Public space: A good investment

Photo by neighborhoods.org – Flickr

New research suggests that close proximity to green space may increase the value of your property.

Living close to a trail entry increases the value of nearby properties, according to a recent study by University of Cincinnati researchers Associate Professor Rainer vom Hofe and Assistant Professor Olivier Parent.

They investigated a 12 mile (19.3km) section of the Little Miami Scenic Trail that traverses the Cincinnati metropolitan area to assess the relationship between property values and access to the trail.

The Little Miami Scenic Trail is used by hikers, walkers, and cyclists, and also caters for horse riding enthusiasts.

Combining their expertise in planning (vom Hofe) and economics (Parent), the researchers developed their own model of analysis which led to the conclusion that housing prices increased by nine dollars for every foot closer the property was to an access point into the trail. This translates into a $9000 premium for a property that is 1,000 feet (or around 300 metres) closer to the trail.

This result provides tangible evidence that property purchasers value access to open space and are willing to pay more to be closer to it. It also means that there are positive impacts on property values, and an elevation in property rates subsequently collected, by having trails nearby.

“Urban amenities, including open spaces and trails, are becoming more and more important in many cities throughout the US,” says vom Hofe.

“Bike trails do positively influence property values.”

The financial value of open space

So what are the implications of this finding? One is that both governments and property developers may be more likely to value open space and invest in creating it if there are tangible economic outcomes from doing so.

“Being a City of Cincinnati Planning Commissioner myself, I can testify that local governments are very interested in the potential revenue gains through increased property taxes,” said Associate Professor vom Hofe.

He said there had been a tremendous amount of interest in his study, including from civic groups, bike trail enthusiasts, and real estate people, such as developers.

“Many like the outcome of our study as it shows that public investment in urban amenities does pay off—at least some of the initial investment can be recovered. This is particularly of importance during times of leaner fiscal conditions, as at the moment.”

“Most surprising is the fact that neighbourhood councils here in Cincinnati used the results from our study to argue for the investment in a large urban bike trail running through multiple neighbourhoods,” he continued.

“In addition, we have been approached by at least a dozen bike trail advocates for more detailed results,” he said.

The varying values of green spaces

So would it be expected that this result confirming an increase in the value of properties situated near a trail be applicable for proximity to all types of open space? In other words, does the character of the open space matter?

Yes it does, according to vom Hofe.

“Our study, as well as the relevant literature, shows that on-street, off-street, and rail-trails (like the one we studied) have different impacts on property values.”

“The problem here is that open spaces, as well as neighbourhoods, are not unique and as such different types of open spaces are expected to have different impacts on property values. This can be seen as different studies report quite different results.”

“Another aspect is whether the trails are in the city or in the suburbs. Generally, open spaces, if used appropriately, are expected to increase property values. However, we would not expect that they are all equally attractive to potential buyers.”

However, Associate Professor vom Hofe does not think the outcome of this study is unique to the Cincinnati area.

“We think that our results could be replicated in other cities here in the US,” he said.

“We are continuing our work on urban amenities and their impacts on property values.”

Health benefits

This study by vom Hofe and Parent confirms findings by Lilly Shoup and Reid Ewing in their research synthesis report of May 2010 on behalf of Active Living Research, a Californian-based program of the Robert Wood Johnson Foundation, which seeks to identify environmental factors and policies that influence physical activity for children and families.

In their report, entitled ‘The Economic Benefits of Open Space, Recreation Facilities and Walkable Community Design’, they found that open spaces have a positive effect on property values, which in turn can lead to higher tax revenues for governments.

The report also found that “people living in walkable neighbourhoods get about 35-45 more minutes of moderate-intensity physical activity per week, and are substantially less likely to be overweight or obese that do people of similar socio-economic status living in neighbourhoods that are not walkable.”

So although vom Hofe and Parent are focusing on the economic benefits of trails, it is also important to keep in mind that health benefits such as more walkable neighbourhoods are also an outcome of investing in trail infrastructure.

The Active Living research project also confirmed the conclusion of vom Hofe and Parent that investment in open space does make financial sense and perceived negatives such as loss of privacy and an increase in crime are not supported by evidence.

In fact, Shoup and Ewing say that not only can communities designed for “walkability,” such as the area investigated by vom Hofe and Parent, command a higher purchase price for properties, but also “neighbourhoods designed to preserve open space through compact development patterns may result in savings to private developers through reduced construction and maintenance costs.”

It is clear from these studies that open spaces, such as trails, can deliver economic benefits as well as the more well-documented health outcomes. However it is also clear that the location of a park, the type of recreational activities it offers, and its proximity to residential homes also influences both its economic benefits and the resultant health benefits for local citizens.

As further research is being undertaken into the financial impact of public amenities, it is worth prospective property developers keeping in mind that on the evidence accumulated so far, people value natural green environments and are prepared to pay more to live close to them. Construction of alternative development patterns, which preserve large areas of open space while condensing development into smaller zones, is certainly worth consideration.

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