53%
of people would prefer a walkable home close to shops and other amenities versus a car-dependent home.
The 2024 NMHC/Grace Hill National Report reveals that a strong sense of community plays a crucial role in renters’ happiness. Over half of renters consider it very important to their well-being, while 40% view it as fairly important. A thriving community, they note, is built on mutual respect, a welcoming atmosphere from staff, and access to shared amenities, gathering spaces, and social events. Social events can even be organized by a property manager or asset services team, bringing communities together through programmed events like on- or off-site community cooking classes, Food Truck Fridays or fitness and small group training classes. A Satisfacts Residents Survey further emphasizes the importance of building community; residents with seven or more friends in the community are nearly twice as likely to renew their lease as those who don’t know their neighbors. While amenities remain a key part of renters’ decision-making, the reality is that the neighborhood around an asset can equally serve as a differentiator. Multifamily properties in Walkable Urban Places that have a higher share of “Play” real estate have demonstrated more resilience and better outcomes (as measured by price per square foot, NOI per square foot, vacancy rate changes) compared to those with little to none. This is particularly true in Downtowns across the nation. “Play” real estate encompasses both destination-oriented venues, such as museums and theatres, and community-oriented spaces like local retail. These include essential services and goods that cater to residents, such as grocery stores, hardware stores, self-care, and other fitness options. In the immediate aftermath of the pandemic, urban cores were more challenged, but residents are once again showing their preference for denser, urban neighborhoods and the many amenities that come with walkability. Nationally, multifamily vacancy in the Central Business District (CBD) spiked in 2020 but has since rebounded, exceeding suburban recovery. For three consecutive years, demand growth in CBDs has outperformed that of suburban markets, driving this strong resurgence.3 People want walkability. According to a 2023 survey,4 56% of respondents said that if they were to move, they would accept a smaller yard as a trade-off for a more walkable neighborhood. Asked to choose between a house in a car-dependent area and a townhouse or apartment offering a shorter commute and walkable shops and restaurants, 53% chose the latter (an 8% increase from 2015). Young residents, particularly Gen Z, are returning to cities in notable numbers. Across the 15 cities studied in Reimagining Cities, population growth among 15-29-year-olds from 2021 to 2023 was higher in Downtowns (0.6%) compared to zero growth in the broader metropolitan areas outside Downtowns. In Manhattan alone, the population of 15-29-year-olds grew by 9.1% between 2021 and 2023.5
1 According to Travel and Tourism Satellite Accounts data from the Department of Commerce’s International Trade Association 2 Source: Reimagining Cities: Disrupting the Urban Doom Loop 3 Urban Comeback: Exploring the Post-Pandemic Resurgence of CBD Multifamily Living 4 Do Americans really want urban sprawl? Yale Climate Connections 5 Cushman & Wakefield Research analysis of U.S. Census Bureau data 6 According to Cushman & Wakefield Total Workplace Research & Innovation’s Experience per Square FootTM Instant Insights 7 Costar, Cushman & Wakefield Research 8 Travel Industry Trends 2023| Mastercard Data & Services
Play
Work
Live
Tech
07
Apple
Luxury
06
Tea at Tiffany’s, RH Rooftop Restaurant, Olfactory
Adults
05
Nike, Dick’s House of Sport, Bass Pro, PGA Superstore, Dyson, American Express Lounge, Friends Experience, Sex & the City Experience, Van Gogh Experience, Chicken & Pickle
Kids & family
04
Lego Store, Nintendo, American Girl, Jellycat Diner Experience at FAO Schwartz, Harry Potter Store, BASH, Pinstripes, Swingers, Top Golf, Hasbro, Camp
Making ordinary visits unique
03
Airline lounges, Cooking or baking classes (MilkBar), Sleep No More/Life & Trust, Spy Museum
Mixed-use & Planned Community
02
Plant Riverside District (Savannah), Wynwood (Miami), The Wharf (DC)
Hospitality
01
Evermore, Disney, Wolf Lodge
Here are some of the ways we see experiences influencing the “Play” in real estate:
2.4%
The increase in NOI per square foot (PSF) from 2019 to 2023 in “Work” real estate in Walkable Urban Places that have an optimal share of “Play” nearby.
All work and no play makes going to the office pretty boring. Employees report that the top three purposes of the office are collaboration, relationships, and socializing—making co-workers the ultimate “amenity” in the post-pandemic world.6 Companies continue to study traditional drivers for where they locate offices, including labor, corporate ecosystems, and transportation. Attracting young talent is a constant priority, as is being centrally located within a metro area to minimize commute time for a given workforce. However, as a way to “sell the commute,” a major emphasis of occupiers remains on creating an experience while at and around the office. Employees want a blend of amenities that are convenient but also foster experience and entertainment—employees want to be together, but few want to come into the office just to work. Curating a hospitality-like environment with access to communities and experiences is an emerging trend even in the office sector. Examples of exclusive experiences for office tenants include The Cove in 525 Market Street in San Francisco and The Bell at 225 Randolph Street in Chicago. New York City landlords have also mastered the integration of experience into offices with Instagrammable moments at The Top of the Rock’s The Beam at Rock Center and Summit One Vanderbilt, as well as through the multiple food, beverage, shopping, and tourism options at Hudson Yards. Other less flashy examples of landlords responding to occupiers (and ultimately worker) preferences include a tenant lounge at One Victory Park in Dallas, a food hall in International Plaza in Dallas, a golf simulator and an experience coordinator at One South in Charlotte, and a cutting edge conference center at 140 Broadway in New York City. “Play” and “Work” real estate cohabitating in Walkable Urban Places is associated with better outcomes, including on a price per square foot or NOI per square foot basis and this is especially true in Downtowns. Business Improvement Districts (BIDs) enhance office building areas by pooling resources from local businesses and landlords. They fund public space improvements, safety initiatives, and events, resulting in cleaner streets, cultural festivals, and better security. BIDs also support local businesses through marketing and infrastructure upgrades, fostering community and economic growth. Overall, BIDs transform neighborhoods into dynamic, engaging environments with a higher quality of life.
In places with too much, NOI PSF declined by 7.2% and in places with too little, NOI PSF declined by 10.2%.
67%
of foot traffic in Walkable Urban Places is associated with visitors (versus commuters or residents). Of all visitors, 25.6% go to anchoring institutions like museums, theatres, stadiums, etc., highlighting how critical “Play” real estate is to economic vitality.
Real estate associated with “Play” is most obviously connected to the experience economy because these assets are the physical touchpoints where consumers interact with a brand. Brands have been integrating into their services and formats new ways of engaging customers to enhance value perceptions and create lasting relationships through immersion, storytelling, memory generation, and even exclusive product or service access. Experience underpins the “Play” environment almost by definition. When people shop in physical locations, they are intrinsically placing value on the in-person shopping experience. With ever-growing accessibility to online fulfillment, consumers have more reason than ever not to leave home, yet foot traffic to open-air shopping centers and top-tier malls exceeds 2019 levels. Shifting retail leasing trends reflect growing consumer interest in experiences. Consumer services tenants now account for about 50% of leasing in U.S. retail centers, up from 44% a decade earlier. Food services, education/healthcare, personal care, and fitness providers account for the bulk of this increase.7 Lessons from tourist spending indicate what motivates people to visit a faraway destination. Experiences capture an increasing share of foreign tourist dollars; in 2023, tourism spending on experiences was 25% higher than in 2019, while spending on "things" was down 15% over the same period.8 Tourist attractions can drive activity in Walkable Urban Places, but striking the right balance in “Play” is crucial. A successful mix blends spending from both visitors and locals, as their preferences often differ significantly. Developers and planners must carefully consider demographics and target audiences to determine the most effective types of “Play.” For example, 67% of Millennials are willing to pay more for unique experiences like traveling exhibits, while 53% of affluent consumers prefer ongoing engagements, such as seasonal memberships to local attractions. Competitive socializing venues, such as Swingers, Puttshack, and Flight Club, exemplify the shift toward experiential retail by combining entertainment, dining, and social interaction in unique, Instagram-friendly environments that appeal strongly to Millennials and Gen Z. Not to mention, they make great teambuilding activities for nearby office workers. These “Play” concepts not only drive increased foot traffic by creating memorable experiences but also enhance surrounding retail areas, benefiting landlords through longer dwell times and higher ancillary revenues. Experiences come in all shapes and sizes in the “Play” environment. We often think of lavish events such as the Super Bowl or Taylor Swift concerts as best exemplifying the experience economy, but even the simplest experiences, like ordering a coffee, can be elevated through unique and memorable touches.
