Gary Pivo

The Walkability Premium in Commercial Real Estate Investments

This article examines the effects of walkability on property values and investment returns. Walkability is the degree to which an area within walking distance of a property encourages walking for recreational or functional purposes. We use data from the National Council of Real Estate Investment Fiduciaries and Walk Score to examine the effects of walkability on the market value and investment returns of more than 4,200 office, apartment, retail and industrial properties from 2001 to 2008 in the United States. We found that, all else being equal, the benefits of greater walkability were capitalized into higher office, retail and apartment values. We found no effect on industrial properties. On a 100‐point scale, a 10‐point increase in walkability increased values by 1–9%, depending on property type. We also found that walkability was associated with lower cap rates and higher incomes, suggesting it has been favored in both the capital asset and building space markets. Walkability had no significant effect on historical total investment returns. All walkable property types have the potential to generate returns as good as or better than less walkable properties, as long as they are priced correctly. Developers should be willing to develop more walkable properties as long as any additional cost for more walkable locations and related development expenses do not exhaust the walkability premium.

The Net of Mixed Beads Suburban Office Development in Six Metropolitan Regions

Abstract In the past few decades we have witnessed an explosion of suburban office development, but we are only beginning to understand the pattern of development that is emerging. In this article six longitudinal case studies are used to test the validity of four descriptive theories of office suburbanization. Urban villages, office corridors, and other popular theories prove to be too simple to capture the actual complexity in the case studies. A more complex pattern is evolving in which the majority of office space is located outside the regional CBD, with some scattered away from freeways, but most located in a large number of small and moderate-sized, low intensity clusters along freeway corridors. It will be important to evaluate the impacts of this emerging pattern on various planning issues and to better understand its underlying causes, if city planners wish to alter current trends. A new metropolis is upon us, and we need to understand what will be a critical element of the twenty-first century ...

A taxonomy of suburban office clusters: the case of Toronto

Metropolitan plans are commonly based on a system of suburban office clusters. The large variation among recent plans suggests a poor understanding of their nature and impacts. A taxonomy of office clusters could provide a necessary framework. Six hypotheses on the type, frequency, location, employment base and travel characteristics of suburban clusters were tested in a case-study of the Toronto region. Six physical types were identified and found to be associated with certain locations, employment activities and travel mode characteristics. The Toronto metropolitan plan was found to be successful when it conformed with these findings and unsuccessful when it did not. The results lead to provisional guidelines for future metropolitan plans.

Responsible property investing: what the leaders are doing

Purpose – This paper seeks to help those making investment decisions on existing commercial real estate portfolios to understand how environmental, social, and governance (ESG) issues impact the current value and prospective investment performance of the assets they own and manage.Design/methodology/approach – The issues and literature related to ESG issues in property investing are reviewed and examples of what industry leaders are doing to address these issues are collected and reported.Findings – Property investors can realize greater returns on their investments through considering and acting on a range of social and environmental issues. Lenders, owners, fund managers, asset and property managers, and developers can all incorporate RPI strategies into their own activities. RPI strategies can be categorized into ten elements covering environmental, social and community issues. There are two types of financially sound RPI strategies: no cost and value added approaches. More research needs to be carried...

Toward sustainable urbanization on mainstreet Cascadia

Mainstreet Cascadia is a band of urban development stretching from the Canadian city of Vancouver, British Columbia to the US city of Eugene, Oregon. The rate and pattern of urbanization there have produced deep public concern over growth related problems and negative environmental consequences. City and regional plans have been prepared in response to these conditions with the common goal of promoting more sustainable urbanization. Some cities in the area already exhibit elements of sustainable urbanization and census data indicate these places are measurably different from other places. Demographic and market trends suggest the plans can be successfully implemented. Copyright ~ 1996 Elsevier Science Ltd

Specializations, Faculty Interest, and Courses in Physical Planning Subjects at Graduate Planning Schools

This article describes the level of physical planning educational activ ity at graduate schools of city and regional planning. The major find ings are (1) in many schools, special izations in physical planning subjects are unavailable; (2) there are a large number of schools at which faculty are not interested in many of the subjects; and (3) between 36 percent and 91 percent of the schools do not offer courses in various physical planning subjects.

Unequal access to energy efficiency in US multifamily rental housing: opportunities to improve

The energy efficiency of US multifamily rental housing is compared with other housing types. A real and growing energy efficiency gap is documented, particularly for lower income households. Findings are based on data from the 2005 and 2009 US Residential Energy Consumption Survey (RECS). Individual energy efficiency features related to HVAC (heating, ventilation and cooling) systems, appliances, and the building envelope are analysed along with weighted and unweighted total energy efficiency indices. Multifamily units occupied by low income renters had 4.1 fewer energy efficiency features in 2005 and 4.7 fewer in 2009 compared with other households. If the number of efficiency features was on par with other housing, the savings could be in the range of US

Social and environmental metrics for US real estate portfolios: Sources of data and aggregation methods

200–400 per year for most lower-income renters in multifamily buildings. There is an astonishing lack of information on how efficiency retrofits would affect property (real estate) metrics such as cash flow and value. Available evidence suggests that millions of US properties could be good retrofit investment opportunities. Better efficiency would allow renters to increase spending on food, healthcare and other essentials. This is not only an economic issue: it has implications for household health, social equity and environmental problems tied to energy consumption.

Green Buildings in Commercial Mortgage-Backed Securities: The Effects of LEED and Energy Star Certification on Default Risk and Loan Terms: Green Buildings in Commercial Mortgage-Backed Securities

Purpose – The purpose of this paper is to assess the availability of information in the USA for measuring the social and environmental performance of real estate portfolios.Design/methodology/approach – A search is conducted for relevant indicator data sources using internet, library and government resources. Priority is placed on information that could be accessed on line, by any user, free of charge, from reputable sources, using available search parameters, for all types of properties and for any properties anywhere in the USA. Useful sources are identified and assessed using data quality indicators. Information gaps are also identified. A previously published method is adapted for comparing the social and environmental performance of properties and portfolios and data collected from identified sources are used to illustrate the construction of indices useful for making comparisons.Findings – Nationwide data sources are available for most important dimensions with greater availability for the most impo...

Rural Cluster Zoning: Survey and Guidelines

We study the impact of green building on loans in the CMBS market. A hazard model shows green buildings carry 34% less default risk, all else equal. A matched‐sample analysis gives similar results. We attribute the effect to a loan‐to‐value channel, where risk is lowered by a green price premium. The benefit comes at least partly from the level of green achievement, not only the label itself. Loans on buildings that were green at loan origination have slightly better terms than loans on nongreen buildings. That difference is growing over time, but the effect is economically small compared to default risk.