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1
By Christopher B. Leinberger
The George Washington UniversitySchool o Business
DC:
The WalkUPWake-Up CallThe Nations Capital As a
National Model or Walkable Urban Places
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2 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
I. IntroductIon 3
II. WalkuPs defIned 5
The Rise o the WalkUP 6
Form Meets Function 7
The 6 Types o WalkUPs 8
III. WalkuPs In Metro d.c. 15
The 43 WalkUPs 16
Geographic Findings 18
Product Findings 19
IV. WalkuP trends 21
The Last Three Real Estate Cycles 22
Metro DC: A Model or the Country 23
V. WalkuP rankIngs 25
Economic Rankings 26
Social Equity Rankings 31
VII. next stePs 35
Conclusions & Recommendations 36
Further Study 39
VII. aPPendIces 40
Methodology 41
Endnotes 42
Acknowledgments 43
Table o Contents
Thanks to:
The Center or Real Estateand Urban Analysis
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3
Welcome to the Future.There is a game-changing shit underway in real estate.
New research reveals how walkable urban places and projects
will drive tomorrows real estate industry and the economy
and what actions are needed to take advantage o
these market trends.
What was perceived as a niche market is becoming the market.
This research takes a deep look at Washington, D.C., a national pioneer
in walkable urban places, to identiy where development has and will
take placeand the economic and social impact it will have.
>>>>>>>>>>>>>>>>>>>>>>>>>>
I. Introduction
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industry: place management. This new eld develops
the strategy and provides the day-to-day manage-
ment or walkable urban places (reerred to in short-
hand as WalkUPs), creating a distinctive could only
be here place in which investors and residents seem
willing to invest or the long term.
This new research denesor the rst timewhere
most existing WalkUPs are in the metropolitan D.C.
region. It shows specic locations, the physical size
o the places, the product mix, the transportation
options and so orth.
This study then ranks perormance or these WalkUPs,
based on two criteria: economics and social equity.
The economic perormance metrics help determine
where dierent kinds o investors should put their cap-ital and how these WalkUPs stack up against one an-
other. The social equity perormance metrics demon-
strate whether a broad cross-section o metropolitan
residents can live in or have transit access to WalkUPs.
WalkUps are the outcome o smart growth policiesthat have been debated or the last two decades.
The time or debate is over. The market has spoken.
It is now time or the public sector to encourage, the
real estate industry to build and place managementto be strengthened or be put in place to give the
market what it wants.
This rst attempt at quantiying the economics
and social equity o WalkUPs is based on research
methodology, titled Walk This Way3, that Dr. Mariela
Alonzo and I developed at the Brookings Institution.
Over time, I expect the results to be modied and
improved. This is not only anticipated, but it is en-
couraged as the eld o urbanism and the real estate
industry make strides in better understanding how tobuild and manage great places.
Sincerely,
Cisp B. Linbg
Charles Bendit Distinguished Scholar andResearch Proessor o Urban Real Estate
Gg Wsingn Univsi Scl Businss
Introduction
real estate de-
velopers, investors, regulators, managers, academics
and citizens to rethink the way we manage the 35
percent o our nations wealth that is invested in real
estate and inrastructure, the built environment.1 This
is an important recalibration that aects how most o
us live, work and are entertained. To ignore this struc-
tural change would be akin to ignoring the impactroads and cars had on the built environment more
than a hal-century ago.
This new development model is walkable urban de-
velopment. Metropolitan Washington, D.C., stands at
the vanguard o this trend in the nation.
For decades, real estate practitioners, observers and
scholars have looked through an urban-versus-subur-ban lens. This can be traced to the U.S. Census, which
serves as the platorm or much o the research on the
built environment. The Census separates its data into
Wlbl Ubn: This orm o development has
much higher density, employs multiple modes o
transportation that get people and goods to walk-
able environments and integrates many dierent
real estate products in the same place.
Drivable sub-urban and walkable urban orms odevelopment have market support and appeal
and, despite their names, each are ound in both
cities and suburbs. In the case o metropolitan D.C.,
drivable sub-urban development is located in the
Districts Palisades neighborhood and in Virginias
Prince William County subdivisions. Likewise, D.C.s
Dupont Circle takes a walkable urban orm, as does
Reston Town Center in Fairax County, Virginia.
Drivable sub-urban has long been the dominant
approach to real estate development. Today, that
is reversing; the pendulum is swinging back to
walkable urban development. Market demand or
principal city and outlying counties. It is not unlike
the classic social science joke about the tipsy guest
who drops his keys at the ront door as he leaves a
party. While searching under a streetlight at the curb,
he is asked, Why arent you looking where you lost
the keys? He replies, This is where the light is.
We have watched and analyzed the urban/suburban
debate where the light was, even i that meant using
the wrong approach with the wrong datasets.
In cn dcds in u -bsd wld, v bn w bd s plin
dvlpn:2
Divbl Sub-ubn: This development has the
lowest development density in metropolitanhistory. It is car/truck driven and eatures stand-
alone real estate products and socially and racially
segregated development.
drivable sub-urban development, which has be-
come overbuilt and was the primary market cause
o the mortgage meltdown that triggered the Great
Recession, is on the wane. Meanwhile, there is such
pent-up demand or walkable urban development
as demonstrated by rental and sales price premiumsper-square-oot and capitalization ratesthat it could
take a generation o new construction to satisy.
This shit is extremely good news or the beleaguered
real estate industry and the economy as a whole. It will
put a oundation under the economy as well as gov-
ernment tax revenues, much like drivable sub-urban
development beneted the economy and selected
jurisdictions in the second hal o the 20th century.
Walkable urban development calls or dramaticallydierent approaches to urban design and planning,
regulation, nancing and construction. Most im-
portantly, it also requires the introduction o a new
Walkable urban development calls or radically dierent approaches to urbandesign and planning, regulation, nancing and construction. Most importantly,
it also requires the introduction a new industry: place management.
This research challenges
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II.WalkUPs
Defned
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6 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUPsDeined
The Rise o the WalkUPThe move toward WalkUPs started nearly two decades
ago in U.S. metropolitan areas. Today they promise to be
a powerul driver o the economy.
During the second hal o the 20th century, thedominant development model has been the amiliar
drivable sub-urban approach. Most real estate
developers and investors, government regulators
and nanciers have come to understand this model
extremely well, turning it into a successul develop-
ment ormula and economic driver.
However, starting in the mid-1990s, the pendulum
has been slowly moving back toward building
WalkUPs, which was the approach embraced by the
Washington, D.C., metro area and virtually every oth-er metropolitan area prior to World War II. In recent
years, real estate developers, investors, government
regulators and nanciers in the metropolitan D.C.
area have become quite comortable developing
and managing walkable urban projectsdistinguish-
ing the nations capital region rom most other metro
areas that have not yet recognized the importance o
WalkUPs in their uture development.
In act, metropolitan Washington, D.C., has emerged
as the model or how the nation should develop the
built environment, according to a 2007 Brookings In-stitution study,4 as will be expanded on in this report.
S hare of In c ome Property i n WalkUPs O v er the Last 3 R eal Estate Cy c les
Income Property = Oce, Retail, Apartment and Hotel
1992-2000 2001-2008
2009-Psn
24%34%
48%
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7
In metropolitan areas, land use is unctionally catego-rized as either regionally signicant or local serving.
Regionally signicant places have concentrations o
employment (export or base and regional employ-
ment), civic centers, institutions o higher education,
major medical centers and regional retail, as well as
cultural, entertainment and sports assets. Local-serv-
ing places are bedroom communities dominated by
residential development that is complemented by
local serving commercial and civic uses, such as pri-
mary and secondary schools, police and re stations,
and so on. Generally speaking, regionally signicantplaces are where the metropolitan area earns its
living while local-serving places are where people
spend their non-work lives.
When orm meets unction, a simple matrix emerges
that show how 100 percent o a metropolitan areas
land is used.
This research ocuses on the upper-let quadrant o
the matrix: regionally signicant WalkUPs (reerred to
as simply WalkUPs below). WalkUPs are where met-
ropolitan D.C. will build much o its wealth-creating
assets. This research has ound that WalkUPs, a niche
market 20 years ago, are becoming the market o the
uture, both in the metro D.C. area and, likely, in the
rest o the nations metropolitan areas.
Future research will ocus on local-serving neigh-borhoods, represented by the top right cell o the
matrix. For the District o Columbia, this means
neighborhoods like Petworth, Brookland and Cleve-
land Park. Outside the District, examples includeShirlington and Falls Church, Virginia. In this research,
the statistics or local-serving WalkUPs are combined
with drivable sub-urban development since we have
not yet separated them.
Research on metropolitan D.C.s WalkUPs is basedupon the 2012 Brookings Institution report, men-
tioned above, that developed a methodology to
dene WalkUPs (geographically and by product
mix) and to rank them using separate economic and
social equity perormance metrics. The Brookings
research statistically dened regional signicance
as having a minimum o 1.4 million square eet o
oce space and/or a minimum o 340,000 square
eet o retail space.5 These metrics were used to rank
the WalkUPs that emerged rom the research and
to create our levels o economic and social equity
perormance.6
Regionally signicant and local serving WalkUPs
are likely to be the major generators o real estate
growth in the uture. Although no scal impact
analysis has yet been undertaken or the D.C.-areaWalkUPs, their contribution to total government tax
revenues in the region is expected to be many times
the proportion o land they consume. In Arlington
County, or example, the share o property tax assess-
ments rom the countys seven regionally signicantWalkUPs is ve times the amount o the land the
WalkUPs occupy.7 Fiscal impact studies throughout
the country indicate that WalkUPs tend to produce a
signicant net surplus (tax revenues minus costs o
service), subsidizing the local serving areas o
the jurisdiction.8
Form Meets FunctionRegionally signifcant WalkUPs will be the primary location o economic
growth in metropolitan D.C. For most other U.S. metropolitan areas,
regionally signifcant WalkUPs will also play a signifcant role in the uture.
Regionally
SignificanTlocal SeRving
WalKaBle URBan
WaLkUP(Walkable Urban Place)
1-2% of Metro Area AcreageNeIGhBorhooD
3-7% of Metro Area Acreage
DRivaBle SUB-URBan
eDGe CIty
5-7% of Metro Area Acreage
BeDroomCommUNIty
80-85% of Metro Area Acreage
U S Metropol i tan Lan d Use O pti on s
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8 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
Examples: Downtown D.C. and Golden Triangle
Downtown WalkUPs are the original downtown
sections o a metro areas principal city. Downtown
WalkUPs are dominated by oce space (83 percent
o total square ootage) and have modest though
ast-growing residential (6 percent). Only one per-
cent o the space is occupied by retail, althoughone-o-a-kind regional assets (convention center,
Verizon Center, museums, etc.) account or 10 per-
cent o all space.
WalkUPsDeined
The 6 Types oWalkUPsThere are six types o regionally signifcant WalkUPs
in any metropolitan area. Metropolitan Washington is
the only metro area that possesses an example o each.
PHOTOS:Christopher Leaman
a. The National ArchivesBuilding and Navy Memorialon Pennsylvania Ave. NW
B. A quintessential GoldenTriangle street scene
C. Hines Interests oce,residential and retail mixed-use project on the old con-
vention center land; the lastsurace parking lot down-town to be redeveloped
D. The Chinatown FriendshipGate at Gallery Place at 7thand H Sts.
e. Woolly Mammoth Theatreand new downtown oceand residential at 7th andD Sts. NW
F., G. & h. Golden Triangleood trucks at FarrugetSquare
1 Downtown
P roduct Mix: Downtown
Average % of Total Square Foo tage
oFFICe:
83%
aPartmeNt reNtaL:
3%
retaIL: 1%
For-SaLe hoUSING:
3%
a
B
e
F
h
G
C
D
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e
Examples: Capitol Hill, Capitol Riverront,
Dupont Circle, Foggy Bottom/West End,
Logan Circle, NoMA and SW Federal Area
Immediately adjacent to downtown, these WalkUPs
usually have a lower density than downtown andpossess unique character.
Downtown Adjacent WalkUPs have a substantial
amount o oce space (58 percent), but they also
have signicant residential (24 percent) and our
times the relative retail o downtown (4 percent).
The result is generally a lively, 24-hour environment.
PHOTOS:Christopher Leaman
a. & B. Waterront sculptureand ountains at Yards Parkin Capitol Riverront
C. & D. Dupont Circle parkand ountain
e. The Studio Theatre at 14th& P Sts. NW in Logan Circle
F. & G. Victorian row housesin Logan Circle
h. Free Wednesday nightyoga in the park at DupontCircle
I. Sweetgreen is amongmany new restaurants at theFoggy Bottom Metro Stationat George WashingtonUniversity
J. Whole Foods at 14th &P Sts. NW
2 Downtown Adjacent
Product Mix: Downtown-Adjacent
Average % of Total Square Foo tage
oFFICe:
58%
For-SaLehoUSING:
16%
aPartmeNt reNtaL:
8%
retaIL: 4%
a
B C D
FG
h
I
J
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10 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUPsDeined
Examples:Adams Morgan, Columbia Heights,
Georgetown, H Street/Atlas District, Tenleytown,
U Street/Shaw, Van Ness and Woodley Park
Historically local-serving neighborhood commer-
cial, these places declined ater World War II but, inrecent years, ound a new economic role.
Urban Commercial WalkUPs in metro D.C. are dom-
inated by residential property (56 percent) and are
marked by more retail (15 percent) and less oce
space (20 percent) than downtown or downtown
adjacent. The retail in urban commercial WalkUPs is
generally characterized as urban entertainment, such
as restaurants and nightclubs, as well boutique shopsand urniture and home dcor stores.
PHOTOS:Christopher Leaman
a. The Northern Exchangecondominium underconstruction at 14th andR Sts. NW by developerPN Homan
B. Recently opened George-town Waterront Park
C. The intersection o U St.,16th St. and New HampshireAve. NW
D. Alley grati along U St.NW
e. Georgetown WaterrontPark
F.The Pug bar on H St. NE
G. Pedestrian crossing inthe U Street Corridor at16th St. and New HampshireAve. NW
h. & I. Georgetown retail on
M St. NW
3 Urban Commercial
P roduct Mix: Urban Commercial
Average % of Total Square Foo tage
oFFICe:
20%
For-SaLehoUSING:
43%
aPartmeNtreNtaL:
13%
retaIL:
15%
a
B
C
e
D
G h I
F
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11
PHOTOS:Christopher Leaman
a. Park space in the mixedresidential/commercial de-velopment at N. EdgewoodSt. and Clarendon Blvd.
B. & C. Downtown SilverSpring
D. Iced coee romNorthside Social Coeeand Wine
e. Liberty Tavern on thecorner o Wilson Blvd. andN. Irving St.
F.Sidewalk dining inClarendon
G. Single amily neigh-borhood within walkingdistance o Clarendon
h. Rental apartments underconstruction in Clarendon
I. Pedestrian on DowntownSilver Springs mosaic tilestaircase
4 Suburban Town Center
Examples: Bethesda, Clarendon, Frederick ,
Historic Fairax City, Old Town Alexandria,
Rockville, Rosslyn and Silver Spring
Typical Suburban Town Centers are 18th or 19th-
century towns that were swept up in the sprawl othe metropolitan area ater World War II. Following
decades o decline, they have ound a neweconomic role.
Suburban Town Centers have relatively less oce
space than in downtowns or downtown adjacent
areas (although oces still occupy 46 percent o
all space), more residential (30 percent) and signi-
cantly more retail (16 percent).
Product Mix: Suburban Town Center
Average % of Total Square Foo tage
oFFICe:
46%For-SaLe
hoUSING:
19%
aPartmeNtreNtaL:
11%
retaIL:
16%
a
B C
D
e
F
G
h
I
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12 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUPsDeined
Examples:Annandale CDC, Baileys Crossroads,
Ballston, Carlyle, Courtthouse, Friendship Heights,
New Carrollton, Pentagon City, Prince Georges Plaza,
Seven Corners CDC, Tysons Corner, Virginia Square,
Wheaton and White Flint
These WalkUPs were mid-to-late 20th century stripcommercial that became obsolete and then evolved
into higher density development.
Somewhat similar to suburban town centers, Strip
Commercial Redevelopment WalkUPs have relatively
less oce space than in downtowns or downtown
adjacent areas (46 percent o all space), more resi-
dential (31 percent) and signicantly more retail
(16 percent). Many o these WalkUPs include regional
malls that have been or will be urbanized. This typeo o WalkUP will be the major ocus o walkable
urban development over the next generation.
PHOTOS:Christopher Leaman
a. Street musician inWelburn Square in Ballston,Arlington
B. Commuters on their wayhome in Ballston
C. Commercial oce spaceand Virginia Tech ResearchCenter on N. Glebe Road
in BallstonD., e., F. & G. Green spaceand armers market inWelburn Square
h. Walkway in Ballston atStuart and 9th St. N
5Strip CommercialRedevelopment
Product Mix: Strip Commercial Redevelopment
Average % of Total Square Foo tage
oFFICe:
46%
For-SaLehoUSING:
19%
aPartmeNtreNtaL:
12%
retaIL:
16%
a
B C
e F
G
h
D
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13
Examples: Crystal City, Kentlands,
National Harbor and Reston Town Center
Oten criticized as being steri le, Greeneld WalkUPs
are situated where major investment has quickly
turned ormerly undeveloped land into a walkable
urban place.
Greeneld WalkUPs have among the most balanced
product mix. Oce (45 percent) is in balance with
rental and or-sale residential (33 percent), while re-
tail (6 percent) tends to be urban entertainment and
boutiques. The large upront capital costs requiredor Greeneld WalkUps and high market risk mean
ew will probably be attempted in the next generation.
PHOTOS:Christopher Leaman
a. & B. The Marina atNational Harbor
C. The Awakening, analuminum sculpture byJ. Seward Johnson, Jr.,was relocated to NationalHarbor rom Hains Point
D. Boutique retail alongAmerican Way
e., F. & G. Retaurant andretail development at theAmerican Way andWaterront St.
h. The intersection oMariner Passage andWaterront St.
I. Gravel bike paths alongthe waters edge
J. Rosa Mexicano onWaterront St.
6 Greenfeld
P roduct Mix: Greeneld
Average % of Total Square Foo tage
oFFICe:
45%For-SaLe
hoUSING:
17%
aPartmeNtreNtaL:
16% retaIL: 6%
a
B
C
D
e
F
hG
J I
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14 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
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15
III.WalkUPs in
Metro D.C.
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16 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
Loudoun
County
Loudoun
County
Prince William
County
Prince William
County
3030
1616
Frederick CountyFrederick County
WalkUPs inMetro D.C.
The 43 WalkUPsThough concentrated inside the Beltway, Metropolitan D.C.s
regionally signifcant walkable urban places span seven counties.
Id # WuP nm a
1 ads mgn 61.82
2 annndl 242.70
3 Bils Cssds 471.11
4 Bllsn 342.85
5 Bsd 518.41
6 Cpil hill 510.89
7 Cpil rivn 304.73
8 Cll 223.81
9 Clndn 207.83
10 Clubi higs 413.17
11 Cuus 246.63
12 Csl Ci 365.34
13 Dwnwn DC 635.49
14 Dupn Cicl 284.51
15 Fgg B/Ws end 498.61
16 Fdic 377.14
17 Findsip higs 359.64
18 Ggwn 132.60
19 Gldn tingl 179.54
20 h S/als Disic 292.02
21 hisic Fix Ci 439.40
22 knlnds 385.76
Id # WuP nm a
23 Lgn Cicl 228.57
24 Ninl hb 190.95
25 Nw Clln 597.69
26 Nma 240.35
27 old twn alxndi 377.98
28 Pngn Ci 240.46
29 Pinc Gg's Plz 277.43
30 rsn 246.32
31 rcvill 518.60
32 rssln 316.45
33 Svn Cns CBC 278.75
34 Silv Sping 403.16
35 SW Fdl Cn 266.21
36 tnlwn 571.47
37 tsns Cn 2176.34
38 U S/Sw 361.42
39 Vn Nss 753.81
40 Vigini Squ 190.56
41 Wn 489.78
42 Wi Flin 444.37
43 Wdl P 382.71
DOWNTOWN
DOWNTOWN ADJACENT
URBAN COMMERCIAL
SUBURBAN TOWN CENTER
STRIP COMMERCIAL
REDEVELOPMENT
GREENFIELD
WlUP tp:
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17
FairfaxCountyFairfaxCounty
ArlingtonCounty
ArlingtonCounty
AlexandriaAlexandria
MontgomeryCounty
MontgomeryCounty
Prince GeorgesCounty
Prince GeorgesCounty
District ofColumbiaDistrict ofColumbia3737
55
66
3939
44
1313
77
2525
3636
1515
4141
4242
99
1010
2727
33
3131
22
88
2121
3434
2222
4343
1212
3838
1717
3232
2020
1414
3333
2929
35351111
2828
26262323
2424
4040
19191818
11
0 2 4 61
Miles
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18 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUPs inMetro D.C.
Geographic FindingsGeography-ocused distinctionsrom their size to
their locationdefne Metropolitan D.C.s WalkUPs.
t w 43 ginll signicn WlUPs
in D.C. in 2012. The amount o land in the
metropolitan area used by these WalkUPs is .91
o 1.0 percent., and their size ranges rom 62 to
2,176 acres with an average o 408 acres. Walking
distance is what limits a WalkUPs size.
t dnsi s WlUPs vgs 0.62
gss f i (Far),9 nging 0.13
4.26. The gross FAR or the region, excluding
these 43 walkable urban places, is only 0.04. In
other words, the regionally signicant WalkUPsare 15 times denser than the rest o the region.
t WlUPs clus in nws pin
plin , which has been metro D.C.s
avored quarter since at least World War II.10
S 34 pcn plin jbs lc-
d in WlUPs. Overall, WalkUPs have an employ-
ment density o 50.5 jobs/acre, compared with
non-WalkUPs employment density o only 0.9
jobs/acre. About 65 percent o the regions jobs in
public administration and 44 percent o its jobs inknowledge industries are in WalkUPs. Local-serv-
ing jobs (grocery clerks, teachers, police ocers,
reghters and sanitation workers, etc.), which ac-
count or 35 percent o all jobs, are least likely to
locate in WalkUPs.11 Thereore, the share o export
(or base) and regional jobs that are ound in metro
D.C. WalkUPs is probably closer to 50 percent.
Sinc 2000, nw WlUPs v gd in
Disics ns nd sus s, spcill
lng ms Gn Lin. This brings more
employment and opportunities closer to low-in-come households. Few other metropolitan areas
are seeing regionally signicant private sector in-
vestment outside their respective avored quarters.
onl 42 pcn WlUPs in Disic
Clubi. a supising 58 pcn in
sububs. t Disic Clubi s 49 pcn
l squ g ll wlbl ubn l
s pduc vsus 51 pcn in sububs.The growth o new regionally signicant WalkUPs
in the suburbs over the past 20 years is the major
reason why metropolitan D.C. has the most walk-
able urban places in the country. The trend toward
WalkUPs is as much about transorming the sub-
urbs as it is about redeveloping the central city. ti- 43 ginll signicn
WlUPs, 77 pcn, v il nsi
cunl inslling il nsi. Two addition Walk-
UPs (Reston Town Center and Baileys Crossroads)
have rail transit planned within the next decade,raising the total to 81 percent. Eight WalkUPs have
no rail service and none planned. Statistically,
there is no proven causal connection between rail
transit and the development o walkable urban
places. However, the high percentage o WalkUPs
with rail suggests that it is an important actor. Asthe WalkUPs without rail demonstrate, however,
it is possible to develop walkable urbanism with-
out rail.
t is bu n ginll signicn WlUP
v 130,000 sidns in D.C.,
quivln svn ig WlUPs v
illin sidns (5.7 illin sidns in
dividd b 43 plcs). Assuming met-
ropolitan D.C. is the model or how the country
is developing the built environment, this would
suggest that there are hundreds o regionallysignicant WalkUPs that should be developed in
U.S. metro areas over the next generation. How-
ever, is too early to say with condence that this
ormula will hold as the WalkUPs trend matures.
In the 1960s, when regional malls were rst being
developed, there was similar uncertainty aboutthe population needed to support each mall.
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19
Product FindingsThe strength o WalkUPs or many orms o income-producing real estate
has become apparent. Ofce, hotel, rental residential and sports/convention
development have each adapted to this orm. However, retail and or-sale
housing still ace challenges.
t 4.1 billin squ l s
in plin D.C. However, this gure nota-
bly omits owner-user space (i.e. government,
corporate and institutional-owned space). That
is because there is not a reliable data source
or this type o real estate, though this might beaddressed in the uture.12
t un spc in ginll signicn
WlUPs is 11.6 pcn l.
Inc-pducing pp, wic includsc, pn, il, insiuinl nd ll
nn--sl l s, ls 1.34 billin squ nd ccuns 33 pcn D.C.s
inc l s. Again, this excludes owner-oc-
cupied space, which would certainly increase this
percentage. WalkUPs account or 29 percent o all
the income property in the region. The rest alls
into the other cells o the matrix on page 7, name-ly regionally signicant and local-serving drivable
sub-urban and local-serving walkable urban.
Inc-pducing l s in WlUPs visbwn 2.4 pcn nd 60 pcn ll spc
in gin. Again, the local serving WalkUPs,
like Petworth in the District or Shirlington in Vir-
ginia, are not included in these numbers, so total
WalkUP market share is higher. In order o lowest
to highest, the percentage o income-producing
WalkUPs by product square ootage are:
> Flex Industrial 2.3 percent> Industrial 3.7 percent> Heath Care 7.6 percent
> Institutional 17.2 percent> Rental Residential 13.8 percent> Retail 21.5 percent
> Hotel 51.3 percent> Ofce 54.8 percent> Sports/Convention 60.0 percent
F-sl sidnil (singl il, wnuss
nd cndinius) ccun 67 pcn l l
l s in gin. Only 3 percent o this
inventory is in WalkUPs. The rest is split betweendrivable sub-urban and local-serving WalkUPs,
although it would seem that the majority would
be in drivable sub-urban locations.
avg vcnc-djusd nnul c n in
WlUPs is $36.78 p squ , cpd $20.98 divbl sub-ubn c ns,
75 pcn nl piu. Comparable data or
20 or 30 years ago is not available, but most real
estate proessionals would recall that drivable
sub-urban rental rates had a signicant premium
over the ew WalkUPs in existence in the 1980s.Those positions have switched, giving a signi-
cant market advantage to WalkUPs and indicating
pent-up demand.
Vluins c spc signicnl igin WlUPs. Annual oce rental income in the
region totals $13.6 billion; 68 percent o these
rents are generated by regionally signicant
WalkUPs. Valuations are directly related to rental
income and capitalization rates. Since cap rates
tend to be substantially lower in WalkUPs,13 which
translates into higher valuations, combining the
rent premiums and the lower cap rates results in
an even higher percentage o metro area ocevaluations in WalkUPs.
ang -sl using, p-squ- vlus
ginll signicn WlUPs 71 pcn
ig n vg ll plcs in
D.C. . WalkUps average price is $398
per square oot versus the drivable sub-urban av-
erage price o $222 per square oot. Once again,
i local-serving walkable urban or-sale housingwere combined with these regionally signicant
WalkUP housing results, the premium would
probably be even larger. The 2012 Brookings
research, which had a larger sample o drivable
sub-urban or-sale housing, indicates that there
is more than a 100 percent premium or WalkUPsover drivable sub-urban or-sale housing on a
price per-square-oot basis.
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20 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
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21
IV.WalkUP
Trends
lk T d
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22 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUP Trends
The Last Three Real Estate CyclesThere are big questions acing developers, investors and public ofcials:
What direction is the real estate market headed? Is it more drivable
sub-urban or more walkable urban?
Data covering the past three metro D.C. real estate
cycles (1992 to 2000, 2001 to 2008, and 2009 to the
present) make it possible to see where dierent real
estate products have been built. Only data or oce,
retail, apartments and hotels or these three cycles is
available.
As mentioned, data is available only or regionally
signicant WalkUPs, the balance being both drivable
sub-urban locations and local-serving WalkUPs. This
data, thereore, understates the amount o walkable
urban product developed during each cycle since
local-serving WalkUPs are lumped in with drivable
sub-urban.
real estate cycles QuantIfIed
t s u inc pp cgis(c, il, pn nd l) lcd in
WlUPs incsd sdil v ps
l s ccls. These our product types
together accounted or 24 percent in the 1990s
cycle, and rose to 34 percent in the 2000s cycleand 48 percent in the current cycle that startedin 2009.
oc spc ws div nd wd
building ginll signicn wlbl u-
bn pduc. Some 38 percent o the oce space
delivered in the 1990s cycle was built in WalkUPs.
This increased to 49 percent in the 2000s and to
59 percent in the current cycle that started in 2009.
rnl pn dvlps v bgun
ggssivl pusu wlbl ubn lcins. In
1990s, nl 12 pcn gins nwnl pn spc ws buil in WlUPs. In
l 2000s, is s 19 pcn nd s
scd 42 pcn d. In addition, the
volume o rental apartments in local-serving Walk-
UPs has probably increased the walkable urban
rental apartment market share considerably inrecent years, as local-serving WalkUPs in Petworth
and Mount Vernon show.
Dvlpn il spc lgs. onl 8 pcn
il spc dvlpd in gin in
1990s ws lcd in WlUPs. F l2000s, i s 16 pcn bu s lln 13
pcn ccl sing in 2009.The likelyreason is that many, though not all, retail tenants
have not yet gured out how to build walkable
urban retail ormats, particularly when it comes
to big box stores. Many smaller specialty stores(Urban Outtters, Brooks Brothers, etc.) and many
grocery stores (Saeway, Harris Teeter, Whole
Foods, etc.) have walkable urban ormats. The
big box retailers like Wal-Mart are just attempting
walkable urban locations. Big box walkable urban
pioneers, such as Target and Home Depot, only
have ve or so years experience with this ormat.Adding local serving WalkUPs to these product to-
tals will probably signicantly increase the percent-
age o retail that is walkable urban in the currentcycle; many rental apartments over grocery stores
are under construction in local-serving WalkUPs.
tsns Cn nd Wi Flin, w nw
WlUPs in D.C., ipn dls gin nd cun. Both represent large
strip commercial redevelopment WalkUP types
and both were the poster children o edge city
drivable sub-urban development in the late 20thcentury. They are signicant or another reason:
Many o the neighborhood associations surround-
ing these places became supporters o increased
density because o the promised walkable urbanuture. NIMBYs (Not in My Backyard) became YIM-
BYs (Yes In My Backyard). Tysons Corner is about
to open our new Metrorail stations. Because o its
size, Tysons Corner will likely be split into three,
or even our, WalkUPs. Currently it covers 2,176
acres when the metropolitan average or a Walk-
UP is 408 acres.
Wlbl ubn dvlpn usd b
nic . td nd in uu, i will bcnsidd the . This will become increas-
ingly obvious once local-serving walkable urbandevelopment is olded into the analysis.
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23
Richard Florida, director o the Martin Prosperity
Center at the University o Toronto School o Manage-
ment and originator o the concept o the creative
class, has most clearly demonstrated this connec-
tion. As Florida says in The Rise o the Creative Class
Revisted,14 the Creative Class is ... the key orce thatis shaping our geography, spearheading the move-
ment back rom outlying areas to urban centers and
close-in walkable suburbs. He quotes Carly Fiorina,
then-CEO o Hewlett-Packard Co., as saying, Keep
your tax incentives and highway interchanges; we will
go to where highly skilled people are.
Florida and this research demonstrate that most
highly skilled, highly educated creative class workers
want to work and live in walkable urban places. Thecreative class is driving the current and uture knowl-
edge economy and, in turn, driving the demand or
walkable urban places.
Metro DC:A Model or the CountryThe nations capital region, intertwined with the ederal government
and buered rom some recessionary eects, seems an unlikely national
model or real estate development. But its signature characteristics include
the elements needed to thrive in the current and uture knowledge economy.
Metropolitan Washington, D.C., is an improbable
model or the uture o the built environment. As the
nations capital, it benets rom a one-o-a-kind eco-
nomic and employment base, namely the ederal gov-
ernment, which has a recession-resistant oundation.
The counter-argument or those who maintain that the
presence o the ederal government disqualies the
nations capital rom consideration as a model or the
uture o the built environment is that all metropolitan
areas have a unique base economy. In Detroit, that
industry is autos. In Seattle, it is aircrat and sotware.
In Columbus, it is state government and insurance.
Having a unique economic base cannot disqualiy a
metropolitan area rom being the national model.
In addition, metropolitan D.C. resembles other recent
boomtowns. Like Dallas, Orlando and Atlanta, it is a
southern metro that has been invaded by Yankees
who uel its population and boost its employment.
Like Austin, Boston, San Francisco/San Jose and Ra-
leigh, it has a notable technology sector. Metro D.C.
also sprawled in a drivable sub-urban ashion in thelate 20th century, just like all boomtowns, yielding
arguably the worst trac congestion in the country.
Still, metropolitan D.C. sits near or at the top o
surveys on walkability. According to a 2007 Brook-
ings survey, the greater D.C. area has more WalkUPs
per capita than any large metro area. Notably, metro
D.C.s population holds more college degrees per
capita than anywhere else in the nation. An educated
populacethe number o people over age 25 with
college degreesis an indicator o the strength o the
local knowledge economy. And knowledge workerswant walkable urban options.
this population grew rom 20 percent in 1990 to 28
percent in 2010.
Putting aside the DC metro area, the next ve mostwalkable large U.S. metropolitan areas have college-
educated populations in 2010 that were equivalent
to metro D.C.s in 1990. A plausible assumption can
be made regarding education levels: that the next
ve most walkable metro areas are 20 years ahead
o both the nation and the lowest ve metro areas.
Further, assume that metro D.C. is roughly 40 years
ahead o the nation as a whole. It is possible that thecountry will ollow the trajectory o the most walk-
able metro areas and metro D.C. over the next ew
decades. As education levels continue to increase
and the country evolves urther into the knowledge
economy, the walkable urban trend will continue.
Metro D.C.s population holds more college degrees per capita than anywhereelse in the nation. An educated populace is an indicator o the strength o the local
knowledge economy. And knowledge workers want walkable urban options.
In short, Metropolitan Washington, D.C., can be used
as a model or the uture o the built environment
because it is also the arthest along in adjusting to
the demands o the knowledge economy and highly
educated workers. The graph on the ollowing page
shows the growth in college-educated residents in
the ve least walkable large U.S. metros as well asthe the nation as a whole; as illustrated in the chart,
Also consider that in 1990, metro D.C. had ew mean-
ingul walkable urban areas. Its downtownlike many
city centers across the nationwas abandoned and
considered dangerous. No suburban-located walk-
able urban places had yet emerged, except or Old
Town Alexandria and Rosslyn. When Joel Garreau
wrote Edge Cityin 1989, the seminal book about therise o drivable sub-urbanism, his prime example
W lkUP Tr d
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24 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUP Trends
was Tysons Corner in suburban Virginia. It was the
worlds largest drivable sub-urban concentration o
commercial enterprises. Tysons is now on the path o
becoming walkable urban.
A rise in highly educated knowledge workers haspowered the explosion in demand or and devel-
opment o walkable urban places in metro D.C. and
elsewhere. These highly educated creative class
workers, especially the young Millennials (born be-
tween 1982 and 2004), want the option o living and
working in walkable urban places. Since metro D.C.
has relatively more o these workers than any other
metropolitan area, it is not surprising that it leads
the WalkUPs phenomenon. As these Millennials age,many seem to be moving to or near suburban Walk-
UPs, such as Arlington. When it comes to developing
suburban WalkUPs, metro D.C. has a substantial lead
over all other U.S. areas.
Development o WalkUPs is obviously not conned
to metropolitan D.C., as the 2007 Brookings survey
revealed. The Wall Street Journal has recenlty report-ed on numerous examples o corporate headquar-
ters moving back into downtown Chicago and evendowntown Detroit, as well as the rise o high-tech
concentrations such as Silicon Alley in New York City
and the growth o high-tech rms south o Market
Street in San Francisco.
The trajectory or large metropolitan areasand the
country as a wholeis toward a better-educated popu-
lation, the expansion o the knowledge economy and
a growing demand or more walkable urban places.
Metro D.C. just happened to get there rst.
Growth of Col leg e-Ed uc ated Populat i on% o Adults 25 or Older in Select U.S. Metro Areas with at Least a Four-Year Degree
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
1990 20102000 2020 2030 2040 2050
DC REGION
% COLLEGE EDUCATED IN:
PROJECTED
% COLLEGE EDUCATED IN:
NEXT 5 MOSTWALKABLEMETRO AREAS
5 LEASTWALKABLEMETRO AREAS
NEXT 5 MOSTWALKABLEMETRO AREAS
NATION &5 LEASTWALKABLEMETRO AREAS
NATION
D.C.s % of collegeeducated adults is
20 years ahaead ofthe next 5 most
walkable metroareas...
...and 40 yearsahead of the
nation as a wholeand the 5 leastwalkable metroareas
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25
V.WalkUPRankings
WalkUP Rankings
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26 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
WalkUP Rankings
coPPer
sIlVer
gold
PlatInuM
0
$10
$20
$30
$40
$50
Office Retail Residential(Rental)
Residential(Ownership)
Overall
Rent(orRentEquivalent)perSquareFoot
Rents by Product Type
COPPER
SILVER
GOLD
PLATINUM
l i
I
I
Wa l k Score & FAR by Ca tegory
WALKSCORE
GROSS FAR**Floor Area Ratio,a Measure of Density
0
0.5
1.0
1.5
2.0
2.5
3.0
65
70
75
80
85
90
95
FAR
WalkScore
CO PPER SILVER GOLD PLATIN UM
Economic RankingsWalkUPs in Metro D.C. all into our levels
when measured by economic perormance.Each WalkUP level has dierent growth and
investment potential than the others.
These charts summarize the relative rent, Walk Score and FAR
perormance o the 42 WalkUPs (SW Federal Area was omitteddue to data irregularities) by level. Each ranking is based upon
the rents achieved or oce, retail, rental apartment and or-sale
housing (converted to the equivalent o annual rent).
The average rent per square oot or the WalkUP was deter-
mined and weighted based upon the percentage o square eet
per product type. The assumption is that the amount the market
is willing and able to pay in rent is a proxy or the economic per-
ormance o the WalkUP. Rent is a proxy to be sure, but the bestproxy we have at the moment.
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27
avg k mics
Walk Score: 77.30
Acreage: 531.1 acs
Gross FAR: 0.41(Floor Area Ratio)
Annual Rent per Sq. Ft .{$= $10}
oFFICe:$21.82
retaIL:$25.17
aPartmeNt:$22.02
Housing per Sq. Ft. {$= $10}
For SaLe hoUSING:$252.16
Square Footage
totaL:9.3 illinsq. .
oFFICe:
43%
For-SaLehoUSING:
19%
aPartmeNtreNtaL:
12% retaIL:18%
which will probably be served by the Columbia
Pike streetcara game-changing investment.
An important Copper example is Silver Spring,
especially when viewed with its social equity rank-
ing (Platinum, the highest). Silver Spring walks the
tightrope in attempting to achieve higher econom-
ic returns without gentriying and detracting romits unique and diverse character.
There are many potential WalkUPs waiting to move
onto the WalkUP list. One that stands out is Poto-mac Yards in Alexandria. The proposed private sec-
tor-nanced Metro station will mark the beginning
o its transormation while the required greater
density o zoning is now in place. This will spark the
redevelopment o the existing big box center, an-
chored by Target and a multiplex cinema, into highdensity, mixed-use development, converting the
current interim land uses into a WalkUP. Another
potential WalkUP is the Minnesota Avenue Metro
station area, which will emerge as the greater cen-
ter city builds out over the next 10 to 20 years.
Prince Georges County has three WalkUPs listed
as Copper (New Carrollton, Prince Georges Plaza
and National Harbor). There are others that could
earn a place on the Copper list in the uture, suchas West Hyattsville, College Park, Naylor Road and
Branch Avenue, the result o new development and
place management. The key to the evolution o the
new WalkUPs to the northeast and southeast is the
expansion o the avored quarter. No metropol-
itan area in the country has witnessed substantial
market-based employment growth outside theavored quarter. However, land and inrastructure
constraints in metro D.C.s avored quarter haveled to this tentative expansion, which currently
includes WalkUPs such as NoMA, Capitol Water-
ront, New Carrollton, Wheaton and Silver Spring.
Metro D.C. growth outside the avored quarter is
the rst market-based bridging o the notorious
west-east divide and is to be welcomed since it
brings services and jobs where they are needed
most. Still, it is important to recognize how unusual
and tentative this trend is. To continue, it must be
nurtured by inrastructure and zoning changesrather than by levying onerous costs or ees on
uture development.
cHaracterIstIcs
The lowest level o economic perormance, Copper
WalkUPs have generally demonstrated the intention
to be walkable urban. These places have decided toinvest in transportation inrastructure, revised their
zoning and sometimes introduced place manage-
ment. However, they have not yet seen dramatic
new walkable urban development and are not close
to achieving critical mass. Some private investment
in walkable urban projects may have begun but the
Copper WalkUP may still be drivable sub-urban in
nature or the redevelopment may be fedgling.
The Copper level WalkUPs have the lowest rents, arethe least dense and are the least walkable. Com-
pared to the rest o the drivable sub-urban region,
there is only a 4 percent price premium or oce
space in these WalkUPs over drivable sub-urban
oce space. However, or-sale housing prices are 13
percent higher, residential rental rates are 23 percent
higher and retail rates are about 26 percent higher.
oBserVatIons
Copper WalkUPs Tysons Corner and White Flint arenational models o strip commercial redevelop-
ment. Both are at the Copper level since they have
recently made or committed to make signicant
transit improvements, and both have dramatically
increased and made legal walkable urban zoning.
Tysons Corners, as the largest drivable sub-urban
location in the country (with more than 42 million
square eet), is about to open our Metro stations.
Tysons covers 2,176 acres, nearly twice the acreageo the ve Rosslyn-Ballston corridor WalkUPs
(1,305 acres). There is no doubt that Tysons willevolve into at least three separate WalkUPs, each
with its own character, density, product mix and
perormance, and place management.
Some WalkUPs have achieved the Copper ranking
without much conscious eort. Examples are Seven
Corners, Baileys Crossroads and Annandale, all in
Fairax County, Virginia, and Van Ness in the Districto Columbia. While comprehensive plans have been
proposed to transorm these places into more vibrant
WalkUPs, the character is still perceived as drivable
sub-urban with little private/nonprot sector-led
eort to accelerate and manage these places. One
notable exception may be Baileys Crossroads,
coPPer
annndl
Bils Cssds
Csl Ci
Fdic
h S Ne/als Disic
hisic Fix Ci
knlnds
Nw Clln
Pinc Ggs Plz
rcvillSvn Cns CBC
Silv Sping
tsns Cn
Vn Nss
Wn
Wi Flin
WalkUP Rankings
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28 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
avg k mics
Walk Score: 86.18
Acreage: 319.0 acs
Gross FAR: 0.63(Floor Area Ratio)
Annual Rent per Sq. Ft .{$= $10}
oFFICe:$33.01
retaIL:$37.25
aPartmeNt:$28.93
Housing per Sq. Ft. {$= $10}
For SaLe hoUSING:$413.77
sIlVer
cHaracterIstIcs
Places in the Silver tier have the private develop-
ment and, usually, the place management required
to become a regionally signicant WalkUP, but
critical mass has not yet been achievedalthough it
is obvious it eventually will.
Silver WalkUPs have the greatest value-creation po-
tential or investors and developers. While they may
still have an image as being somewhat economi-
cally risky, as evidenced by their high capitalizationrates and relatively lower valuations, this will likely
be improved with more development and place
management. The result will be lower capitalization
rates and, thereore, higher valuations as they move
into the Gold tier.
Silver WalkUPs have 44 percent higher rents and are
53 percent more dense than Copper WalkUPs. They
achieve a nine point higher Walk Score on average.
oBserVatIons
Each Silver WalkUP took a dierent path to reach
this level o economic perormance. NationalHarbor and Reston Town Center are Greeneld
WalkUPs, which can suer rom eeling sterile.
However, all have made remarkable strides in
creating walkable urban vibrancy or specic target
markets attracted to new development. Carlyle
and Pentagon City have been strip commercial
redevelopment WalkUPs, taking advantage o
either ederal government or regional mall anchors
at their Metro stations.
Old Town Alexandria has leveraged its historic
character, innate urban character, tourism and arts.
R g
ads mgn
Bllsn
Bsd
Cll
Clndn
Clubi higs
Cuus
Ninl hb
old twn alxndi
Pngn Ci
rsn twn Cn
rssln
U S/Sw
Wdl P
Its major drawback is a lack o rail transit. Columbia
Heights is a national model o urban commercial
WalkUP redevelopment, ocusing on regional
retail while maintaining a diverse, mixed-income
community.
Many o Arlingtons WalkUPs are in the Silver tier.
Arlington has more WalkUPs per capita than any ju-
risdiction in the country and is the suburban model
o walkable urban development.
Bethesda barely missed a Gold ranking. The rede-
velopment o the area adjacent to the south o the
Metro station has been a national model, as has
its place management. The Woodmont Triangle iswhere the uture o opportunity exists.
The lack o private/nonprot place management is a
concern or uture economic progress in Old Town,
Carlyle, Pentagon City and Columbia Heights.
Adams Morgan has successully implemented an
urban entertainment strategy, but it has possiblyleveled o in perormance, unable to broaden
this strategy.
Square Footage
totaL:8.6 illinsq. .
oFFICe:
40%For-SaLehoUSING:
25%
aPartmeNtreNtaL:
15%
retaIL:
10%
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29
avg k mics
Walk Score: 87.62
Acreage: 356.4 acs
Gross FAR: 0.62(Floor Area Ratio)
Annual Rent per Sq. Ft .{$= $10}
oFFICe:$39.29
retaIL:$42.82
aPartmeNt:$35.74
Housing per Sq. Ft. {$= $10}
For SaLe hoUSING:$455.69
gold
cHaracterIstIcs
Gold WalkUPs have achieved critical mass; there is
a there-there. Investors recognize this by lowering
capitalization rates (increasing valuations). Land
prices are at a premium, refecting the higher rents
and selling prices per-square-oot that have beenachieved. Developers are attracted to Gold WalkUPs
since the market risk is low and there are relatively
assured exit strategies or selling stabilized projects
to institutional investors.
Average rents or Gold WalkUPs are 19 percent
higher than those o Silver WalkUPs, although their
Walk Score and density are similar. Gold Walk-
UPs or-sale housing prices are twice the drivable
sub-urban average in the metro area, though only10 percent higher than Silver or-sale housing prices.
Two actors stand out in the economic perormance
o these WalkUPs. One is that most have aggressive
place management, mainly nonprot BIDs, although
there are public sector exceptions. The other actor is
described in the Brookings Walk This Wayresearch:
Walkable places beneft rom being near other walkable
places. On average, walkable neighborhoods in met-
ropolitan Washington that cluster and orm walkable
districts exhibit higher rents and home values than
stand-alone walkable places.
The greater center city o the District (the down-
town, downtown adjacent and some o the urban
commercial WalkUPs) have achieved Gold and
even Platinum rankings as a result o clustering. The
economic perormance o both NoMA and CapitolRiverront is particularly remarkable since they have
only been in existence or one real estate cycle.
Cpil hill
Cpil rivn
Dupn Cicl
Findsip higs
Lgn Cicl
Nma
tnlwn
Vigini Squ
oBserVatIons
There are a number o WalkUPs that do not have
active place management but still have achieved
Gold ranking. This is more a matter o having been
dealt a good hand by the market. Dupont Circle
was the rst WalkUP to emerge ater the walkableurban decline o the late 20th century. It was built
in the ormer luxury mansion district, Embassy Row,
and beneted rom early reinvestment by the gay
communitynow recognized as an urban pioneer-
ing demographic.
Still, competition rom well-managed competitive
WalkUPs could derail the economic success o
these unmanaged WalkUPs. Dupont, in particular,
could be vulnerable to its at, dumb and happyapproach to place management. For example,
there are no plans to have streetcarsthe regions
major rail transit investment in the early 21st cen-
turyto connect Dupont to the rest o the WalkUPs
in the District. That will be seen in retrospect as a
major mistake.
Square Footage
totaL:8.1 illinsq. .
oFFICe:
46%
For-SaLehoUSING:
25%
aPartmeNtreNtaL:
9%
retaIL:
8%
WalkUP Rankings
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30 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
avg k mics
Walk Score: 95.96
Acreage: 361.51 acs
Gross FAR: 2.19(Floor Area Ratio)
Annual Rent per Sq. Ft .{$= $10}
oFFICe:$43.67
retaIL:$45.29
aPartmeNt:$40.68
Housing per Sq. Ft. {$= $10}
For SaLe hoUSING:$590.15
PlatInuM
cHaracterIstIcs
This exalted ranking has been achieved by only
our o the 43 WalkUPs. All are in the District, which
is remarkable considering that 30 years ago these
places were viewed as secondary investment
opportunities or worse. The Platinum ranking is theclearest indication that the walkable urban trend
has revitalized the center city, particularly over the
past 15 years, and reversed the relative economic
perormance o drivable sub-urban versus walkable
urban places.
Platinum WalkUPs predominantly are where large
institutional owners, such as insurance companies,
pension unds, sovereign wealth unds and REITs,
have chosen to invest, resulting in the lowest capital-ization rates and highest valuations and land prices.
The Platinum WalkUPs have the highest rents,
19 percent above Gold. Oce rents, retail rents,
and housing prices (both rental and or-sale) are
more than double those in drivable sub-urban
areas. The average density is more than triple that
o Gold WalkUPs and has substantially greater walk-
ability over all competition.
Dwnwn D.C.
Fgg B/Ws end
Ggwn
Gldn tingl
oBserVatIons
The our Platinum WalkUPs all benet rom being
adjacent to other WalkUPs and, with the exception
o Foggy Bottom/West End, rom aggressive place
management. They also have a preponderance o
oce space (78 percent o all space), which runscounter to the popular wisdom that a balanced
portolio o dierent product types is needed or
optimal economic perormance.
Downtown and Golden Triangle combined orm theactual downtown o the District o Columbia. The
city core has regained its position as the regions
premier business district, with rising oce mar-
ket share since 2004 (ater more than 50 years o
relative decline) and the regions highest rental ratesand lowest vacancies. Foggy Bottom/West End has
large wealthy institutions (The George Washington
University, the World Bank, etc.) and is geograph-
ically situated between downtown and the other
Platinum WalkUP, Georgetown. It is evolving into
D.C.s Upper East Side. Much can still be accom-
plished, including re-establishment o downtown
as a major retail concentration, continued growth in
convention activity and, perhaps surprisingly, reloca-tion o ederal oce space away rom downtown.
Vacated ederal space should be replaced by more
walkable and vital private sector oce, hotel, residen-
tial and retail. Downtown needed the ederal pres-
ence to survive the downward spiral o the late 20th
century, but portions should now decamp to new
WalkUPs, including Copper and Silver. Relocation o
the U.S. Dept. o Transportation and the U.S. Patentand Trademark Oce to Capitol Riverront andCarlyle, respectively, over the past decade demon-
strates how eective this anchoring strategy can be.
Square Footage
totaL:31.3 illinsq. .
oFFICe:
78%
For-SaLehoUSING:
5%
retaIL:
3%
aPartmeNtreNtaL: 3%
l i
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31
WalkUPs all into the same our levels as
the economic rankings, although driven by
entirely dierent variables.
There has been no previous attempt at developing social equity
perormance rankings or WalkUPs. This ranking is, by its very
nature, controversial. It is hoped that the release o these rankings
will provoke lively discussion, urther research and eventual con-
sensus on how to measure social equity in walkable urban places.
The methodology is controversial because there is disagreement
over what is a positive societal good and what is a negative one.
The word that best captures this in urbanism is gentrication. A
new word, it rst appeared in Websters Collegiate Dictionaryin
1964, dened as the process o renewal and rebuilding accom-
panying the infux o middle class or afuent people into deterio-
rating areas that oten displaces earlier, usually poorer, residents.
Gentrication is both a loved and hated word, depending on ones
perception as to whether it brings about positive or negative socialimpacts. Still, gentrication can be an unequivocal orce or good
i it is harnessed to pay or social programs and public investment.
coPPer
sIlVer
gold
PlatInuM
Social EquityRankings
HOUSING &TRANSPORTATION COSTSas a % of Area Median Income
SHARE OF JOBS INTHE REGIONAccessible in 90 Minutes
DIVERSITY INDEX (2010)
Social Equity Measures by Category
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
10
20
30
40
50
60
70
80
CO PPER SILVER GOLD PLATIN UM
DiversityIndex
In examining social equity, we looked at variables that are consistently available nationally.
Those variables include these ve:
husld using nd nspin css as a percentage o the metropolitan area medi-
an income. These are used to measure actual aordability since housing and transportationare intimately linked, especially i the household has to drive until you qualiy. Relative
weighting equal to 30 percent o total score.
Unpln , since a WalkUPs ability to provide jobs or people living within it is a
basic component o social equity. Relative weighting equal to 20 percent o total score.
Divsi Indx, developed by ESRI, represents the likelihood that two persons, chosen at
random rom the same area, belong to dierent race or ethnic groups. Relative weighting
equal to 15 percent o total score.
Pcng cng bwn wis nd blcs, a proxy or gnicin with displacement
o the Arican American population being a negative indicator, in the WalkUP between the
2000 Census and the 2010 Census. Relative weighting equal to 15 percent o total score. S jbs ccssibl b nsi wiin 90 inus rom the WalkUP. Relative weighting
equal to 20 percent o total score.
WalkUP Rankings
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32 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
oBserVatIons
Two WalkUPs that share much in common, Georgetown and Old Town Alexandria,
are listed at the Copper level. They are the oldest, most historic, riverront places
(water orientation in real estate is exceedingly valuable) and have no rail transit.
These common actors are partially responsible or the poor rankings. For exam-
ple, it is expensive to buy land or aordable housing in these WalkUPs and theirwaterront locations result in unstable geology, one o the reasons Metro tunnels
were not built.
The lack o rail transit accessibility aects other Copper WalkUPs. Being on the
metropolitan ringe complicates accessibility in Kentlands, Frederick and HistoricFairax City.
H Street/Atlas District, the newly redeveloping WalkUP in northeast D.C. that seems
to be replacing U Street/Shaw as the young urban entertainment area, achieved
a surprise low ranking. The primary reason was the change rom a predominantlyblack neighborhood to an integrated neighborhood. This highlights the diculty
in developing a social equity ranking system: An argument can be made on both
sides o this issue about the societal benet, or harm, o such a change.
cHaracterIstIcs
The lowest level o social equity, these eight WalkUPs
have on average:
t igs usld using nd nsp-
in css n WlUPs (56 percent o aver-
age metro household income). As an average,
this is signicantly higher than the benchmarkor neighborhood aordability established
by the Center or Neighborhood Technology
(45 percent); in the least aordable WalkUP,
Georgetown, average housing and transporta-
tion is 84 percent o area median income, nearly
double the national average.
hig n vg unpln (with three
notable exceptions).
t Lws Divsi Indx, meaning an individ-
ual is only 39 percent likely to come into contact
with a person o a dierent ethnic background
at random, compared to 53 percent or allWalkUPs. Copper WalkUPs have about the same
Diversity Index as the average metropolitanarea in the country (40 percent).
an x si in cil cpsiin in many
WalkUPs, such as H Street NE and, to a lesser
extent, Frederick, with white residents repre-
senting a larger share o the population and
black residents a smaller share.
Unil p ginl nsi ccssibili
(six o the eight do not have rail transit availabil-
ity) and the worst accessibility among WalkUPs
to regional jobs.
coPPer
Cll
Fdic
Ggwn
h S Ne/als Disic
hisic Fix Ci
knlnds
old twn alxndi
tnlwn
avg k mics
Housing &Transportation Costs:
(As a % o median income ormetropolitan D.C.)
Unemployment: 8.25%
Diversity Index:39.42
Racial Change:7.61%(Change in % o whites vs.blacks rom 2000 to 2010)
Job Accessibility:44.92%(Share o jobs accessible by
transit within 90 minutes)
56%
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33
avg k mics
Housing &Transportation Costs:
(As a % o median income ormetropolitan D.C.)
Unemployment: 7.74%
Diversity Index:42.93
Racial Change:7.82%(Change in % o whites vs.blacks rom 2000 to 2010)
Job Accessibility:60.35%(Share o jobs accessible by
transit within 90 minutes)
ads mgn
Bils Cssds
Bllsn
Bsd
Clubi higs
Csl Ci
Dupn Cicl
Fgg B/Ws end
Lgn Cicl
Pinc Ggs Plz
rcvill
Svn Cns
Vigini Squ
Wi Flin
avg k mics
Housing &Transportation Costs:
(As a % o median income ormetropolitan D.C.)
Unemployment: 8.31%
Diversity Index:61.52
Racial Change:7.05%(Change in % o whites vs.blacks rom 2000 to 2010)
Job Accessibility:60.95%(Share o jobs accessible by
transit within 90 minutes)
sIlVer
cHaracterIstIcs
The second lowest level o social equity, these 10
WalkUPs have on average:
t scnd igs usld using nd
nspin css (44 percent o average
metro household income) though substantially
lower than Copper and, on average, just withinthe national average (45 percent). Downtown
D.C. has the lowest percentage (30 percent) in
the region, even lower than many households
spend on housing by itsel.
rlivl lw unpln (7.7 percent).
a sw ig Divsi Indx (43
percent), though this was mainly due to two
WalkUPs that are not diverse (Capitol Hill and
Woodley Park). This ranking is only slightly bet-
ter than U.S. metro areas overall (40 percent).
rlivl uncngd cil cpsiin
bwn 2000 nd 2010, with the notable
exceptions o downtown D.C. and U Street/Shaw, where the demographics shited dramat-ically, with white residents representing a much
larger share o the population mix and black
residents a much smaller share. In contrast, over
this period, Tysons Corners population shited
signicantly in the opposite direction, with white
residents becoming a much smaller share and
black residents a somewhat larger share.
Subsnill b ginl nsi ccssibil-
i jbs than Copper WalkUPs, and accessi-
bility comparable to Gold and Platinum levelWalkUPs. This is primarily due to the act thatmost have Metrorail stations.
Cpil hill
Clndn
Dwnwn D.C.
Findsip higs
Nw Clln
rsn twn Cn
tsns Cn
U S/Sw
Vn Nss
Wdl P
cHaracterIstIcs
The second highest level o social equity, these 14
WalkUPs have on average:
ang lws using nd nspin
usld css in the region (37 percent),
substantially below those o Copper or Silver
WalkUPs or the national average (45 percent).The presence o Metrorail in nearly all o these
places is a signicant actor in the lower aver-
age transportation costs.
abu s unpln s Silv
WlUPs.
a subsnill incsd Divsi Indx (62 per-
cent) compared with Silver and Copper WalkUPs
and the national metropolitan average (40 percent),
although there are some low outliers, notably
Dupont Circle and Foggy Bottom/West End.
rlivl uncngd cil cpsiin
bwn 2000 nd 2010, with, again, a ew
notable exceptions. In Logan Circle andColumbia Heights, white residents came torepresent a much larger share o the population
mix and black residents a much smaller share.
There were similar, but less dramatic patterns
in Adams Morgan and Prince Georges Plaza,
where signicant declines in the Latino popula-
tions were also observed. In contrast, the white
population o White Flint became much less
dominant over this period as the Asian popula-
tion increased dramatically.
Subsnill b ginl nsi ccssibili jbs than Copper WalkUPs and comparable toSilver and Platinum-level WalkUPs. This is primari-
ly due to most places having Metrorail stations.
gold
44% 37%
WalkUP Rankings
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34 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
Cuus
rssln
Silv Sping
Wn
avg k mics
Housing &Transportation Costs:
(As a % o median income ormetropolitan D.C.)
Unemployment: 5.97%
Diversity Index:72.09
Racial Change:6.47%(Change in % o whites vs.blacks rom 2000 to 2010)
Job Accessibility:62.18%(Share o jobs accessible by
transit within 90 minutes)
PlatInuM
cHaracterIstIcs
The highest level o social equity, these our WalkUPs
have on average:
t s lw lvl using nd nsp-
in css s Gld WlUPs (37 percent), sub-
stantially below the Copper and Silver WalkUPs
as well as the national average.
t lws vg unpln (6 percent).
t igs Divsi Indx (72 percent) withparticularly high ratings or Wheaton (the high-
est) and Silver Spring.
Insignicn cngs in i cil cpsiins
bwn 2000 nd 2010, with the exception o
Silver Spring, in which the white population grew
relative to the black population, which declined.
Subsnill b ginl nsi ccssibili
jbs n Cpp WlUPs and comparable
to Silver and Platinum level WalkUPs. This is primar-
ily due to most places having Metrorail stations.
37%
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35
VI. Next Steps
Next Steps
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36 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
Conclusions &RecommendationsThe metropolitan landscape has never been systemically categorized by walkable
urban versus drivable sub-urban. There is much to learn. Even this frst glimpse
reveals startling dierences in economic and social equity perormance.
Investors and developers looking or new opportunities should understand
these place characteristics beore investing, matching their risk tolerance and
the implicit market risk implied in these rankings, such as:
Investing in a Copper WalkUP means that a long-term time rame is required
to maximize returns, though entry prices are relatively modest. Place strategyand management or a Copper WalkUP is particularly important to ensure
economic perormance.
Silver WalkUPs are prime or growth in the existing real estate cycle and
there is an opportunity or this WalkUP to emerge with a Gold ranking,increasing returns substantially.
Investing in Gold or Platinum WalkUPs is much less risky but the high price
o entry refects this. The upside o Platinum investments might be relatively
less but will be more stable and, thus, attractive to institutional investors
(insurance companies, pension unds, REITs, etc.).
The public policy response to these market trends should be to encourage the
economic growth and resulting scal benets to each jurisdictions revenue base.
The rst step needed to make this happen is to monitor the increasing econom-
ic perormance o WalkUPs so as to understand the scal impact on government
revenues. The second step is to make sure the zoning is in place and the properinrastructure is planned and nanced in order to make the place more walk-
able, to increase its job density and to attract an educated workorce.
Copper and Silver WalkUPs may require special attention rom the jurisdiction
via investment in quality o lie improvements (as opposed to subsidies or
corporate relocation or developer incentives). However, long-term public sec-
tor investments in specic projects, as opposed to upront subsidies, are more
appropriate. A public investment approach helps a project get nancing as
productively as a subsidy, but it also carries a hoped-or return o capital, plus
prot rom the investment, that the government can then re-invest.
Gold and Platinum WalkUPs need little in the way o special public nancing
programs. For example, there is no reason to provide incentives or Platinum
econoMIc conclusIons
Incss inavg k mics
As the average Metro
D.C. WalkUPs economic
level moves rom Copperto Silver, Silver to Gold,
and Gold to Platinum,
there are substantial
increases in perormance:
Walk Score:+6.22 pins
Ofce Rent:+$7.28/squ nnull
Retail Rent:+$6.71/squ nnull
Rental Apartment Rent:+$6.22/squ nnull
For-Sale Housing Price:+$113.00/squ
Statistical analysis shows that there are three actors
that explain 90 percent o the increased economic
perormance in the 43 metro DC WalkUPs.
WalkaBIlIty
B isl, Wl Sc xplins 67% incs in cnic pnc.
As measured by Walk Score, a fnding confrmed by theBrookings Walk This Way research.
JoB densIty
adding jbs p c wlbili xplins 84%
incs in cnic pnc.
Workforce educatIon
adding nub ws wi cllg
dg wlbili nd jb dnsi xplins90% incs in cnic pnc.
As measured by percentage o college-educated
persons over 25 in the workorce living in a WalkUP.
WlUP plc ngs nd invss/dvlps
wuld ipv i cnic uns bincsing wlbili, jb dnsi nd
ducin lvls w c.
Note that simple subtraction o these three actors is nota correct way o understanding their individual impact
since there is substantial overlapping co-variability.
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37
places like Georgetown. In act, there is the possibil-
ity o engaging in value capture where sharing the
private sector upside returns rom public improve-ments, say a street car line, could help und those
public investments or social programs like aordable
housing. Basically this is a private sector Tax-Incre-
ment Financing (TIF) program.
socIal eQuIty conclusIons
Since there is no agreed upon measure o social
equity, it has been somewhat like discussing theweather. Everybody talks about it, but there is l ittle
that can be done about it. Eventually, agreement
on a social equity perormance metric will allow or
more eective management. I you cannot measure,
you cannot manage.
One obvious conclusion is that increased economic
perormance leads to lower social equity outcomes.
Georgetown epitomizes this with a Platinum econom-ic ranking and a Copper social equity ranking. Golden
Triangle has taken care o this issue by gerryman-
dering so as to have almost no one living within its
boundaries, making it dicult to measure social equity.
On the other hand, WalkUPs with high social equity
have lower economic perormance. Two Platinum
social equity WalkUPs, Silver Spring and Wheaton,
had Copper economic rankings. The other two Plat-
inum social equity places, Rosslyn and Courthouse,had Silver economic rankings.
There are lessons rom those WalkUPs that do well
on both measures. Dupont Circle, Logan Circle, and
Virginia Square were double Gold while Foggy Bot-tom/West End scored Platinum/Gold. All are older
WalkUPs with many smaller buildings, ranging rom
modest to the very highest rents or sales pricesal-
though this could just be part o the evolution rom
partially aordable to completely gentried.
What is needed is a conscious strategy or each
WalkUP to create and maintain aordable and
workorce housing, as well as to increase accessibil-ity. Having social equity measures will provide placemanagers and their jurisdictions with goals to which
they can aspire. Implementation o the social equity
goals should be the responsibility o the place
management organization and part o its charter
granted by the local jurisdiction.
However, the second reason is land values. In Dupont
Circle, the land cost as a percentage o the house
is at least 50 percent. That compares with most
drivable sub-urban housing, where it is 20 percent.
The shortage o walkable urban residential land,
especially or townhouses and small lot single-am-
ily housing, is driving up land prices. This makes
no sense in the United States since we have no
shortage o land. What we do not have is enough
walkable urban land.
Public policy that creates more in-ll residential land
(browneld, rezoned, assembling small parcels,
knocking down obsolete uses, etc.) is the most
crucial way to address social equity concerns.
NIMBY opposition to high-density development
One obvious conclusion is that increased economic perormance leads to lower
social equity outcomes. Georgetown epitomizes this with a Platinumeconomic ranking and a Copper social equity ranking.
The ultimate solution to aordable housing is to
build more walkable urban product. There are two
reasons why walkable urban housing costs more
than the drivable sub-urban product. The rst is the
quality o construction. It must be higher quality or
walkable urban product (better oundations, serious
architecture, buildings right up to the sidewalk, etc.).Most people compensate or this additional cost byoccupying a smaller amount o space.
is equally responsible or the land shortage. An
education campaign must be undertaken to turn the
opposition into YIMBYs, such as happened in Tysons
Corner and White Flint.
Given a growing understanding o how economi-
cally successul WalkUPs can be, we must gure outhow to take advantage o this rising tide o econom-ic activity to pay or social equity perormance.
Next Steps
S oc i a l Equi ty v s Ec on omi c R an ki n g s
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38 DC: The WalkUp Wake-Up Call The George Washington University School of Business 2012
q y gScatterplot Showing the Distribution o the Metro D.C. WalkUPs
on Both Economic and Social Equity Rankings
PLatINUmGoLDCoPPer
S o cia l E q uity Rank ings
EconomicRankings
PLatINUm
Go
LD
SILVer
CoPPer
SILVer
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39
Further StudyNo research report would be complete without the obligatory
more research needs to be done. This is particularly the case
with WalkUPs research.
There are a number o areas that require expanded
research:
This research ocused on regionally signicant
WalkUPs. Local-serving WalkUPs, walkable urban
bedroom communities, need to be quantied
and better understood.
This research is a snapshot in time (early 2012)
but longitudinal research will help understand
what actions are needed to improve economicand social equity perormance over time.
Comparisons to other metropolitan areas willprovide insights into how this market trend is
unolding as well as a larger universe o the six
dierent types o WalkUps rom which to learn
how to improve perormance.
Optimal product mix in a WalkUP is a much-de-
bated topic in urban circles. How much retail or
housing is best or economic or social equity
perormance? The urbanism eld contains many
opinions about the optimal product mix but ew
measurable principles.
There is need to quantiy the illusive concept
o critical mass, colloquially reerred to (usingGertrude Steins masterul phrase) as having a
there-there. We can eel when a place is at criti-
cal mass but this eeling has not been quantied.
The expansion o the avored quarter to the
northeast and southeast in metro D.C. is a major
social and economic change that needs to be
better understood. What can be done to encour-
age this positive market trend? The economic measures should include devel-
opment o a GDP measure or a WalkUP. GDP
measures have come down as ar as metropoli-
tan areas. It is time to push this gold standardo economic perormance measurement to the
WalkUP level.
Social equity measures need to be rened.
There are clear and agreed-upon denitions o
aordable and workorce housing, but there is
no agreed-upon measure o social equity.
economic growth, quality o lie and social equity.Regionally signicant and local-serving WalkUPs,
although likely to be located on less than 10 percent
o the land in any region, could house most o the
population growth and spur economic develop-
ment or the next generation. WalkUPs will provide a
oundation or the regional and national economy.
More knowledge about this trend will propel how Americans invest in thelargest asset class in the economy, an investment that directly infuences
economic growth, quality o lie and social equity.
There needs to be a determination o scalreturns resulting rom government investment
in inrastructure and operating programs. The
measurement o additional government revenues
resulting rom these investments should be calcu-
lated continuously, just as the private sector does.
Since the economic returns o public sector
investments tend to accrue to the private sector,
we need to understand more about the potential
o value capture. These private sector, TIF-like,
arrangements can help pay or inrastructure and
social programs.
The maturity o walkable urban development inmetropolitan Washington makes it a model or the
nation. More knowledge about this trend will propelhow Americans invest in the largest asset class in
the economy, an investment that directly infuences
Yet the creation o economically successul WalkUPs
with high social equity is a huge challenge, possible
the largest domestic challenge U.S. society currently
a