Jul 08, 2016

Housing Trends

Roommates, Not Neighbors

There once was a story of two roommates. Both had big, outgoing personalities. Both were beautiful in their own way. Both would work hard all day, but loved to have fun at night. Even though they lived in the same house, there was a wall dividing their home into two. Sometimes one roommate would go to the other roommate’s side and spend a little time, but for the most part they would spend their time on their own side of the house (part of the problem was that the door between the two sides of the house was sometimes locked or difficult to open). Then one day, the roommates realized that life could be so much better if they behaved as one household, rather than two individuals occupying the same space. So they set out to make a plan… Who are these roommates? They are San Diego and Tijuana.

The similarities and differences between these two cities are well documented but not always well understood. This summary provides insights from the recent Baja Real Estate Symposium produced by Probien and the Urban Land Institute.

A few weeks ago, a full day conference of speakers and best practices from both sides of the border (including the Meyers Research team) produced some interesting takeaways that started with the challenge of having real estate solutions that considered the regional impact of decisions that could benefit both sides of the border. Here is a summary:

Demographics imply specific opportunities: Baja is a very young market with an average age of 22 years. This is significantly younger than the 35 year old average age in San Diego County. This youth explosion implies a significant opportunity for an increase in the development of good quality rental apartments and supporting commercial that is focused on activity and open space. In addition, San Diego suffers from a shortage of developable land, and there may be ways to address some of that demand south of the border over time;

Tactical Urbanism is alive and well in Tijuana: the concept of tactical urbanism, where short term land use adaptations lead to long term changes, has been taking place for years in Tijuana. A major driver of this has been the burgeoning food and wine culture, led by world-class chefs and a growing wine country in Valle de Guadalupe. Further, there are a series of new buildings (existing and under construction) that are ushering an architectural renaissance into Tijuana.

Residential and commercial uses can embrace many of the same “lessons learned” from Great Place Making: we are seeing residential and commercial development on both sides of the border embracing the “four Fs” of transformation:  1) Food; 2) Fitness; 3) Fun; and 4) Facilitating access to outdoor activity. Some great commercial examples were provided by the Alexandria Company and terrific execution in the residential space was shown by Newland Communities. It should be noted that, regardless of whether we are creating (or redeveloping) spaces in which we live, work, or play, the principles of great place making for residential and commercial uses are rapidly coalescing into the same thing.

Capital is still not educated on the opportunities in Baja: the vast majority of real estate development capital in the Baja region is provided by private sources and Mexican based financial institutions. While there are still some legal and process improvements that can be made to facilitate more investment by U.S. sources, perhaps the most significant barrier is the lack of great real estate information in the Baja region, which makes telling the story of the region’s evolution more difficult to do.

The Concept of Building Healthy Places is the Focus: the day-long conversation kept coming back to the same conclusion – that we need to integrate our built environment with the natural environment and enhance the population’s opportunity to walk more and drive less. For Tijuana, the direction has been set and progress is being made by integrating its culture with community evolution.

In 20 years from now, will we be neighbors or roommates? We are certainly friends, and now that the conversation has been started, the future is bright!

If you would like to discuss how we can help with your cross-border project, please contact me at the email address below.

Timothy Sullivan, Managing Principal


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