City ranks No. 6 based on percentage of office, retail and multifamily located in “WalkUPs”
CHICAGO, Aug. 1, 2019 – Fueled by an influx of jobs and people to the downtown core, Chicago has claimed the No. 6 spot on a newly released list that ranks the country’s top 30 metropolitan areas based on walkable urbanism.
The 2019 Foot Traffic Ahead report, released by the Center for Real Estate and Urban Analysis (CREUA) at the George Washington University School of Business and produced in partnership with Cushman & Wakefield, Smart Growth America/LOCUS and Yardi Matrix, placed Chicago in the top tier of walkable cities, behind only New York City, Denver, Boston, Washington and San Francisco. The report ranks the 30 largest U.S. metros based on the percentage of office, retail and rental multifamily space in walkable urban places, or “WalkUPs.” There are a total of 761 “regionally significant” walkable urban places across the country, 41 of which are located in the Chicago metro area, according to the report.
Chicago’s 41 WalkUPs
While WalkUPs account for just a fraction of each metro’s total land area – on average, between 0.04% and 1.2% – they’re often the most recognizable places, with high concentrations of economic activity and jobs, as well as rental and for-sale premiums, when compared to their drivable suburban counterparts, the report found. Nearly 30% of Chicago’s total office, retail and rental multifamily space is in the metro’s 41 WalkUPs, where income-producing real estate boasts a 75% per square foot rent premium over space outside of these designated areas. That premium is 27 percentage points higher than in 2010, when the current cycle began, and may not yet have reached its peak, according to the report.
“The report’s findings reflect just how much downtown Chicago has grown during this extended period of economic expansion that, as of the end of July, is the longest in U.S. history,” said Vicki Noonan, Chicago managing principal at Cushman & Wakefield. “Companies like McDonald’s, Kraft Heinz and Motorola Solutions have relocated to the city to tap into the younger workforce that wants to live there. Space comes at a premium because people are willing to pay more for the myriad benefits walkable urbanism affords.”
Chicago ranked 11th in terms of walkable urban market share growth between 2010 and 2018, according to the report’s Market Share Shift Index (MSSI). The MSSI measures the walkable urban market share increase or decrease of net absorption of real estate for a given time period, compared to market share at the beginning of that period. A higher MSSI score means drivable suburban places in that metro are losing market share, the report says. Chicago’s MSSI score of 2.44 was above the weighted average for the top 30 metros (2.30), a sign of demand that helps explain the high vacancies in many suburban business parks.
Suburban Demand for WalkUPs
The report also found that while the Chicago region ranks sixth for walkable urbanism, it is much lower – No. 22 out of 30 – for WalkUP space located in the suburbs. Just 4% of the metro’s total WalkUP space is in these outlying areas, which include the downtowns of Arlington Heights, Aurora, Des Plaines, Evanston, Geneva, Highland Park, Joliet, Lake Forest, Naperville, Oak Park, Skokie, St. Charles and Wheaton.
“Some Chicago suburbs with rail infrastructure are seeing revitalization of their town centers originally built around and linked by rail transit,” said Adam Showalter, senior director, suburban leasing at Cushman & Wakefield. “Evanston is an example of an inner-ring suburb that has embraced thoughtful density and reaped economic benefits as a result. Oak Park and Arlington Heights also boast vibrant downtown districts with a mix of uses oriented around their respective Metra stations.”
The report found that while there is tremendous potential for urbanizing Chicago’s suburbs, they are established enough to have strong “not in my backyard” (NIMBY) opposition to new ground-up developments, even near rail stations that are currently surrounded by parking lots. If those barriers can be overcome, Chicago’s suburbs will accrue great economic, social equity and environmental benefits, according to the report.
Chicago ranks No. 7 out of 30 for its social equity, a measure of the affordability of living in a WalkUP. The population-weighted average housing cost in a walkable urban place in Chicago – calculated for a household earning 80% of the area median income – is 40.5% of income, which is the highest of the six metros with the top walkable urbanism rankings. This is also above the weighted average of 37%.
In addition to housing costs, the report’s Social Equity Index (SEI) also considers transportation costs and the balance between rental and for-sale housing inventory in a particular market. At 14.4% of income, Chicago’s transportation cost was higher than the average of 12.5%. Its lower share of rental housing relative to other metros – 62% vs. an average of 75% — suggests a greater variety of housing options, which contributed to its SEI score.
For a more detailed understanding of walkability in Chicago and the other top 30 U.S. cities, download the report here.
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