The inexorable urbanization of the San Diego region, driven by intense employment and population increases at the rate of 35,000 jobs and 50,000 persons each year, is forcing policymakers to consider how to accommodate the growth without cramping quality of life. Numbers aside, many of the changes unfolding have to do with demographics and how new generations make decisions that are seemingly non-land use on the surface, yet significantly alter how and where we live.

The Blossoming Of Gen Y

Nearly 79 million people, or 26 percent of this country’s population, are considered Gen Y or alternatively echo boomers or millennials. Most are teenagers, born between 1977 and 1994, ages 8 to 25. One-third are Hispanic or black, making it the most ethnically diverse subpopulation of any previous generation.

The U.S. birth rate started rising in early 1980. From 1989 to 1993, more than 4 million babies were born annually, the first time that happened in almost 30 years. Today, nearly 57 million children are under the age of 15, with more than 20 million in the 4-to-8-year-old category. In 10 years, when the oldest member of Gen Y is 35, they and all of those younger will make up 41.4 percent of the U.S. population.

In San Diego, 22 percent of the population, some 606,000 persons, are Gen Y. They now number about the same as their parents, the baby boomers, who total 24 percent of the population or 652,000 persons. Over the next 20 years, Gen Y will grow by 150,000 persons. The baby boomers will decrease in size, as will the in-between Gen X population, which today is slightly larger than Gen Y at 24 percent of the population but will fall to 19 percent by 2020.

When the baby boomers arrived between 1949 and 1964, they changed the world. They caused a boom in school construction and led the protest era of the 1960s. The first condominium craze of the early 1980s was their doing, as was the demand for single-family detached starter homes immediately following.

Yet perhaps the boomers’ greatest impact is the large number of children they have sired. Their Gen Y offspring bring huge market implications. Already they are the obvious targets for most retailers, from soft goods to consumer electronics. This generation uses the new toys of our time with the same comfort and ubiquity that their parents utilized telephones and televisions.

Gradually, this technology comfort level will affect land use and alter the San Diego region as that group becomes more involved in government and business.

In Touch

The computer, Internet, cell phones and PDAs are impacting how and where we live. Untethered from a physical office, more people can conduct their business seamlessly from anywhere. In the office, growing numbers are participating in video conferences using a camera on top of the computer. If physical attendance at meetings is not always mandatory, people have a much wider array of options on where to live and work.

This trend must be taken into account as developers ponder and propose new Downtown office buildings. Downtowns no longer function as pure central business cores. This does not mean that they are vestigial as office centers, rather they are simply evolving. The increasingly footloose nature of business is a direct result of the emergence of communication technology, a trend certain to accelerate as Gen Y comes of age.

Transportation Breakthroughs

Over the first half of the 20th century we grew inside our urban cores, clustering households near jobs. In the second half we began to grow to the “edges” as the automobile and its freeways took us to ever farther suburbs. Today, despite the increasing freeway congestion that pattern created, the solution is no longer simply the construction of more roads.

We have erred over the years by not building many freeways, local connectors and relief arteries, but the cost is probably too high, and the issues too complicated, to focus on an infrastructure-only solution. Instead, the challenge is to use the many transportation options available to improve our capacity and efficiency of movement. In the coming years we will see autos equipped with sensors allowing drivers to go bumper to bumper at high speeds and new mass transit options.

My own personal favorite is the implications of personal transportation devices such as the Segway Human Transporter the new battery-operated, computer-calibrated personal transportation platform that is now legal and will be introduced this month to the first wave of purchasers. If people can travel locally over relatively short distances with speed and efficiency, shouldn’t that have major implications for our urban development? The impact of such a device could be as major as the train and auto when they carried workers to their new homes out of the urban center.

Implications

The implications of these changes applied to a metro area or a nation are profound. It is unlikely we are building a nation of home workers or urban dwellers. But we are changing the way and the where of doing business, including the location of business-to-home, how much space we lease, and what takes place within that space. The impact of technology is all around us: it covers all types of land use, including our offices, our homes and our shopping centers.

Multiply these incremental decisions by people all over the metro area, and the shape and feel of that area alters over time. The traditional, centrifugal view of the city — the old model in which the center city is the most important and most valuable location in the market — long ago gave way to a much more complex, multiple nucleus metropolitan area. In our city of the future, the traditional purpose of each community is no longer guaranteed.

San Diego County Population Born Since 1948 By Generation Source: The London Group Realty Advisors, Inc., U.S. Census 2000

A sense of premium or value will not be easy to gauge. Limited housing affordability alone will cause the Gen Y population to reevaluate its lifestyles. The building industry will catch on to new demands, eventually reversing the trend of bigger homes in remote areas, to smaller, more efficient and presumably more affordable homes in numerous infill locations.

This snapshot of changing demand generated by Gen Y is the perfect platform for changes in urban policy. At 79 million strong and with an influence of more than $500 billion in household spending, they are a force to be reckoned with, to wit:

• The first Gen Y’s are graduating from college and will enter the work force, increasing their already huge spending potential.
  
  
• Gen Y is the most ethnically diverse generation to date. They are far more tolerant of diversity than any preceding generation.
  
  
• They have been raised in relative affluence, a tendency that will serve to revitalize urban areas.

How does one capture Gen Y? By creating public policy that flexibly weaves them throughout the community, accommodating their propensities, and embracing change and experimentation in lifestyle, transportation and land use. It is a challenge San Diego’s leaders, political and real estate, face today.

Gary H. London is president of The London Group Realty Advisors Inc., providing real estate consulting and economic analysis. Check him out on the Web at www.londongroup.com.