Washington, D.C. – March 1, 2012 – (RealEstateRama) — As the demographic and physical landscape of cities across the United States evolves, commercial real estate developers will need a sophisticated framework to identify valuable opportunities in the Middle Ring suburbs, says a new report commissioned by the NAIOP Research Foundation.
The Middle Ring is defined by its demographic, geographic and physical characteristics, including:
- Diversity – Both ethnic and cultural, with a significant foreign-born population.
- Income Level – Incomes are typically at or below the Metropolitan Statistical Area median.
- Employment Type – Higher levels of employment in construction, maintenance and personal services.
- Transit Proximity – Situated close to both major automobile and public transit infrastructure.
- Older Housing Stock – Majority built prior to 1969.
With Middle Ring suburbs identified as an area of opportunity for re-investment, this study, Toward a Development Model for the Middle Ring Suburbs, uses the city of Boston as a case study (see specific Middle Ring site study locations below) to address the questions of a new development model by analyzing demographic and situational characteristics, as well as determining strengths and weaknesses for development. It concludes by outlining the steps that could be taken for development site selection and proposes a model to be implemented.The report was done in partnership with the Organization for Permanent Modernity at the Massachusetts Institute for Technology. The full study, including detailed maps, investment diagrams, graphic models and case studies, is available at www.naioprf.org.
Middle Ring Framework
Development is largely focused on urban centers and suburban sprawl, leaving the so-called Middle Ring that is located in the middle of a metropolitan area. Opportunities lie with changes in investment and development patterns that accelerate the relevance of the Middle Ring as an area to profit from both value growth in downtowns and the presence of suburban purchasing power.
Development in the Middle Ring – called “in between places” – must engage with community leaders for public-private partnerships that invest in local infrastructure that create a sense of place to attract high-end tenants, provide easy and safe public transportation access, and emphasize the novelty of development, says the report. An important component of that is Transit Oriented Development (TOD), which Generation Y consumers have expressed an immense interest in living near. As this new generation comes of age, they will play an increasing role in shaping the future of housing. Their desire to live in active, urban neighborhoods will drive the need for high-density, multi-family housing and the development of mixed-use districts and suburban downtowns.
General Development Model for the Middle Ring Suburbs
The study characterized the Middle Ring and outlined a method by which zones for development can be identified, as well as the following key factors for a successful redevelopment project:
- Demographic groups – Generally, three demographic groups comprise the Middle Ring: white working class and lower/middle class; ethnic and immigrant communities; and artists who use workshop and storage space. These communities have lower purchasing power, which can deter investors. Leveraging the proximity of these three key groups helps identify value-adders to the neighborhood.
- Programmatic and Spatial Entitles – Ethnic cuisine and well-defined public spaces (both indoor and outdoor) contribute to Middle Ring development and add value as defining a sense of belonging. Commuter transfer station parking and rail access connect the Middle Rings to city centers and suburbs, and adding a few suburban mall brands provides basic comforts and conveniences for shoppers and commuters.
- Economic Engines – Office space can be built over parking garages or constituted by transforming parking garages.
In a development comparison of the Middle Ring vs. City Center, the study shows that:
- The regulatory environment in many Middle Ring cities is more supportive and works to attract investment. The approval process in many city centers can take months or years, adding significant costs for permitting and lost rents.
- Community involvement in Middle Ring cities is often lower than in city centers, leading to shorter permitting times.
- Middle Ring cities have greater isolated land tracts ripe for redevelopment, while city centers are generally mature with few undeveloped tracts.
- Land acquisition prices in the Middle Ring are generally lower, as are construction costs due to an abundance of available labor and smaller, local construction companies.
- Financing and grants can be more abundant, with many Middle Ring governments proactively seeking investors.
Middle Ring Site Studies
The following locations were identified as Middle Ring locations in the study. For each, the report includes site statistics; demographics; available parcels; land and business owners; government officials; and community groups:
- Waterfront District – Lynn, Mass.
- Wonderland – Revere, Mass.
- Chelsea – Chelsea, Mass.
- Malden Station – Malden, Mass.
- Wellington – Medford, Mass.
- Jackson Square – Boston, Mass.
- Hyde Park – Boston, Mass.
- Readville – Boston, Mass.
- Mattapan – Boston, Mass.
- Fields Corner – Boston, Mass.
- Quincy Center – Quincy, Mass.
- North Quincy – Quincy, Mass.
To access the full report, please visit the NAIOP Research Foundation at www.naioprf.org or contact Kathryn Hamilton at (703) 904-7100 / :">.
About the NAIOP Research Foundation:The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation’s core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial, retail and mixed-use properties, impact and benefit communities throughout North America. For more information on how to contribute or for complimentary research reports, visit www.naioprf.org.
NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 15,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.