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Friday, March 25, 2005

Long Term Demand for Housing is BIG

TOWARD A NEW METROPOLIS:
THE OPPORTUNITY TO REBUILD AMERICA

Arthur C. Nelson
Virginia Polytechnic Institute and State University
A Discussion Paper Prepared for
The Brookings Institution Metropolitan Policy Program

Most American states and metropolitan areas have some idea as to the amount of growth
they expect over the next several decades, based on estimates of projected demographic,
household, market and industry trends. These estimates form the foundation of public policies and are vital for use in goal setting, planning, and implementation of a variety of growth and development However, there is not a general sense of how the projected changes in demographic, household, and market trends will impact our nation's built environment—that is, how many new homes, office buildings, and other physical structures will need to be built to accommodate future growth. To that end, this paper examines a series of projected trends at the national, state, and metropolitan level to determine the estimated demand for new housing, commercial, and industrial

In short, this paper finds that:
• In 2030, about half of the buildings in which Americans live, work, and shop will have
been built after 2000. The nation had about 300 billion square feet of built space in 2000.
By 2030, the nation will need about 427 billion square feet of built space to accommodate
growth projections. About 82 billion of that will be from replacement of existing space and
131 will be new space. Thus, 50 percent of that 427 billion will have to be constructed
between now and then.
• Most of the space built between 2000 and 2030 will be residential space. The largest
component of this space will be homes. Over 100 billion square feet of new residential
space will be needed by 2030. However, percentage-wise, the commercial and industrial
sectors will have the most new space with over 60 percent of the space in 2030 less than 30
years old.
• Overall, most new growth will occur in the South and the West. There is tremendous
variation in the total amount of buildings to be built between regions. In the Northeast, for
example, less than 50 percent of the space in 2030 will have been built since 2000, while in
the West that figure is about 87 percent, a near doubling of built space. Fast growing
southern and western places—states like Nevada and Florida and metropolitan areas like
Austin and Raleigh—will see the most dramatic growth.
• Though a small component of overall growth, the projected demand for industrial
space in the Midwest outpaces that of the other regions, unlike the other major land
uses. States with a strong industrial presence will see the largest amount of growth in
industrial space even though other areas may witness faster growth. After California, which
far outpaces the nation in terms of absolute square feet of new industrial construction, the
next four largest producers of industrial space are all Rust Belt states in the Midwest: Ohio,
Michigan, Illinois, and Indiana. By 2030, 70 percent of the Midwest’s industrial space will be
less than 30 years old.
• While these projections may seem overwhelming, they also demonstrate that nearly
half of what will be the built environment in 2030 doesn’t even exist yet, giving the
current generation a vital opportunity to reshape future development. Recent trends
indicate that demand is increasing for more compact, walkable, and high quality living,
entertainment, and work environments. The challenge for leaders is to create the right
market, land use, and other regulatory climates to accommodate new growth in more
sustainable ways.

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