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In the 1960s, the “white flight” movement, which drove middle-class America to the suburbs en masse, contributed to the depletion of inner cities. Infamously, in 1975, President Ford dismissed the federal bailout requests from a near-bankrupt New York City. That made national headlines, and New York spiraled into a black hole of urban chaos, crime and decay.
But times change. The American urban renewal has seen the past dramatically reverse. Inner-city neighborhoods were repopulated and revived throughout the United States. This phenomenon is a developing trend that is over a decade in the making, and still has ways to go. In light of it, how will our cities look like in the future?
Current migration trends are leading to the rebirth of older buildings and historic architecture. This is highly visible in my firm’s primary market, Brooklyn, New York. For instance, Two Trees Management, a large local developer, has revived the formerly dilapidated Domino Sugar Factory — and quite impressively, at that. Indeed, featured in this large-scale redevelopment are an 11-acre waterfront park, a volleyball court, a restaurant, a picnic area and 2,300 apartments. And these include a large portion of affordable housing units available at below-market rates for renters whose income is below a certain threshold.
All the more, the same developer is now proposing a waterfront beach. Yes, Brooklyn may soon have a brand new sand beach where locals can tan while looking at the Manhattan skyline. Long gone are the 1950s of Arthur Miller’s A View From The Bridge, in which two poor illegal immigrants from Sicily work as longshoremen on the Brooklyn docks. They would be lifeguards today.
Interestingly enough, urban renewal in many parts of Brooklyn has often followed the theories of Jane Jacobs, a prominent mid-20th century New York activist. She advocated for “small-town life” within large cities, such as in the Cobble Hill or Bed-Stuy neighborhoods. She called her era’s urban planning disregarding of the needs of city dwellers, and vocally supported dense mixed-use developments, walkable streets with large sidewalks and an active street life that ensures public order.
Not so surprisingly in the days of Instagram, smartphone and easy international travel, the rest of the world has followed cities in the United States in their rebirth: Shoreditch, in London, has gone from rundown to fashionable to unaffordable (and now so high-end that it is home to Europe’s first Nobu Hotel). Similarly, Eastern and Northern Paris have gone from dangerous to cooler than Brooklyn (if that is possible).
While previously a manufacturing powerhouse, Milan, Italy was characterized by abandoned rail tracks and industrial wasteland in the 1990s. In the city’s north, the Porta Nuova area became a symbol of urban decay. Nevertheless, in 1997, legendary Texas developer Gerald Hines led an effort to redevelop the neighborhood into a cutting-edge office district. Today, it is home to Italy’s highest GDP/district, to Italy’s tallest skyscraper and most noticeably to the eye-catching “vertical forest,” the self-proclaimed world’s greenest building, featuring 800-plus trees (with a going rate on Airbnb of nearly $500 per night). All of that while blending in the 1810-built Neoclassical stone gate that gave its name to the area.
And of notice, Hines modeled one of the world’s largest malls, the Houston Galleria in Texas, after Milan’s Galleria Vittorio Emanuele II, itself Italy’s oldest active shopping mall (completed in 1877).
Such continuity has value. As technology increasingly makes everything virtual, human beings will seek more and more anchor points reminding them of their real-world roots. As we speak, retailers are reportedly exploring ways for customers to pay not with their smartphones, but directly with their hand palms via a scan that would link human bodies to their respective credit card information. You read this correctly.
Berlin, Germany, might be Western Europe’s most impressive revival story. Destroyed and severely depopulated upon the Second World War, the former East Germany city is truly the Brooklyn of Europe, where everyone seems to be 25 and speaks flawless English. Whether the Bundestag (parliament) with its glass rooftop dome visitable by tourists, or Museum Island with its blend of brand new modern art facilities and 19th century monuments exhibiting Byzantine and Babylonian art pieces, the juxtaposition of old and new is breathtaking. Real estate developers have even managed to build luxury homes footsteps from what remains of the Berlin Wall.
Brooklyn, Milan and Berlin have thrived on the visions of innovative developers. Those are far from frenzied, Rastignac-style buy-and-flip deal-makers. They enrich cities more than themselves. And in major capitals, the largest financial returns are usually associated with the boldest and most noble endeavors.
As the world’s population keeps recentering into large urban centers, and as locals become more invested in their areas (emotionally and/or through homeownership), we will see more and more new-blends-old architectural projects. In the same spirit, rebuilding Notre Dame in Paris with a futuristic glass roof that would respect its former look would be welcome. Including a glasshouse and making the building carbon-neutral would be a good idea. What better way for France to show the world it embraces both its past and the future with open arms, and addresses the concerns of our era?
The future of real estate private equity, development and urbanism belongs to those with a vision, with both the staying power and the willpower to implement it — but also to those who can relate to humankind and link the past to the future. The real estate industry must never cease to challenge and elevate itself to blend the past into the future. We don’t want to live in dull cities, or visit them. Given the impact of architecture and city planning on GDPs, there is more than meets the eye, literally.