Reimagining Cities-Disrupting the Urban Doom Loop

The change in overall values differs across WalkUP types, where Downtown WalkUPs saw the greatest decline in valuation (-23%) from 2019 to 2023 during a period where valuations in the rest of the city (that is, outside of WalkUPs) increased. For Downtowns, this reflects the misfortune of being both relatively supply-constrained and over-indexed in office. For the rest of the city, it reflects the benefits of having a far greater share of its portfolio in for-sale housing, which has increased significantly in value over the past few years. 66 Notably, we underscore that the decline in WalkUP valuation is almost completely driven by gateway cities, especially where Downtown WalkUP valuations decreased 30%, while secondary cities’ Downtowns were flat or up slightly. Large and moderate secondary cities witnessed an appreciation in their WalkUPs, although lagging behind

growth in the for-sale housing-rich remainder of the city. When attributing the decline in valuation, we see that this is indeed driven by office. From 2019 to 2023, on net, real estate values in WalkUPs declined 17% and office drove 77% of that change. In other words, the value of real estate in WalkUPs would have declined by just 3.9% if there was no office space. For the 15 cities as a whole— including non-WalkUP real estate—values are up 3.3%, with a 10.2% increase in for-sale housing valuations offsetting the impact of declines in commercial real estate. These measures only look at total valuation, which is influenced both by underlying pricing as well as inventory. To that end, it’s important to consider the compositional influences at work, which can be more effectively managed by evaluating valuations on a per square-foot basis.

TOTAL VALUE GROWTH BY WALKUP TYPE

GATEWAY

-45% -30% -15% 0% 15% 30% 45%

1.9%

-6.9%

-14.5%

-19.1%

-20.4%

-30.2%

Downtown Downtown Adjacent

Urban Commercial

Urban University Rest of City

Total City

ALL SECONDARIES

40.5%

-45% -30% -15% 0% 15% 30% 45%

33.6%

20.2%

17.3%

15.6%

1.7%

Downtown

Downtown Adjacent

Urban Commercial

Urban University Rest of City

Total City

2019-2021

2021-2023

2019-2023

2017-2019

Source: Places Platform, LLC and Cushman & Wakefield Research estimates based on data from CoStar, CoreLogic, Cushman & Wakefield, U.S. General Services Administration, U.S. Department of Education IPEDS, U.S. Census Bureau, Property Shark, NCREIF and MSCI Real Capital Analytics Note: Total % change, not an annualized growth rate.

66 Review of Quarterly Report on Household Credit and Debt. 2024. Federal Reserve Bank of New York Research & Statistics Group. August 2024

Reimagining Cities: Disrupting the Urban Doom Loop 39