Maryland Planning Blog

“The market is flashing very large and very loud signals: ‘Build more walkable urban places,’” says Christopher B. Leinberger

For many decades urban and regional planners have chased the elusive “walkable community” much like the Holy Grail. From Radburn to Columbia to your local mixed use center, walkability has often been a planning goal, although rarely achieved. This is now changing. An emerging land use in the second decade of the 21st century are walkable urban places. These are locations with much higher density, that employ multiple modes of transportation that get people and goods to walkable environments, and that integrate many different real estate products

Bethesda
Photo Credit: MDP

in the same place. In the past, developers and the market often shunned these. Today, the most valuable real estate is located in walkable urban places.

Walkable urban places are an outcome of smart growth policies, although they have now become a powerful economic engine in the real estate industry. Until the mid-1990s, single lot suburban

homes that were accessible only by car were the priciest housing per square foot in the U.S. These suburban housing types became overbuilt and their housing values have fallen. Now, buyers are clearly willing to pay more for homes that allow them to walk, bicycle or take transit rather than drive.

What are WalkUPs? 

WalkUPs are short for “Walkable, Urban Places.”

We are in the middle of a structural shift in how we develop our built environment in this country. The last time we had a change of this magnitude was back in the 1950’s when we shifted from

investing in cities to building drivable suburban development. “The pendulum is coming back to building walkable urban places,” according to Christopher B. Leinberger, George Washington University professor and President of Smart Growth America’s LOCUS during an early December talk at the Baltimore Museum of Art.

Leinberger claims that the “next real estate cycle will be defined by the rise of walkable urban places.” WalkUPs are poised to “put a foundation under the economy as well as government tax revenues.” Currently a visiting fellow at the Brookings Institution, Leinberger’s research indicates that WalkUPs are the hot real estate investment in many locations in the Washington, D.C. region and the Maryland suburbs.

“Over-building of ‘drivable sub-urban’ development was a major part of the U.S.’s economic slowdown,” says Leinberger. “Changing development strategies to meet shifting market demand will play an equally important role in repairing the national economy.”

Leinberger goes on to state: “The built environment – our real estate and the infrastructure that supports our real estate – is 35% of the asset base of our country. That’s 35% of our wealth and right now that wealth is sitting on the sidelines pretty dormant and unless we can activate that, we’re not going to get this economy moving.”

Contributing to the emerging market for WalkUPs is a highly educated, creative workforce that is increasingly made up of one and two-person households. This demographic prefers WalkUPs and, as they are now voting with their feet, the development industry is responding. Leinberger claims that metropolitan areas without WalkUPs will likely be left behind.

Christopher B. Leinberger
Photo Credit: http://chrisleinberger.com/

Keep in mind that there is a reduction in transportation costs associated with WalkUps. Across the board, walkable urban places have high “Walk Score rankings” and they offer a variety of transportation options. More transportation options lead to a reduction in the rates of auto ownership, the numbers of vehicle miles traveled, and expenditures on gasoline per household. That translates to less dollars spent for transportation purposes and more that can be spent for housing. Looking at housing and transportation costs combined, WalkUPs are relatively affordable, even in D.C. region. About 78 percent of WalkUPs have housing and transportation costs below 45 percent of the area median income, and below the regional average.

Leinberger’s contends that as the real estate industry emerges from the recession WalkUPs are proving to be a financially successful alternative to “drivable sub-urban” forms of development. Drivable sub-urban development was the mainstay development concept since the post-World War Two era. Unfortunately, drivable sub-urban development has the lowest development density in U.S. urban history. It is auto/truck oriented and is composed of stand-alone real estate products. It also fosters socially and racially segregated development patterns along with combined housing and transportation costs that pose economic challenges for many households.

Drivable sub-urban has long been the financial bulwark of the U.S. real estate development industry. Leinberger states that market demand for drivable sub-urban development, which had become overbuilt, was the primary market cause of the mortgage meltdown that triggered the Great Recession.

There may be such pent-up demand for WalkUPs that it could take a generation of new construction to satisfy all would be investors. Leinberger demonstrates this demand through a variety of real estate metrics including rental and sales price premiums per-square-foot and through capitalization rates for differing development types. All in all, the development shift to WalkUPs is good news for the recovering real estate industry and for our economy as a whole. He contends that the move towards WalkUPs will bolster local government tax revenues, much like drivable sub-urban development pumped dollars into the economies of local jurisdictions in the second half of the 20th century.

“WalkUPs used to be a niche market,” Leinberger says. “Today and in the future, it will be considered the market.” Also driving this is a highly educated, creative workforce that is increasingly made up

Kentlands
Photo Credit: MDP

of one and two-person households. The Washington, D.C. region is ahead of the nation in education level, but other metro areas including the Baltimore region are heading in the same direction.

To support his thesis Leinberger notes that “up until the 1980s, drivable suburban office space commanded a premium rent over WalkUPs, but this position has reversed.” “There is currently a 75 percent premium for WalkUP office rent, giving such places a market advantage.”

“Build more walkable urban places,” says Leinberger. “It’s because people are willing to pay 80%, 100%, 200% greater on a price per square foot basis for the housing, for the offices, for the retail because that’s where the market is and there’s not enough product.”

DC: The WalkUP Wake-Up Call – The Nation’s Capital as a National Model for Walkable Urban Places

In the first regional, comprehensive study of WalkUPs for the Center for Real Estate and Urban Analysis at George Washington University, Leinberger examined 43 mixed-use urban centers in the Washington, D.C., region. Most of these centers were developed over the past two decades. While these WalkUP centers occupy less than two percent of the land area in the D.C. region, they account for 29 percent of the income-producing property. These centers generate tax revenues far out of proportion to the land they consume. Since 1990, WalkUPs have steadily gained a larger share of commercial development in the D.C. region. Now they lead for commercial and mixed use development investment.

Regionally Significant WalkUPs in the DC Region
Map: George Washington School of Business Center for Real Estate and Urban Analysis

Leinberger’s study indicates where most WalkUPs can be found in the metropolitan D.C. region. He analyzes specific locations, the physical size of the places, the product mix, the transportation options and additional land use and economic metrics for each WalkUP development area. Of note, Leinberger states that there are six types of regionally significant WalkUPs in any metropolitan area. These are: Downtown; Downtown Adjacent; Urban Commercial; Suburban Town Center; Strip Commercial Redevelopment; and Greenfield. Currently, the Washington, D.C. region is the only metro area that possesses an example of each.

From a planning perspective, Leinberger’s study ranks performance for the 43 WalkUPs in the D.C. region, based on two criteria: economics and social equity. These economic performance metrics help determine where different kinds of investors can place their capital and how selected WalkUPs in the D.C. region rate in comparison to one another. The social equity performance metrics demonstrate whether a broad cross-section of metropolitan residents can live in or have transit access to WalkUPs.

According to Leinberger, the time for debate is over. The market has spoken. It is now time for the public sector to support, the regional real estate industry to invest in, and for private-public partnerships to develop the necessary “place management tools” to give the market what it is demanding – WalkUps.

Additional information related to this topic:

• Smart Growth America’s LOCUS

• Housing & Transportation Affordability Index, Center for Neighborhood Technology:

• Walk Score

• Smart Growth America – Smart Growth Stories: LOCUS President Chris Leinberger on the power of walkable development

• The Brookings Institution, Christoper B. Leinberger

• 10 Techniques for Making Cities More Walkable (theatlanticcities.com)