Those in the market for new homes, stores and other amenities are both older and younger than in years past. Generation Y, or those born between 1979 and 1995, number nearly 80 million and have increasingly migrated toward dense urban cores. But the country's second largest generation, the baby boomers, or those born between 1946 and 1964, number 75 million, and have also joined their children's generation in demanding dense communities.

“For years, we've been building housing like every family is the Waltons,” McMahon adds. But the fastest-growing type of household in the US is singles who live alone.

Earlier this spring, ULI released the results of its “America in 2013” housing survey, which shows that these growing demographic groups, including Gen Y, African-Americans and Latinos, strongly desire urban-style, mixed-use communities. For example, most Gen Y members prefer diverse housing choices, 62% prefer to live in developments that provide shopping, dining and even office space, and more than three-fourths place high value on walkability. And perhaps most significant for real estate developers, 63% of Gen Y respondents said they would move in the next five years.

“The boomers have also changed,” McMahon says. “Their children have left home and many are interested in downsizing. We've found that many want to live near their kids.” According to the ULI survey, the majority of boomers want better access to public transportation, and 72% would prefer shorter commutes and smaller homes over longer commutes and larger homes. Furthermore, nearly half want to join the younger generation and live near a diverse mix of shopping, dining and office space.

“All of these things coming together are basically changing the real estate world,” says McMahon. “It's why we are seeing so much multi-use development. One-size-fits-all won't work for buying groups that are so different from one another.”

The signs of that transformation are becoming more visible every year and have even begun correcting past mistakes. The city of Rockville, in Maryland's Montgomery County, for example, tore down its historic downtown back in the early 1970s in a fit of urban renewal, and replaced it with a mall, McMahon says. “Today, of course, they took the mall down and put the downtown back.” The current Rockville Town Square has a more appealing mix of boutiques, restaurants, condos, rental apartments and the Rockville Library.

And in 2011, Fairfax County in Virginia won the Daniel Burnham Award from the American Planning Association for its plan to transform Tysons Corner, a huge suburban office park and shopping district in McLean, into a 24-hour urban center connected to public transportation where people will live, work and shop.

“Market analysis in the past was always backward looking,” McMahon adds. “Today you have to really look forward and analyze the demographic make-up and ask, 'what do these people want?'”

The downtown of West Palm Beach, FL, for example, recently was transformed by CityPlace, a New Urbanist mixed-use development by the Palladium Co. First opened in 2000, it eventually included about 600,000 square feet of retail, anchored by tenants such as Macy's and Publix, the first downtown office tower in many years and about 1,000 private residences, McMahon says.

“A traditional market analysis would have told you that there is no market for housing in Downtown West Palm Beach,” simply because there was none there at the time, McMahon says. But once it was built, “it sold or leased up overnight. You have to hold your finger to the wind and figure out the inevitable; that's the secret to real estate today.”

“There have always been people who have done smart, sophisticated analysis,” he adds. However, most of the housing in the US was constructed by small builders who didn't have that capacity. But McMahon hopes that all developers can take inspiration from the growing number of intelligent mixed-use designs.

“When Disney decided to build the town of Celebration,” the company's Florida showpiece of New Urbanist thinking not far from its Disney World complex, “it probably did more market analysis than anybody ever did in the US,” McMahon says. One of the most important things it discovered was that “prospective residents wanted an active community, not a bland one.” The developers responded by building the retail component first. “They wanted to create an active place and generate buzz.”

“Demographics are certainly important in our analysis,” says Beau Arnason, executive vice president of Steiner + Associates, a Columbus, OH-based developer, “and retail outlets are the drivers of our centers.”

Last year, Steiner and Chicago-based Bucksbaum Retail Properties broke ground on Liberty Center, a 64-acre, 1.1-million-square-foot mixed-use project north of Cincinnati. The partners say they hope the center will grow into a regional development hub. When they complete this first phase in 2015, it will have 600,000 square feet of retail space including a department store, specialty retail and restaurants. The center will also include 100,000 square feet of class A office space, a 135-key hotel and 220 luxury multifamily units.

And with its partners the Georgetown Co. and Limited Brands, Steiner also recently broke ground on Easton Gateway, a 54-acre addition to its Easton Town Center in Columbus, which will have more than 500,000 square feet of retail and about 40,000-square-feet of office-above-retail space. The original center opened in 1999.

“We have to determine if a site has a regional draw,” Arnason says. This involves more than looking at the average income of a targeted area. “We drill down deep into a region's demographic profile to find the amount of discretionary dollars.” For example, single women earning $75,000 will be far more likely to spend money at the Easton or Liberty Centers than households with two children also earning $75,000.

“The demographics are not as important when layering on other uses, such as offices, as they are in retail,” Arnason adds, because the company does not look to draw these users from an entire region. “The key for us when we layer in these other uses is to make sure our product is the best in the local market.”

However, he believes that combining several uses into one development results in a more dynamic environment. And that dynamism helps bring in empty-nesters and other groups that increasingly reject the old single-family home lifestyle. “These baby boomers now have wealth, and they can afford a higher rent, but they want to be in a place with more energy.” These forms of development “cater to what is inherent in people; and that's the need to interact with others.”

Other developers agree that this need is not exclusive to young people. “We think there has been a dramatic demographic shift to the cities,” says David Schwartz, principal and co-founder of Slate Property Group. “And what's great about this is we have several age groups that are making this change.”

The company, in a partnership with Adam America Real Estate and AEW Capital Management LP, recently entered into a ground lease at 535 Fourth Ave. in the Park Slope neighborhood of Brooklyn. It was the team's third neighborhood acquisition, and they plan to develop 325 residential units and about 25,000 square feet of retail.

“A lot of people are moving to areas like Park Slope that are the perfect mixture of suburban and urban,” Schwartz says. In addition to the young, “there are also a lot of baby-boomers who want to live in a place where they don't have to worry about fixing the boiler, but they also want to be near the action. We once had a whole generation that left the city, and now we have several generations that are moving back. We're seeing that in Manhattan and we're seeing it in Brooklyn.”

And for Slate and its partners, retail is not an afterthought. “It's not just a revenue stream; it's a key amenity,” he says. Although the developers have not settled on which tenants will occupy the retail space, “we would like it to be neighborhood retail,” such as a coffee shop, convenience store, wine store or bakery. “Too often, projects have been geared to either singles or families, but we think these are going to be attractive all groups, including young couples, singles and empty nesters.”

Mixed-use development has even proven popular in US suburbs designed as classic single-family communities. The Atlanta suburb of Alpharetta, for example, saw no multifamily development for years. But this fall, Cincinnati-based North American Properties will open the retail component of the Avalon, a 2.4-million-square-foot project on 86 acres that will have 101 for-sale units and 250 rentals, as well as 500,000 square feet of retail, hotels and office space.

“We have 2,600 families on our waiting list for the for-sale units and about 1,000 for the rentals,” says Mark Toro, managing partner of NAP. And a significant number of these people are over 35 and already own a home, but have decided to rent and “abandon the suburban culture and live in a walkable, urban environment. There will be nearly 1,000 residents on site, and that has not really been known in the suburbs of Atlanta. It's clear that Gen Y is seeking that lifestyle, but their parents are as well.”

“This trend is even stronger in cities already known for being cool places,” says Matt Griffin, managing partner, Pine Street Group, LLC, citing San Francisco, Chicago, Boston and his hometown of Seattle. Pine Street finished Via 6, a two-tower MXD in downtown Seattle with 654 units and 16,000-square-feet of retail, a little over a year ago. It was awarded the 2013 NAIOP Mixed-Use Development of the Year and the 2013 International Interior Design Association IIDA Design INhome award.

The project is 94% leased, and even though “the bulk of our tenants are 25 to 40, there are a fair number that are more like my age,” adds the 62-year-old Griffin.

The Via 6 development does not make its money off the retail component, but the retail does play a key role. “All of it is intended to help build a community,” says Griffin. Tenants have a dog wash, bike shop, a deli and many other gathering spots. “What we kept asking was, 'how do we make an environment where tenants could meet someone not from their workplace?'”

Steiner's Arnason also believes that in one way, this trend toward denser, mixed-use developments is a rediscovery rather than something new. “There was this period between the 1950s and the 1980s when we got away from building communities. We're just getting back to that.”