Home values have bounced back higher and faster in walkable neighborhoods than in the so-called exurbs. The beach cities along the Southern California coast are recovering quickly as well due in big part to walkability as well. The bike path along the Strand plays a big factor as well. This new generation is more environmentally and health conscious than any before it. Demand is great as there is a distinct correlation between walkability and real estate values for both residential and commercial properties. Prices are higher in these urban areas than the suburbs.
City's 'Walkability' Drives Real Estate Values
By Diana Olick
Car shares, bike shares, improved rapid transit and teleworking. All are the product of a new generation that is more environmentally conscious than any before it and more willing to use its own energy to get around town, rather than tapping expensive energy sources.
Millennials prefer urban cores, even ones outside of major metropolitan areas, because they want to be able to walk or bike to work and stores. In turn, areas that offer so-called walkability should see more home buyers and renters than those that don't.
"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," said Geoff Anderson, CEO of Smart
Growth America, which, in conjunction with George Washington University
School of Business, released a new report ranking the walkability of the nation's 30 largest metropolitan areas.
There is, in fact, already a distinct correlation between walkability and real estate values, both commercial and residential.
"Walkable, urban
for-sale housing is by far the most expensive housing in the country.
The range depends on the market, between 40 percent and 200 percent
greater than drivable, suburban housing," said GWU's Chris Leinberger,
author of the report. "Twenty-five years ago that relationship didn't
exist because walkable (cities back then) was not valued."
Home values have bounced back higher and faster in walkable neighborhoods than in the so-called exurbs.
Washington,
D.C., wins as the nation's most walkable city, according to the survey,
which looked at the share of office and retail space located in a
city's "WalkUPs" — walkable urban places — through the first quarter of
2014. A city can have several different WalkUPs within its limits; metro
New York contains 66, while San Antonio has just two.
WalkUPs still occupy a
relatively small portion of the 30 cities' land, just 1 percent on
average. Still, these areas offer outsized economic benefit, according
to the survey.
Commercial office space
in walkable areas has an average 74 percent price-per-square-foot
premium over suburban business parks, according to Leinberger. For
apartments, there is a 70 percent rental premium on walkability. That is
likely why, in the current real estate cycle, 85 percent of all rental
apartments have been built in walkable urban places.
In Washington,
researchers identified 45 WalkUPs that occupy just 1 percent of the
metro's acreage but account for 48 percent of its new office, hotel and
rental apartment square footage. D.C. is also the only metropolitan
region that has more than half of its WalkUPs in its close-in suburbs
(which are classified as part of the metro market). Suburbs like
Bethesda, Md., and Crystal City, Va., are seeing huge commercial
development and rising real estate values, thanks to their focus on the
new urban, walkable core.
In Crystal City, developers are luring tech start-ups, selling them on the walkability of the area.
"The young millennials
are obviously into sharing a lot more, so we've got bike sharing here,
we've got Car2Go, and we've got Zipcar and we're also working with the
folks from WeWork to create a sort of community-environment for living,"
said Mitchell Schear, president of D.C. operations for realty trust
Vornado
Walkability also drives
recovery. Home values have bounced back higher and faster in walkable
neighborhoods than in the so-called exurbs. Cities that focus on
walkability will likely see more retail, restaurant and office
investment. Researchers compiled a "future ranking" on walkable urbanism
and put Boston at the top of the list. The vast majority of Boston's
development in this real estate cycle has been walkable urban.
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