(Editor’s note: This column first appeared in mid-April in the April edition of Real Estate NJ.)
By Michael G. McGuinness
Over the last several weeks, I have received quite an education from experts — consultants, demographers, planners, architects and academics — on the relentless changes advancing our way and what they may mean for New Jersey. I am convinced more than ever that forward-thinking New Jersey suburbs are poised for a comeback. Many city residents, especially those in their 20s and 60s will seek alternate residences. Towns that have invested in their infrastructure and assets for the long term and are ready to accommodate this exodus of consumers and their preferences will be able to compete for this wealth of talent and the resources they bring to the community.
“Big Shifts Ahead,” authored by John Burns and Chris Porter of John Burns Real Estate Consulting, was the topic of discussion at a recent town hall-style meeting convened by Prism Capital Partners at its ON3 redevelopment site in Nutley and Clifton. Among their findings was that urban areas captured 21 percent of household growth in the first half of the 2010s, which is more than twice the usual capture rate. This was due to a number of influencers, such as government efforts, including incentives and the cleanup of contaminated sites to drive development; an economic recession that drove more job growth back to the urban core; technology, including smart phone applications and payment technologies that enable people to rely less on cars for commuting and shopping; and societal shifts, whereby people are starting families later in life, rendering urban living (and the wealth of amenities and experiences that city living offers) viable for longer.
Now that the cities are getting built out, land is becoming more restrained and more expensive. Younger folks who are starting families as they enter their 30s need to find more affordable alternatives, larger living quarters and good schools. Empty-nester baby boomers in their 60s living in the cities may likewise be looking for more affordable living arrangements as they retire, along with access to great health care, wellness centers and a less hectic and more relaxed lifestyle.
The plentiful suburbs of New Jersey offer many good options to these two generations. The most attractive communities will be those that offer great access to public transportation, amenities, a wide range of housing options and are well endowed by philanthropic, academic, corporate and civic organizations. “The New Localism: How Cities Can Thrive in the Age of Populism” (by Bruce Katz and Jeremy Nowak), provides great examples of how struggling cities transformed themselves into magnets for all age groups.
In their book, Katz and Nowak focus on a few cities and the lessons that can be learned for other communities trying to revitalize themselves. There are many examples of how a city needs to think like a system and act like an entrepreneur — which is characterized by tenacity, passion, flexibility and the ability to tolerate risk. Following is an abbreviated list of these lessons learned in the renaissance of Pittsburgh, from a Rust Belt victim of industrialization to a high-tech global hub: (1) Many cities have the potential to become brain-belts by strengthening collaboration across universities, workers, companies, entrepreneurs and investors; (2) Success requires a radical ambition that is forwardlooking; (3) A successful revival reflects the fortitude of investors focused on the long term; (4) Build on rather than discard an historical legacy; and (5) Cities must make their innovations visible to the world.
In Katz and Nowak’s review of the transformation of Indianapolis, the following lessons are worth noting: (1) A city must perfect the mechanics of collaboration, often through new formal structures; (2) City networks must act with intentionality and with regional awareness; (3) Successful governance networks must operate at or be cognizant of multiple geographic levels — regional, metropolitan, city, the downtown or district; (3) Successful governance networks are an interesting combination of silo busting and culture busting; and (4) Networked governance requires continued support (operational and financial) over a sustained period of time. The authors also did a deep dive on the city of Copenhagen in Denmark on how best to manage public assets and capture their value appreciation to create public-purpose revenue. Adaptation of this model in New Jersey is promising, as it could revive urban finances and ensure longer-term stability. Such an approach would require that cities: (1) Know what they own as well as what they owe; (2) Know the value of what they own and leverage that value for the public good; (3) Unify, or at a minimum, align the management of public assets for the maximum benefit of taxpayers; (4) Insulate the management of public assets from political interference; (5) Engender a culture of collaboration across the public, private and civic sectors; (6) Maximize the benefit of public ownership and private management to leverage one another’s core competencies; and (7) Think and act for the long term.
One could argue that our state has only three cities — Newark, Jersey City and Paterson. But upon closer review and having lived here my whole life, I think we could rationalize the existence of 99 “cities,” since most towns over 25,000 people function like small cities. We could also say that New Jersey functions as two huge suburbs of the mega cities to our east and west — New York City and Philadelphia — but, with 565 municipalities, it gets confusing. Only seven of these communities have 100,000 or more people, with 466 municipalities having less than 25,000 people. I read a great quote recently from Chris Cabaldon, mayor of West Sacramento, who said, “Be an ecosystem rather than an ego-system,” as it relates to the governance of a municipality. We need more CEOs as mayors.
Michael McGuinness is CEO of NAIOP New Jersey and has guided the commercial real estate development association’s progress since he joined the staff in 1997. In addition to overseeing daily operations, programs and staff, McGuinness directs the chapter’s legislative activities and manages the Developers Political Action Committee (DPAC).