Downtown revitalization in the era of millennials: how developer perceptions of millennial market demands are shaping urban landscapes

ABSTRACT

Downtown Phoenix and Houston are changing. They are not dense, historic downtowns; instead, they reflect contemporary downtown growth in sprawling cities. Both cities have reimagined their downtowns, leveraging vacant land, new construction, and infill projects. Through this process, developers are shaping downtown in response to market demand. This research explores how developers in two Sun Belt cities are thinking about Millennials and cementing their preferences into rapidly changing downtowns. We triangulate data from the U.S. Census, regional media, and interviews with 22 downtown development experts. We find developers respond to Millennial preferences in several ways. They are endowing their downtown projects with a greater sense of place and diversity of activities. However, there is a social cost: underlying concerns include rising housing costs and gentrification in the downtowns and reduced demand for housing in the suburbs, particularly if Millennials elect to stay downtown for the long term.

KEYWORDS:

• Urban revitalization
• downtown revitalization
• Millennial migration
• affordable housing
• centralization

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Note: The five-year American Community Survey estimates (ACS) are continuously collected over a five-year period. Thus, they differ slightly from our selected Millennial-aged definition of young adults born between 1982 and 2000. In 2013, the mid-point of the 2011–2015 five-year estimate, a 34-year-old would have been slightly older than our target Millennial group (born in 1979). Notably, this definition does still align closely, though not perfectly, with the Pew Research Center’s definition of Millennials (1980–1996) (Dimock, 2019). This is a limitation of the available data, but still offers a largely overlapping view of young adult characteristics in the study areas.

2. The SES index was constructed as follows. First, we calculated z-scores for each PUMA’s percent of adults age 25 and older with at least a bachelor’s degree and percent of households earning above the region’s median household income. Z-scores for each characteristic were calculated by subtracting the PUMA’s value for the characteristic from the average value for the characteristic for all PUMAs in the region and dividing this value by the standard deviation of the characteristic for all PUMAs in the region. Then, we constructed an index by taking the average of the PUMAs’ z-scores for the percent of adults age 25 and older with at least a bachelor’s degree and percent of households earning above the region’s median household income for each geography.

3. The term “penciled out” is often used in the development community and refers to rough cost estimates used to determine if a proposed project would be profitable.

4. Micro-units are small apartments with in-unit kitchen and bathrooms. While there is no standard size, a working definition suggests they generally are less than 350 square feet (Urban Land Institute, 2014).

5. The schooling issue is so pressing in Houston that various downtown management organizations have formed a committee to address education. Yet, our Phoenix participants felt that the public schools downtown were relatively good compared to those elsewhere in the city, which meant that school quality was less of a barrier for their attempting adults trying to stay downtown.