Walk This Way: Data Shows Pedestrian Friendliness Could Be A Step In The Right Direction For Encouraging RTO
Walkability has become a major selling point for employers looking to convince road-weary workers their time is best spent in the office.
An April analysis by Brookings Institution showed that even before the pandemic, mostly suburban office markets across the top 10 most populous U.S. metros were 1.7 times more vacant than their downtowns. Fast-forward to late 2021 and those submarkets were two times as vacant, according to updated numbers provided for Bisnow. Tracy Hadden Loh, a fellow with the institution, said companies are responding to a post-pandemic demand for convenience by choosing to locate in areas with easy access to amenities.
“Commuting sucks, and no one wants to do it,” she said. “One way to make commuting less painful is to [offer] other stuff that people were going to go out of their house to do anyway.”
The average office commute hit a new high in 2019 when workers spent just under an hour getting to and from work. Once the corporate world went remote, it became harder to convince employees to spend hours of their week in a car. As a result, ease of commute has become a major consideration for employers and employees alike, said Maura Brophy, president and CEO of NoMa Business Improvement District, a pedestrian-friendly, mixed-use neighborhood in Washington, D.C.
“If the benefits of being in-office don’t outweigh the cost of the commute … people won’t do it,” Brophy said. “For employers, if they have an interest in getting people back in the office, making sure the commute is not a barrier is really important.”
According to Kastle Systems, a keyless entry provider, average office occupancy across 10 major metros has yet to reach 50%. The week ending March 30 saw occupancy climb to 42%, the highest rate since the pandemic spurred remote work in March 2020. Some cities are faring better than others when it comes to office usage — Austin, Dallas and Houston top the list with about 62%, 54% and 51%, respectively. But in general, most metros are still hovering below 40%.
Improving walkability around office hubs could improve these numbers, according to Cheri Morris, president of Morris & Fellows, who said she was keenly aware of the economic benefits of walkability when she set out to revitalize downtown Alpharetta, a suburb 25 miles north of Atlanta. As a developer, Morris chooses to preserve parks and open space as well as opting for concealed garages instead of parking lots.
These decisions — albeit antithetical to the idea that every square foot of space should be filled with revenue-producing real estate — encourage walkability, Morris said.
“You cannot leave open and green space if you are having to provide surface parking for your shops and restaurants and office workers,” she said. “That kills the sense of community and kills the walkability.”
Building owners in downtown Alpharetta have reaped the benefits of the area’s walkability, which is a highly sought-after amenity for office tenants, Morris said. According to the city of Alpharetta, downtown has an office vacancy rate of 9.4%, which is significantly less than surrounding submarkets and almost half the North Metro average of 16%.
“If you build an office in a walkable area, absolutely that helps bring people back in,” Morris said.
Morris’ firm is also behind the redevelopment of downtown Woodstock, just northwest of Alpharetta. The 32-acre site already includes retail and residential, but Morris’ project will add 50K SF of office. The pool of potential employees living in close proximity is a huge draw for companies looking to establish a presence there.
“There are people who live in the area who would rather commute a few minutes into a cool downtown than commute 45 minutes to the suburban edges of Atlanta,” she said. “We don’t even have full drawings yet, and the office space is almost completely spoken for.”
Residential density is an essential building block of an area’s walkability, said Paul Noland, executive vice president and head of acquisitions at Dallas-based L&B Realty, which also works in Atlanta. Heads in beds drive retail activity, which then boosts the appeal of office space because of access to amenities. Noland said this was especially the case for office buildings and retailers in Uptown and Downtown Dallas, which saw a major uptick in activity once more residential was built.
“That has helped the retail significantly, which has, in turn, helped the office market and corporate relocations,” he said. “Because then you get the coffee shops and the bars and the restaurants that those office tenants want but that also serve the apartments after 5 o’clock.”
Noland said his company considers an area’s Walk Score, an index that ranks locales based on walkability, before it begins a development project. Points are awarded based on walking distance to amenities, population density and road metrics. There are some elements of a walk score that are outside of a developer’s control — such as nearby transit options — but others components, like lighting and sidewalk width, can be improved, Noland said.
The H-Street-NoMa area is the eighth-most-walkable neighborhood in Washington, D.C., with a grade of 95, according to Walk Score. Brophy said the district’s walkability as well as its diverse set of uses saved it from shutting down during Covid-19. In NoMa, 85% of residents travel to work without a car.
“What’s happening in NoMa is proof that urban districts, which have the right mix of walkable office, residential and retail spaces, will be the post-pandemic neighborhoods of choice,” she said, noting that single-digit office vacancy rates outperformed every other submarket in Washington, D.C. “Even at the height of the pandemic, when the majority of office workers were working from home, our streets remained vibrant and active.”
There is close to 13M SF of office space in NoMa, and Brophy said leasing activity held strong despite remote work. TikTok recently announced it would open a 50K SF office in the neighborhood. In the third quarter of last year, one of the largest office deals in Washington, D.C., history came when the Securities and Exchange Commission announced it would move its headquarters from the south end of NoMa to a 1.2M SF space at the north end.
“They’re staying in the neighborhood, which is meaningful because it signals that a major employer … is not only betting that their employees are going to return to an office, but that NoMa is the type of neighborhood they want to return to,” Brophy said.
In the arms race to provide the best amenities, walkability has risen to the top of the list for landlords looking to attract tenants, Noland said. Companies are willing to pay a premium for things like nearby restaurants, bars and coffee shops, as evidenced by data that shows commercial properties in walkable areas command rents 75% higher than those in drivable suburban areas.
“Cheap does not attract tenants — they want quality and they want amenities,” he said. “They don’t really have any interest in just getting a good deal … they need a way to get employees back to the office, and really the key to that is [offering] something the employees can’t get at their house.”
Walkability will likely improve across the board as cities in the U.S. become more dense. But as more and more people leave dense urban cores in search of affordability, the need for walkable areas begins to bleed into suburbia as well, said Taylor Reich, senior research associate with the Institute for Transportation & Development Policy.
“Companies are seeing the financial benefits of locating in walkable areas,” Reich said. “The challenge, though, is that we don’t have that many in the United States — the vast majority of our urban land is developed by a car-centric model. And so the real challenge is, how do we make our cities and our suburbs more walkable, so that everyone can reap the benefits, not just people located in traditional downtowns?”