JLL’s Development and Asset Strategy team provides insights into how cities efforts to create urban amenities are resulting in new development opportunities for investors.

1. Development in City Centers
Urban amenities spurring new development
Insights from JLL’s Development and Asset Strategy Group (DAS)

2. America’s cities, once the casualty of suburban flight, are now experiencing a
strong resurgence, with strong evidence of the “return to the city” phenomenon.
According to the U.S. Census Bureau, the nation’s largest metro areas (5 million
plus population) experienced a 13.3 percent increase in downtown population
during the first decade of the new millennium, more than double the metropolitan-
wide rate. Most recently, Millennials have been reinforcing and accelerating
this urbanization leaving employers scrambling to move their headquarters (or at
least establish outposts) to downtown locations in an effort to compete for young,
tech-oriented talent. Today, we find innumerable examples of this urban revival and
the development community has been quick to respond, eager to profit from this
new demand.
New Development Opportunities in City Centers
13%
downtown
population
increase

3. In broad brush strokes, the demise and revival of major American cities goes as follows: Following the Great Depression
and World War II, enormous pent up demand for housing, reinforced by federal policy, combined to facilitate large-scale
suburbanization. Vast investments in expressways, malls and schools converged, creating suburbs where the real and
perceived ills of densely packed cities could be left behind. Those cities, hollowed out by this exodus and without the
financial capacity to compete, became the proverbial “warehouse of the poor,” trapped in an apparent death spiral.
From the 1950’s through the 1970’s, cities and the federal government struggled to find a solution, but few of these
strategies – from slum clearance to the Model Cities program to community development block grants—were sufficient to
overcome the wave of depopulation and disinvestment in the urban core. The 1976 redevelopment of Boston’s Faneuil
Hall and Quincy Market is a milestone of sorts, when America’s major cities started to figure out how to entice households
with the resources to live anywhere. The project was a shopping and entertainment amenity that prompted a significant
number of households to bid for the right to live and/or work in close proximity. Thus began the long march back to
relevance for the central city which, as it has evolved, now must answer the new question of how to accommodate the poor
who are being priced out of formerly derelict neighborhoods.
Evolution of American cities

4. The “urban amenity” can serve as a useful lens through which we can identify new places for real estate investment and
development. Just as malls followed households in the auto-oriented suburbanization decades, today’s “inversion” of
real estate demand has emboldened cities to invest in additional amenities such as transit lines, parks, bikeways
and marinas.
The return on those investments has been almost instantaneous of late, reinforcing and building on the return to the city.
And as those amenities draw new households to the city, the resultant enhancement to the tax base gives the city more
resources to continue funding new investments in urban amenities: streetcar service, rails to trails and more parks, boat
houses and riverfront pedestrian-ways. Savvy developers and investors have recognized the amenity effect and have
eagerly assembled nearby sites and built out successful residential, retail and office projects. Success begets success
and the death spiral of the past is now the virtuous cycle of revival, as cities such as Atlanta, Chicago and Los Angeles
can attest.
Urban amenities

5. Resurgence of Atlanta
1 Once the poster child for suburban sprawl, Atlanta
has seen a resurgence of residents and workers to its
urban core, including areas such as Midtown, Inman
Park and the Old Fourth Ward. At the forefront of
this renaissance is the transformation of The Beltline,
a 22-mile former heavy rail right-of-way encircling
Atlanta’s core, into a multi-use path and light rail
system planned for completion by 2030. According
to Atlanta Beltline, Inc., the area surrounding the
corridor has drawn more than $1 billion in private
investment since 2005.
Ponce City Market.

6. Chicago - the fastest
growing downtown
2 From 2000 to 2010, Chicago’s downtown
population grew by more than 48,000, increasing
total population by almost 37 percent. A variety of
amenity investments have changed the development
landscape and reinforced that growth trend – trail
conversions, marinas and new transit stations.
The most significant burst of developer investment
emerged around the CTA elevated and subway
stations. This activity has been accelerated by the
city’s recently passed Transit Oriented Development
zoning overlay surrounding CTA stations which allows
higher density and removes developers’ obligations
to provide structured parking.
On the near west side, a new CTA elevated station
at Morgan Street has catalyzed that area into
an important node of tech-centric companies. Its
emergence was validated when Google announced
its intent to consolidate its Midwest offices into
Sterling Bay’s conversion of a former cold storage
warehouse. 1K Fulton’s 550,000 square feet have
been fully committed and the push is on to convert
industrial loft buildings to tech space in the
surrounding area.
CTA Morgan Street Station

7. 3
Downtown LA undergoes
a massive transformation
The payoff from an improved rail transit system
converging at Union Station continues to be
extended into other parts of this sprawling city.
Century-old office buildings along Broadway are
being converted into hotels and residential lofts over
hip new restaurants, all of which blossomed in the
late 1990’s by passage of the city’s Adaptive Reuse
Ordinance. In addition, new construction high-rise
residential towers are clustering in South Park around
the Staples Center and LA Live.
JLL identifies some 40 new residential projects in
various stages of development that are expected
to deliver more than14,000 units over the next five
years. JLL is currently in the market with a 208-unit
high-rise pad near the Staples Center and is helping
Hearst Publishing redevelop the landmark Herald
Examiner building nearby.
South Park Development Rendering

8. Thank you
Read more about JLL’s Development and Asset Strategy Group.
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WAY THAT MAY RESULT IN LIABLITY TO THE AUTHOR.
Tom Kirschbraun
International Director
DAS National Practice Lead
+1 312 228 2265
Thomas.Kirschbraun@am.jll.com
Scott Miller
Managing Director
Midwest Office
+1 312 228 2266
Scott Miller@am.jll.com
Web Bingham
Senior Vice President
East Cost Office
+1 617 531 4153
William.Bingham@am.jll.com
Jeff Adkison
Managing Director
West Coast Office
+1 213 239 6133
Jeff.Adkison@am.jll.com
Scott Cullen
Executive Vice President
Southeast Office
+1 404 995 2127
Scott.Cullen@am.jll.com