How Walkability Impacts Multifamily

Walkable urban places have earned plenty of buzz in recent years for a multitude of reasons. A groundbreaking study explores the links between walkability and investment and in multifamily and other real estate categories.

Released by the nonprofit Smart Growth America, Foot Traffic Ahead, Ranking Walkable Urbanism in America’s Largest Metros 2023 takes a detailed look at the 35 largest U.S. metropolitan areas.

Walkable urban places are characterized by a mix of different real estate product types, according to Chris Leinberger, co-founder & managing director of Places Platform LLC and the study’s author. Those property categories include multifamily, office, retail, industrial and single-family housing. Also central to these walkable areas: civic resources, such as museums or sports venues, within a half-mile radius.

Walkable urban areas and drivable suburban locations constitute “two entirely different ways of building,” Leinberger told MHN. “Everything about it changes from your site acquisition to your financing, your construction types, your marketing, your management.”

To measure walkability and rank metropolitan areas, the study draws on data from research partners Yardi Matrix, Rocktop Partners LLC and the American Enterprise Institute Housing Center’s Walkable Oriented Development database, as well as additional sources.

Counting all property types (office, retail, for-sale homes and multifamily rentals), the highest-ranking metropolitan regions for walkability are New York City, Boston, Washington, D.C., Seattle, Portland, San Francisco, Chicago and Los Angeles. The two lowest-scoring metro regions are San Antonio and Las Vegas. These scores, the walkability of urban places, impact commercial real estate’s prices as well as location and tenant satisfaction. These scores, the walkability of urban places, impact the affordability of housing in the area as well as residents’ overall health and satisfaction.

Taking inventory

In the 35 metropolitan areas studied, 30.4 percent of all multifamily rentals are in walkable urban places. This percentage varies widely, however. For example, the New York City metropolitan region features 70 percent of all multifamily rental inventory in a walkable urban place. Chicago follows at 45 percent of its inventory, then Boston at 44 percent. At the other end of the spectrum, only 4 percent of all multifamily homes in the Las Vegas area are located in walkable urban places.

Communities connected to walkable urbanism benefit from a sense of community, increased public health, safety, social justice and racial equity and climate sustainability. But this comes at a cost. Due to the benefits of walkable urbanism, increased prices in these areas make it hard for housing affordability and social equity. According to the study, these communities more than often come at a price premium.

Through the rankings of each region’s walkable urbanism, multifamily follows the same trend: The more walkable an urban place is, the more multifamily inventory is concentrated in a walkable neighborhood.

In the top level of walkable urbanism, from 31 percent to 70 percent of the multifamily inventory is in walkable locations. These include New York, Boston, Portland, San Francisco and coastal urban areas, with the notable exception of Chicago. Key links among these diverse areas: accessible transit systems, less urban sprawl and significant environmental awareness.

For metropolitan areas in the second level, from 13 to 30 percent. This is a significant drop from just one tier above. Cities in this category include Denver, Houston, Miami, Austin and Pittsburgh.

Columbus, Nashville, Baltimore, Detroit and the Dallas-Fort Worth metropolitan areas are among those that fall into level three. These areas are working on redeveloping walkability or implementing the necessary systems for the first time. Here, communities in walkable areas are 7 percent to 20 percent of the entire multifamily inventory.

In the fourth and least walkable group of metropolitan regions, the share of multifamily communities in walkable areas ranges from 4 percent to 14 percent. These areas include San Diego, Phoenix, Orlando, Las Vegas, Tampa and many Sun Belt locations.

Premium pricing

In every region included in the Foot Traffic Ahead, Ranking Walkable Urbanism in America’s Largest Metros 2023 report there is a significant multifamily unit price premium. On average, this premium for walkable urbanism compared to drivable sub-urban multifamily housing is approximately 41 percent.

“What we saw during the pandemic was [multifamily] walkable urban price premiums retreated a little bit,” Leinberger told MHN. “There were roughly 45 percent rent per square foot premiums in 2019 for walkable urban apartments.”

For almost every area, the percent change in premiums since 2018 has decreased, but this does not mean the premiums reflect more affordability in walkable urban areas. For example, in the New York City region the premium is 80 percent and in Chicago the premium is 65 percent for multifamily units in walkable areas.