The Economic Benefits of Great Public Places
Throughout January, MPC's blog, The Connector, is running a series on the tangible benefits of Placemaking.
Sometimes it's hard to define what makes a great place, but you know it when you experience it. Great places lure people in with activities, people watching, shopping or just the experience of being around others and feeling a sense of connection. Does this only happen at organic farmers markets or outdoor cafes? Hardly. Placemaking doesn't just occur in affluent communities or vacation hotspots. Chicago's 26th street in Little Village, 18th Street in Pilsen, or the Glenwood Market in Rogers Park are evidence that the power of a vibrant public place transcends geographic and demographic boundaries.
Peter Kageyama, author of For the Love of Cities, writes that creating places worth caring about makes for strong communities. We couldn't agree more. That's why we have designed a blog series that considers the importance of placemaking for communities through a variety of lenses. The series will explore the economic, environmental, physical and social aspects that produce quantifiable benefits for a community and its residents. Up first: The economic benefits of great places.
Placemaking as an Economic Engine
The return on investment of a place can occur at many levels. In the high-profile case of Chicago's Millennium Park,
Millennium Park's Cloud Gate ("The Bean") is an example of interactive public art that attracts tourists and locals alike.
the seafarer via Flickr
the city's $500 million investment is projected to generate $2.6 billion in visitor spending and add $1.4 billion in value to the adjacent real estate by 2014, ten years after the park's completion. Other successful placemaking efforts like New York City's Times Square and San Francisco's Ferry Building have generated similar rosy outcomes. These placemaking superstars provide real economic benefits to their environs through higher real estate values, higher occupancy rates, increased tourism, and more jobs.
While the economic benefits of placemaking in the largest cities in America are inspiring, they beg the question, Is placemaking as an economic engine still feasible for those communities that don't have $500 million to spare? Fortunately, the answer is a resounding yes! Developing a great place in your community can be achieved through temporary events, inexpensive treatments, or even encouraging businesses to stay open longer for a monthly event – all of these options produce economic returns.
Events that create temporary hotspots, such as ArtPrize in Grand Rapids, Michigan, have had tremendous economic success. During the 19-day event – held annually since 2009 – the city of 189,000 swells to 300,000 as people flock to the city to view and judge art pieces. Grand Rapids' downtown storefronts transform into galleries and artists are invited to display or perform. In 2012, 1,517 artists competed for prizes and the program generated an immediate economic impact of $15.4 million. This event creates immediate economic benefit, as profiled recently by Better! Cities and Towns, but also inspires increased year-long spending by residents and tourists as they return to restaurants or stores that they discovered while viewing ArtPrize.
Small installations or temporary setups, like that of Gabriel's Wharf in London, prove that creativity, good design and activities will draw people to a place. With a timeline of three months and the equivalent of U.S. $125,580, Urban Space Management reinvented Gabriel's Wharf from an abandoned warehouse district into a vibrant, profitable area. This 20,000 square foot space is now home to a vegetable market, temporary pop-up stores and a performance area. Additional measures like painting the back of a building into a faux street and designing '10x10' pop-up shops created a unique theatre-like atmosphere that immediately drew residents and visitors. As a result, 60 jobs have grown out of the project and the initial project investment paid for itself in four years. Additional measures like adding a giant chess set in a park, or designing a "quick, inexpensive, highimpact change that improve[s] and revitalize[s] underused properties" like that of Team Better Block demonstrate that a low-barrier start has the potential to change an area drastically.
Placemaking is the art of developing a public space that attracts people. In the process, it almost always pays economic dividends back to the community. We've come across so many examples, in fact, of the economic benefits of placemaking that we've decided to catalog our ragtag pile of articles and studies in one place. Here is our best shot at organizing them by theme:
Gathering Places Draw People, Which Lures Retail Opportunities
- Downtown corporate locations are increasingly important to talented professionals. A June 2012 Crain's article documented that recent corporate relocations represent an emerging and necessary trend. ThyssenKrupp, Sara Lee, and Walgreen Company are just a few examples of corporations that have made the move. We think "Rodge R"'s comment on this article is indicative: "Now before I even consider a job the first thing I do is google map the area to see what's around."
- According to U.S. Census Bureau Data released in 2010, 21 percent of America's population is now living within two to four miles of a city hall. The influx of residents to urban areas within the last decade – 2000 to 2010 – has resulted in an increase of over 2.2 million people within cities. For example, within the last 10 years, the Chicago/Joliet/Naperville areas' downtown population increased by 36.2 percent. See our blog for implications for Chicago Union Station, and what it means for Making Union Station an even greater place.
- Last year, a 26-foot-tall Marilyn Monroe statue was placed on an uninviting concrete slab along Michigan Avenue. The sculpture generated high pedestrian traffic and, according to the Chicago Tribune, helped to lease underutilized space on the first floor of surrounding buildings. A restaurateur opening a new eatery next door at Tribune Tower noted that all of his locations are in high pedestrian traffic zones.
Appeal of Great Places Reflected in Home Values
- Good placemaking generates desirable neighborhoods and stable housing prices. Even during the recent recession, areas that had ample placemaking activities "experienced less than half the average decline in price from their housing peak in the mid-2000s."
- In "Why We Pay More for Walkable Neighborhoods," Atlantic Cities argues that walkable urban places enjoy higher residential and commercial property values than their driving-dependent counterparts. For each step up the walkability scale, the value of a home is likely to increase by $81.54 per square foot, and the average rent within a walkable area by $8.88 per square foot.
- In some cases, like that profiled in "The Next Major Real Estate Cycle: Walkable Urbanism?" the tax income generated from properties in areas classified as "walkable urbanism" dwarfs the economic investment a city contributes to the area.
Arts and Culture Produces High Economic Return
- Places that incorporate local heritage and artists attract more tourists, and residents feel a stronger connection to such places. The Arts and Economic Prosperity III report from Americans for the Arts states that annual support in the arts generates a 7:1 return.
- The Travel Industry Association of America (TIA) and Partners in Tourism findings show that tourists who visit a city for cultural activities spend more and stay longer than non-cultural tourists.
Creating places that people love undoubtedly results in an economic return for the area. An economically healthy area benefits all of its residents, but perhaps more interesting is how great places can benefit us on a very personal level. Up next in this series: growing old in a place you love.
MPC Research Assistant Elli Cosky contributed to this post.