The Re-Emergence of Walkable Urban Places: How the Move Back to Urban Centers is Changing the U.S. Landscape and Economy

alumni.gwu.edu/webinars The Re-Emergence of Walkable Urban Places: How the Move Back to Urban Centers is Changing the U.S. Landscape and Economy Thank you for joining. The webinar will begin shortly. If you are experiencing technical difficulties with Adobe Connect, please call 1-800-422-3623.

alumni.gwu.edu/webinars The Re-Emergence of Walkable Urban Places: How the Move Back to Urban Centers is Changing the U.S. Landscape and Economy Presented by: Christopher Leinberger, Charles Bendit Distinguished Scholar and Research Professor of Urban Real Estate The George Washington University School of Business May 15, 2015 12:00-1:00 PM ET

Form & Function of Metropolitan America Metropolitan Land Use Options REGIONALLY SIGNIFICANT WALKUPS: (Walkable Urban Places) ESTABLISHED & EMERGING: 1.2% of the land in metro Boston LOCAL SERVING NEIGHBORHOODS 4.4% of the land in metro Boston DRVABLE EDGE CITIES 2.4% of the land in metro Boston SUB-DIVISIONS 92% of the land in metro Boston SUB-

Real Estate Product Type- Metropolitan Boston 5.5 billion square feet of real estate in the 3,119 square miles that comprise Metropolitan Boston 3.5 billion square feet (63%) is For-Sale Residential (6-12 % points is rental) Distribution of Metropolitan Boston Square Feet by Product Type CIVIC/ INSTITUTIONAL/OTHE R: 16% INDUSTRIAL: 5% HOTEL: 1% * For-sale Residential includes all single-family homes and condominiums, plus 2-3 family units OFFICE: 6% RETAIL: 4% RENTAL APARTMENTS: 5% FOR-SALE RESIDENTIAL:* 63%

Walkable Urban Valuation Premiums Product Type Valuation Premiums: Walkable Urban vs. Drivable Sub-urban OFFICE 134% HOTEL* 120% Significant and increasing real estate premiums for Walkable Urban real estate over Drivable Sub-urban in across all product types. Pent-up demand for walkable urbanism probably take 20-30 years to satisfy RENTAL APARTMENTS RETAIL FOR-SALE RESIDENTIAL TOTAL 20% 41% 37% 54% 0% 20% 40% 60% 80% 100% 120% 140%

Shifting Income Property Market Share to Walkable Urban (Absorption per Real Estate Cycle) 1992-2000 2001-2008 2009-Present 73% 27% 39% 46% 61% 54% Walkable urban income property development has increased its market share during the past three cycles versus Drivable Sub-urban. SUB-

Key Land Use Metrics in Metropolitan Boston 4.4% REGIONAL 92.1% LAND: 1.2% 2.4% POPULATION: 12% 28% 58% 2% WALKUP NEIGHBORHOOD EMPLOYMENT: 26% 15% 9% 49% EDGE CITY SUB-DIVISION OFFICE INVENTORY: 47% 12% 19% 22%

WalkUPs in Metro Boston 57 Established WalkUPs and 14 Emerging WalkUPs The densest of all the metropolitan development options Substantial opportunity for infill development and redevelopment 74% of Established WalkUPs are served by rail transit 5 of 7 possible WalkUP types in Metro Boston Greenfield/Brownfield debut with Assembly Row ADJACENT COMMERCIAL UNIVERSITY REGIONAL CENTER EMERGING WALKUPS EDGE CITY NEIGHBORHOOD SUB-

Product Distribution by WalkUP Type FOR-SALE RESIDENTIAL: 9% RENTAL APTS: 8% RETAIL: 3% HOTEL: 3% More Office space as % Adding Residential & Retail in the future REGIONAL CENTERS More Retail & Residential as a % More Civic space OFFICE: 77% CIVIC/OTHER: 26% INDUSTRIAL: 8% UNIVERSITY & HOSPITAL: 1% FOR-SALE RESIDENTIAL: 25% OFFICE: 14% RETAIL: 11% RENTAL APARTMENTS: 15%

Economic Rankings $60 Average Rents by Product Type $50 $40 EDGE CITY COPPER $30 SILVER $20 GOLD $10 PLATINUM $0 OFFICE RETAIL RENTAL APARTMENT FOR-SALE RESIDENTIAL OVERALL

Economic Rankings $40MM Assessed Valued per Acre ($ Millions) $34.2 MM $30MM PLATINUM WALKUPS $20MM Back Bay Beacon Hill Financial District (Boston) MIT/Kendall Square $10MM $0 $0.6 MM $1.5 MM $3.7 MM $11.8 MM EDGE CITIES COPPER SILVER GOLD PLATINUM

Walkable Urban Development Generates Greater Tax Revenue Property Tax Revenue by Acre WalkUPs: 12x the tax revenue of Edge Cities Walkable Neighborhoods: 6x the tax revenue of Drivable Sub-Urban WALKUPS EDGE CITIES NEIGHBORHOODS SUB-

Social Equity Rankings 4.0 3.5 3.0 Accessibility/Opportunity vs. Affordability Accesibility: % of Regional Population That Can Access WalkUP by Transit Non-car Commute Share Opportunity: Job Density School Test Scores Affordability: Housing & Transportation Costs Housing Cost Burden on Low- Income Households ACCESSIBILITY/OPPORTUNITY 2.5 2.0 1.5 1.0 0.5 0-0.5-1.0-1.5-2.0-3.0-2.5-2.0-1.5-1.0-0.5 0 0.5 1.0 1.5 2.0 2.5 AFFORDABILITY ADJACENT COMMERCIAL UNIVERSITY REGIONAL CENTER NEIGHBORHOOD SUB-DIVISION EDGE CITY

Social Equity Rankings Considering both Housing & Transportation Costs: WalkUPs and Walkable Neighborhoods are more affordable than their Drivable Sub-Urban counterparts: 43% vs 48% of HH income From a Social Equity Perspective: High Economic Ranking WalkUPs tend to offer: High levels of accessibility Low transportation costs High opportunity BUT High housing costs Poor test scores ACCESSIBILITY/OPPORTUNITY 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0-0.5-1.0-1.5-2.0-3.0-2.5-2.0-1.5-1.0-0.5 0 0.5 1.0 1.5 2.0 2.5 AFFORDABILITY ADJACENT COMMERCIAL UNIVERSITY REGIONAL CENTER NEIGHBORHOOD SUB-DIVISION EDGE CITY

WalkUPs: Education & GDP $90k $80k Educational Attainment & GDP Per Capita (2013 per capita GDP, chained 2009 dollars) Significant correlation, but no causal link % of workforce with college degrees: Top 6 high-ranked metros: 39% Low-ranked 10 metros: 29% GDP per capita: Top 6 high-ranked metros: $69,000 Low-ranked 10 metros: $49,000 or METRO PER CAPITA GDP $70k $60k $50k $40k $30k $20k $10k $0 $0 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% % OF METRO POPULATION AGE 25 AND OVER WITH BACHELOR S DEGREE OR HIGHER R2 = 0.62 BOSTON Y = 150,389.65X + 7,258.51

Conclusions A major structural shift towards walkable urbanism appears to be happening in Boston, especially transitoriented development (TOD) Rising market share and high valuation premiums are indicators of this shift Maintenance & expansion of transit system is critical for the economic success of region Rising prices raise social equity concerns; attainable housing policies must be put in place

Is Boston Strong? RESILIENCE OF THE TRANSPORTATION SYSTEM The Blizzards of 2014-2015 showed how vulnerable WalkUPs and Walkable Neighborhoods are given the years of deferred maintenance and the need for expansion of the MBTA rail and bus transit system. But, walkable urban places generates much higher government revenues to help pay for the needed resources

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Income Property Is Shifting to Walkable Urban $450 $400 $350 $300 $250 Average Home Sale Price (Cost per Square Foot) WALKUP NEIGHBORHOOD $200 EDGE CITY $150 SUB-DIVISION $100 $50 $0 2004 2006 2008 2009 2010 2011 2012 2013