Walkable Urbanism to Drive Future Real Estate Development in the U.S.
Walkable urbanism has been gaining momentum over the past few years thanks to its positive impact on cities and communities around the U.S. Walkable urban places have been linked to social equity, easier access to jobs, a healthier lifestyle and climate resilience, as well as improved fiscal performance of cities and of real estate assets.
Walkable urban spaces are known as well-connected, mixed-use areas, including different real estate products from multifamily and single-family housing to retail and office spaces, as well as recreational areas, such as museums or sports venues, located within a half-mile radius.
The 2023 Foot Traffic Ahead report, released by Smart Growth America and produced in collaboration with Places Platform LLC, takes an extensive look at walkable urbanism in the U.S. by ranking the top 35 metros based on what percent of their real estate inventory (by square footage) is in walkable areas. The report focuses on four asset types: office, multifamily, retail and for-sale housing.
Across the 35 metros ranked, around 16% of all four real estate products are in walkable urban places, the report reveals. However, the proportions between these product types in walkable spaces differ significantly. Overall, 42.1% of all office spaces in the top 35 metro areas are in walkable urban spaces. Multifamily makes up 30.4%, retail 18.5%, whereas for-sale housing accounts for 11.6%.
To rank the metros, the study draws on data from Yardi Matrix, Rocktop Partners, the American Enterprise Institute Housing Center and other publicly available data.
Coastal Metros Take the Lead in Walkability
Looking at all four property types, the highest-ranking metro regions for walkability are New York City, Boston, Washington, D.C., Seattle, Portland, San Francisco, Chicago and Los Angeles. On the other end of the spectrum, the lowest-scoring regions include Orlando, San Antonio and Las Vegas.
Unsurprisingly, the most walkable urban metros tend to be on the coast, with historic rail transit networks and a history of more compact urbanism predating 1940. However, the lowest-scoring metros — mostly in the Sunbelt — are just undertaking the effort to introduce walkable urbanism for the first time in generations, the study notes.
While the percentage share of different product types varies across the metros, office and multifamily products are the most concentrated in walkable urban places, followed by retail. New York City stands out with 73.2% of its office, 70.3% of its multifamily and a significant 59.1% of its retail space in walkable areas.
At the same time, Boston has 47.3% of its office, 44.4% of its multifamily and only 11.2% of its retail inventory in walkable urban spaces. The lowest ranking metro, Las Vegas, has only 6.5% of all office, 4.4% of all multifamily and 7.4% of all retail in walkable areas.
Walkable Urbanism Puts Upward Pressure on Real Estate Prices
The walkability scores have a notable economic impact on metropolitan regions and the overall U.S. economy. Although walkable urbanism accounts for roughly 1.2% of the land within the largest 35 metros, it accounts for 19.1% of all U.S. real GDP. Evidently, this means that walkable hubs account for a large amount of the region’s tax revenues from land values and other sales taxes. However, this also resulted in a price premium for office and multifamily products in these areas.
While the percent change in premiums has decreased since 2018 in almost every metro region largely due to the pandemic, real estate in walkable urban spaces is by no means more affordable now. For instance, in New York City, the price for office product premium decreased by 52% from 2018 to 2021, but still stood at 105%. At the same time, the premium in Boston was positioned at 83%, down only 5% over the same period.
The high demand for walkable urbanism and the lack of supply is expected to continue to drive up price premiums in the near future. According to the report, the imbalance between supply and demand underscores the urgency of policy and zoning reforms regarding the development of well-connected mixed-use communities to promote social equity, drive economic activity and boost overall health and resident satisfaction.
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