Reimagining Cities-Disrupting the Urban Doom Loop

Values have declined in most WalkUPs over the time period of this research. Three-fifths of all WalkUPs had a PPSF decline over the time period of this research (2019-2023). When for-sale housing is excluded, nearly three-quarters of WalkUPs experienced declines in PPSF. In both cases, and especially in Downtowns, these declines were primarily due to violating portfolio theory for both Work and Live components. The 32.6% decline in PPSF of the overrepresented office sector (including private sector office, GSA and owner-occupied office) in WalkUPs was responsible for 62% of the PPSF value loss of WalkUP real estate, which declined by 20.1% in total. In turn, this destruction of value has driven local property and income tax government premiums down as well. Live is underrepresented in Downtowns, and for-sale housing is underrepresented in WalkUPs. Within WalkUPs, Live is the second largest use case, with 33.5% of inventory, split roughly equally across multifamily rental and for-sale housing. Combined, Live PPSF valuations increased modestly (0.6%) from 2019-2023, masking a decline in multifamily rental PPSF (-10.8%) that was offset by for-sale housing, which experienced a PPSF increase during the study period (13.5%). For-sale housing is underrepresented in WalkUPs in the 15 cities, so there was only a minor benefit coming from this product’s valuation increase; citywide, for-sale housing is 36.9% of inventory but in our WalkUPs, it is just 16.1%. While for-sale housing is crucial in any WalkUP, it is important to note that WalkUPs do not tend to reach the for-sale penetration that Drivable Sub-urban places achieve. Nationwide, for-sale housing is two-thirds of inventory, substantially higher than both our city and WalkUP market shares. This pattern of less for-sale housing as a percent of all households holds in highly walkable urban cities like Manhattan, Paris and London. Multifamily rental has always been the first residential product type to be developed in WalkUPs, especially Downtown Adjacent WalkUps during the early 21st century (e.g., NoMa and Capitol Riverfront, both Washington, DC Downtown Adjacent WalkUps, are the #1 and #2 neighborhoods adding multifamily rental from 2019-2023 in the country, with over 5,000 units each). This is due to it being targeted at a younger household demographic (48% of renters are under 30 years old), 111 who generally do not have the financial resources to buy. Plus, this demographic tends to appreciate the nightlife-oriented, more gritty condition of a revitalizing WalkUP. Older demographic households live in for-sale housing (over 49% of homeowners are over 45) 112 and tend to be less interested in nightlife. Homeowners must be convinced that the largest asset in their personal balance sheet, their home, will gain value and be able to easily sell at a later date.

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111 Renters and Owners.” NMHC. Nov 2023. 112 Ibid.

84 Cushman & Wakefield