The Walkable Demand

Whether it comes from formal research or simple observation, the evidence keeps piling up. Lots of people want to live and work where they can walk more and drive less. The demand for walkability is trending faster than a Taylor Swift tweet.

• A clear majority of people — 60 percent — favor neighborhoods with a walkable mix of houses and stores rather than neighborhoods that require more driving between home, work and play, according to the latest Community Preferences Survey from the NATIONAL ASSOCIATION OF REALTORS®.
• A survey by the American Planning Association found that 56 percent of millennials and 46 percent of baby boomers want to live in more walkable neighborhoods with a mix of uses.
• Half of the respondents to an Urban Land Institute survey said that walkability is either the top priority or a high priority when deciding where they want to live. A little more than half — 52 percent — said they want to live where they don’t need to use a car so often.
• A report from NAIOP, a commercial real estate development association, showed office tenants prefer locations in walkable urban environments — either in cities or vibrant suburban centers — by a four to one margin over typical suburban office parks. The report also found that rents are higher and vacancy rates lower in vibrant suburban centers than typical suburban office parks.

Now comes “Foot Traffic Ahead: 2016,” a report published earlier this year by the George Washington University School of Business and Smart Growth America.

Walkable urban locations within each metro have outperformed sprawling suburban locations over the last five years in the office, retail and multi-family rental housing sectors.

This analysis of the 30 largest metropolitan areas in the country found that walkable urban locations within each metro have outperformed sprawling suburban locations over the last five years in the office, retail and multi-family rental housing sectors.

In most cases, the gains in market share made by walkable urban development — using their relative percentage of occupied square footage as a yardstick — match the gains in market share made by non-walkable suburban development when it was dominant, but in reverse.

Walkable urban places aren’t just gaining market share. They command rent premiums of 66 percent higher for multi-family, 71 percent higher for retail and 90 percent higher for office properties, as compared to drivable suburban locations, according to “Foot Traffic Ahead.” They also correlate to higher GDP per capita and a more highly educated workforce as measured by the number of college graduates 25 and older.

Although “Foot Traffic Ahead” doesn’t address sales prices, a related study, “DC: The WalkUp Wake-Up Call,” found that homes in walkable urban neighborhoods in metropolitan Washington, D.C., sell for 70 percent more per square foot than those in car-dependent areas.

Sales prices for commercial properties are up 125 percent in central business districts and 43 percent in highly walkable suburban places versus just 21-22 percent for properties in places considered only somewhat walkable or car-dependent, according to nationwide findings from Real Capital Analytics and Walk Score.

It all points to a structural shift in metropolitan development patterns, according to “Foot Traffic Ahead” co-authors Christopher Leinberger and Michael Rodriguez, who label the current real estate cycle a “watershed moment” in a gradual, but definite shift to walkable urban development.

Metropolitan development patterns are often categorized as central city versus the suburbs, but “Foot Traffic Ahead” bases its analysis on whether a place is a WalkUP — short for walkable urban place — versus a drivable sub-urban place — a.k.a. sprawling suburban development — since each type of development can occur in a central city or the suburbs.

A WalkUP is a regionally significant location — like the Midtown District within the central city of Atlanta or Reston Town Center in the suburbs outside Washington, D.C. — that has 1.4 million square feet of office space and/or 340,000 square feet of retail space along with a WalkScore greater than 70 at the most walkable intersection.

There are 619 such places in the nation’s 30 largest metropolitan areas. The New York metro has the most WalkUPs — 67 — followed by the San Francisco Bay (56), Boston (54), Los Angeles (53), Washington, D.C. (44) and Chicago (38).

The New York metro also has the greatest concentration of occupied retail/office/multi-family space in WalkUPs versus drivable sub-urban locations — 38 percent. Next comes Washington, D.C. (33 percent), Boston (32 percent), Chicago (30 percent), San Francisco Bay (25 percent) and Seattle (22 percent).

Taken at face value those percentages are a bit, well, meh. Despite gaining market share, WalkUPs still account for far less than half of the occupied retail/ office/multi-family rental space even in dense metros like New York, Washington, D.C., and Boston. In sprawling metros like Orlando, Phoenix and San Antonio, they account for as little as 3 percent.

The thing to remember, though, is that WalkUPs have a lot of catching up to do given that drivable sub-urban development was the dominant pattern for more than five decades and that many people still prefer it.

“We’ve spent 50 years building up places and infrastructure around the automobile and it may take a few decades for that to get back to (having) more walkable places,” said Mark Hinshaw, an architect and urban planner based in Seattle. “It’s a bit of a hyperbolic statement to say this is the end of an era.

The revitalization of central cities has spearheaded the trend toward walkable urban development and urbanism in the suburbs.

WalkUPs are most common where they have always existed to one degree or another — in central cities. When growth flowed outward to suburbs after World War II, many walkable central city locations languished. They didn’t disappear, though, and the revitalization of central cities has spearheaded the trend toward walkable urban development.

But developing walkable urbanism in the suburbs is also part of the trend. Thanks in large part to growth around suburban rail stations, Washington, D.C., is the most balanced metro with 49 percent of its WalkUp space in the suburbs and 51 percent in the central city, according to “Foot Traffic Ahead.” Others with notable shares of suburban WalkUp space include Houston (48 percent), Miami (46 percent) and Boston (41 percent).

Some metros that rank high in terms of their overall percentage of WalkUp space, rank low in their percentage of WalkUp space in the suburbs — a list that includes Seattle (17 percent), San Francisco Bay (11 percent), Chicago (7 percent) and New York (6 percent). That dichotomy presents great upside potential for those metros to urbanize their suburbs, according to “Foot Traffic Ahead.”

Besides ranking metros on their current level of walkable urbanism, “Foot Traffic Ahead” ranked each metro’s development momentum based on WalkUp absorption, WalkUp rent premiums and upside for suburban urbanization. These rankings indicate how walkable or sprawling a metro’s future development is likely to be.

New York, Boston, Seattle and Washington, D.C., are one, two, four and six in the development momentum rankings. No surprises there. But who would have thought reeling Detroit would be number three and sprawling Phoenix and Los Angeles would be five and seven?

“For decades, these three metros sprawled faster than most other metros,” writes Leinberger and Rodriguez. “But since 2010, their development patterns have experienced a fundamental shift from drivable sub-urban to walkable urban, evidenced by WalkUP market share gains."

“The pedestrian is an extremely fragile species, the canary in the coal mine of urban livability.”
- Jeff Speck, urban planner

After selling homes in metropolitan Washington, D.C., for 15 years, REALTOR® Laura Vickers doesn’t need to read a report to tell her that walkability is a “hot button” for home buyers.

“Every year the demand for that [walkability] seems to grow,” said Vickers, an agent with Weichert Realty in Arlington, Va. “There’s the convenience of being close to restaurants, shops, public transportation, jobs. There’s the feeling of being part of a community as opposed to being someplace where everything is spread out and you have to get in your car. And there’s the health component of encouraging walking and exercise.”

Two huge demographic groups — millennials and baby boomers — are driving the demand for walkable urban development. “Both of those groups are seeking out those places all over the country wherever they’re available,” Hinshaw said. “It’s happening in suburban areas ... and even in small towns.”

Supply is not keeping up with demand, though. “Consumer research indicates ... 30 to 50 percent of us, depending on the metro, want walkable urban places (but) the supply is between 5 percent and 30 percent, so there’s significant pent-up demand,” Leinberger said.

The supply is being held back in large part by 50 years of development and transportation standards that work against it by prioritizing the moving and parking of vehicles over walkability, said Hinshaw.

The need for change hasn’t gone unnoticed. The National Association of City Transportation Officials (NACTO), for example, published a new public works manual with alternative standards that are more conducive to creating walkable urban environments, Hinshaw said.

Millennials and baby boomers are driving the demand for walkable urban development.

“You can’t just expect it to magically appear,” he said. “There have to be development standards that cities adopt that allow it to happen, or better yet, encourage it to happen.”

Walkability is on the front burner wherever economic competitiveness matters.

The buzz around walkable urban living extends beyond the 30 major metros examined in “Foot Traffic Ahead.” Walkability is on the front burner wherever economic competitiveness matters.

As home to three Fortune 500 companies — Tyson Foods, J.B. Hunt Transport Services and Walmart — the Northwest Arkansas region grasps the need to provide the kind of walkable urban living that attracts an educated young workforce.

Each of the region’s five largest cities — Fayetteville, Bentonville, Rogers, Siloam Springs and Springdale — have adopted new downtown master plans and are in various stages of adopting new codes to make it easier for smallscale developers to build infill housing.

“What’s so unique is that we’re really taking this on as a region,” said Matthew Petty, a Fayetteville city councilman. “Everybody agrees these (downtown) plans have been a commercial success, but we need more housing to make these commercial successes sustainable.”