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Park or Development: What’s More Economically Valuable

On a given city block, what is the revenue potential of a creating a new park as compared to that of new residential or commercial building(s)?

Say your city has a downtown parking lot. The average value of the adjacent developed properties is $2 million per property. The city is short on downtown park space and would like to create a park on that block, but is worried that it may lose out on maximizing property tax revenues.

We know from John Crompton’s research that parks can provide as much as a 20 percent marginal value to immediately adjacent residential properties, and additional 5 to 10 percent for those farther out. So let’s just assume 10 percent for only the immediately adjacent properties. In this case, the eight developed blocks would bring in a total of $17.6 million. Without a park and a development instead, the now nine developed blocks would bring in $18 million, only $400,000 more.

That’s not even considering farther out properties, which would bring even greater overall benefit. There’s also the non-property value costs that aren’t included here: added green infrastructure, a gathering place that can foster social glue, and a draw to visitors spending money at businesses and paying sales taxes.

Cities are finding that investing in parks is actually a smart economic development strategy: New York’s Bryant Park, Boston’s Post Office Square, Portland’s Courthouse Square, Houston’s Discovery Green and Chicago’s Millennium Park (for which the property value increase phenomenon has been called the Millennium Park Effect – pdf-). For cities with vacant parking lots sitting within their park poor downtowns, parks can indeed be a coffer-friendly key element in creating the economically beneficial, walkable, mixed-use downtowns they desire.

2 Responses

  1. This is some really great research that could be quite effective in persuading politicians and other policy makers to promote more green space when considering uses for available urban spaces.

  2. Thanks for the comment, Randy. With so many parking lots out there, there’s a lot of opportunity.

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