“The Walkability Premium in Commercial Real Estate Investments,” a report by Gary Pivo and Jeffrey D. Fisher found that “walkability” increases an offices’ and stores’ value by nine percent, as well as apartments by one percent. Chicago was among the most walkable cities, along with New York, Boston, San Francisco, Washington D.C., and Philadelphia, according to the report.
On the opposite end of the spectrum were: Jacksonville, Nashville, Charlotte, Indianapolis, Oklahoma City, Memphis, Fort Worth, Kansas City, San Antonio, El Paso, Austin and Phoenix.
Data was finalized through the use of real estate performance information from the National Council of Real Estate Investment Fiduciaries as well as walkability data from Front Seat, a civic software company who is the developer of Walk Score.
Chicago, according to Walk Score, has an overall score of 74 out of 100, and 62 percent of Chicago residents have a Walk Score of 70 or above.
The Loop, Near North Side, and Lincoln Park are the most walkable Chicago neighborhoods, and Riverdale, Pullman and South Deering are the least walkable.
Only 5 percent live in car-dependent neighborhoods and at least 95 percent of the neighborhoods have a Walk Score of at least 50.
The study defines a walkable place as an area with “streets and districts with physical attributes that encourage walking for functional and recreational purposes.” In addition to the environmental benefits of encouraging less dependence on automobiles, it is also believed that walkability may offer various social benefits.
Walkabilty measures various components including, but not limited to: urban density, land use mixing, street connectivity, distance to destinations, sidewalk width, perceived safety, and aesthetics.
The study found that properties with a Walk Score of 80 were worth six to 54 percent more than properties with a 20 Walk Score, depending on the type of property. Additionally, higher net incomes for retail properties and offices were found for the more walkable properties.
“Walkability did not have a statistically significant effect on total returns. We did see, however, lower cap rates for more walkable retail and apartment properties. Apparently, investors were willing to pay more for each dollar of income produced by more walkable retail and apartment properties either because they viewed them as safer investments or because they anticipated superior income growth or slower depreciation,” said the report.
Based on these results, the report concluded that there was no reason to doubt that the promotion of walkability was a sound investment for developers and investors.