Author's update: Walkable City author Jeff Speck visited the Fool's headquarters to discuss his book recently. Watch my interview with Speck in the following video.
Since the invention of the automobile, Americans have, over time, become less interested in walking as a form of transportation. When it's convenient, driving is a more attractive alternative. And, in most cities, driving's not only more convenient, but it's the only option.
As a result, Americans walk less than citizens of any other industrialized nation, a statistic that has leaders in many fields -- including economics, national security, medicine (link opens PDF file), even online retail -- advocating for a new approach.
Such an undertaking -- a redesign of the American dream -- would dramatically change our day-to-day lives. It would also have ramifications for all types of industries, from real estate to retail to transportation. According to a leading practitioner in the field of city planning, however, this change is already taking place, and it's an easier one to make than you might think.
Toward a Walkable City
Jeff Speck, an architect in Washington, D.C., has spent decades analyzing and designing cities, and from his perspective nothing is more important than creating environments conducive to walking. In his new book, Walkable City: How Downtown Can Save America, One Step at a Time, he sums it up as follows: "I have watched my focus narrow to [walkability] as the one issue that seems to both influence and embody most of the others. Get walkability right and so much of the rest will follow."
What often follows, in Speck's experience, are healthier, wealthier, and more sustainable cities. In other words, investing in "walkability" pays outsize dividends, and the cities that get this right will reap the lion's share of these social, economic, and environmental benefits.
In Walkable City, Speck vividly describes the state of America's downtowns, outlines a demographic shift that is quietly changing the American landscape, and provides a straightforward 10-step plan for redesigning our towns and cities. It's a provocative but approachable read, even for non-planners. Below are a few takeaways I found particularly relevant, along with insight into why businesses should pay close attention.
Walkability for wealth
There's a simple reason, according to Speck, that our communities have taken their current shape, and it's primarily attributed to the death of the "generalist": "The modern world is full of experts who are paid to ignore criteria beyond their professions."
From Speck's perspective, when so-called professionals like traffic engineers are "solving" the imminent problems of our cities, they're ignoring the more pressing questions posed by the citizens and mayors alike. The first one, not surprisingly, pertains to jobs: "What kind of city will help us thrive economically?" is so often asked.
To answer this question, Speck investigates the rise of the "creative class," a term coined by urban planner Richard Florida, which describes a demographic group Speck believes represents the "walking generation." Consisting primarily of millennials, this younger generation has a different perspective on everything from cars (they own fewer, they drive less) to the job market to home ownership. As he points out, "64% of college-educated millennials choose first where they want to live, and only then do they look for a job. Fully 77% of them plan to live in America's urban core."
These are highly attractive job candidates for employers, and they're not settling in typical suburban settings. As a result, employers are taking note. Technology-driven companies like Google, Amazon.com, Facebook and Twitter all recently opened corporate offices in dense, walkable neighborhoods to align themselves with this new class of workers. Expect others to follow.
Still, the rise of the creative class might not be the most interesting demographic shift yet to come. As Speck explains, "There's a larger one: the millennials' parents, the front-end boomers. They are citizens that every city wants -- significant personal savings, no schoolkids."
Guess what? This cohort of boomers is less interested in maintaining their spacious suburban homes, and they're flocking to walkable, accessible communities too. Combined with the millenials, this means we're looking at 101 million new households taking shape by 2025, and 88% of those are expected to be childless. This compares with about half of household starts including children in 1970.
This massive movement, if it occurs, will take years to unfold, but don't expect real estate executives to stand by and watch. Instead, the savviest investors recognize the opportunity, especially the significant premiums being paid for properties in walkable neighborhoods versus suburban houses. "In the Seattle region, that premium is 51 percent; in Denver, it's 150 percent. New York City, unsurprisingly, tops the list at 200 percent."
While no one can predict what America's economy will look like in the years to come, you can expect it to rely heavily on an intelligent, creative workforce. After reading Speck's discussion of the creative class, it's hard to argue that downtowns will not be critical to attracting these highly skilled young employees.
"The conventional wisdom used to be that creating a strong economy came first, and that increased population and a higher quality of life would follow. The converse now seems more likely: creating a higher quality of life is the first step to attracting new residents and jobs."
Walkable City also delves into the health and environmental benefits of accessible, walkable downtowns. Speck provides anecdotal evidence and thorough research that reveals the need for walkable downtowns to curb our obesity problem and address carbon emissions in a serious manner. The arguments are equally as compelling as the economic case for walkability, but perhaps ones that interested readers should explore firsthand. For now, let's examine walkability as it pertains to investors and a new way of doing business.
Big business should take note
About halfway through Walkable City, you start to realize the huge negative effects of years of planning for suburban sprawl. You wonder, at the same time, whether we should ever listen to a city planner again when it comes to this issue they supposedly know inside and out.
Well, for folks like Jeff Speck, that's been precisely the problem for decades -- since Jane Jacobs' book The Death and Life of Great American Cities disrupted the planning community's entire way of thinking in the 1960s. Cities were planned so poorly for so long that when planners woke up to the reality, hardly anyone was ready to listen.
But that dynamic is starting to change. As mentioned above, experts in a variety of fields recognize that our city designs are outdated. Even the business community is listening and getting on board.
For investors, this budding trend could shake up entire industries. We're already witnessing the slow death of the suburban shopping mall, which might be a story less about online retail than it is about our changing culture. Would we rather spend our time at a remote mall or at a neighborhood shop that's just down the street?
And the auto industry could be next in line. As The Economist recently pointed out, "In the rich world the decades-long link between rising incomes and car use has been severed (see article), and miles driven per person have been falling." What happens if car sales in the world's wealthiest countries hit a saturation point (see Europe)? Or even start to decline?
Where all the lights are bright
No business executive has been more vocal about addressing the needs of our downtowns than the CEO of Zappos, Tony Hsieh. Running a billion-dollar online retail operation is his first priority, of course, but reinventing Las Vegas' downtown has become a close second. Or perhaps they go hand in hand.
Hsieh recently dedicated $350 million of his own money to reviving over 20 acres of downtown Las Vegas. Ironically, he's investing heavily in small businesses, but also keeping Zappos' objectives in mind. As he points out, "The research has shown that every time the size of a city doubles, productivity or innovation per resident increases by 15 percent. But when companies get bigger, productivity per employee generally goes down." Hsieh wants downtown to become a hub for all of Zappos' employees, which will hopefully result in productivity increases for both the company and the community.
While Zappos employees will relocate from their Henderson, Nev., headquarters to downtown Las Vegas in the next six months, Hsieh's personal investment in the Downtown Project could take decades to pay off. In the near term, however, he's really investing in a better quality of life for his employees at Zappos. And when it comes to employee happiness, Zappos, which consistently ranks near the top of Fortune's Best Companies to Work For list, seems to know a thing or two.
Perhaps the rest of the business community should do some research and follow suit. For further reading, Walkable City is a good place to start.
Isaac Pino, CPA, owns shares of Google. The Motley Fool recommends Amazon.com, Facebook, and Google. The Motley Fool owns shares of Amazon.com, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.