Behind the Numbers
The boom in downtown residential redevelopment in Rochester and other upstate cities is one of the most encouraging aspects of the current economic environment.
According to the Rochester Downtown Development Corp., 38 downtown commercial buildings are being or have been converted to residential and mixed uses since 2000, and nine new residential projects have been built.
All told, the downtown residential population has grown to nearly 6,000—an increase of 1,900 since 2000. An additional 1,700 or more residents are expected in the near future with projects now in the pipeline.
Despite the increase in new residential inventory, the vacancy rate for downtown market-rate rental properties remains tight at 4.9 percent—down 2.3 percentage points from August 2012.
Demographic trends are underpinning the remarkable increase in urban real estate momentum.
The number of Monroe County residents between the ages of 20 and 34—prime consumers of rental accommodations—has grown by an estimated 13.1 percent since 2006, according to estimates by market research firm Moody’s Analytics (Figure 1). In contrast, the county’s overall population is up only 1.5 percent over the same period.
This increase is part of a broader nationwide trend—the so-called millennial generation—in which the number of persons aged 20 to 34 has increased by 8.6 percent since 2006, topping the 6 percent gain in total population.
Increasingly, younger adults are gravitating to vibrant “24/7” urban living environments, creating demand for new downtown rental housing.
While the millennial segment’s growth rate is expected to slow in the coming years, in absolute size, the 20-to-34 demographic will remain significant—averaging over 21 percent of the countywide population, slightly above the national average (Figure 2).
This favorable demographic trend should continue to boost the Rochester economy through the remainder of the decade.
Gary Keith is vice president and regional economist at M&T Bank Corp.
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