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New City Construction - 8/18/14

For decades, new construction was largely a suburban phenomenon.  Job and population growth tended to be concentrated in leafy subdivisions located away from central cities, which prompted construction of new residential subdivisions and suburban office parks. 

But times have really changed.  Today, a growing share of development is taking place in center cities as both population and jobs return.  As reported in the Wall Street Journal, Toll Brothers, the nation’s largest luxury builder of homes, reports that revenue from its multifamily and high rise tower businesses represented more than 20 percent of the company’s total sales last year, up from less than 3 percent in 2000.  The company is presently looking to expand its urban business into Boston, San Francisco and Miami.

Housing consultant IBISWorld estimates that by the end of the current year, national construction of new condominiums and apartments buildings will have increased at an annual average rate of 28 percent since 2009.  And much of the construction is happening in cities.  According to analysts, suburban markets aren’t seeing the same interest in speculative housing development that was observed a decade ago during the housing boom.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.