Walkup Wake-Up Call: New York © the George Washington University School of Business 2017 3 Introduction

By Christopher B. Leinberger & Patrick Lynch The George Washington University School of Business Christopher B. Leinberger, Michael Rodriguez & Tracy Loh By CENTER FOR REAL ESTATE & URBAN ANALYSIS THE GEORGE WASHINGTON UNIVERSITY SCHOOL OF BUSINESS 1 Table of Contents I. INTRODUCTION .......................................... 4 Executive Summary........................................... 5 II. LAND USE DEFINED ....................................... 8 A New Lens for Understanding the Tri-State Region ................. 9 Form Meets Function ......................................... 10 Methodology................................................ 12 The Eight Types of WalkUPs.................................... 15 III. LAND USE IN METRO NEW YORK .......................... 21 Maps: Where the WalkUPs Are in the Tri-State Region .............. 22 Geographic Findings .......................................... 25 Product Findings ............................................. 26 Findings in Real Estate Trends................................... 30 IV. WALKUP PERFORMANCE & RANKINGS .................... 31 Economic Performance ........................................ 32 Economic Rankings ........................................... 39 Social Equity Performance ..................................... 41 Social Equity Rankings ........................................ 50 V. FUTURE WALKUPS ........................................ 53 Emerging & Potential WalkUPs ................................. 54 VI. NEXT STEPS .............................................. 57 The Center for Real Estate Conclusions................................................. 54 and Urban Analysis VII. APPENDICES ............................................. 68 Endnotes .................................................. 63 Acknowledgments ............................................ 67 2 The WalkUP Wake-Up Call: New York © The George Washington University School of Business 2017 3 Introduction Executive Summary INTRODUCTION The New York-New Jersey-Connecticut metropolitan estate products located in walkable urban places Our prior national research also found a correlation region has some of the most iconic and globally have a substantial valuation premium in the tri- between walkable urbanism and two economic significant walkable urbanism on the planet. Previous state region. This research analyzed many product factors: regional educational attainment and GRP George Washington University research3 showed that types, including office, retail, industrial, hotel, rental per capita.6 This study further explores these trends Walkable urban places (or “WalkUPs”) in the New York- the tri-state region ranks as the most walkable urban apartments, and for-sale housing. We find that real within the tri-state region. Our research allocates the New Jersey-Connecticut tri-state region are centers of metro area of the largest 30 metropolitans in the estate products have higher values per square foot in region’s annual GRP ($1.17 trillion) to the “place lev- United States. walkable urban places than in drivable locations—a el” for the first time; we estimate that the 2.5 percent both economic vitality and social inclusion. 150 percent premium, or 2.5 times higher, on a per of walkable urban land produces 56 percent of the However, the tri-state region contains significant square foot basis. region’s GRP. This research also finds that increased Policy makers, real estate professionals, environmentalists, amounts of low-density drivable development. The economic activity is correlated with Walk Score®: The city-versus- tri-state region, as defined by the Regional Plan region has very little walkable urbanism outside of Prior nationally focused GWU research published a one percent increase in Walk Score is correlated and community advocates have common cause in increas- suburban Association (RPA).1 the urban core, in contrast to other metropolitan in Foot Traffic Ahead 20165 shows that, for the first with a 0.6 percent increase in GRP per employee in ing the supply of walkable urban places—places that will dichotomy misses areas like Boston and Washington, D.C. It is certainly time in at least a half century, walkable urbanism is walkable urban places. the nuance that We overlay this new geography of walkability a “tale of two metropolitan areas.” gaining in all 30 of the largest U.S. metropolitan ar- grow and expand the region’s economic development, metropolitan with novel combinations of public and private eas—and that it demands significant rental premiums. The tri-state region has pent-up market demand social equity, and environmental sustainability. regions have datasets to find new insights, including: As the country’s largest metro region, the tri-state re- These trends also hold in the tri-state region. Over for substantially more walkable urbanism, but there nodes of walk- gion is home to 22.6 million residents and 10.4 million the most recent real estate cycle from 2010 to 2016, are challenges ahead. The region has the largest able urbanism • A census of nearly 100 percent of the metro- jobs across 12,800 square miles—a land mass larger walkable urbanism has gained new leasing activity transit-dependent population (40 percent of all com- During the late 20th century, real estate practi- dispersed throughout the region, and low-densi- politan real estate market in all product types than Maryland. If the region were a state, its employ- 1.9 times faster than its market share in 2010 at the muting trips), but the rail and bus transit system is tioners, observers, and scholars studying land ty drivable development in both the central city (office, residential, retail, industrial, own- ment base and gross regional product (GRP) would beginning of this cycle. woefully under-maintained and has barely expanded use looked through a city-versus-suburban lens. and the suburbs. Developers, public officials, and er-user, hotel, etc.), including an estimate of be the third largest, behind California and Texas. for generations. This underscores the need for con- This lens has created a bias in understanding advocates need a new way to talk about urban- owner-user space as a discrete product type The tri-state region contains the most extensive rail tinued investment in transit infrastructure. ization that includes both town and country, and metropolitan development trends. • Identifying emerging and potential walkable The region contains globally significant walkable transit and commuter rail network in the country. In understands that walkable urban communities urban places urban places such as Lower and Midtown Manhat- the tri-state region, 130 of the 149 walkable urban Marquee projects of regional significance include: It is not unlike the classic social science joke everywhere can both have economic growth and tan. However, the future of the tri-state region goes places (87 percent) are located within a half-mile about the tipsy guest who drops his keys by the social equity. • Real estate valuation at the location and beyond only developing walkable urbanism in New of a rail transit or commuter rail station. Increasing • Gateway Program to add Hudson River tunnel front door as he leaves a party. He searches for place level York City. It must also include fostering and growing walkable urbanism leverages this investment and capacity for Amtrak and New Jersey Transit trains his keys under a streetlight at the curb and he is To capture this nuance, it is necessary to create walkable urbanism throughout the rest of the region. also provides benefits to those seeking to locate in • Gross regional product (GRP)2 at the location • East Side Access to connect Long Island Rail Road asked, “Why aren’t you looking where you lost new definitions of place that reflect the economic The region’s walkable urbanism presently occurs in a place where they can walk and use transit to get to and place level, rather than just the metro- (LIRR) tunnels in Queens to Grand Central Station your keys?” He replies, “This is where the light and social realities of today. Standard data sets at only 2.5 percent of the region’s land. And, this 2.5 their destination. politan level is.” This research casts a light on where and how census tract or county levels are not sufficient to percent of land is home to 42 percent of the popula- • Second Avenue Subway households and businesses are actually living, understand what is driving development trends. • Place and location-based social equity tion, and holds 31 percent of the region's real estate The most contentious issue in the tri-state area is so- working, and thriving in the 21st century. Therefore, our research is based on our own cus- measurement square footage and 53 percent of its $6 trillion in real cial equity, particularly the impacts of gentrification. • Number 7 Line Extension tom, data-driven geographic boundaries. These estate market value. Counter-intuitively, this research shows that the most • New Tappan Zee Bridge, with the addition of boundaries reflect the distinct ways people walkable urban places in the region are also the most enhanced bus service connecting Rockland and are using real estate today and map the entire Consistent with George Washington University socially equitable. For low-income families, however, Westchester Counties 31-county New York-New Jersey-Connecticut (GWU) research in other metropolitan areas,4 real "the rent is still too damn high.” 5 Introduction Introduction The findings below quantify the interaction between These premiums

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