How do businesses’ pay to give workers a short stroll to amenities? Using open-source data, we find companies buy easy access to nearby banks, stores, and cafes as they pay for office space and zip codes.
In A, we see LA commercial real estate prices rise with square footage and nearby household income (P-values 3.82E-16 and 0.01%, respectively), as shown by the surface. Included in the calculation of that log-linear plane is “Walk Score,” which “measures the walkability of any address (www.walkscore.com, no affiliation with me).”
B shows the Walk Scores of 60 properties versus their prices. Walk Score is a statistically significant (P-value 0.69%) contributor to Value (as sustainable prices). The overall equation uses square footage, household income, and Walk Score. It has an adjusted R^2 of 71.8%, implying there’s more work to do.
Figures C and D reveal that in Feb 2020 LA, doubling the Walk Score more than proportionally lifted the sustainable price. Firms wishing to put up a new facility need to know this. If the added Value of a new building exceeds its added cost, it may be worthwhile to set it up in high walkability areas.
Is NYC like LA? Look at the next post.