By Robert Pirani, Director of Environmental Programs, RPA
In 1861, five years into the construction of Central Park, Frederick Law Olmsted and the Central Park Commission, concerned over the prospect of continued funding, noted the impact of the emerging Central Park on the adjoining properties along its borders. Finding that many of these neighboring properties had quadrupled in value, the Commission declared in its Annual Report, "Central Park has been, and will be, in a merely pecuniary point of view, one of the wisest and most fortunate measures ever undertaken by the City of New York."
Olmsted's understanding of the value of parks is as true today as it was 150 years ago. According to a report just released by Friends of Hudson River Park entitled, "The Impact of Hudson River Park on Property Values," about 20% of the value of properties in the two blocks adjoining the Hudson River in Greenwich Village can be attributed to the Hudson River Park. Regional Plan Association conducted the data analysis in the report and I was a member of the steering committee that directed the report's conclusions.
This shared value, akin to the appreciation accruing to one's home from a well tended yard or building foyer, is both extraordinary in its implications and totally expected given the literature. It also presents some important lessons as we think about the value of investments in public infrastructure in challenging economic times.
The study analyzed actual property sales in Greenwich Village between 1990 and 2005. An initial statistical analysis determined that property values in the Village are largely based on four factors: the age of the building, how big the building is, how far the property is from the subway, and how close it is to Hudson River Park. By holding three of those factors constant, the second analysis specified how much of the sales price was attributable to the property's proximity to the park.
For the years since the park was built or substantially complete, from 2002 to 2005, a full 20% of value of sales within two blocks of Hudson River Park can be attributed to it presence. Spread across all the properties in the study area, including those that did not change hands, the value attributable to the park is about $200 million. A very big number, but a finding totally consistent with similar analyses conducted in parks from Philadelphia to Washington State.
Here are a few ways to think about these findings.
The creation of public parks is indeed, "a wise and fortunate measure," as Olmstead once stated. The initial public investment in the Greenwich Village section of the Park was $75 million. Given the $200 million that attributed to property in just the immediate two block area, the City and State realized a 160% return on their investment. Not a direct return to be sure, but a significant financial benefit will accrue to City and State through transactional fees and sales, property and income taxes.
Another way to look at it is as if the $200 million of attributable value is a shared value. Because there is a well designed, well maintained park nearby, adjacent properties are worth more. But if Hudson River Park were not as attractive, or if a lack of maintenance led to deteriorated conditions, the attributable value would be smaller or even negative. It is in the shared interest of both the public and property owner to ensure that this value remains through proper maintenance.
Of course, Hudson River Park was not created to improve real estate values. The real purpose of the Park has been and always will be to reclaim access to the water, create recreational opportunities, and restore habitat. There are many values, both direct and indirect, that accrue from this public space, from providing quality time with family and friends to improved public health.
But as governments throughout the Region takes on the difficult task of adjusting their capital and operating budgets to the latest economic news, it's important to remember the very real economic value created by these long-term capital investments and their maintenance.
In 1861, five years into the construction of Central Park, Frederick Law Olmsted and the Central Park Commission, concerned over the prospect of continued funding, noted the impact of the emerging Central Park on the adjoining properties along its borders. Finding that many of these neighboring properties had quadrupled in value, the Commission declared in its Annual Report, "Central Park has been, and will be, in a merely pecuniary point of view, one of the wisest and most fortunate measures ever undertaken by the City of New York."
Olmsted's understanding of the value of parks is as true today as it was 150 years ago. According to a report just released by Friends of Hudson River Park entitled, "The Impact of Hudson River Park on Property Values," about 20% of the value of properties in the two blocks adjoining the Hudson River in Greenwich Village can be attributed to the Hudson River Park. Regional Plan Association conducted the data analysis in the report and I was a member of the steering committee that directed the report's conclusions.
This shared value, akin to the appreciation accruing to one's home from a well tended yard or building foyer, is both extraordinary in its implications and totally expected given the literature. It also presents some important lessons as we think about the value of investments in public infrastructure in challenging economic times.
The study analyzed actual property sales in Greenwich Village between 1990 and 2005. An initial statistical analysis determined that property values in the Village are largely based on four factors: the age of the building, how big the building is, how far the property is from the subway, and how close it is to Hudson River Park. By holding three of those factors constant, the second analysis specified how much of the sales price was attributable to the property's proximity to the park.
For the years since the park was built or substantially complete, from 2002 to 2005, a full 20% of value of sales within two blocks of Hudson River Park can be attributed to it presence. Spread across all the properties in the study area, including those that did not change hands, the value attributable to the park is about $200 million. A very big number, but a finding totally consistent with similar analyses conducted in parks from Philadelphia to Washington State.
Here are a few ways to think about these findings.
The creation of public parks is indeed, "a wise and fortunate measure," as Olmstead once stated. The initial public investment in the Greenwich Village section of the Park was $75 million. Given the $200 million that attributed to property in just the immediate two block area, the City and State realized a 160% return on their investment. Not a direct return to be sure, but a significant financial benefit will accrue to City and State through transactional fees and sales, property and income taxes.
Another way to look at it is as if the $200 million of attributable value is a shared value. Because there is a well designed, well maintained park nearby, adjacent properties are worth more. But if Hudson River Park were not as attractive, or if a lack of maintenance led to deteriorated conditions, the attributable value would be smaller or even negative. It is in the shared interest of both the public and property owner to ensure that this value remains through proper maintenance.
Of course, Hudson River Park was not created to improve real estate values. The real purpose of the Park has been and always will be to reclaim access to the water, create recreational opportunities, and restore habitat. There are many values, both direct and indirect, that accrue from this public space, from providing quality time with family and friends to improved public health.
But as governments throughout the Region takes on the difficult task of adjusting their capital and operating budgets to the latest economic news, it's important to remember the very real economic value created by these long-term capital investments and their maintenance.
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