Walkability’s Continued Impact on CBDs – What is a Ground Lease?

By Feb1,2023

Suzann D. Silverman, Editorial Director

Despite the COVID exodus, walkable urban areas have retained their value over drivable suburbs, according to the newly released 2023 edition of the “Foot Traffic Ahead” walkability study. And that’s not just housing, which has seen record rental rate increases in recent years. Even mid-pandemic, while office buildings struggled to attract workers back, the urban-over-suburban price premiums for both office and surrounding retail space continued to surpass those for multifamily and for-sale housing, the study by Places Platform LLC and Smart Growth America found. (Full disclosure: Yardi Systems, which owns CPE, was a research partner on the study, contributing data.)

Certainly, the preference for walkability hasn’t changed post-COVID, no matter where people landed as many searched for bigger homes with more space to accommodate work. Some still prefer everything primary cities have to offer, and benefits like strong transit systems and economic drivers have kept major coastal cities—plus Chicago—at the top of this ranking. Many others were attracted to smaller, more affordable cities that have regained prominence through redevelopment and reorientation. And, in fact, there continues to be a strong preference for central business districts of all sizes, with their easy accessibility to businesses, stores, schools and parks. To me, that’s not surprising. Convenience matters in our all-too-busy lives, and that’s not going to go away.

As someone who lives in a small suburb and drives a lot, I very much appreciate the services surrounding my big-city office—especially when I think back to earlier office situations, where there was nothing nearby and I had to get in my car and drive if I wanted to pick up lunch or run an errand. I also appreciate that my suburban town has a strong CBD, complete with direct access to New York City via train or bus. With apartments above the businesses, it’s walkable urbanism on a small scale.

But I digress. The good news among the study’s findings, which Jordana Rothberg details in her special report “How Walkability Impacts CRE Markets,” is that mixed-use in cities both big and small is still in great demand, attracting residents who in turn draw business. The bad news is that space for urban expansion is limited, curtailing growth, and high land prices continue to limit affordability—and in turn, social equity.

But the study’s authors, led by Chris Leinberger, co-founder & managing director of Places Platform, see potential to address these issues in addition to environmental concerns, reducing costs for developers, accommodating demand and making these practical commercial centers more accessible to diverse communities while encouraging them to grow. There are a lot more details among the findings. I encourage you to read Jordana’s article and then delve into the study.