Nesters Upset the Economy

For many, the best part about college is moving out and enjoying the newfound freedom, but now as graduation nears, how “free” do these graduates want to be?  Since 2007, more and more college graduates have been returning to live with their parents due to the struggling economy; and according to a recent study by the University of Southern California Lusk Center of Real Estate, this trend continues to drive the economy to a deeper sorrow. 

As students transition to move back in with their parents, many industries lose business and income. For example, real estate brokers and sales agents will miss out on commission, less demand for housing is needed, construction jobs are reduced, furniture stores will sell less product, service providers miss out on contracts for internet, telephone, cable etc., and the “paradox of thrift” or cause and effect scenario keeps going. 

While there are couples in their later 20’s and early 30’s starting families, moving out and sparking economic growth, the number of recent graduates moving back in exceeds this group.  On top of that, the median age for “leaving the nest” is rising as the economy worsens. According to the data in the New York Times article, 950,000 new households were created last year, but is significantly lower than 2007 numbers when 1.3 million new households were created.

How do we fix this downward spiral?

While the solution may be as simple as increasing spending, it will be difficult to persuade the 25% of jobless graduates to do so.  But in reality, by holding back spending, the economy is only worsening.  As Robert Reich, economist and UC Berkeley professor, advocates that the middle class is the backbone of the economy and the ones who have the means to spend, need to. Big spending is not what is required but a little bit by a larger group will go a long way. 

The other beacon of hope is that large group of individuals who have been holding back rent checks and saving money.  We can only hope this group of people is nearing the ability to take the leap to purchasing a home.  In order to incentivize this crucial group of potential homebuyers, programs such as “first time home buyer” tax incentives need to make a comeback.  Are you listening Federal Housing Administration?  Let Americans feel safe to leave the nest.  

The Comeback

Remember those gigantic cubes of stores surrounded by a sea of pavement?  Oh yeah…they’re called malls.  Over the last decade, the concept of the enclosed mall has been nearly put on life-support and only to be easily forgotten with replacement by the lifestyle retail center.  The recent trend to create open-air retail centers such as the Grove, Americana, Santa Monica Place and 3^rd Street Promenade have changed the traditional shopping experience but right when people thought enclosed malls were dead, a recent study by the Urban Land Institute begs to differ.  

Since the early 2000’s, the enclosed mall has been in a death spiral, reaching its lowest point in the last couple years due to the take over of new shopping experiences.  The majority of these malls were built during the suburban housing boom of the 1980’s and have remained unchanged for the last several decades but mall Real Estate Investment Trusts (REITs) have decided to spice things up to help spark a comeback.  By taking an unconventional approach to bring in new tenants, who would normally occupy a “big-box” retail store,  Tenants such as Best Buy, Dick’s Sporting Goods and Target are starting to make the move into the enclosed mall. 

So what does this mean?

Well, since the decline of the real estate market in 2007, the vacancy rate for the enclosed mall has risen to over 12% and this in turn caused many major retail anchors such at Nordstrom’s and Cheesecake Factory to relocate to the more attractive and highly visited lifestyle retail centers. With the loss of major anchors, slowly but surely, the smaller stores were beginning to die off, but now with the addition of high volume retailers like Target and Best Buy, daily mall spending has increased to numbers higher than pre 2007 amounts. 

The revitalization of the enclosed mall is also beneficial because it now allows consumers to take part in daily shopping routines in more convenient locations that promote public interaction. As you can see, the addition of the lifestyle retail center has caused a shift in the shopping spectrum, but does not mean that the enclosed mall is going anywhere, well it would be too costly to tear it down, its just now attracting a new customer base. I’m curious to see the long-term effects of having multiple strong retail options available to consumers. 

Safety 2nd

If you live in Los Angeles, you are most likely an attendee of the worst tailgates ever.  I’m not talking about a sporting event pregame party with friends, but rather a different type of parking lot….the LA Freeways.  The 405, 101 and 5 freeways are known for their infamous bumper-to-bumper traffic that can wear you out more than the 9 to 5 work day. 

By 2020, California’s population is projected to increase by 6 million and this traffic, congestion and roadway crowding will only get worse. A green, environmentally-friendly solution is to get people out of their metal gas-powered cocoons and onto their bicycles. 

Los Angeles has been very slow to realize the changing needs of its residents.  The Los Angeles County population is currently about 10 million but most of its infrastructure and roadways were designed in an era when the population was nearly half of what it is today, causing extra stress on routes used by automobile commuters.  

In response to the increased traffic, increased fuel prices, parking difficulty and newly promoted mixed use land uses, more and more cyclists are hitting the streets, but doing so in a space struggle with cars.

Last summer, Mayor Villaraigosa was hit by a taxicab while riding his bike on Venice Boulevard. Other than suffering some bumps and bruises, Villaraigosa was also “hit with the bug” to become a bicycle advocate.  His partaking includes the three CyLAvia events that have taken place and the 2010 Los Angeles Bicycle Master Plan* that was released last week.

*Although named the 2010 Los Angeles Bicycle Master Plan, it was released in 2011.

While the 2010 Los Angeles Bicycle Master Plan is the first master plan since 1975 and addresses many of the needs for today’s cyclists, it leaves out an important component which caused Villaraigosa to become involved in the first place….separation of cars and bicycles. 

The new master plan proposes 1,684 miles of bike routes but roughly two-thirds of those routes will be flawed in the eyes of cyclists.  The issue lies in “bike lane” which is a 4-5 foot wide lane placed to the right of traffic lanes but to the left of the curbside parking lane. 

Cyclists are forced to be in the path of cars attempting to park, opening car doors and exiting the parking lane. Not to mention next to cars traveling at speeds up to 50 mph, given they are following the posted speed limit. 

All it takes is one driver to be not paying attention, on their phone texting, picking up that french fry that fell on the floor or applying make-up, to strike a cyclist. As you can imagine, a 2 –ton car vs a 25 pound bicycle will not be a good match-up. 

Some statements from cyclists at a public hearing held by the Los Angeles Department of Transportation:

“The plan is not designed for us”

“No one asked us what we wanted, even though we are the ones using the bike routes”

Cyclists feel that they were left out of the design process and what they really want/ need for safety is a “bike path” separated from the automobile.  All this would take is some sort of buffer to deter drivers from crossing into the path of cyclists. 

It doesn’t make sense that Los Angeles is placing large amounts of resources to create a master plan that is not safe in the eyes of those using it. Since money is most likely the primary issue with creating such separated pathways, the LA DOT should reduce the amount of miles in their master plan but create routes that cyclists actually feel safe using. 

There is no point in allocating funds to create something that no one will use. If Los Angeles is serious about creating an attractive alternative to the car, they really need to sit down and actually consider the needs of bicycle riders. 

As of right now, sitting in traffic seems more fun than getting hit by an automobile.  Keep trying Los Angeles!