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Development trends and housing affordability by walkability in the CMAP region

Jan 11, 2018

Development trends and housing affordability by walkability in the CMAP region

Walkable communities – places with a variety of businesses, transportation, and community assets in easy walking distance – can improve quality of life, drive down transportation costs, encourage healthier lifestyles, reduce emissions, and foster a more economically and environmentally sustainable region. Emerging evidence points to a growing demand for walkable communities rich in amenities and transportation options. Demand for walkability does not always lead to more walkable places, due to limits within existing local development and zoning regulations as well as a lack of capacity and resources to invest in walkable communities in certain areas. This mismatch of supply and demand can increase housing costs and pose challenges for inclusive growth.

This Policy Update looks at the relationship between walkability and various measures, including real estate development, local planning priorities, and affordability. The analysis builds on a new CMAP metric estimating walkability in the region, which is detailed in the ON TO 2050 report on Non-Motorized Transportation.

CMAP analysis found walkable places throughout the region with untapped potential to leverage walkable amenities and existing transit access to attract investment. Economic growth in auto-oriented or less compact and pedestrian-friendly areas can benefit from infill strategies to generate denser, more walkable environments. Comparative analysis of walkable places and local plans indicates that planning for mixed-use development has largely focused on places with supportive transit infrastructure. Some suburban nodes may hold future potential for developing walkable communities with advancement of bus transit. In addition, walkable communities often offer better job access and lower transportation costs, but due to rising housing costs many such areas are already unaffordable for median income households. Preserving affordability of walkable communities will be a challenge as demand continues to grow.

Geographic overview of walkability in the CMAP region
CMAP evaluated walkability through a metric that combines population and employment densities, pedestrian infrastructure and safety, amenities and destinations within walking distance, and transit availability. These walkability scores generate five typologies: Very Walkable, Walkable, Somewhat Walkable, Auto-Centric, and Rural/Not Walkable.

The following map shows the geographic distribution of walkability in the region. Walkability strongly aligns with existing transit, as walkable communities often harbor transit-supportive densities. Particularly outside of Cook County, main streets and transit-oriented development patterns around Metra stations feature predominantly as the areas with the highest walkability. Conversely, industrial and utility centers like O’Hare that are low-density and built for auto and freight transport are Not Walkable.

Map showing the walkability of the CMAP region

Walkability and development patterns
The following table compares market value per capita and employees for major real estate product types by walkability. Residential value per capita declines as walkability increases; this relationship may be due to the greater prevalence of older housing stock and multi-family rental properties, overlap between economically disinvested areas and walkable areas, and/or the overall lower square footage per housing unit and vertical nature of housing in more walkable areas. Industrial value shows a similar but more pronounced trend because of the need for vast amounts of space for production lines, warehousing, freight transfer, and similar low-density uses. Notably, Very Walkable areas have the highest commercial value per capita while Walkable areas, though similarly constituting high density urban neighborhoods in and around Chicago, have disproportionately low commercial value and total square footage.

Table showing the market value per capita and jobs by walkability

Disparities in commercial value are somewhat related to overall built square footage. The high commercial value in Very Walkable areas derives largely from their 41 percent share of regional office space, as these areas encompass the nexus of business and finance and are predominantly located within the City of Chicago’s downtown, River North neighborhood, and medical district. In contrast, Walkable areas not only have lower office space inventory, but also a disproportionately small share of regional retail space. This could be due to a number of drivers. For one, Walkable areas tend to be moderate density residential neighborhoods with small scale retail, whereas car-oriented strip malls and shopping centers serve as primary consumer destinations. Additionally, there may be overall lack of investment, as almost 50 percent of households in Walkable areas are in census tracts with high concentrations of low-income and minority populations (discussed further in subsequent sections). Vacancy rates in Walkable areas are relatively low, however, indicating that the market for space is stable. Walkable areas may have untapped potential for commercial reinvestment, especially reinvestment that leverages existing assets.

Table showing non-residential rentable building areas and vacancy by walkability

In contrast, Somewhat Walkable and Auto-Centric areas have high vacancy rates across product types despite holding significant shares of the region’s developed space (table above). Previous CMAP research found that high office vacancy has been a persistent regional and national trend since the 2001 recession. This trend signals a spatial mismatch between regional and subregional office supply and demand, which is influenced by regional employment levels, changing private sector location preferences, and office configuration and per-employee space trends. In particular, post-recession recovery in the region’s office market has been strongest at the region’s core, building on new demand for office locations with access to transit, retail, and entertainment amenities, and pedestrian-oriented places.

Retail occupancy is similarly affected by a multitude of factors, such as changing demographics, the evolution of online retail, and land-use codes. Prior CMAP analysis has highlighted the relationship between overbuilding of retail space in the CMAP region due to local development decisions that may prioritize retail to benefit from the state sales tax revenue disbursement structure. High vacancy rates pose challenges to economic prosperity, especially for Somewhat Walkable and Auto-Centric areas, as communities must continue to provide services to underutilized spaces while receiving minimal to no fiscal benefits.

Walkability in local plans
The region’s municipalities are the primary implementers of walkable development through their purview over planning, zoning, and development regulation to meet local goals and needs. Local planning for and investment in mixed-use development can lay the groundwork for walkable communities by generating supportive densities and encouraging infill and compact development. CMAP staff scanned local plans adopted within the last 10 years and identified local priority areas for mixed-use development or reinvestment, called Locally Identified Mixed-Use Areas (LIMAs). As shown on the following map, many LIMAs overlap with existing downtowns and transit access, using transit to spur demand for compact development and walkable places. Though some suburban LIMAs are not currently served by transit, many of them align with Pace’s planned arterial rapid transit routes. Increasing density and capitalizing on strong bus transit in these nodes can generate potential for developing walkable communities in the long term.

Map showing walkability of locally identified mixed use areas in CMAP region

Walkability and housing affordability
As investments in walkable communities improve quality of life and make places more desirable, preserving affordability may become a challenge due to increased market demand. To compare current levels of affordability by walkability in the region, this Policy Update uses the Center for Neighborhood Technology’s census block group level estimates for combined housing and transportation cost as percentage of a regional typical household’s income. The regional typical household in the Chicago-Naperville-Elgin Metropolitan Statistical Area had a median income of $63,153 in 2015, an average of 2.7 people, and 1.2 commuters per household. An “affordable” place for the typical household has combined cost of housing and transportation is not more than 45 percent of the area median household income.

As the following maps illustrate, Walkable and Very Walkable areas have more areas that are affordable for a typical household, as compared to the less walkable areas. The high degree of overlap between affordability and walkability results from of a number of factors. For one, easy access to transit and geographic proximity to economic and job centers contribute to a lower transportation burden for households. In addition, affordable areas overlap significantly with economically disconnected areas (EDAs), which are census tracts with a high concentration of low-income households and either a concentration of minority residents or residents with limited English proficiency.

Side by side maps showing the walkability of economically disconnected areas and areas affordable for regional typical households compared

Table showing share of households in economically disconnected areas within each walkability typology

As the chart above illustrates, almost half of households in Walkable and Very Walkable areas are located within EDAs. Many of these areas also belong to submarkets where housing costs are low because long-term disinvestment has led to declining property values, foreclosures, and high vacancy rates.

Many areas that are Very Walkable, such as much of the north side of Chicago along the lakefront, are already unaffordable for a regional typical household. The patterns and overlaps of EDAs and Walkable and Very Walkable areas point to potential displacement of populations living in currently affordable areas with high walkability and transit access. The same reasons that contribute to a lower cost of living—access to transit, weak market, lower property value—also make these populations vulnerable to rising land values and rents if market demand for walkable communities continues to grow. This trend could continue with increased market demand. GO TO 2040 and ON TO 2050 recommend increasing and preserving housing affordability in transit rich areas and helping communities plan for housing choice.

Policy Implications
Investing in existing communities creates opportunities for more compact, walkable, and mixed-use development. ON TO 2050 will continue to recognize the benefits of walkable communities to promoting livability and regional resilience and will recommend planning for and reinvesting in mixed-use and transit-served areas in particular. This type of development is not limited to the region’s dense urban core, and many of the region’s suburbs have already invested in building vibrant, walkable downtowns. By building upon the region’s hamlets, main streets, downtowns, commercial corridors, and other mixed-use activity centers, communities can capitalize on existing assets to meet increasing demand for walkable places, improve economic vitality, and foster a strong quality of life.

Reinvestment and infill strategies are especially important for EDAs, as many of them possess strong community and transportation assets such as walkable streets and proximity to transit. Activating the untapped potential of these areas requires a comprehensive suite of strategies, from infill-supportive land-use policies, regulatory approaches to blight reduction, innovative public sector support of new development, and new infrastructure investments to strengthening community and private sector capacity to promote economic growth and livability.

In Auto-Centric or Somewhat Walkable areas with large amounts of underutilized space, remediation of underused office strips or shopping centers to more compact, mixed development is another option for attracting new investment. Successful retail depends on nearby residential neighborhoods and passersby to provide a sufficient customer base, and local serving office developments are now seeking places with a mix of services and pedestrian amenities. Increasing residential density through infill may create greater market demand for a variety of business types. Similarly, improving the pedestrian experience through street improvements, landscaping, and green infrastructure may make sites more attractive to businesses.

With increased demand for walkable communities, preserving affordability and preventing displacement of existing residents will be crucial. Communities should ensure the addition and preservation of affordable housing to accompany investments in walkable communities. Municipalities can also incorporate policies to address housing challenges in development decisions and local planning efforts so that the full benefits of walkable communities are enjoyed by all.