WON'T YOU BE MY NEIGHBOR?: Who's moving in next door?

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As the population ages and moves, cities and suburbs will begin to blend.

As technology continues to redefine how we live and where we can work, what will this mean for our neighborhoods? The digital age has already transformed our homes, allowing many of us the flexibility to work in our pajamas, while forcing us to bequeath a section of our residence to office gear. Now it's about to change the definition of our neighborhoods and communities.

In some ways, it already has. Once, the words neighborhoods and communities were interchangeable. A community was defined by the bricks-and-mortar region a person chose to occupy. Increasingly, they are being defined separately: A neighborhood is a place where one lives, and a community is the social circle one chooses to inhabit. Chat rooms, online communities, and message boards have allowed like-minded people to connect with one another in the same way neighborhoods once did, argues futurist Ryan Mathews of FirstMatter LLC, a Westport, Connecticut, think tank. "Now you can live in one geographic area and have a community in multiple geographic areas," says Mathews. "And it's quite possible to not know your neighbors."

Yet, rather than eliminate the necessity of neighborhoods and communities, the tools of the New Economy may reinforce the need for both. Chat rooms, instant e-mail, and international cell phones have broadened our sense of place - much the same way tools of the Old Economy (airplanes and automobiles) did years ago, by shortening the distances between places and people. And just as the Old Economy's inventions didn't eliminate the need for a sense of community, new technology isn't about to supercede that most human of desires, either. Says futurist Watts Wacker, also of FirstMatter: "The more ether-centric your life becomes, the more you'll want to be part of the physical community. You'll want it even more because it'll be even more apparent to you when it's not there."

As a result, communities with a growing number of at-home workers will generate services to supply their needs. People working at home, for example, will be more likely to want to get out of that home office to work out at a local health club than to have exercise equipment in a home gym. Without the social environment of an office workplace, home workers have a need to connect to other people in their neighborhoods, and that's where retailers can play a role, says M. Leanne Lachman, a principal at Lend Lease real estate investments in New York City. "What we may see evolve is more ordering online, but you have to go by Foot Locker to pick up your order, for example," she says. "That gets people out and about, collecting things."

That's just the beginning. Technology, combined with changes in demographics, will once again force us to redesign our physical neighborhoods. It took nearly five decades for Americans to become comfortable with the idea that we were moving away from cities, toward life centered in their suburban outer-rings. Now just as we have begun to accept the "burbs" as the predominate way to view communal life, rapid changes are transforming our ideas of both cities and suburbs - making them seem as outdated as an episode of Leave it to Beaver. Soon, our cities may look more like our suburbs and our suburbs may take on characteristics of our cities.

The two factors why: boomers and immigrants. We've heard time and again how these two demographic groups will reconstruct the face of America. By one estimate, immigrants and their kids will account for more than half of the 50 million people who will be added to the nation's population over the next 25 years. Also within that quarter of a century, America's elderly population will rise by almost 80 percent on the strength of aging boomers, according to demographer William H. Frey of the Milken Institute.

These population shifts are expected to have a profound impact on our sense of place. Some boomers are expected to seek out resort-like living accommodations in Sunbelt locations. Some may stay where they are. And others, particularly the younger and more affluent segment of the aging boomer population, will give cities an urban facelift. For certain older cities, this changing and evolving esthetic will fuel astounding growth. A recent Brookings Institute Survey projects downtown residential populations will grow by at least 38 percent in 23 cities between 1998 and 2010.

As that shift drives up housing prices, it will force immigrants - folks who typically settle in states such as New York, California, and Texas - to head to the suburbs. In fact, immigrants have already begun to move further out into the greater metropolitan areas, breaking age-old housing patterns and bolstering areas that would otherwise face declining populations or zero-growth rates. From 1990 to 1997, about 3 million people moved into the suburbs. As in the past, young families in search of good schools and a patch of grass continued to lead the march to home ownership.

As new families have begun to settle into the older suburbs, the move has raised a host of questions. Across the country, formerly homogenous and aging communities are suddenly forced to tackle issues ranging from a lack of childcare facilities to the need to support multilingual education in the schools. School districts in New York, California, Texas, and Florida, for example, will face huge teacher shortages over the next few years as the systems try to play catch-up with the shifting demographics. And businesses on suburban main streets are hustling to keep up with the different ethnic tastes of their new local customers. The consumer needs, tastes, and spending habits of new immigrant groups are often somewhat different from native-born groups. Hispanic households, for example, tend to spend more on food, utilities, and shelter, and less on services and healthcare than other demographic groups, even after adjusting for income and family size.

It's these types of individual needs that marketers will want to be mindful of over the next 25 years, as the nature of business changes substantively. Marketers have built stores on the assumption of a mobile population, but what do they do when a majority of the population becomes less mobile? Says Mathews: "Businesses in this country have evolved around the mall model: large box, multiple lines. But you can't move those businesses into the city. We've gone through this era of big-box retailing. If these affluent markets move back to the cities, all of these big-box businesses will have to regroup or cease being attractive to their core consumers." Unless they tailor their products to suit the new demands of their consumers.

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