About 15 years ago, I was out in Phoenix and a local was telling me about the unlimited supply of water available from regional aquifers. I had been questioning how the city could maintain all its vernal golf courses in the middle of cactus filled deserts, let alone the rampant suburban development stretching to the horizons.
Arid landscapes had not been standing in the way of builders in Texas, Colorado, New Mexico, Utah, Nevada or Southern California either. Cheap land, warm climes, and new houses were a perfect combination for attracting snowbirds and other folks priced out of cold, more expensive and/or poorly ageing neighborhoods in the Northeast and Midwest. Summer heat could easily be offset by air conditioning. In fact, many of the fastest growing cities and counties in the country had been situated in virtual deserts or near deserts. I say had been, because now water or the lack of it will constrain these areas' development prospects and significantly increase local cost of living.
Arizona's “unlimited” aquifers are rapidly being drained and depleted Rocky Mountain snow packs reduce flows into the Colorado River threatening water supplies for communities from western Colorado to the Los Angeles area. I was out in New Mexico last month where a nearly 20-year drought has caught everyone's attention—a welcome near record late season storm dropped about 10 inches of light-airy snow near Santa Fe, but the cover of white rapidly evaporated in less than a day.
California, meanwhile, may be about to enter a freak-out, crisis mode after another dry “rainy” winter season—several quick hitting January storms, resulted mostly in run off and mud slides. More recently temperatures have registered well-above normal, auguring increased distress as reservoirs sink to dangerously low levels with another likely hot, rainless summer approaching.
At the very least, water rates will escalate in these places—an increasingly precious commodity will bear a high cost and add to living expenses. Battles between agricultural interests and population centers will intensify in California and Arizona—the nation's vegetable and fruit prices could soar, as more farmers get priced out. In extreme cases, builders will be unable to develop and some communities even may run out of water supplies. California may build desalinization plants to access ocean water—but the process is extremely power intensive (by the way power companies use a ton of water to make electricity) and has environmental costs. In Phoenix, Las Vegas and other Southwest locations, re-circulating grey water for industrial uses and watering the remaining golf courses will become absolutely necessary. Forget about lawns there and welcome to rock gardens. Having expansive lots will be increasingly less enticing without plantings and shade from trees and bushes, unless scrub brush is your thing. More restrictions and building codes will be put in place to reduce water use in homes and businesses, and make development more expensive and less enticing.
The population push into warm and dry zones, so dramatic over the past generation, may not come to an abrupt halt, but could slow dramatically. There is a reason when you fly cross country west of the Rocky Mountains why you see so much empty, inhospitable space—it's water, lack of it.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
