Residents Flock to Urban Areas But Supply Lags

SEATTLE—Population growth rates in urban areas are approaching suburban growth rates for the first time in decades. Today, more than 29 million Americans live in urban neighborhoods. This figure represents 17% of the total population in just 1% of the land area in the 50 largest metropolitan statistical areas, according to a study from ULI.

While the 1% increase in urban population is well below the 13% population growth in suburban places, the urban and suburban places grew at roughly the same rate between 2010 and 2015. During this time, denser urban locations grew significantly faster than more residential neighborhoods, suggesting that new urban residents are demonstrating a preference for mixed-use environments, says ULI. However, three-quarters of these urbanities still live in somewhat dense but predominantly residential neighborhoods.

And in Seattle, the demand for these urban locations is of a similar vein. Home prices continue on a skyrocketing trajectory, thanks to a tech boom that shows no signs of slowing down.

No other neighborhood better illustrates Seattle’s tech-driven boom than South Lake Union. What was once a lakefront district filled mostly with warehouses transformed seemingly overnight into the epicenter of the city’s tech industry, thanks to the location of Amazon’s headquarters, The Spheres. It also includes offices for Facebook and Google, which results in about one-third of all tech space, some 80 million square feet, being located in South Lake Union, GlobeSt.com learns.

South Lake Union is comprised of 170 acres of parks, community amenities, LEED-certified commercial and residential buildings as well as lakefront access and a myriad of alternative transit options. Public art, pocket parks and historic buildings include retail, life sciences and tech startups. Both residents and business owners are drawn to the neighborhood because of its pedestrian-oriented infrastructure and modern approach to place-making.

“The challenge is how to manage public spaces,” H. Pike Oliver, managing partner of Urbanexus, tells GlobeSt.com. “And there is not a lot of for-sale housing. We need to stay balanced with job growth, which would require at least 60,000 units.”

Another active neighborhood south of the metro through SoDo and the Industrial District is Georgetown, where tech workers ascend on weekends and after work. It is geographically disconnected from the rest of the city by industrial zones but is nonetheless, a thriving commercial and residential district, although it lacks abundant single-family home offerings.

Pioneer Square is Seattle’s original neighborhood dating back to 1852. This community has experienced many changes from natural disasters to the Gold Rush to urban renewals to a melting pot of demographics and businesses. It features a good balance of old coexisting with new businesses, shops, arts, eateries and night life.

Even though only 10.1% of Seattle-Tacoma-Bellevue is considered urban, several parts of the city follow this urban focus, says ULI. Following the development of two bridges to Seattle, Bellevue, WA gradually transformed from a rural agricultural community to a major economic and cultural hub. Despite its otherwise suburban location, downtown Bellevue now functions as the metropolitan area’s second downtown. Today, there are more than 53,000 employees in downtown Bellevue, and the number of residents has doubled to nearly 14,000 since 2010.

“The Seattle metro market has been going nuts,” Oliver tells GlobeSt.com. “The cap rates are nearly subterranean and groups are buying whole city blocks. We keep wondering how long this will go on.”