Business Trends

Walkability = Office Rent Premiums, by Center for Real Estate and Urban Analysis

File Type: Free Content, Article
Release Date: June 2014
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Office space in walkable urban areas commands a 74 percent price-per-square-foot premium over rents for office space in suburban business parks accessible only by cars, according to a new report, “Foot Traffic Ahead: Ranking Walkable Urbanism in America’s Largest Metros,” by Christopher Leinberger and Patrick Lynch of the Center for Real Estate and Urban Analysis at the George Washington University School of Business, which ranks the growth of walkable places in these areas. And that rent premium is growing.

The report, published June 17 by the university and LOCUS, a group of developers affiliated with Smart Growth America, identifies 558 regionally significant walkable urban places — those with at least 1.4 million square feet or more of office space and/or 340,000 square feet of retail space, which it dubs “WalkUPs” — in the nation’s 30 largest metro areas.

It then ranks each metro area according to its current and future levels of walkable urbanism. Somewhat surprisingly, New York and Boston are only second and third in the current ranking, primarily because their suburbs have not been urbanizing as rapidly as those in Washington, D.C., which tops the list.

“We can no longer categorize metropolitan real estate as simply ‘city’ or ‘suburb,’” the report states, adding that “a far more useful understanding of metropolitan America is ‘walkable urban’ and ‘drivable sub-urban’ development.”

The report cites the following six metro areas as having the highest current level of walkable urbanism:

  1. Washington, D.C.;
  2. New York;
  3. Boston;
  4. San Francisco;
  5. Chicago; and
  6. Seattle.

The following nine metro areas have the highest potential for future walkable urbanism:

  1. Boston;
  2. Washington, D.C.;
  3. New York;
  4. Miami;
  5. Atlanta;
  6. Seattle;
  7. San Francisco;
  8. Detroit; and
  9. Denver.

“These trends suggest future demand for tens of millions of square feet of walkable urban development and hundreds of new WalkUPs,” the report announces, adding that “this demand would provide an economic foundation for the U.S. economy similar to the building of drivable suburbs in the mid to late 20th century.”

As this trend takes root, “This is likely the end of sprawl in this country,” Leinberger adds.