By: Brandon Wilhite
Starting with the Federal-Aid Highway Act of 1956, the way cities were developed in the United States began changing. Although it was never the intent of the legislation, new highways funded by federal and state funds incentivized development away from city centers and into the suburbs in quantities never before seen in American history. New highways, originally intended to provide mobility for US military resources, made suburban areas more accessible, and thus more attractive to the masses. Suburban development thrived, and with it, the American car culture, necessitated by the new commuting patterns of workers who worked in the city centers and lived in the suburbs. Suburban development patterns of single-use developments and neighborhoods (i.e. residential subdivisions, retail shopping centers, and suburban office parks) further exasperated America’s dependency on automobiles. Within a generation, walking between destinations as part of a daily routine became a thing of the past for large populations of American citizens.
Recent trends are indicating that preferences are changing across both demographics and generations. Growth in Vehicle Miles Traveled (VMT) per capita is slowing according to most studies and some studies actually show the number shrinking considerably. The recent rise of on-demand transportation services such as Uber and Lyft are starting to make some rethink the idea of car ownership all together in some parts of the country. This trend will likely increase with the rise of autonomous cars, thereby reducing the cost of those services.
Generations from Millennials to retiring Baby Boomers are increasingly showing a preference for living in walkable communities. Both retailers and employers, both wanting to be close and convenient to their customers and employees, are following suit and showing a preference towards mixed-use walkable neighborhoods. Intuitively, it would make sense that as demand for walkable neighborhoods increased, so to would property values in those neighborhoods. The data backs up that intuition: A recent study conducted by Real Capital Analytics and WalkScore found that between 2005 and 2015:
- Prices for properties located in Central Business Districts (CBDs) have risen 125%
- Prices for suburban properties that are also considered highly walkable increased 43%
- Prices in less walkable, car-dependent suburban locations increased only 21%-22%
The benefits of walkability don’t end there. Workers and residents in walkable areas typically have lower transportation costs. When combining housing costs and transportation costs, residents living in cities typically viewed as having high costs of living such as New York City, San Francisco and Washington DC actually spend a lower percentage of their income than residents in cities typically considered to be more affordable such as Houston, Atlanta and Dallas. Additionally, residents enjoy significant health benefits from living in walkable communities such as lower instances of obesity and diabetes.
Because of these benefits, walkable communities are no longer limited to urban city centers. Public officials of suburban cities also recognize walkable and livable communities are a key to economic competitiveness. As a result, many new suburban developments are developed adjacent to commuter rail and offer mixed-use “live-work-play” environments.
Metropolitan Capital Advisors has assisted our clients in financing projects ranging from mixed-use high-rise redevelopments in CBDs to ground-up mixed-use developments in suburban locations.
The author, Brandon Wilhite, is a Senior Director in the Dallas office of Metropolitan Capital Advisors. Please contact Brandon Wilhite at email@example.com or visit the Metropolitan Capital Advisors website at http://metcapital.com.