Why is building more homes essential to a thriving local economy?

There’s been a lot of talk recently among city leaders who see more commercial development in Newton as key to raising tax revenue. But what is needed to lure more commercial development to Newton?

When Northland went to the City Council requesting to amend their special permit to build homes instead of offices, many councilors bemoaned the loss of expected tax revenue. It is common knowledge however, that office vacancy rates in Greater Boston are uncommonly high due to many working remotely since the pandemic. High vacancy rates drive down the value of office buildings which in turn lowers projected tax revenues.

Charles River Chamber president Greg Reibman also sees the loss as disappointing, but notes:

The economic reality is that the office market has been decimated, and the best single thing Newton can do to compete for new office tenants is to build more housing so employers will find this to be a desirable location as they compete for the best talent.

Business requires people.

Successful businesses require talented people to run them, as well as customers to purchase the products and services they offer. 

According to Newton’s Economic Development Commission Chair Chuck Tanowitz: 

The first thing most companies do when considering where to move is to examine the local workforce. Most need a balance of different experience levels. If you need young workers, or those in manufacturing or health services, they will likely need to commute from farther away, making them harder to recruit. More diverse housing options and lower housing costs diversify the talent base and therefore make it easier to sell Newton to a wider set of businesses.

And people want homes near jobs.

If you're looking for a job and interested in a particular company, but there's no housing in your price range within a reasonable commute to that job, you may decide to look elsewhere. Companies know this. 

Local businesses value customers who live nearby.

Local retail stores and restaurants need patrons to survive. Mixing housing with active uses provides a nearby customer base for the bakery, café, toy or book store. In this era of online shopping, people who do live within walking distance of stores do frequent the local stores more often.

When we do not enable enough housing to support commercial uses, what happens to our communities?  

When there are not enough people living nearby, local shops don’t have enough customers and local businesses struggle to find employees. Many small businesses in Newton have folded for lack of customers. The village centers become less inviting and less interesting places to visit. By way of contrast, in Newtonville where there are many new apartments, small businesses are thriving.

Greg Reibman points out: 

How we address our housing needs will determine the future vibrancy of our beloved villages while simultaneously addressing the need to grow commercial tax revenue.

We're losing the next generation of residents.

In a recent analysis, more than half of the people who left Massachusetts were working-age adults, 26-45 years old, which is disproportionate to their share of the overall population.

This age group “would normally start making up more of the labor market as they grow older. But if we lose them, they’re not going to be able to,” noted Peter Ciurczak, author of the study. When considering whether to stay in Massachusetts or not, the cost of rent and the ability to buy a homeranked among the highest issue to consider.

At a recent Charles River Chamber meeting, Dr. Mary Burke of the Federal Reserve Bank of Boston described the housing shortage as making the cost of living untenable, saying that Massachusetts is losing its well educated young adults in alarmingly large numbers.

When the workers companies need cannot afford to live here, companies may choose to move to an area where the cost of living is more affordable.

How can Newton attract and support more commercial development?

Before COVID, Newton hired economic consultants Camoin Associates, to develop an Economic Development Action Plan for the City of Newton. The City Council approved the proposed strategy. 

A key finding in this work was:

To support commercial development, it will be necessary to make transportation improvements and to increase both the number and types of residential units to attract and retain a more diverse population. 

Reibman echoes this point:

We need more housing in Newton to make the city competitive so we can attract life science companies, tech companies, financial services businesses, the medical profession and many other well-paying jobs.  We also need housing for our municipal employees, teachers, child and senior care providers, restaurant workers and others. We need housing of all types. Employers will choose to locate somewhere besides Newton if we don’t allow for the housing supply that companies need to succeed.

We need housing at the full range of price points. In Newton we say that we care about this, but as of yet we have not enabled the housing that supports economic diversity, which is key to all kinds of diversity. 

What can Newton do to encourage more diverse homes that support commercial development?

To support businesses, stores and restaurants in our villages, the City Council needs to identify the financially viable ways to build new homes in and near the villages. This could be achieved by allowing more homes built by right such as small multifamily homes with 3-6 units near the villages and mixed-use development within the commercial areas of our villages. 

To support commercial development in other areas, the Council needs to streamline the process of approval for mixed use development with clear requirements for approval and a clear time frame for review. They could also identify locations to encourage mixed use development. 

Riverside is a clear example of how the current process has failed us. It took so many years that Newton lost out on the potential of lab space plus stores and restaurants that would have gone along with the new residential development.

What you can do.

Tell our city leaders to make it easier to allow more homes by-right with clear rules to enable the kind of housing we need to support the development they say they want.

Update:

On May 5, 2025, the City Council approved the amendment to Northland’s special permit with a vote of 19 yes, 4 no, and 1 absent.