Reassembling the Past for Future Profits

Written by Brian Hicks
Posted January 25, 2006

Dear Wealth Daily Reader,

Over the weekend I had lunch with my 90-year-old grandmother. Nearly a full century old, the woman is tough as nails and sharp as a tack. And she's often more than willing to prove it.

As is typical with our visits, she usually takes some time to reminisce with me...taking me back to her world during the depression or WWII. I find her stories fascinating as this is the type of history you won't read about in high school or college text books. There's no editing, no spin and no human detachment. It's as real as it can possibly get.

On Saturday afternoon we decided to go out for lunch. Now understand, the closest restaurant is about ten minutes from her apartment. She's not much for long trips in the car, so our topic of discussion quickly turned from how warm it was to how convenient it used to be 'back in the day.' Everything you needed was within walking distance. Schools, restaurants, community centers, etc. And if you did need to travel outside your neighborhood, you just hopped on a trolley and you were there in no time.

Of course, that type of community was quickly uprooted, displaced and turned on its head with the advent of suburbia and the strategic dismantling of efficient trolley systems that could take you anywhere in the city.

In less than a decade, once-thriving urban communities were reduced to ghost towns and slums.

Having grown up in rural Maryland, surrounded by farms and feed stores, I only saw the city on television. And rarely did it look attractive.

Between the blocks and blocks of vacant buildings, mountains of trash piling up along the streets and the constant reminder of poverty and crime, it was hard to believe anyone would want to live there.

But here we are in 2006…and a lot has changed since then.

While Baltimore still maintains the #2 spot for most dangerous city, the urban landscape is changing dramatically.

The fact is, while there are certainly parts of Baltimore you wouldn't even feel safe driving a tank through, there are also a number of up and coming communities that are re-defining city life.

Young professionals, along with their truck-loads of money, have transformed old warehouses and row homes into upscale 'hot' communities. It still blows my mind that sellers are getting a quarter of a million dollars for 1950's row homes in Hampden - a blue-collar section of the city that only exists because of a textile industry boom about sixty years ago.

But times have changed. And what was once nothing more than cheap real estate has quickly become a launching pad for sustainability and profitability.

The communities that my grandmother looks back so fondly on have reemerged as what's now being called New Urbanism.

But this is more than just a 'retro' trend.

New Urbanism is a movement that has captured the hearts, minds and wallets of a growing 'sustainable living' demographic.

Defining the Movement...Defining the Money

According to new

New Urbanism promotes the creation and restoration of diverse, walkable, compact, vibrant, mixed-use communities composed of the same components as conventional development, but assembled in a more integrated fashion, in the form of complete communities. These contain housing, work places, shops, entertainment, schools, parks, and civic facilities essential to the daily lives of the residents, all within easy walking distance of each other. New Urbanism also promotes the increased use of trains and light rail, instead of more highways and roads.

Those who flock to new urban communities do so for a number of reasons:

Higher quality of life

Higher, more stable property values

Close proximity to bike trails, parks and nature

More freedom and independence for children and the elderly

Massive savings by driving less and owning less cars

Better sense of community identity

More efficient use of tax money with less spent on spread out utilities and roads.

But the one reason that new urbanist communities are so enticing these days can actually be found right in your own driveway.

Traffic is the Enemy!

The #1 quality of life complaint of Americans today is traffic congestion.

And most traffic engineers agree that it is simply not possible to build enough road capacity to significantly reduce congestion.

Yet hundreds of billions of dollars are spent continuously expanding our road system in an attempt to keep up with the rising congestion. A losing battle and an overwhelming tax drain!

Meanwhile, U.S. motorists are spending $54 billion a year in extra vehicle repairs due to driving on roads in need of repair and an extra $63.1 billion a year in wasted time and fuel costs caused by traffic congestion.

Yes, the lure of the suburbs has become a money-sucking vacuum for many. Which is why it's not surprising that so many new urbanist developments today are turning massive profits for developers who had the foresight to stake their claim early on.

But that's only half the story.

Because while new urban dwellings are demanding impressive price premiums - the capitalist spirit is unstoppable.

Green building integration is now starting to make an appearance in new urban communities. Especially in the areas of building-integrated photovoltaics and water conservation.

And even those mass transit optimists are coming back to the table, using high oil prices and environmental momentum to reintroduce efficient train systems…similar to those in many parts of Europe.

In fact, it's one of the most popular trends in new urbanism design.

Known as Transit Oriented Design (TOD), compact, walkable communities are constructed around a centered, high quality train system.

Now before you start drafting your finger-pointing e-mails, I'm not suggesting that new urbanism will take over the U.S. landscape and everyone will abandon their cars and run to the train station.

But understand, while Americans love their cars - and the independence our cars afford us, a new generation of consumers making their homes within new urban communities aren't going to be as opposed to using an efficient train system as those living in the suburbs.

Look at it like this...

I live in a new urban community in Baltimore City. And I own a car. But there are many instances where driving my car is completely inefficient and costly.

For example, two weeks ago I had a meeting in D.C. Driving to D.C. takes about 40 minutes without traffic…about an hour and a half with traffic. Then, parking in D.C. runs me about $30.00 for the day.

But for 22 bucks, I was able to jump on the train, which took me within two blocks of my destination, and when I returned, took me within a block of my home.

This is the type of transit system that new urban dwellers already use on a daily basis, without question.

And this is the type of trend that some are banking on for new train system integration within new urbanist communities being planned and constructed right now.

Yes, I realize that there have been a whole army of advocates before me who continuously met with fifty-foot roadblocks of opposition.

But they weren't pushing their agenda during a validated global energy crisis. Nor were they pushing their agenda with the support of a young, progressive, forward thinking generation of consumers who happen to have mountains of money, backlogs of ideas, high-level connections and a collective political influence.

I'm telling you... if there was ever a time for TOD to gain acceptance - it is now.

Of course, I'm well aware some of you still think I'm insane for even approaching this topic. But I heard every argument in the book against solar back in the mid 1990s. I suppose it's the price you must pay for being right before everyone else has figured it out.

Until next time...

Jeff Siegel
Editor, Green Chip Stocks