91Ƶ

Growth spurt: suburbs suddenly outpacing cities

By: Chuck Slothower//September 18, 2017//

Growth spurt: suburbs suddenly outpacing cities

Chuck Slothower//September 18, 2017//

Listen to this article
Guardian Real Estate Services expects to break ground in early 2018 on a five-story apartment project in the downtown core of Milwaukie, which Tom Brenneke, Guardian's president, says is “ripe for development.” (Courtesy of Guardian Real Estate Services)
expects to break ground in early 2018 on a five-story apartment project in the downtown core of Milwaukie, which Tom Brenneke, Guardian’s president, says is “ripe for development.” (Courtesy of Guardian Real Estate Services)

It’s back to the future for the nation’s suburbs, which are again growing at a faster rate than American cities.

That’s according to an analysis of U.S. Census population estimates by William Frey, a Brookings Institution demographer.

The new data upend a trend that stretched for the previous five years. From 2010-11 to 2014-15, cities grew faster than their surrounding suburbs. People flocked to urban settings, driving up home prices and putting pressure on roads and other urban infrastructure.

In 2015-16, that wave may have crested. Among the nation’s 53 largest metropolitan areas, the suburbs grew at a 0.89 percent annual rate, outpacing cities’ 0.82 percent growth. That may not sound like much, but it’s a change that bears watching, Frey said.

“The difference isn’t very big, but it’s a little bit of a tipping point,” he said.

Portland was no exception to the national trend. Here, suburban growth outpaced the city itself, with 1.8 percent growth in the suburbs topping 1.4 percent growth in Portland.

For decades after World War II, the suburbs expanded faster than American cities. Malls replaced downtown department stores, highways snaked across metro areas and suburban garages grew to the size of small houses.

If faster suburban growth endures, that will signify a return to a historical pattern, Frey said.

“I do think in some ways if that happens, then we’ll see the first years of this decade more as a blip than a long-term trend,” he said.

To be sure, the city of Portland remains a popular destination for people looking for urban living. But growth in Portland proper, as in many attractive cities, is restricted by housing supply.

Single-family housing inventory in the Portland-metro area in August was 2.1 months, far below what is considered a balanced market, according to , a real estate listing service. Meanwhile, the apartment market remains relatively tight despite some softening this year, with a 4 percent vacancy rate in spring 2017, according to a survey conducted by .

With scarcity comes escalating prices. The median price of a home for sale in Portland is approaching $400,000, and in the city’s most desirable neighborhoods, it can be difficult to find a home for less than $600,000.

Rents have risen as well, although prices have leveled off this year as new apartment buildings have opened.

As buyers and renters look for alternatives to pricy Portland housing, developers are finding opportunities in the suburbs. Increasingly, they’re bringing the five-story mixed-use apartment buildings with ground-floor retail space that have proliferated throughout Portland’s hip urban neighborhoods.

On Tuesday, Guardian Real Estate Services won final approval from the Milwaukie City Council to build a five-story apartment building in the downtown core of the suburb southeast of Portland.

The structure near the MAX orange light-rail line will be the tallest apartment building in downtown Milwaukie. It will include 110 apartments and 7,300 square feet of ground-floor retail space.

Construction of the MAX orange line was promised to bring development along the light-rail corridor. Slowly, that promise is being fulfilled.

Tom Brenneke, president of Guardian Real Estate Services, grew up in Milwaukie, and attended grade school a few blocks away from the apartment project.

“It’s just ripe for development and opportunities and housing,” he said.

Brenneke said it’s easier to commute to central Portland from areas south of the city, making Milwaukie attractive to professionals. He expects to break ground on the apartment building early next year.

Milwaukie’s City Council in August authorized moving forward with negotiations with developer Farid Bolouri to sell a downtown lot for a mixed-use project known as Coho Point at Kellogg Creek. That project would be next door to Brenneke’s apartments.

“We’re getting a lot of interest, and we want to make sure we do it right,” said Leila Aman, development manager for the city of Milwaukie.

While Milwaukie is having something of a renaissance, West Portland suburbs are growing, too.

has built many projects in Portland, but the company’s latest to open is in Tigard. Attwell Off Main has 165 apartments in two buildings and small retail spaces. The apartments are 85 percent to 90 percent leased, and a local hair salon took one of the ground-floor retail spaces.

Jeff Sackett, a principal at Capstone Partners, noted millennials are now the largest generation in the U.S., and they’re starting to move to the suburbs.

“When you look at demographics, you really need to look at what the millennials are doing, because that’s going to drive everything,” he said. “I think that what’s happening now with millennials is the same thing that happened to the baby boomers and the greatest generation before them – you get to a certain point in life where you want to settle down and have a wife and a dog and a yard, and that’s hard to do in an urban apartment.”

Beaverton is seeing more interest from multifamily developers, too. Rembold broke ground in August on a 230-unit, two-building project in Beaverton called The Rise Central. That comes after the Portland-based developer built an 87-unit project, The Rise Old Town, in Beaverton.

Developer Roy Kim's recent LaScala project in downtown Beaverton is among a new crop of urban-style mixed-use projects to be built in Portland suburbs, which outpaced Portland in growth in 2015-16. (Sam Tenney/91Ƶ)
Developer Roy Kim’s recent LaScala project in downtown Beaverton is among a new crop of urban-style mixed-use projects to be built in Portland suburbs, which outpaced Portland in growth in 2015-16. (Sam Tenney/91Ƶ)

Suburbs are also more connected to cities than they once were. The MAX orange line can get a commuter from downtown Milwaukie to Pioneer Courthouse Square in fewer than 30 minutes. In coming years, the proposed Southwest Corridor light-rail line would zip down Barbur Boulevard or Interstate 5 through downtown Tigard to Bridgeport Village. That has raised some opposition among Tigard residents who don’t want to be more connected to Portland.

“There’s a fear of light rail amongst many folks that live in the suburbs,” Sackett said. “I think it’s unfounded. I think light rail’s a good thing. I hope it happens, and I hope it happens in my lifetime.”

Portland’s suburbs have another competitive advantage over the city: They lack Portland’s inclusionary housing regulations that require developers to set aside 20 percent of their units as rent-restricted affordable apartments, or pay a hefty fee in lieu of providing affordable housing.

Civic boosters in the suburbs haven’t been shy about pointing that out.

“One of the first things you hear when you talk to any of the suburban economic development folks is, ‘We don’t have inclusionary zoning.’” Sackett said. “It’s a big negative for the city of Portland right now, and it’s going to be until people figure out how to operate with it, or they change it.”

Major single-family housing developments are coming to the suburbs, too.

Infrastructure work is under way in south Hillsboro on the sprawling Reed’s Crossing development that could eventually include 4,000 housing units – mostly single-family homes.

In Wilsonville, the City Council in July adopted a master plan for the area known as Frog Pond into the city’s comprehensive plan. The plan calls for 1,932 single-family housing units in 500 acres.

Single-family development is also burgeoning in Happy Valley and unincorporated Washington County, despite layoffs from major employers such as Nike and Intel.

While the suburbs are booming, most observers expect the city of Portland to continue to see robust growth. Developers are filling in where they can.

Frey said it will take years of data, and an official Census count in 2020, to know for sure whether faster suburban growth is a blip or an enduring trend.

More people would live in urban neighborhoods if they could find homes they could afford, said Joe Cortright, a Portland-based urban economist who writes for the City Observatory website.

“The limit on growth now is how quickly we can build housing, because vacancy rates are extremely low,” he said. “That’s what we’re bumping up against in a lot of cities. In some cases, we haven’t zoned enough land for the kinds of housing and the kinds of places people want to live.”



News

See All News

Commentary

See All Commentary

COMMUNITY CALENDAR