The End of the Suburbs: Where the American Dream Is Moving

by Leigh Gallagher

  6

  WHERE THE WEALTH IS MOVING

  I’m going to close my eyes and when I open them I want to see skyscrapers.

  —DON DRAPER, MAD MEN, EPISODE 505, APRIL 15, 2012

  At first glance, the sleek new condo building at 205 Water Street in the DUMBO neighborhood of Brooklyn doesn’t seem out of the ordinary. It is certainly striking—nine stories high with a rust-colored Corten steel cantilevered penthouse jutting out from the top floor over Plymouth Street. But this slick-looking structure is very much in tune with the industrial chic of the neighborhood, a onetime manufacturing district where factories churned out paper boxes and Brillo pads. The lobby of 205 Water is all exposed concrete, the floors steel-plated. A reflecting garden awaits in the courtyard; there is an indigenously landscaped garden on the roof. All sixty-five apartments are lofts.

  But the most striking quality about 205 Water is not obvious from looking at it. The building was conceived, built, and developed by Toll Brothers, the Pennsylvania-based production home builder and the patron saint of the luxury suburban mega-home. You wouldn’t know it from looking at it; the only time the Toll Brothers name appeared on this urban dwelling was during construction when the scaffolding surrounding the site advertised the builder. Even the New York real estate press said the building blends in in an “unerringly contextual” way: the angles on the cantilever structure are inspired by the Manhattan Bridge and the walls of the lobby are made of reclaimed boardwalks from Coney Island. But the master home builder is still having a little trouble adapting to the urban landscape. When Toll’s CEO, Douglas Yearley, came to see the property and saw that the concrete floors in the lobby were cracked and the graffiti had been left on the wall of an adjacent building that was viewable in the courtyard, he told his crew these kinds of things were unacceptable—“we’re Toll Brothers,” he insisted—until they gently informed him the floor was cracked on purpose to give it an industrial feel and the graffiti had been left by design, to create urban charm. “I’m a suburban guy.” Yearley shrugs.

  He won’t be able to get away with that line for much longer. Toll is midway through a little-noticed but extremely ambitious push into big-city real estate. The property at 205 Water is one of sixteen in New York City open or in development as of this writing, and the company has slowly but surely been putting up luxury condo buildings at the most desirable addresses in town. Not even Carrie Bradshaw could have done a better job doing the location scouting: in the hipster enclave of Williamsburg, the company has built Northside Piers, two thirty-story all-glass modern luxury condo towers with open floor apartments, a screening room, and a pool. On the tony Upper East Side there’s the Touraine, a twenty-two-unit ode to Old World elegance with modern services including a concierge, gym, rooftop terrace, library, and wine cellar—and an average selling price of some $5 million per unit. A few blocks away, a sixteen-story building is planned for Eighty-ninth and Park, the white-glove epicenter of the Gossip Girl set. A few miles south in the Gramercy neighborhood sits 160 East Twenty-second, a modern, twenty-one-story, full-service doorman building aiming for LEED certification that will offer studio, one-, two-, and three-bedroom luxury condos. There’s One Ten Third, a Mondrian-inspired boutique building that opened in the formerly gritty East Village in 2006, and there are three communities in neighboring Hoboken. The company will soon test its limits even more, with a hotel and condo community being developed on Brooklyn’s waterfront in partnership with Starwood Capital Group and with the purchase in 2013 of two new properties on First Avenue and in Soho. And at the corner of Twenty-eighth and Park Avenue South, what is now a massive hole in the ground will soon give way to a forty-story glass skyscraper designed by the award–winning architect Christian de Portzamparc. Developed in partnership with the real estate mogul Sam Zell’s Equity Residential and nicknamed by blogs the “Fortress of Glassitude,” the building will house 364 units and will alter the lower Manhattan skyline.

  Is it crazy for the suburban home builder to plant such stakes in one of the world’s most cosmopolitan markets—let alone when the overall economy has yet to fully recover from the mortgage meltdown? Not quite. At 205 Water, where prices ranged from $400,000 to $2.5 million, the condos sold out in a year. The Touraine sold twenty-one of its twenty-two units within four months; as of this writing all that remains is the top duplex, which is on the market for $20 million. Toll’s City Living division, which it formed in 2003, has grown to become one of the biggest bright spots in the company’s portfolio, making up 10 percent of the company’s revenue by units delivered, a figure that could rise to 15 percent. The division recently established a new branch in Washington, DC, and is now eyeing other cities including Boston, San Francisco, Seattle, and even São Paolo. Toll Brothers City Living “is our best market in the country,” Yearley told the New York Times in 2011.

  Toll is just one of many icons of suburbia pushing into urban markets. Within a mile or two of the Touraine, there are three Whole Foods, and a stone’s throw south there’s the Container Store, Home Depot, Walgreens, Victoria’s Secret, and the Gap. Across the nation, everything from store retail chains to sports stadiums to corporate headquarters to young families have been moving into cities and leaving the suburbs behind.

  • • •

  To see that cities are resurgent centers of wealth and culture, all you need to do is set foot in one. Or you can simply set foot in a bookstore. A litany of volumes have come out in the past few years praising cities and urbanism, titles like Richard Florida’s popular The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life and The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work; Aerotropolis: The Way We’ll Live Next by John Kasarda and Greg Lindsay; The Great Inversion and the Future of the American City by Alan Ehrenhalt; and Edward Glaeser’s love letter to cities, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier. Highbrow publications like Salon.com and The Atlantic have launched new sections of coverage devoted entirely to cities.

  Our nation’s big cities have bloomed in the last decade. Reversing a ninety-year trend, in 2011 our largest cities grew more quickly than their combined suburbs. In many of the biggest cities, downtown populations grew at double-digit rates from 2000 to 2010. It’s particularly pronounced in cities like New York, which saw the population within a two-mile radius of city hall grow by nearly forty thousand people from 2000 to 2010—even in the wake of the 9/11 terrorist attacks—and where new census numbers show a net population inflow for the first time in fifty years. In Philadelphia, the 2010 census revealed its population grew for the first time in sixty years, with the fastest growth occurring in the eight zip codes that make up its Greater Center City downtown area. Of all cities, Chicago showed the biggest gain to its downtown area, with forty-eight thousand people moving in. The population of the Loop area alone—Chicago’s central business district—has tripled over the past decade. The influx isn’t stopping: Manhattan is expected to add almost three hundred thousand people by 2030, roughly one new neighbor for every six current residents.

  The transformation has been particularly remarkable in neighborhoods that were once the grittiest. In Washington, DC, Logan Circle has been transformed from a crime-ridden haven for drugs and prostitution into one of the highest-priced residential areas in the city. A few miles away, H Street NE, a onetime blighted stretch of boarded-up buildings, is now filled with restaurants and bars that draw young revelers at night. Nearby, Fourteenth and U Streets, the very corner where riots erupted in 1968 after the assassination of Martin Luther King Jr., is now one of the chicest strips in the city, with coffee shops, restaurants, independent fashion boutiques, and a thirty-three-thousand-square-foot Room and Board store. When it was mulling locations, the seller of upscale, stylish modern furniture analyzed zip codes to identify where the majority of its wealthy young professional customers were; Fourteenth and U showed up as the epi
center.

  Developers have turned many of these neighborhoods into some of the most desirable new enclaves in town. In St. Louis, an old abandoned shoe-manufacturing warehouse is being turned into luxury loft apartments. In Denver, the trendy Lower Downtown, “LoDo,” neighborhood has emerged amid what was once a red-light district. In Boston, a West Coast development firm is building a twenty-story residential tower in Fort Point, the former industrial district that was the setting for much of the Martin Scorsese movie The Departed.

  This is, of course, a stark contrast to the destruction and decay that once plagued our cities, which in the ’60s saw street riots, in the ’70s suffered from white flight, and in the ’80s and ’90s experienced an influx of crime, prostitution, and a crack epidemic that ravaged urban areas across our nation. It’s hard to imagine now, but in New York, it wasn’t all that long ago that Times Square was dangerous, prostitutes trolled the Meatpacking District, and Central Park’s Belvedere Castle was boarded up and covered with graffiti. In 1975, the New York Daily News ran the now-famous headline “Ford to City: Drop Dead,” referring to Gerald Ford’s reluctance to bail the city out from bankruptcy and encapsulating a sentiment that our cities weren’t worth saving.

  But over the years lower crime rates and new public works projects, not to mention major reinvestment, have transformed our urban centers. Across the country, cities that were once left to deteriorate now have so many waterfront marinas, multiplexes, loft apartment buildings, convention centers, and sidewalk cafés that they more closely resemble amusement parks than the dangerous places they used to be. In New York, Times Square is now an only slightly more urban version of Disneyland, and the Meatpacking District on weekends fills up with so many dolled-up twentysomethings, it looks like a nationwide casting call for The Bachelorette. The Upper West Side has enough multiplexes, gargantuan-size restaurants, and national chain stores that it seems more suburban than some suburbs. (“Put a roof over the whole thing, and you could be at a mall in Iowa,” wrote the New York Times about the neighborhood. That was in 1999.) The grit of shows like Taxi and NYPD Blue gave way to the Jimmy Choo Manhattan of Sex and the City and, now its younger, Brooklyn hipsterized progeny, HBO’s Girls. One night last summer, walking home by myself down an abandoned block in Tribeca, I felt my guard go up—a rare event—as I saw two figures walking toward me in the shadows. Then I got closer and realized it was two preteens talking about the boarding school Andover. That Toll Brothers had to pay someone to crack the concrete to make its Brooklyn building look appropriately urban perhaps says it all.

  Even more striking than the reduction in crime is the fact that cities are attracting and keeping young families with children, a group that in the past almost universally decamped to the suburbs. In Philadelphia, much of the population increase over the past decade has come from young households flocking to or staying in its downtown area; the number of adults aged twenty to thirty-four grew 15 percent to nearly four hundred thousand at a time when that age group’s share of the overall population was declining. Similar trends are happening in Providence, Rhode Island, Austin, Texas, Boston, and many other metropolitan areas in the country. Young families are increasingly going out of their way to stay in cities.

  Bethany Daily and her husband always thought they would move from their apartment in Boston’s North End to the suburbs once they had their two children, but the longer they stayed, the more friends they made—and the more they realized they didn’t want to leave. So they moved from their cramped one-bedroom apartment to an only slightly less cramped two-bedroom in the financial district, dividing one of the rooms in two to fit both kids. It’s a tight fit—the kids’ bedrooms are seventy square feet apiece—but Daily says she and her husband will squeeze as much as they have to in order to stay in Boston. She loves the vibrancy of the city, and she thinks her children are getting exposed to things they wouldn’t see in the suburbs. “They see architecture and culture and all sorts of people every day,” she says. “I feel like they’ll take life a little more in stride because things won’t shock them.”

  Daily also values the extra time she’s able to spend with them. To get to her job as a hospital administrator, she either walks twenty minutes or uses Boston’s bike share and gets there in half the time. “I’m able to pull off my job and still see my kids and still get to work out most days and do all the things that are important for me because I don’t have a commute,” she says. “It’s about how I want to spend my time.” The day after we spoke on the phone, Daily e-mailed me to say that our conversation had got her “brain spinning about how much I love our lifestyle.” She listed ten more benefits she’d forgotten to mention, including access to free events like fireworks and “cliff” diving into Boston Harbor; more time because they didn’t have to take care of a big house; and easy access to museums that makes even shorter in-and-out “kid-length” visits worthwhile.

  It’s one thing to stay in the city, but it’s another for young families to beat the traditional path to the suburbs only to pull up stakes and move back to the city again. Yet many are doing just that. Jason Duckworth, the Philadelphia developer who appears throughout these pages, and his wife, Angela, settled in Narberth, an old railroad suburb of Philadelphia, just after their second daughter was born in 2003. Duckworth had been working in venture capital in San Francisco, but both their families were in the Philadelphia area, Jason had the opportunity to run Arcadia, and Narberth seemed like the perfect place, with its walkable urban charm: it has a downtown with shops, a five-and-ten store, and a historic movie house, as well as excellent public schools, a gardening group, and even a rugby team. Downtown Philadelphia is a reasonable ten miles away.

  When I first started talking with Duckworth for this book, I thought he would end up serving as an example of just how great suburban life can be. Then one day in passing, he mentioned he was moving his family into Philadelphia’s Center City. When I pressed him, Duckworth shrugged. He and Angela realized they are happier in urban places, he told me, but they were really moving for their daughters, now ages nine and eleven. In the city, he thinks they’ll have a more diverse group of friends and acquaintances. “I want them to have more exposure to the world,” he said, “and not be so sequestered as I fear they will be.” He said he got some flack from a few of his suburban neighbors, one of whom said she thought they were making the move solely for themselves and not for their children. “It’s okay if that’s your reason,” she told him, “but just admit it.”

  Toll Brothers, for its part, is looking to market its new city developments to families just like the Duckworths and the Dailys, but the company is also targeting empty nesters returning to an urban environment, international buyers, wealthy Wall Streeters, retirees, and incoming millennials. “The reason New York is so hot and is our best market is because it’s ‘all of the above,’” says Toll’s Yearley.

  • • •

  For the clearest picture of where American wealth is moving, it’s always a safe bet to watch what retailers do. In increasing numbers, they’re charging into cities, too. Walmart, the retailer known for its enormous footprint above all else, has been fine-tuning new formats designed for more urban areas: Neighborhood Markets, which are less than a quarter the size of its supercenters, and an even smaller Walmart Express format, which measures about the size of a standard-issue CVS. Walmart has said it is planning “hundreds” of these smaller stores across the country in the coming years. By 2016 Best Buy plans to double the number of its smaller-format Best Buy Mobile stores. Even Target, which more than other big-box stores tied its strategy to the growth of the suburbs, is going in the other direction, opening a new urban format store—called, simply, City—that’s two-thirds the size of its typical store. The first opened in downtown Chicago, and stores are planned for Los Angeles, Seattle, and San Francisco. “You have a massive rush throughout retail to get small,” Leon Nicholas of market research firm Kantar Retail told the Wall Street Journal. “Honestly, I am not
sure what’s going to happen with a lot of these giant boxes.” As of this writing, JCPenney, the quintessential old-school mall anchor, had just announced plans to lease a high-profile building in Manhattan’s Soho.

  Company headquarters, too, are starting to relocate back to cities from their massive suburban office parks. This has been particularly true in Chicago, whose suburbs have long housed some of the bluest of blue-chip corporate campuses—McDonald’s in Oak Brook, Kraft in Northfield. But in 2007, United Airlines left suburban Elk Grove for downtown Chicago. This year, Hillshire Brands (formerly known as Sara Lee Corporation) will move from its headquarters in Downers Grove to a new space in downtown Chicago. Motorola Mobility is shuttering its Libertyville campus and moving all three thousand workers to Chicago’s Merchandise Mart. “The whole corporate campus seems a little dated,” Joe Mansueto, CEO of Morningstar, which has always been in Chicago, told Crain’s Chicago Business in an article about the city’s many corporate campus reverse migrations (“Like the disco ball, the regional shopping mall and the McMansion, the suburban corporate headquarters campus is losing its charm,” the story began). It’s not just Chicago. In New York City, UBS is said to be mulling plans to return to Manhattan from Stamford, Connecticut, where it moved in the mid-1990s. In 2011, Quicken Loans relocated from suburban Livonia, Michigan, to downtown Detroit. In Philadelphia, venture capital firm First Round Capital moved from suburban Conshohocken to University City. The list goes on and on as companies competing for younger workers realize they need to move to where the talent wants to live.