Bright Lights Dimming in the Big City?

 

Everyone knows the story of the post-recession economy. As foreclosed homes piled up and personal credit was ruined, many people turned to rentals as the only alternative to home-ownership to meet their housing needs. Demand for apartments increased even further as the Millennial generation came into its own, moving out of their childhood homes and starting careers and new lives as adults.

Almost as soon as the recession was over, new apartment towers began sprouting out of the ground like mushrooms after a rain. An outsized amount of this building activity seemed to be concentrated in the central districts of the country’s biggest cities. From the early years of the 2010s, tens of thousands of young professionals rushed in to fill those units and live the big city life.

Almost as soon as the recession was over, new apartment towers began sprouting out of the ground like mushrooms after a rain.

Of course, these new residents were lured first and foremost by the jobs being created in these locations. But something else seemed to be at play as well. Many of these young, educated, career-minded newcomers seemed to be very publicly rejecting the cul-de-sacs and grassy lawns they grew up with. Ironically, these were the same suburban communities that many of their parents had chosen over the big bad cities of their own childhoods.

The pendulum had swung. Now it was the cities’ turn to lure back a new generation from the suburbs to which the previous generation had fled. Yesterday’s greener pastures were today’s no-go zones. The city was, once again, where it was at.

The pendulum had swung. Now it was the cities’ turn to lure back a new generation from the suburbs to which the previous generation had fled.

But a funny thing happened as the decade – and the Millennials – got older. The pendulum paused, and then seemed to begin a reversal. As the suburbs started looking better again, the bright lights of the city seemed to grow just a little bit dimmer.

There are lots of reasons why this shift in preferences is happening again. Perhaps the biggest reason was that the cities were too successful in drawing people and businesses to their resurgent downtowns. This flow of people and jobs pushed rents way above where they had been just a few short years before as more and more people kept moving in and builders struggled to keep pace with demand.

But it’s also true that the cities were never as attractive to more than a select subset of the population as the media made them out to be. Perhaps the media was a little biased since many of the journalists were, themselves, part of this select group. Overlooked in all the hoop-la about the resurgent city was the unpleasant reality of traffic congestion, under-performing schools, overloaded infrastructure and just the general hassle factor of city living. The boring suburbs started to look better again as the differential in living costs grew ever wider between the urban core and the periphery.

It’s also true that the cities were never as attractive to more than a select subset of the population as the media made them out to be.

Millennials discovered, as their parents had before them, that starting and growing a family in a city is just not as easy as it is in the suburbs. Those cookie-cutter houses on quarter-acre lots that had seemed so 20th Century earlier in the decade suddenly seemed more appealing once their own kids began to approach school age. And even the nicest two-bedroom apartment with a view started to feel small once children entered the scene. More and more of these older Millennials decided that maybe suburban life wasn’t so unthinkable after all. They began voting with their feet, leaving the city behind – at least once the workday was done.

Millennials discovered, as their parents had before them, that starting and growing a family in a city is just not as easy as it is in the suburbs.

In 2018, the US Census found that the New York, Los Angeles and Chicago metropolitan areas all lost population. An Atlantic Monthly article about this demographic reversal provides a host of reasons why. But the main reason seems to be that each of these cities was, in its own unique way, too successful. A wide range of other cities of various sizes continue to see growth, even while the big three hit a roadblock. These other cities often have less expensive housing. Almost all have shorter commute times. Some have better schools. But, like their mega-city rivals, they still offer good restaurants, coffee shops and hip neighborhoods. The days when you had to live in New York or Los Angeles to find these urban amenities are long gone.

The silver lining for the big-three metros is that they are all still attractive places to be for many – if not all – businesses and individuals.

Graphic courtesy of New Geography Blog (https://www.newgeography.com/content/002346-the-evolving-urban-form-chicago)

Focusing on Chicago, which is near and dear to all of our hearts, we can see that the city continues to attract corporate headquarters and technology companies downtown, and that young professionals continue to move to all those apartment buildings that seem to keep springing up on every vacant parcel in or near the city’s core.

A good number of today’s city-dwellers are going to make the decision to move to the suburbs. Many already have.

But there may be fewer of these young professionals in the future as housing prices continue to widen between the Central Area and the suburbs. Meanwhile, many of the young professionals who moved in earlier in the decade are no longer quite so young. Some have started families. Others have simply decided that $2,000 for a studio apartment is no longer worth the shorter commute and quicker access to trendy bars.

These aging city-dwellers are going to continue to reassess their budgets and their lifestyles. Access to “the scene” is a different priority for most 22-year-olds than it is for most 32-year-olds. A good number of today’s city-dwellers are going to make the decision to move to the suburbs. Many already have.