Demographics Are Key in Real Estate
Fred Faust Of the Post-Dispatch, St Louis Post-Dispatch (MO)
The recent depression in the real estate industry was not simply the bottom of another cycle, experts warn. The industry has to learn from dramatic changes in demographics, and recognize basic changes in financing.
"If there is just one lesson learned from the late 1980s in real estate, it should be that we ignore demand at our peril," said M. Leanne Lachman, managing director of Schroder Real Estate Associates in New York.
"The people who will reside, work, shop and recreate in our real estate over the next 20 years are alive," she said. "We can count them, we know their ages, their household composition, their educational attainment, their ethnicity."
All this data comes courtesy of the Census Bureau. And demographic forces, observed Robert M. Lewis, are long term, unlike interest rates, tax policies and zoning decisions. Lewis is a principal of Development Strategies Inc., a St. Louis planning firm.
Lewis used historical data from the metropolitan area to show how impressions can be misleading. While it seems that the St. Louis region has grown a lot since 1970, Lewis said, the population increased by less than 2 percent.
But jobs grew by 27 percent and households grew by 24 percent. Baby boomers were the key to what Lewis called this "growth without growth."
The appearance of population growth has also been fed by sprawl. Lewis said the St. Louis area covers 400 percent more land than it did in 1950. The population has only grown 35 percent since then, with nearly all of that growth between 1950 and 1970.
Lachmann and Lewis were among the speakers at a seminar here Wednesday sponsored by the Urban Land Institute, a real estate trade organization. The subject was Urban Growth Prospects and Issues.
What the numbers reveal, Lachmann said, is a population that is growing much more slowly, with a median age that is advancing steadily toward 40 and with far greater ethnic diversity than ever before.
The aging of the population has major implications for retailers, Lachmann said. …