John Vomhof Jr.,
Staff Writer
Minneapolis/St. Paul Business Journal
April, 2011
Urban sprawl is dead, a victim of the recession and shifting population trends.
That was the news State Demographer Tom Gillaspy brought to Minnesota retail real estate professionals at an International Council of Shopping Centers (ICSC) event earlier this week at the Mall of America.
“That outward movement — what was more than a half-century trend — just stopped,” Gillaspy said, citing the most recent U.S. Census data. “Urban sprawl may have some brief resurgences, but for the most part it’s over with. Does that mean we’ll all move to Minneapolis and St. Paul? Probably not, but I’d say the beltway and interior.”
That’s one of several new demographic trends that could dramatically affect retail development and leasing in the years ahead. Also making a big impact will be a rapidly aging population and altered consumer behavior following the recession...
The end, or at least sharp decline, of urban sprawl is largely due to shifting population-growth rates. In recent years, the suburbs and exurbs, which were growing at an average rate of 2 to 5 percent at the start of the 2000s, now are growing at more modest rates of roughly 1 percent.
...
Growing older
Minnesota will see unprecedented increases in its population of people 65 years or older in the years ahead. Nearly 275,000 people will join those ranks this decade, more than in the past four decades combined. Another 350,000 people will turn 65 in the 2020s. That’s significant because older consumers spend their money differently than younger consumers. Gillaspy pointed to a 2006 consumer-spending survey which showed that households where the head of household is between 55 and 64 years old spend significantly more on prescription drugs, home repair and reading materials than do households where the head of the household is between the ages of 35 and 44. Meanwhile, the older consumers spend significantly less on household services like cable and Internet, footwear, entertainment and eating out. “If people have to spend more money on health insurance, they have less money to spend on shoes. It starts to impact retail sales,” Gillaspy said. The tenant mix at local shopping centers — and the products and services offered by existing retailers — will start to shift as a result,
...
Slow recovery
The local economy may take longer than normal to bounce back from this recession, in part because of the aging population, ... Normally, “frugality fatigue” kicks in at the start of a recovery as people grow anxious to start spending again after a long period of cutting back expenses to save money, but that’s not the case this time around. “They haven’t come back as they normally would because they’re still trying to recover their retirement balances,” ... “That’s much more of an issue now because we’re getting older.” Personal wealth also declined during the recession, largely the result of falling home prices. That’s another factor that is holding back spending, ...
“Most of what people spend comes out of income. You work, you get paid, you spend money,” ... “But part of it also comes from wealth. Americans spend about 5 percent of the their wealth each year.”
What’s ahead
At an International Council of Shopping Centers meeting earlier this week, state demographer Tom Gillaspy told retail executives that changing demographics and lingering effects of the recession will have an impact on their industry.
• Urban sprawl is dead: Population growth in the suburbs and exurbs has slowed, while growth in urban counties has accelerated, and Gillaspy expects that trend to continue.
• Growing older: Minnesota’s population is aging rapidly, and that will affect retail trends. Older people spend more on things like prescription drugs and home repair, but less on cable and Internet services, footwear, entertainment and restaurants.
• Slow recovery: While there’s pent up demand for consumer goods following the recession, aging consumers will rebuild their retirement savings before they boost spending again.
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http://www.bizjournals.com/twincities/print-edition/2011/04/08/urban-sprawl-is-over-mall-officials.html?page=all
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