The Walkability Premium – How Walkability is Impacting #CRE Value
by Evan Santos, Partner Relations at RealMassive
As urban commercial real estate markets continue to see growth, the concept of “walkability” is playing a critical role in the evaluation of new opportunities. Today, walkability is a well known concept. The benefits of walkability are well documented and range from reducing greenhouse gases emissions to improving public health; but it is really the economic story that has pushed walkability into the real estate limelight.
Walk Score, launched in 2007, has become the industry standard index for evaluating the walkability of a specific property. It is an excellent tool for tenants, investors and developers to compare property locations with respect to how pedestrian-friendly they are. Walk Score utilizes Google data to locate stores, dining facilities, entertainment venues, parks, etc. within walking distance of a particular address and assigns a “Walk Score” of 0-to-100 based on proximity.
Businesses as well as the investment and development community understand that urban dwellers and employees want to be within walking distance of key amenities such as shopping, dining and parks. This market driver is prompting real estate decision makers today to include walkability in their overall assessment of urban investment opportunities.
Cities large and small across the U.S. are now marketing their walkability as a sign of an energetic and attractive community. Cities that want to thrive in our new economic and demographic realities will need to find ways to create and support more of these dynamic, productive walkable districts that are in high demand.
A recent ULI article by Mariela Alfonzo, Ph.D, the founder of State of Place, explains that walkability is no longer something that is merely nice to have or a luxury; it is a key to economic competitiveness. Municipalities now see redeveloped or new walkable districts as having the potential to enhance assessed value, create new and better jobs, maintain real estate value for existing property owners, and existing infrastructure.
There is clear evidence that consumers attach major economic value to walkability. Today, walkability is “driving” more than just demand. At a recent JLL forecasting meeting in Atlanta, Ben Breslau, Managing Director for research with JLL, said commercial properties nationally in highly walkable central business districts and pedestrian-oriented suburbs are appreciating in value at a rate roughly double that of properties in car-centric suburbs. Converting the car-centric suburbs and cities to more walkable and dense communities rank among the greatest challenges and opportunities in real estate, Breslau said.
Walkable developments offer opportunities with less traffic congestion and appreciation in land values and rents. High demand and limited availability mean these places — whether in city centers, inner suburban downtowns or outer-ring suburbs — will be part of the future of commercial real estate development. Improved walkability increases accessibility, provides consumer and public cost savings, increases community livability, improves public health and supports strategic economic development objectives all while sustainably growing cities.
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