Better Walkability = Higher Valuation?

There's a lot of anecdotal evidence that companies are relocating in significant numbers to areas of better walkability.

There’s a lot of anecdotal evidence that companies are relocating in significant numbers to areas of better walkability — which tend to be urban cores — than to less-walkable suburban locations. Widely cited is the latest major firm to announce that kind of move: Expedia, which plans to leave Bellevue, Wash., for Seattle. One reason for the move is the new area’s walkability. Bellevue’s an expanding and prosperous King County edge city, but in terms of walkability, it’s no Seattle. Bellevue’s Walk Score is 38 (“car dependent”), while Seattle’s is 71, making it the eighth-most walkable city in the country.

But are the anecdotes quantifiable? Real Capital Analytics recently unveiled plans to do just that with its Commercial Property Price Indices (CPPI), the first ones to quantify the price value of walkability for commercial properties. The new indices will be calculated on a quarterly basis and are powered by Walk Score’s property database, which generates a single comparative measure of the ease or ‘walkability’ from a given property location to nearby amenities, or a measure for a city or town (as above, with Seattle and Bellevue).

The first report, for the first quarter of 2015, will be out next month, and RCA founder Robert White asserts that it will show that “prices for commercial properties in highly walkable locations show significantly greater appreciation trends than car-dependent locations.” The company’s findings cut across both urban and suburban locales, large and small markets and each of the office, retail and apartment sectors.

According to RCA, CBD commercial property values, which score consistently high Walk Scores, have risen 125 percent over the last decade, while values for suburban properties that are nevertheless very walkable were up 43 percent. In “somewhat walkable” or “car-dependent” suburbs, property values are only up by about 22 percent. The logical projection from that — though the indicies aren’t in the business of predicting — is that as the nation’s demographics change and tenants want to be in walkable locations, high Walk Scores are going to mean higher prices for properties. The stronger price appreciation trends associated with highly walkable properties reflect both a premium in rents that tenants pay for such locations, but also the increasing demand from investors who recognize the long-term value of walkability and mixed-use developments.