Pivo and Fisher on the Walkability Premium for Commercial Properties

Edited thanks to thoughtful commenter Derek Pokora:

The full article in per can be downloaded from Pivo’s academic page at the University of Arizona.

I always follow the work of Gary Pivo, and he and Jeffrey Fisher have a new manuscript in this (excellent) edition of Real Estate Economics. Because this is a scholarly publication, you have to pay for access, unfortunately. I will discuss it extensively here for those who can’t go read it themselves.

Here is the citation:

Pivo, G., & Fisher, J. D. (2010). The walkability premium in commercial real estate investments. Real Estate Economics. doi:10.1111/j.1540-6229.2010.00296.x

From the abstract:

This article examines the effects of walkability on property values and investment returns. Walkability is the degree to which an area within walking distance of a property encourages walking for recreational or functional purposes. We use data from the National Council of Real Estate Investment Fiduciaries and Walk Score to examine the effects of walkability on the market value and investment returns of more than 4,200 office, apartment, retail and industrial properties from 2001 to 2008 in the United States. We found that, all else being equal, the benefits of greater walkability were capitalized into higher office, retail and apartment values. We found no effect on industrial properties. On a 100-point scale, a 10-point increase in walkability increased values by 1–9%, depending on property type. We also found that walkability was associated with lower cap rates and higher incomes, suggesting it has been favored in both the capital asset and building space markets. Walkability had no significant effect on historical total investment returns. All walkable property types have the potential to generate returns as good as or better than less walkable properties, as long as they are priced correctly. Developers should be willing to develop more walkable properties as long as any additional cost for more walkable locations and related development expenses do not exhaust the walkability premium.

The use regional, neighborhood, and building variables in their models. Among their building characteristics include: number of stories, a square of that, the property tax, and whether the property is within a half mile of rail transit station. For neighborhood characteristics, they have property crime rates, population density and Walk Scores. They also use a bunch of regional variables.

One of the nice parts of the paper is their discussion of the Walk Score and what it measures.

Ohhhhhhh how I wish they had had parking availability for this study. A walking premium holds with theory. But theory would also suggest that the sorts of designs that accommodate both parking and walking would be even more productive for the developer and the tenants. The big box world of large surface lots has become uninteresting to a lot of urban consumers. But think about all the urban Trader Joe’s out there that have four stories of parking underneath or above in addition to their street-level storefront. Those are the properties that I bet get a nice value boost, and there’s no way to glean that from their data or model.

The difference is huge for those who argue that walkable developments “take cars off the road.” These developments may do so, but they may also simply generate more trips overall–and that’s certainly not a bad thing from the developer’s viewpoint.

Pivo and Fisher find that apartment properties had little premium value associated with walking–rather, the major boost came to commercial property, and in particular, retail property. They argue that it may be that the Walk Score, reflecting multiple things, is also capturing what may be negative effects from proximity to busy commercial centers (noise, lack of privacy, etc). It could be that–Lord knows, plenty of the people who advocate loudly for urban living completely discount its inconveniences.

But I strongly suspect one of the reasons they don’t see more of an effect for the apartments is that there is just plain more variation in quality and individual building characteristics than they can really capture with the data they’ve got. So it’s not like there is no effect, it’s just really hard to suss here given the data and given, as they point out, the potential conflicting effects from the Walk Score.

They find a 0.18 coefficient for market value with regard to their 1/4 mile buffer, and it’s highly significant, for the rail access variable, but that variable correlates at 0.51 to the Walk Score, and they don’t really present any tests for this problem. The correlation is not the end of the world, but it’s just high enough, and it’s positive, that had I been a reviewer, I would have grouched at them to check on it more. When you are using a combined or index measure like a Walk Score, it’s important to help your reader understand how it may interact or correlate with other measures.

The proximity to transit variable tells an interesting story for urban theory. They have appreciation and income variables for outcomes, and these variables are all logged. They find, just as with the Walk Score, that rail transit access has the highest impact (all effects significant) for retail and commercial property. Retail gets a nice boost in operating income from a higher walk score and rail transit access.

However, the aggregate regressions show a positive value for appreciation and negative for income.

So what does this mean? Their interpretation, if I understand them, means that the value of the additional business you get from walking customers probably gets captured by landlords and property owners rather than businesses renting–that is, they pay higher rents for their location location location. Property owners benefit from walkability, but tenants should think twice if somebody asks them to pony up for walking improvements. It also suggests that the property tax is a good source of funding for walking improvements, given who financially benefits, even though we all know that expecting property owners to pay taxes is the equivalent of spitting on veterans and making cookies for Jane Fonda.

Tweenbots in the city by artist Kacie Kinzer

Kacie Kinzer’s tweenbots are super cute, and the interactive concept is really cool. From her web page:

Tweenbots are human-dependent robots that navigate the city with the help of pedestrians they encounter. Rolling at a constant speed, in a straight line, Tweenbots have a destination displayed on a flag, and rely on people they meet to read this flag and to aim them in the right direction to reach their goal.

Her web page includes a really nice video of people interacting with the bots. In there is a good samaritan with a fabulous handbag I covet. But I digress, as I often do.

This photo is from the artist’s website. Check it out, and give a bot a hand if you see one!

Voila Capture9

What I learned from Marlon Boarnet about walking in the suburbs

Marlon Boarnet of UCI gave a seminar in our school yesterday on some of his collaborative research on walking in the suburbs. I took the following from the talk:

1. Suburbs have various spatial forms, and some of those may be conducive to walking in polycentric regions.

2. Those spatial forms may be difficult to divine empirically, but business number and–perhaps–service diversity may be one way to define a center/cluster.

3. Centers and clusters in the polycentric city can foster walking and dampen driving, though the latter effect appears weakly significant in this test.

4. There is a potential tradeoff between making retail clusters that serve nearby residents who walk becoming greater draws to the larger region that can generate auto traffic into the neighborhood.

5. Successful scholars experiment with cutting-edge ideas and analogies, some of which work, some of which don’t, but from that experiment new concepts and measures emanate.

Downtown LA Weenie Bicyclists

Andy and I were on the sidewalk the other day with our dogs, and we stopped to chat with another couple who had their dogs, and we weren’t taking up that much space–there was room for people to walk around us–but a bicyclist went around us and yelled “You’re blocking the sidewalk!”

How dare we use the sidewalk for interaction and conversation when he wants it as a dedicated bikeway where he can go 30 mph without cars? If I move out of downtown Los Angeles, it won’t be because of the pervasive pee smell, the dodgy after hours crime, and the ridiculous per-square foot prices for what you get. It will be because of the weenie bicyclists.

Yes, I said it. If you ride your bike on the sidewalk in downtown LA, you are a big weenie. The traffic in downtown Los Angeles is not NEARLY as dodgy or difficult as places, like Georgetown or Manhattan or downtown Paris, where real bicyclists ride–if they want to ride quickly–in the street. There are some of those bicyclists here. But most downtown bicyclists are weenies who bully pedestrians on the sidewalk by going way too fast, missing pedestrians by inches, and just basically being jerks.

I have no problem with people who ride on the sidewalk if they go along at a pace appropriate to the flow of pedestrians. Those are bicyclists who adopt their speed to the right level and act like part of the sidewalk community. But once a cyclist starts going fast enough to really hurt somebody on sidewalk–which is slower than most people think–he or she should get on the street.

Given this behavior, it’s hard for me to support the arguments that most cyclists make for public investment. When bicyclists tend to speak in planning discussions, they take on a heavy tone that they are doing right and the rest of us are doing wrong: they are clean and green and healthy and the rest of the world–and by this they mean car drivers–are lazy planet killers. Only many of the rest of us are not drivers or cyclists. We’re pedestrians. We move slowly. We have toddlers by the hand, bags of groceries in our arms. When bicyclists tear through the space pedestrians occupy, cyclists become the safety equivalent of an SUV–the biggest, heaviest, most forceful kid on the block. So my feeling is that in the eyes of the average downtown bicyclist, I am an obstacle to be shoved around the way they themselves feel bullied and ignored on the street. Instead of making it work through decency, respect, and goodwill, it’s about who is biggest and has the most metal behind them.

I’m sorry there isn’t more space for cyclists and I’ll do what I can to advocate for more, but at some point, bicyclists have to stop acting like weenies in downtown LA. Fine, do all your protests where you take up the whole road, by all means, but don’t expect anybody to respect what you are doing and see this mode of transport as a positive, constructive force if large portions of the biking community are self-indulgent street bullies who make the sidewalk miserable for the rest of us.

Why do parents drive kids to school when they could walk?

UNC’s Noreen MacDonald has a very nice manuscript in the upcoming issue of the Journal of the American Planning Association:

From their abstract:

We found that 75% of parents driving their children less than 2 miles to school said they did this for convenience and to save time. Nearly half of parents driving their children less than 2 miles did not allow their child to walk to school without adult supervision. Accompanying a child on a walk to school greatly increases the time the household devotes to such a trip. Few Safe Routes to School programs effectively address issues of parental convenience and time constraints. [1]

So here we have it. The good thing about Noreen and her co-author is that they won’t allow the interpretation here to turn into some working-mom-blame (you think I kid; I have heard public health people say that moms entering the workforce have contributed to childhood obesity because more meals are prepared away from home and the children are outside walking less. This may be, but nobody’s blaming working fathers for this, now are they? Let’s think about how this problem is framed.)

One of the things about the manuscript that makes me wonder: 2 miles is a long way for a young kid to walk–so yeah, it’s going to take some time. I wonder if they were to go finer-scaled–five blocks or so away from school–whether they would get some new insights on why those parents are or are not walking their kids to school.

[1] N. C. McDonald and A. E. Aalborg. Why parents drive children to school: Implications for safe routes to school programs. Journal of the American Planning Association, 75(3):331–342, 2009.