Demographic Changes May Mean Big Redevelopment Opportunities
March 25th, 2010 by Peter Kasabach
- New Jersey Future’s Redevelopment Forum on March 19 featured keynote speaker Jeffrey Otteau, president of the Otteau Valuation Group, who presented compelling data that supports a strong and promising future for redevelopment in New Jersey.
- In 1985, half the homebuyers in New Jersey were families with children. By 2009, this number had dwindled to about one in three. By 2025, it is estimated that only 25 percent of New Jersey homebuyers will be families with children, while 50 percent will be single-person households.
- Smaller families and single homebuyers will seek smaller, less expensive homes near jobs and transportation, according to Mr. Otteau. They will “trade their cars for lifestyles,” shifting their demand from drivable commutes to walkable communities.
- In Mr. Otteau’s view, New Jersey is particularly well situated to take advantage of this trend. The state’s comprehensive rail system is a unique asset, creating opportunities for growth along transit corridors. A “rental rebound” may generate redevelopment of many of the state’s urban centers and older inner suburbs.
Significant Alterations Ahead for New Jersey’s Landscape
In his thought-provoking keynote address at New Jersey Future’s fifth-annual Redevelopment Forum, Jeffrey Otteau painted a picture of a 21st-century New Jersey whose political, economic and social landscape will likely look radically different from the state in which we now live. Changes already detectable in household size, family income, population distribution and housing preference will grow more noticeable in years to come, Mr. Otteau predicted, leading to significant shifts in public policy.
For example, it has become an article of faith in New Jersey that towns do not want residential development because more homes mean more schoolchildren—and more schoolchildren mean higher property taxes. But Mr. Otteau’s assertion that three out of every four homebuyers 15 years from now will be childless, thus “deconstructing the school enrollment myth,” should cause municipal officials and planners to rethink their master plans and zoning ordinances. The reduced school enrollment trend can already be seen in some communities.
Meanwhile, the state’s baby boomers, most of whom have not put away enough money for retirement (and will therefore be reduced to lower socioeconomic status), are starting to move into retirement communities or downsized homes and apartments. This bodes ill for the state’s luxury housing market, glutted with large-lot McMansions that smaller families don’t want and less affluent families can’t afford.
For those who might conclude from these facts and figures that New Jersey’s glass is half-empty, however, Mr. Otteau posited that the glass may instead be half-full. The same trends that bedevil the state’s sprawling suburbs, he noted, may benefit its urban and town centers.
Housing demand in the future will seek efficiency, Mr. Otteau predicted, in the form of smaller, less expensive design. Concern about energy costs will cause people to seek homes and apartments near jobs and transportation. Downtowns and transit-oriented developments will deliver these efficiencies. Office markets will shift to transportation hubs, creating a direct linkage to job retention and growth. And retail markets will “follow the money.”
Mr. Otteau’s keynote drew sustained and enthusiastic applause—and more than a few open-mouthed expressions, as attendees visibly struggled to take in the wealth of information offered, and the messages the information conveyed. Though the slides accompanying Mr. Otteau’s presentation lose something without his running commentary, we offer them here to provide a glimpse into his view of New Jersey’s future. We also draw your attention to the other panelists and participants who informed and inspired the nearly 500 attendees at the 2010 Redevelopment Forum.