How Park Improvements Affect Community Real Estate Values
Investing capital funds in parks can generate significant economic returns in the form of increased property values, but New York City is not making the most of this opportunity, according to a study released at the Great Parks, Great Cities conference, an international urban parks conference held in New York City last month.
The study, conducted by the accounting firm Ernst & Young and the advocacy group New Yorkers for Parks, selected at random 30 parks from all over the city and analyzed the relationship between capital investments and how tax assessments differed between parts of the same neighborhood closer and farther from the park over the past ten years. It also chose six different parks, at least one in every borough, to examine more closely as case studies, looking at capital funding, planning, and community involvement and comparing real estate prices, tax assessments and turnover rates in areas next to the park with those in the broader neighborhood.
A more thorough analysis also would have included the maintenance dollars allocated to each park, but this data was not available because the parks department uses roving crews for most park maintenance.
The analysis found that simply upgrading a park does not automatically add value to the surrounding area. From the sample of 30 parks, 55 percent of the 15 parks with the largest capital expenditures had either no increase or a decrease in the value of the real estate surrounding them. "The conclusion was that you cannot just throw money at a problem and expect to get results," said the project’s director, Glenn Brill, senior manager of real estate advisory services at Ernst & Young.
The detailed case studies showed that capital spending has higher economic returns when it is part of a larger plan for the community and includes long-term maintenance as well as the involvement of local residents and organizations.
The best example of this in the study is Prospect Park in Brooklyn, where $103 million – including $78 million in city funds -- has been invested since the 1980s. The Prospect Park Alliance, a public-private partnership that operates the park, has planned and overseen the park’s gradual restoration, working together with a wide range of community organizations. It also raises private funds to help maintain and program the park. The study found that the gap between the average single-family home sale price in the "park impact area" of adjoining Park Slope and comparable areas of the neighborhood farther from the park widened dramatically from 1996 to 2000. Before 1996, prices closer to the park were from 90 to 170 percent higher. Between 1996 to 2000, the price spread increased to 300 to 600 percent, before leveling off to 150 percent as prices farther from the park continued to rise.
Brill said that the research underlined the need for the city to take a strategic approach to investment in parks and coordinate it with other aspects of community development, like housing and policing. He also stressed the need for continued maintenance to preserve the city’s investment. "Our study supports the concept that a well-maintained park can make a significant contribution to real estate values," he said. "In doing so, it’s generating wealth for the owners and certainly a portion of it will be recirculated through the New York City economy."