COVER STORY, SEPTEMBER 2008

MANAGING TEXAS’ GROWTH: MIXED-USE AND DENSITY
Bob Voelker

The Texas real estate market is experiencing a radical transformation brought about by the reversal of over 50 years of centrifugal forces that propelled development to the fringes of the state’s major cities. To grasp these trends, we first need to review a brief history of real estate in America.

In the early 20th Century, advances in infrastructure (water and sewer facilities, in particular) allowed for the growth of large cities. Prior to that time, cities could not grow beyond a certain size without health issues arising from too many people living in close proximity to one another. With the advent of mass production and the need for factory workers to live close to employment centers, the trend was clearly set for in-migration from rural areas to denser inner city dwellings. The automobile was new on the scene and still too expensive for most people, so work, home, shopping and church were all placed within walking distance.

Beginning somewhere around 1950, the over-industrialization of major cities, along with exponential growth in automobile ownership and in the federal highway system made development in the suburbs more feasible and attractive. The Civil Rights Movement and court-ordered busing in the 1960’s also exacerbated flight to the suburbs. Land and automobile transportation were cheap, and the perceived ills of mixed-use zoning and density in the city (factories too close to housing, and the density of the housing projects) gave rise to Euclidian zoning, separating real estate in bands that insulate more intense uses from lesser intensive uses. As the suburbs grew in prominence, desirable living began to be viewed in terms of acres per residential unit, instead of residential units per acre.

A combination of factors are now forcing a reconsideration of the desirability of Euclidian zoning separation and low density. Traffic congestion, $4-a-gallon gasoline, pollution and the Green Movement are moving Texans away from auto-centricity. Generation Y is much more comfortable living multi-culturally (reversing one of the major driving factors in the flight to the suburbs) and in less traditional residential settings. The Baby Boomers are retiring and looking for more carefree housing options (such as condos or townhomes) as well. The combination of these forces is driving development toward density — in the inner core of our major cities, but also in the suburbs — with residential mixed-use projects that are properly scaled to allow living, working, shopping and entertainment within walking distance or at least accessible through mass transit options.

Interestingly, until recently one of the criteria for ranking systems of major cities was housing affordability. The Center for Neighborhood Technology and the Center for Transit Oriented Development recently published the first Housing + Transportation Affordability Index that combines the cost of housing with the cost of transportation to determine the true cost of living in these cities. The index emphasizes the importance of mass-transit options and of density close to job centers, while factoring in the direct cost of sprawl. A recent Wall Street Journal article reported that in several major cities the population of the suburbs is now growing slower than the urban core. In addition, residential and office properties nearer the urban core and in close proximity to transit have sustained their value in the recent real estate downturn, a testament to the impact of transit on real estate choice and value. All of the major Texas cities are building or actively investigating light rail or expanded bus routes, and the resulting transit stops are prime locations for mixed-use developments. 

Like most changes in the late 20th and early 21st Centuries, this shift in development patterns is occurring within a very short time frame and requires some retooling of our thought processes and systems. Separation of uses in distinct development patterns will continue to be necessary and effective in places, but this cannot be universally applied since mixed-use zoning combines uses both horizontally and vertically. Denser residential products, such as multifamily rental and for-sale condos, townhomes and rowhouses, should become the preferred forms of development in appropriate urban and suburban locations. In the context of the Green Movement and current gas prices, higher density residential units adjacent or near public transit have more vitality than ever before. Reconnecting America, a nonprofit group committed to transit-oriented development, estimates that the number of households near transit stations will soar to 15 million by 2030 (from 6 million now), and higher density, transit-oriented residential development opportunities will expand as Texas focuses on building its transit infrastructure.

The Texas population is expected to grow from approximately 24 to 25 million today to 33 to 36 million in 2030, and the vast majority of this increase will occur in our major cities — both in the inner urban core and in the surrounding suburbs. Imagine the incredible challenges, but awesome opportunities, that will arise in adding 50 percent to the populations of Dallas/Fort Worth, Houston, Austin and San Antonio. With this impending growth curve, failure to quickly embrace new models of development only will exacerbate traffic gridlock and pollution. As our major Texas cities and the real estate industry grapple with this population surge, our public leaders have an opportunity to frame the dialogue about density as the new and effective tool to responsibly manage growth and to promote the true positives that walkable, transit-oriented live/work/play density can provide to a community.

Bob Voelker is the head of the Munsch Hardt Kopf & Harr PC Mixed Use Practice Group.

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