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Urban Infill Now a Commercial Real Estate Norm

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Urban infill, the development of blighted or underused commercial real estate space in the cores of cities, is becoming increasingly popular in the United States.

Before suburban sprawl took off following World War II, larger portions of the population tended to live, work, and shop in, or very near, larger cities.

The advent of mass suburban housing also moved shopping, and in many cases, large office complexes, outside of urban cores.

In the last several years, though, we have started to see commercial real estate developers take advantage of a reverse shift, where populations are moving back into city centers.

The Millenial generation tends to prefer living in environments where it can work as well as shop and regularly use public transportation. Baby Boomers, whose children have moved out, are also now looking to downsize and prefer to have amenities close by.

One commercial sector that has received a lot of attention for its push into urban areas is retail. Big-box stores, which were always considered a suburban phenomenon, are making urban-core areas an expansion priority. When The Home Depot entered Manhattan in 2004, it became a benchmark for this kind of growth. Whole Foods, Target, and many others are actively positioning themselves for infill locations.

Additionally, many cities are offering commercial real estate developers incentives to revitalize neglected urban areas, making their locales more attractive for business and tax revenue – and it’s working.

Los Angeles is one frequently cited example of a metropolis that continues to transform. Residents are flocking to the city to live in loft and high-rise buildings. Old offices with high vacancy rates are being gutted and new, innovative offices are being constructed based on working models made popular in the tech industry.

L.A. is only one example, though. The Urban Land Institute regularly features projects across North America going up in urban areas large and small, encompassing various product types.

And, as populations shift back towards cities, there is no reason to think that urban infill development won’t continue to grow in the years to come.

What do you think? Will urban infill growth continue? And, will we start to see it in markets beyond the top 10 metro areas?


By: Ben Miller

Co-Founder | Fundrise


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