Update: The study (PDF) referenced below is available online, along with three attachments: target market descriptions (PDF), target market tables (PDF), and a detailed downtown map (PDF).
At today’s Finance Control Board meeting, Laurie Volk of Zimmerman/Volk Associates presented a portion of the results of a recent market-rate housing study for Springfield’s downtown area, between the train tracks and Union Street to the north and south, and Byers/Myrtle Streets and the Connecticut River to the east and west.
Opening the presentation, Volk said, "We discovered that when we were here—even though we were a little apprehensive before we got here, because we had read a lot of negative press about what’s happened in Springfield—you actually have an enormous number of assets."
DOWNTOWN ASSETS
– historic buildings
– center of employment
– culture
– walkability
– parks and the riverfront
– access
"The historic buildings that you have here are quite extraordinary," she continued, "and really form the good bones of what makes a real downtown work. Downtown is still a regional center of employment, and that’s really critical for those people who would consider living downtown. It’s also a cultural center. And that’s something that many cities strive for, but haven’t gotten there. Springfield is there."
"It is also extremely walkable, and that’s very important. One of the reasons that people move downtown is that they want to be able to walk—to work, restaurants, to the theater. Springfield is very walkable. You have wonderful parks, and you’ve got a riverfront. We’ve done work in many cities that don’t have those assets. And believe me, it’s quite a challenge trying to come up with an asset that’s as wonderful as a river. You also have tourist attractions, and again, that’s an asset that you have that many cities don’t, and finally, you have extraordinary location and access. You could actually live in downtown Springfield and work anywhere along the interstate corridor."
The goal is not so much to focus on supply and demand, but rather getting a handle on "what the market could be, and what you need to do to capture that market." She said that every year, 15 to 20 percent of American households move. "If you can understand why they’re moving, what they’re looking for when they move, and what their financial capabilities are, you have a really wonderful opportunity to catch a percentage of that market."
ZVA uses IRS as well as Census data to generate their projections. The IRS data is helpful in indicating people’s moving patterns. Volk explained, "If you move in a given year, you report it on your tax return. The IRS keeps massive change-of-address files, which they then compile to understand what the migration and mobility is in the US."
"For Springfield," she continued, "we saw, in the city as a whole, people who are already living in the city represent a third of the market. People are moving from one house to another, from an apartment to a house, the common types of moves that people make."
DRAW AREAS TO DOWNTOWN SPRINGFIELD
City of Springfield: 32%
Hampden County: 24%
Hartford/Hampshire County/Worcester: 12%
Boston metro area: 12%
Nation (NY, New England): 20%
The study was designed to learn where the city’s potential market is living now, how many of them will be a likely market, who they are, what kind of housing they’re looking or, what kind of housing is currently available downtown for them, how much the market will pay for it, and how fast can the units be rented or leased.
Volk added, "We were specifically asked to address the issue of market-rate housing only. Some cities—because they have nobody living downtown—they want to see what the complete mix would be. But we personally feel that you have a large supply of affordable housing in the downtown which needs to be balanced by a large supply of market-rate housing. And that’s what this study is designed to address."
"How many households would be likely to move downtown?" Volk asked. She said that city-wide, the annual potential market is just under 8,000 households. "When you take away all those households that are for single-family detached houses, or for suburban neighborhoods, just looking at those people who represent the downtown market, there are more than 1,150 households per year that represent the market potential. Which is a very significant number."
More than half of the market, or 53 percent, Volk said, come from the "younger singles and couples" demographic, one of three groupings the consultant uses based on life stage. "Depending on where you are in your life stage will have a significant impact on the kind of housing choices you make," she said. "So it’s very important to understand who your market is in terms of where they are in their life stage, because that can have an impact on the kind of units you need to build. With half the market being young people, that’s actually very good, because we’re finding that young people are choosing downtowns and urban environments."
Empty-nesters and retirees are another 35 percent of the market, Volk said, which she saw as significant because the baby boom generation is the largest in the country, followed by their children, the "millennials," the leading edge turning 30 this year. "What we are finding," Volk said, "across the country and here in Springfield, is that the millennials, who were largely brought up in the suburbs, are choosing to move to downtown, into urban neighborhoods, in much higher percentages than predecessor generations. What we have here are the two largest generations in America converging, so that over the next 15 to 20 years, you have an enormous number of baby boomers, who are moving out of their single-family detached houses in the suburbs, and moving back to urban neighborhoods, and you have the millennials, who are moving out of their parents’ households, and moving into downtowns and neighborhoods."
To Volk this translates into "basic, strong demographic support for significant increases in downtown housing," not just in Springfield, but in every American city.
Families, both traditional and non-traditional, comprise 12 percent of the market. "Very few full-nest families choose multi-family housing to live in," Volk explained. "In a downtown, that’s the kind of housing you really want to create, because it brings more people and more units in the same piece of ground." She added that back in the 1980s, families comprised 45 percent of all American households, in contrast with 25 percent today. "You don’t even have the number of those kinds of families that typically drove the movement out of cities into the suburbs." She also pointed out that over two-thirds of Springfield’s households consist of either one or two people: not families, she said.
In looking at the housing preferences of the market, ZVA’s recommendation is that 37 percent of the downtown housing consist of rental lofts or apartments, 35 percent consist of lofts or apartments for sale, and the remaining 28 percent be rowhouses for sale (like what’s available on Mattoon Street).
"You could actually go higher in both rent and price, given certain conditions," Volk said. "If you are actually able to create units to specifically target those households, you could get rents from $600 to $2,000 a month for studios to three-bedroom units. Sale prices could range from $90,000 for a loft for a young, single person, to more than half a million dollars for a high-end condominium. There’s a number of buildings downtown that I can think of where you could easily do those kind of high-end condominiums that would be highly desirable to the market. Rowhouses could range in price from $195,000 to $350,000." Volk later indicated that she thinks 13-31 Elm Street falls into the category of a building that could be transformed into the high-end condominiums she envisions working here.
"How fast can you actually absorb those units?" she continued. "If you can tap between just ten and 15 percent of that potential market a year, you could add more than 150 new units in downtown Springfield every year for the next five years. And what we find is that once development really gets going, and you keep introducing new housing units in the downtown that are matched to the target market preferences, that instead of depleting the market, you actually add to the market."
CAPTURE OF MARKET POTENTIAL
157 units per year over the next five years
Rental lofts/apts : 65 units
For-sale lofts/apts: 60 units
For-sale rowhouses/live-work: 32 units
Annual market capture from outside Springfield: 106 units
"What’s even better news, we’re not playing a zero-sum game here. In other words, we’re not robbing other neighborhoods to fill up downtown. Of those 157 units, 106 of them will be purchased or leased by people who are not currently living in the city. And that’s really good, because a city needs to do two things to remain healthy: you need to keep the people here, who are already living here, but you also need to attract new blood."
And now for the challenges. "There are some specific challenges to Springfield that we haven’t necessarily come across in other downtowns," Volk said. "Safety concerns is not really people fearing for their physical safety as they walk down the street. I think it has more to do with the quality of the public realm, in that one should be able to walk down the street without being accosted by drug dealing, prostitution, or by aggressive homeless. Every city has these problems; they need to be addressed. You need to take back your streets, because in order to attract the market that we identified, people need to feel like they can walk down the street without being confronted."
"I heard it in a series of interviews here, across the board, everyone mentioned it," Volk emphasized. "This was a much stronger response than I’ve gotten in any of the other 50 downtown studies that we’ve done. So that said to me that this is an issue that genuinely needs to be addressed, because Springfield has enormous potential, but right now people can’t get past it. They can’t get past what the physical situation is when you walk down the street."
DOWNTOWN CHALLENGES
– safety concerns
– neglected/vacant properties
– high development costs
– developer perceptions
– unsupportive real estate community
– parking misconceptions
– lack of marketing
She went on to explain the other challenges as well. "Neglected, vacant properties could be viewed as a positive, because those are buildings that represent potential development projects. High development costs are not specific to Springfield; it happens in every downtown. Typically, people who own land in the downtown think it’s worth way more than it really is, which makes it really challenging for a developer. Developer perceptions: some of the developers in many cities believe that nobody wants to live downtown. Well, we know that’s not true. And this study will help, I think, assure them that there really is a market."
"An unsupportive real estate community: I actually learned today that it’s not limited to the real estate community, but brokers, personnel departments, will actually steer people away from living in Springfield. And a lot of that has to do with that issue number one, which is why it’s so critical to address that issue, among the first things that you do."
"There’s also typical parking misconceptions, that there’s never enough parking in downtown, even if the entire downtown were a parking lot. And the lack of marketing. We think it’s very important that Springfield, and the downtown, be marketed as the center of the region, and not just another little piece of the Pioneer Valley. This is not again something that’s exclusive to Springfield, but those cities that understand that they need to market all of their assets to the outside world find that the people who live in Springfield, and live in their own city, find their own conceptions changing, and you have an entirely transformed city where it can go from where everyone feels down on the place, to where everyone’s very positive, and you get much more cooperation when you’re trying to undertake various projects."
Volk said, "Getting the private sector in here is your ultimate goal. The city doesn’t want to have to be in the development business, but it has to create the climate that will make it attractive for the private sector. We are quite confident that we have a number of clients that I think once they see our study will be very interested in any potential parcels that might be available here. But it’s very important that you keep in mind that this is a downtown, and it’s urban, and you should not be doing suburban development in a vain attempt to try to bring people back from the suburbs. Again, marketing is key, marketing that will transform people’s perceptions of what Springfield has to offer. Because you have a tremendous amount."
Then she outlined four housing strategies for downtown, including the creation of a variety of housing and unit types; preserving the built environment; supporting mixed-use development; and the establishment of "neighborhood guidelines." Lack of time prevented Volk from sharing much detail about the recommendations, but she underlined that they are intended not to cost the city any money.
In quickly describing some recommended programs and policies in pursuing market-rate housing downtown, Volk highlighted the idea of an arts housing district. "I can’t tell you how critical it is to try and encourage an arts district," she said, "because artists are inherently interesting. They create all kinds of neat stores and neat sculptures that people like. And they are typically poor, so they can’t afford the rents and prices that are available in downtown. Being able to establish a separate district where artists would get special incentives to live there is really critical."
Volk concluded, "The one thing I found when I was here with focus groups is that even though people were very distressed about some of what they viewed as the problems of downtown, and the problems of the city, there was a depth of personal affection and commitment to Springfield that I haven’t seen in a long time. So I think that you have a very strong base from which to proceed. I wouldn’t be surprised if someone called me up five years from now and said, ‘Laurie, you will not believe what’s happening in downtown Springfield.’"
Brian Connors of the Office of Planning and Economic Development told the board that the goal of the day was to get this information out to the people who need it. "This morning," he said, "we met with real estate agents [from] throughout the city, today with the control board and the public, and this afternoon we’ll be meeting with building owners who are considering the future of their building downtown. So the way we look at this is a great tool for us, a tool for outreach, and to the development community."
