Demography may not be destiny, but it does pose choices. And the regions that choose wisely prosper, while those ignoring the statistics often stagnate.
Greater Boston has all of the ingredients to continue its trajectory as a growing and prosperous region: an economy based in innovation; world class medical and educational institutions; a great international reputation; and, for the first time in 33 years, we are matching the national rate of population growth.
However, future prosperity is not a given – 1 million workers now over age 40, or 39 percent of the workforce, will be retired by 2030, and cannot be replaced unless greater Boston continues to increase the number of young workers who move and stay here. A positive “in-migration” of 10,000 workers a year will be pivotal to whether we stagnate or soar.
The Metropolitan Area Planning Council (MAPC) published a report in January projecting demand for 435,000 new housing units by 2040 if the region experiences healthy economic growth.
More than half of the housing demand in a healthy economy will be for the compact multifamily housing units desired by younger workers, who are central to our innovation economy. “Gen Y” is now the largest generational cohort, and is notable for its preference for apartments in lively, walkable, transit-connected neighborhoods. Interestingly, this is increasingly the preference for the next largest generational cohort as well. The Baby Boomers are selling their single-family homes, and are expected to put 130,000 such homes on the greater Boston market by 2020 – largely satisfying demand for single-family homes without any new production.
Good News
The good news is that developers in Massachusetts are responding to this multifamily housing demand, and that some key public officials have put an emphasis on housing production.
Last fall, ULI’s Terwilliger Center for Housing awarded its workforce housing public policy award to the commonwealth for its leadership on housing production.
Seeing the demographic data in 2012, Gov. Deval Patrick set a first-in-the-nation goal of building 10,000 multifamily homes a year through 2020. Further, the goal is particularly directed where the demographic indicators point – at housing in city/town centers, near transit and employment.
By strategically deploying the commonwealth’s scarce resources, Greg Bialecki, secretary of housing and economic development, last year made multifamily housing a priority for the MassWorks public infrastructure funding, making awards to support 20 projects likely to produce over 2,500 multifamily units.
The number of multifamily permits pulled in 2013 rose to 7,601, making it the strongest year for such construction since 2006.
The increase in multifamily housing production is a result of developers responding to the demographic shifts in preference and the support of institutional capital seeking stability in core markets with strong demographic indicators.
Building On The Good News
For greater Boston to meet the demand for multifamily housing necessary for its future prosperity, its municipal and business leaders cannot assume that the present burst of construction will continue without proactive planning.
We must take a regional approach to growth. No one wants a Boston region where all new jobs and homes are in the inner core, or a region where separation of jobs and homes places even greater stress on our road systems. Planning beyond the borders of a single municipality will produce a livable region with access to a variety of jobs, housing options and recreational opportunities.
We must challenge old assumptions about good places to live and work. The new demographics are creating demand in places like the newly dubbed “Metro North” (think East Boston, Somerville and Malden). Public and private investment there can provide new frontiers in urban living.
We must rethink what we build. Bruce Katz, a seminal land use thinker, argued in a December article that the Silicon Valley/Route 128 model of corporate campuses isolated from homes and recreation is now outdated. Employers all over the country are following their young workers to places that are, or feel, more urban. Creating downtowns and office parks with an urban feel should be a key part of every municipality’s economic development strategy.
We must build housing that is priced for our workforce. The city of Boston reports that of the new housing starts in 2011-2014, only 12 percent were priced for this middle tier. Almost 69 percent were at the high end and 19 percent were deed-restricted affordable units. Current affordable housing policies and subsidy structures, as well as the high cost of construction, contributes to the creation of housing only at the high and low ends of the economic spectrum.
We must build near transit and invest in public transportation infrastructure. A 2010 study by ULI’s Terwilliger Center for Housing found that more Massachusetts households were cost-burdened than previously thought; these households incur higher transportation costs to find more affordable housing further from their jobs. The reverse can also be true – providing more housing in locations near transit and employment can lower “cost of place.”
We must encourage density in the right locations. If regions and municipalities can develop a consensus about where to grow, and zoning laws can provide a vehicle to implement that growth, they can trade density for units that serve middle tier households.
Riding The Demographic Wave
When you see new apartments rising in greater Boston, you know that institutional capital is investing in our demographic future. But it will take innovative planning and bold choices to continue our regional growth and prosperity. If we make the necessary choices to invest in the type of development that appeals to the rising demographic, we will be investing in our own future.
Sarah Barnat is the executive director of ULI Boston/New England.
