Open Space Has a Compelling Business Case for Developers

On the surface, it may seem as though providing open space within a large-scale mixed-use development is strictly a gesture of civic-mindedness. Turns out that ROI is also a compelling reason to create such spaces.

“Active open spaces are proven to deliver an excellent return on investment, often supplying far more in benefits than they cost to construct,” says Elizabeth Shreeve, chairman of the Urban Land Institute’s Sustainable Development Council and principal at the SWA Group. “These benefits accrue to private development while effectively strengthening communities and opening opportunities for all.”

ULI has just completed a study examining the business rationale for incorporating open space into private developments. Titled “The Case for Open Space: Why the Real Estate Industry Should Invest in Parks and Open Spaces,” the report cites benefits to developers at each phase of a project’s life cycle, from planning and design through long-term operation.

Take the planning and design phase, for example. Among the advantages that incorporating open spaces can provide are:

• Stronger support for proposed developments through early community engagement on open-space components
• Increased buy-in from influential stakeholders, including public officials and investors
• Faster zoning approvals and entitlements from local jurisdictions, lowering project costs

“Opportunities to leverage demand for such spaces are significant: 85% of U.S. residents identify proximity to parks, playgrounds, open space, or recreation centers as an important factor in their decision of where to live,” according to ULI’s report. “Yet public investment in park development and maintenance has remained stagnant or declined in recent years across the United States.”

In New York City alone, an estimated $5.8 billion will need to be spent over the next decade to bring its parks to a state of good repair.

New York is home to one of the five developments spotlighted in case studies as part of the report. Along with Hunter’s Point South in Queens, the report also drills down into Levy Park in Houston, Grand Park in Los Angeles, Guthrie Green in Tulsa, OK and Solaris Plaza in Vail, CO.

In the case of Grand Park (pictured), it was a $50-million investment from Related California that transformed a formerly underused public space into a 12-acre public park in downtown Los Angeles. Related’s commitment to developing the park led to city approval for a $1-billion mixed-use project on adjacent publicly owned parcels, according to ULI’s report.

“Related and the Grand Avenue Committee hosted 12 community meetings to determine Grand Park’s design, which they envisioned as ‘the park for everyone,’” the report states. Translators were provided at the meetings “to ensure that the diverse voices of Los Angeles residents were reflected in the final park design.”

Through these individual case studies as well as a more general discussion, Shreeve says the study describes “a winning formula: when undertaken thoughtfully, the creation of privately owned or operated, community-accessible open spaces can provide equitable access to resources, strengthen communities, reduce execution risk and contribute to a solid bottom line for real estate investment.”

For comments, questions or concerns, please contact Paul Bubny