Take a drive through one of the older neighborhoods in your closest city's urban core and you might see something new … like a single-family house under construction. If you live in Jacksonville, Fla., for instance, you'd see 20 or more newly finished or in-progress houses on scattered lots in the city's historic Springfield section, with another 130 or so more still to come.
It's called infill housing, and it's not just high-rise condos anymore. To accommodate a generation of aging but still active baby boomers moving down in house size and looking for more vitality and convenience than a retirement community in exurbia, builders and developers are teaming with civic leaders, lenders, trade contractors, and suppliers to revitalize America's cities with a variety of housing products.
For dealers, specifically, the trend represents a growing opportunity to supply lumber and building materials to a variety of single-family and mid-rise housing styles in enough volume and regularity to outweigh logistical challenges such as access to urban lots and limited on-site storage space. As more suburban builders initiate projects in the city, suppliers can leverage existing relationships (and product inventories) while also carving a niche with infill specialists.
“Most people define infill as an adaptive reuse [of an old or abandoned building] to multifamily or retail,” says Mack Bissette, CEO of SRG Homes & Neighborhoods, the scattered-lot developer/builder of Springfield's revitalization. “But true infill is filling in the streetscape between existing homes and buildings.”
However you define it, infill housing or “new urbanism” is sweeping America's metros: Of the 20 largest cities in the United States, 16 experienced population growth between the 1990 and 2000 Censuses. New York City now boasts a total population of more than 8 million (a nearly 10 percent jump in that decade), while Austin, Texas, saw a 41 percent boost that raised its urban citizenry to 657,000. Several others also witnessed double-digit growth. “It's a nationwide phenomenon,” says Ed Tombari, a land use planner at NAHB. “There's an infill market in every mid-sized city and above.”
That's a stunning reversal from the urban exodus that started in the 1950s, and the numbers have no doubt continued to rise in the years since. It's a trend driven by demographic, political, economic, and regulatory factors that are causing a slow but steady shift toward accepting and encouraging infill development as a viable and necessary segment of the housing industry—and a sustainable market in which to succeed.
Driving Factors Ask those in the know about what's driving interest in infill and you'll likely get a variety of answers. Bissette, for instance, sees a renewed desire among young professional and empty-nester home buyers for nostalgia and urban vitality, while others point to trouble in suburbia. “There's a lot of interest in diversifying [into urban infill] because suburban land is becoming so difficult to find and expensive to develop,” says Rick Haughey, director of multifamily development at the Urban Land Institute (ULI) in Washington, D.C. “On a square-foot basis, there's more potential for profit with infill.”
Political pressure is also at work, both at the local and federal levels. In addition to encouraging vacant-lot infill development—specifically housing—as a way to leverage and improve existing urban infrastructure (instead of building it from scratch to serve suburban development), city leaders are looking to clean up and reuse “brownfields”—dilapidated industrial sites in urban cores—for a variety of development, including homes.
In March, Rep. Michael Turner, R-Ohio, introduced federal legislation to provide tax credits for brownfield redevelopment and also leads the congressional “Saving America's Cities” initiative, in which public and private housing is a priority. “At the federal level, our job is to make sure that funding [for infill housing] is working and not being stalled by Congress,” says Turner.
Brownfields and bundled lots (combining individual lots, either vacant or pegged for tear-down, for a single developer or even into a single parcel), he says, open up land for larger housing and mixed-use developments that encourage even more interest than what small-scale, scattered-lot infill alone can support. “It's a critical mass [of land] that makes sense to more developers,” Turner says.