The concept of walkability has become increasingly influential in the world of commercial real estate.
Walkable areas, defined as urban locations that offer convenience, unique experiences, and easy access to amenities, are highly desired by both residents and employees.
This desirability has made walkable locations a valuable investment opportunity for commercial real estate investors.
- There is a strong correlation between walkability and various commercial real estate metrics, including property values, rents, retail sales, occupancy, absorption, and price resilience.
- Mixed-use developments, particularly those located in urban environments, tend to outperform single-use properties in terms of performance and tenant attraction.
- Companies are willing to pay a rent premium for highly walkable spaces, as they recognize the value of walkability in attracting top-tier talent.
- There is a significant opportunity for investment in highly walkable real estate, as there is still a shortage of such properties in the market.
How it Works:
Walkability is assessed using various metrics, like the walkability of an address, neighborhood, or city.
Several CRE firms, like JLL, have their own Walk Scores, which they measure in their own way. Properties with higher Walk Scores have been shown to experience greater price appreciation and rental rate premiums.
Factors that contribute to walkability include proximity to public transit, availability of amenities, and the design of the built environment.
Enhanced walkability attracts foot traffic and increases retail sales, leading to higher occupancy rates and commercial property values.
- Higher property values and rental rates: Walkable properties, particularly those located in urban environments, experience significant price appreciation and rental rate premiums compared to car-dependent properties.
- Increased foot traffic and retail sales: Walkability projects, such as pedestrian and bicycle infrastructure, have been shown to attract more foot traffic and increase retail sales in adjacent properties.
- Attractiveness to tenants and employees: Companies are attracted to walkable spaces that offer convenience and access to amenities, making them more attractive to both tenants and employees.
Walkable areas are highly sought after by both residents and employees, resulting in increased property values, rental rate premiums, and retail sales.
It is important for investors to consider factors such as proximity to public transit, availability of amenities, and the design of the built environment when evaluating walkable properties.
By understanding the strong correlation between walkability and commercial real estate economics, investors can make informed decisions and shape a brighter way forward in the industry.
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