In the 1980s, drivable suburban development saw great gains in market share as people scrambled to escape decaying urban cores and the crime and congestion that went with them. They escaped from concrete jungles to concrete savannas—vast sprawling communities of strip malls and never-full parking lots, or planned neighborhoods miles away from the nearest bus stop or grocery store.
Today, that trend is noticeably reversing. 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. Seniors planning to age in place are also seeking out accessible neighborhoods, where getting groceries or reaching activities aren’t chores for those no longer able to jump behind the wheel. In turn, walkable areas are seeing more home buyers and renters than the drivable suburban areas that were popular at the end of the 20th century.
The demand for mixed-use communities with moderate density that accommodate multiple types of transportation (foot, bikes, public transit, or cars) is changing the face of both residential and commercial real estate. Smart Growth America recently released their “Foot Traffic Ahead” report, ranking the levels and quality of walkable urbanism in America’s largest metros. According to the report, metros with more instances of walkable urban places (WalkUPs) “are also the most educated and wealthy (as measured by GDP per capita)—and, surprisingly, the most socially equitable.”
What does Walkable Urban Development Look Like?
Walkable urbanism is one of the oldest forms of community development there is. After the mass exodus of urbanites to the suburbs in the 1980s, center cities and suburban town centers began a period of redevelopment. By the mid-1990s, the New Urbanism movement revived the demand for walkable urbanism. According to the report, walkable urban development includes:
- Substantially higher densities (1.0 to 40 floor area ratio, though mostly in the 1.0–4.0 range).
- Mixed-use real-estate products, or the adjacent spatial mix of products.
- Emerging “new” product types, such as rental apartments over a ground-floor grocery store.
- Multiple transportation options, such as bus, rail, bicycle, and pedestrian-friendly sidewalks, as well as motor vehicles, that connect to the greater metro area. Within the boundaries of the WalkUP itself, most destinations are within walking distance.
Where are WalkUPs?
While WalkUPs only occupy an average of 1% of all land within the 30 metro areas of the study, they absorb 49% of the metro area’s office and multi-family rental square footage. The majority of WalkUPs are located in central cities, but for several metros (those with the highest levels of walkability), a significant amount of WalkUP space was located in suburban jurisdictions, as well.
Locally, examples of WalkUPs include the Asheville and Hendersonville central business districts (CBDs), as well as planned multi-use communities like Biltmore Park Town Square.
How are WalkUPs Changing Commercial Real Estate?
According to the report, “walkable urbanism has gained market share in the office, retail, and multi-family rental product types over drivable suburban, possibly for the first time in 60–70 years.” Every one of the 30 metros surveyed showed a Fair Share Index (FSI) value of more than 1.0, indicating the degree to which WalkUPs are gaining market share while drivable suburban locations lose share.
A more obvious measure of the shift in demand can be seen in the rent-per-square-foot premium of commercial space in WalkUPs. The top 6 metros in the study “have a 125% WalkUP rental premium, meaning rents in their WalkUPs are, on average, more than double what they are in drivable suburban locations.”
In addition, this change is accelerating in the majority of metro markets. Of the seven metros surveyed that showed a decline in their WalkUP premium from 2010–2015, all but one were ranked as having low walkable urbanism.
In short, the demand for WalkUPs is increasing, driving up the price of the commercial spaces within them.
Why do WalkUPs Matter?
The trends of these 30 large metros signify more than a change in preferences among eco-conscious millennials. Affordable housing, income parity, public transportation, and aging infrastructure are major issues on the national and local fronts. As it turns out, walkable cities can be a sign of social equity, public education, and GDP per capita.
Counter to intuition, the study demonstrated a clear correlation between high walkable urban rankings and high social equity performance, “as measured by moderate-income household spending on housing and transportation and access to employment.” In addition:
There is a significant positive correlation between a metro’s current walkable urbanism and the higher education of its workforce. Even more compelling is the high degree of correlation between walkable urbanism and metropolitan GDP per capita.
Further studies are needed to determine any causal connections between these correlations. However, regardless of the causal direction, cities like Asheville—with a larger percentage of college graduates than all the cities surveyed except Washington, D.C.—can actively consider higher density and walkable development among their strategies for increasing affordability and social equity.
Will WalkUPs Conquer Urban Sprawl?
Commercial real estate within urban metros will continue to strongly trend toward walkable urbanism for the foreseeable future. However, the pace of that change will depend on a number of local factors. The age of individual urban landscapes will largely determine a city’s trend toward WalkUPs, since most buildings have a 40-year life. In addition, dominant infrastructure, zoning, and land-use subsidies continue to favor drivable suburban development in many metros, both large and small. True transformation towards walkable urbanism will require advocacy and the support of place management, policy tools, and transportation infrastructure to encourage the future form of American urban development.
All real estate is local. In order to make confident real estate decisions, we believe it is important for you to have timely and neighborhood-specific information. If you would like more information about commercial real estate investing in Western North Carolina, our experts at Beverly-Hanks are here to help. Contact us today to speak with a Beverly-Hanks real estate agent about buying homes and land in WNC.
Photo Copyright: radnatt / 123RF Stock Photo