior households are more diverse, and many choose urban housing for lifestyle reasons.
For instance, the gay and lesbian community is growing in size as a retirement housing segment and plays an important role in revitalizing American cities. Urban housing developers are increasingly targeting gay and lesbian households as a distinct market segment. Urban areas provide a support network of social resources.
Urban housing encompasses a wide variety of product opportunities. These range from rental, condominium, live-work, subsidized, market-rate and low-, mid- and high-rise; to loft, row home, infill planned community or “neighborhood-style” projects; to new, adaptive reuse and historic rehab units. The products being developed today offer designs that make urban housing appealing, in contrast to just offering “suburban” products in the city.
The Metropolitan Condiminiums sit atop the Omni Hotel in San Diego and offer boomers an urban lifestyle.
Successful urban housing development is taking place in locations with the following elements:
- Committed public officials and investment
- Favorable weather
- Regulatory flexibility
- A development-friendly business climate
- Amenities — including retail, cultural, sporting venues, dining and entertainment
The Metropolitan Condominiums, a project built by JMI Realty in downtown San Diego, is a good example of this new urban trend. This luxury project, which offered 38 units on top of an Omni Hotel, featured hotel amenities as well as views of the city skyline, Pacific Ocean and the adjoining Petco Park ball field. It attracted affluent senior buyers who purchased their units as a primary residence or part-time home.
The Metropolitan had units ranging from 1,600 to 2,500 square feet, with sales prices from $1.1 to $2.2 million. This project offered a high level of standard features and personal services, and all units featured views.
The view from a Metropolitan condo
“None of the older buyers really considered themselves retired,” said Sheridan Mantor, who handled marketing and sales for The Metropolitan. “They were a group that was young and active in attitude and looked upon their move downtown as a chance to pursue new endeavors.”
Hot Buttons for Today’s Buyers
The Metropolitan project and others illustrate the types of product hot buttons that attract senior buyers to urban housing projects. They include:
- Larger Unit Sizes and High-Quality Features
There always is a market for small affordable condo units as an affordable option, but boomer seniors are typically looking for larger units that are in the 1,300- to 2,000-square-foot range. Important considerations include adequate space for daily living, entertaining, occasional guests and dedicated office space for those still actively working or managing finances. In temperate climates, outdoor living space is a popular feature.
Move-down buyers tend to be very concerned with room size and storage and value generous room sizes and walk-in closets. Open floor plans that can accommodate flexible uses are a good way to maximize valuable square footage.
Discriminating buyers expect high-end finishes, quality and attractive designs that reflect their sophisticated urban location. Because of tight building schedules, builders of urban product typically limit unit options to a finite list of selections. However, it’s important to understand what your buyers see as quality and value.
- Hotel or Service Amenities
These consumers value their time and appreciate the option of having hotel-like services. Urban housing projects typically offer things like a concierge, business services, package receipt, pet walking, laundry and dry cleaning, maid service and, in some cases, meals. Making these services available saves your owners time, freeing them up to pursue hobbies and personal interests. Amenities like an onsite pool and fitness center allow for the easy pursuit of wellness programs.
- Building Security/Low Maintenance
The ability to “lock and leave” the unit allows the owner to travel easily for pleasure or work. Owning an urban condo removes the need for exterior maintenance. Older households also can have peace of mind knowing that there is a building staff on-site to assist in the event of a medical issue or personal emergency.
- The Excitement of Being in an Urban Setting
Boomers are attracted to housing in locations that offer a unique, rewarding lifestyle and allow them to be connected professionally, intellectually and socially. Urban settings often fit the bill.
For many buyers, the urban environment is the primary amenity. Walkability is high on the priority list. These buyers want to be only a few minutes away from restaurants, theaters, shopping and sporting events. Moving downtown is a social thing in and of itself, with buildings offering residents opportunities to mingle.
Between 1990 and 2000, the U.S. population of those 60 and older increased by approximately 3.5 million. According to Census projections, this age group will grow by another 10 million over the next 10 years — almost three times greater than the past decade. By 2030, people ages 65 and older will number about 70 million, which is double the total in 1987.
Urban housing already is attracting many boomers by giving them the opportunity to buy a unit that offers little or no maintenance as well as a lifestyle and more active environment.
To attract more of these affluent, individualistic consumers, builders should offer urban housing products that provide a new lifestyle and well-designed, functional layouts.
The most successful projects are market-driven and rely on market and consumer research. The revitalization of downtowns across the nation is a well-established trend that should provide builders with plenty of opportunities in the future.
Peter F. Dennehy is the senior vice president for San Diego-based Sullivan Group Real Estate Advisors, a division of The Ryness Company. Dennehy oversees the division’s daily operations and has expertise in consulting on a broad spectrum of residential and commercial properties, including rental housing, master-planned communities, detached for-sale housing, urban and infill housing developments and business/industrial parks. For more information, e-mail Dennehy, or call him at 858-523-0946 x227.
A version of this article originally appeared in the summer 2005 issue of 50+ Housing Magazine, available free to members of NAHB’s 50+ Housing Council. Non-members can subscribe for $95 a year.
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