Chapter 2
The Urban Renaissance
Shaping Tomorrow’s Cities: Fostering Resilient and Vibrant Urban Environments
5 Minute Read
Many U.S. cities underwent a profound urban renaissance in the three decades before the COVID pandemic, slowing the suburbanization that dominated American growth in the 1970s and 1980s. In the 2010s, U.S. urban areas grew even more rapidly, largely driven by the influx of young, highly educated millennials for employment opportunities, urban amenities and social experiences, as well as aging baby boomers.
U.S. urban areas grew faster than the suburbs from 2010 to 2020.
Figure 5: U.S Average Annual Population Growth - Urban vs. Suburban
Millennials and baby boomers drove urban population growth.
Figure 6: U.S. Urban Neighborhood Population Growth by Age Group
Total population in the 19 focus markets in this report increased by 38 million from 1990 to 2020, with urban areas gaining 12 million.
Although Super Cities and Mixed Majors accounted for the largest absolute growth in urban population, rapid growth occurred in urban centers across all archetypes. In the 19 focus markets, we identified 188 distinct, walkable urban neighborhoods, which grew by an average of 17% from 2000 to 2020. Fourteen of these neighborhoods saw explosive growth, more than doubling their population during this period. A common feature of these places is mixed-use development, often accompanied by zoning that encourages housing construction, and investment in trophy office buildings to create a live-work-play environment attractive to residents, businesses and employees. Many of the urban neighborhoods with slow population growth or population losses are desirable historic areas where growth is limited by redevelopment restrictions rather than a lack of demand. Easing these restrictions allows for transformation, as evidenced in the 25 Water Street case study on Lower Manhattan in this report.
Emerging live-work-play neighborhoods grew rapidly.
Figure 7: Population Change in Urban Neighborhoods 2000-2020
Source: CBRE, IPUMS NHGIS, University of Minnesota, Data for Good at Meta, 2024.
Jobs and Investment Followed People
Fierce competition for highly skilled workers in recent years upended the traditional dynamic of workers locating near their employers. Instead, companies relocated to and expanded in areas where top talent lived, and these decisions were heavily influenced by the movement of young, highly educated millennials into urban areas. Robust office-using job growth in both traditional office-using sectors and fast-evolving industries such as technology and life sciences benefited cities with large, highly educated labor pools. Office jobs became more concentrated in nearly every major CBD from 2010 to 2020, compared with other jobs that generally became more dispersed between CBDs and suburbs. Rapidly growing industry clusters with high-income workers drove strong demand for ancillary business and leisure services, such as retail and restaurants, further boosting economic growth in both established and emerging hubs.
Office-using jobs became more concentrated in CBDs from 2010 to 2020.
Figure 8: Job Growth by Location 2010-2020
Source: CBRE, U.S. Census LEHD LODES, 2024.
The commercial real estate industry reacted to these economic and demographic trends, enabling a virtuous cycle of urban growth. Developers built high-quality office space, residential units and other amenities, further increasing the vibrancy and appeal of many urban areas and attracting more people and jobs.
Although urban retail development was much more muted due to overbuilding in prior decades and the growth of e-commerce, demand was robust in high-street and office-centric areas due to strong job, income and population growth. Demand for restaurants and bars also surged. April 2015 was a turning point: the first month in which spending at restaurants and drinking places exceeded spending at grocery stores. Aside from a reversal during the pandemic and the years-long recovery, restaurant spending has further exceeded grocery spending by 26% as of Q1 2024. Local governments benefited from this urban resurgence, as new companies, residents and real estate investment and development generated more tax revenue.
Multifamily construction increasingly concentrated in urban areas.
Figure 9: Apartment Inventory by Location
Source: CBRE, CBRE Econometric Advisors, 2024.
Downtown markets accounted for 33% of total office completions since 2010, up from 22% from 1988 to 2009.
Figure 10: U.S. Office Construction Completions
Growing Pains
Urban renaissance led to longer commute times in nearly every market included in this report except for New York and Washington, D.C. Nationally, the average commute time increased by more than 10% from 2006 to 2019 to an average of 25 minutes. Commute times were much longer in many of the largest U.S. metro areas, even those with established, well-connected public transit systems. More than 15% of commutes totaled 60 minutes or more in the New York, San Francisco/Oakland, Washington, D.C. and Inland Empire, CA metro areas as of 2019.
Strong population growth, coupled with an overall housing shortage, drove up housing costs in urban cores and inner-ring suburbs, forcing some households to relocate to lower-cost, farther-out suburbs and exurbs—further lengthening commute times. According to CBRE’s 2022 Global Live-Work-Shop report, 77% of North America respondents want a commute of 30 minutes or less, while 40% of commute times in the U.S. were 30 minutes or longer as of 2019. This indicates a clear disconnect between commute time preferences and realities for many workers.
Increasing commute distances and congestion have contributed to longer commute times in most markets.
Figure 11: Median Rush Hour Commute and Components of Change - 2010 vs. 2020
Source: CBRE, U.S. Census LEHD LODES, Texas A&M Transportation Institute, 2024.
Infrastructure investment has not kept pace with urban growth in recent decades, contributing to more traffic congestion and longer commute times. According to the Congressional Budget Office, real public spending on transportation and water capital projects decreased from the mid-2000s through 2017, with a growing share of spending allocated for operation and maintenance of existing infrastructure instead of new projects.
“Transit” and “Roads” were two of the lowest-ranked categories of infrastructure, according to the American Society of Civil Engineers’ 2021 Infrastructure Report Card. More than 40% of the U.S. road system was in “poor or mediocre condition,” costing the 75% of Americans who commute to work by car $1,000 more annually for fuel due to time spent in traffic. Infrastructure spending has been rising since enactment of the Bipartisan Infrastructure Law in 2021, but state and local capital investment as a share of GDP (a proxy for infrastructure spending) remains below the long-run average from 1970 to 2023.
Infrastructure investment share of GDP up since mid-2022, but still below long-run average.
Figure 12: State & Local Capital Investment as Share of GDP
Source: CBRE, Bureau of Economic Analysis, U.S. Treasury, 2024.
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