For the first time in decades, U.S. cities are catching up to the population growth of suburban America, according to the latest report from the Urban Land Institute.
The Urban Land Institute, a global real estate and urban development professionals’ organization, partnered with RCLCO, a quantitative analytics and strategic planning company, to analyze the rate of urban growth.
RCLCO examined census tracts in the 50 largest metropolitan statistical areas and then classified each into one of six categories, including Gateway, Sun Belt, New West, Heartland, Legacy and New York, according to ULI.
ULI discovered that between 2010-2015, denser urban locations grew significantly faster than residential neighborhoods, suggesting that new urban residents are demonstrating a preference for mixed-use environments. Urban residents now account for more than 29 million Americans, which is 17% of the total population in just 1% of the land area in the 50 largest metropolitan statistical areas, according to ULI.
The report also attributes urban population growth to rental apartment development. In the years between 2010 and 2017, the rate of rental apartment inventory in urban places grew 32%, while inventory in the suburbs only grew 16%.
Employment is also an indication of population growth, notably between 2005 and 2015, suburban areas accounted for 30% of existing jobs and 36% of new job growth. Economic centers, which are established urban employment cores, in downtown areas increased at a faster rate than the number of jobs in any other type of neighborhood during this time.
Interestingly, although most minorities live in the suburbs and many economically challenged urban neighborhoods are predominantly non-white, upscale urban neighborhoods also attracted more racially and ethnically diverse residents, according to the report.
In urban neighborhoods, young households are disproportionately more likely to gravitate toward dense neighborhoods with a mix of uses. More than 29% of Millennials account as heads of households in urban areas, according to the report.
Although urban population growth is catching up to suburbia, affordability is still hindering the growth of the urban market. The average monthly rent of a multifamily apartment in an urban area is $1,650, which exceeds the $1,275 suburban residents typically pay.
Overall, ILI's findings suggest the climb in population in urban areas may continue to last.