An increasing share of new apartment construction has focused on urban infill and suburban town center (or so-called “urban suburban”) areas, as developers recognize the greater increased popularity of such locations. New data suggests that such properties also have substantially greater price appreciation.
Real Capital Analytics recently combined its commercial property price indices with Walk Score indices, which measure the “walkability” of different property locations, to better quantify the connection.
Properties in highly walkable central business districts (CBDs) have appreciated 173 percent since December 2000, compared with 110 percent for highly walkable suburbs, 65 percent for somewhat walkable suburbs and 49 percent for car-dependent suburbs. Properties in the latter two categories are 11 percent and 7 percent below their pre-recession peaks, respectively, while properties in the first two categories are 39 percent and 6 percent higher.
The gains from walkability are stronger for apartments than for other real estate sectors. The premium for CBD locations is significant across all sectors but is highest for apartments. Similarly, the advantage of highly walkable suburban locations, compared with less walkable and car-dependent suburbs, is greater for apartments than for either office or retail.