By Andy Peters
When the NFL in 2014 named Minneapolis host city for Super Bowl LII, local leaders realized they needed to create more public space for fans to gather before and after the big game. Though they didn’t know it, officials were also about to add credence to a high-stakes theory in commercial real estate development.
The city worked with developer Ryan Cos. to build a 4.2-acre public park next to U.S. Bank Stadium, where the Super Bowl would be played. As it turned out, Downtown East Commons Park provided more than an outdoor plaza for football fans: Since opening in 2016, property development has followed, including the residential tower at 700 S. Fourth St. and an office building for financial-services provider Thrivent at 517 S. Sixth St.
Minneapolis then provided $11 million annually to develop new and maintain existing parks across the city. Combined with special taxes, Minneapolis spent $296 per person on public parks in 2021, the highest among the 100 largest U.S. cities in a new analysis. The nonprofit Trust for Public Land and real estate consultancy HR&A Advisors say a corresponding rise in development near the parks contributed to 18% job growth in Minneapolis from 2011 to 2021, higher than the 11% national average.
“We were surprised to see how extensively parks funding influenced key economic indicators like talent retention and new construction,” Jill Bengochea, a director at New York-based HR&A, said in a statement.
Minneapolis is one of five U.S. cities that raised public parks spending from 2011 to 2021 and saw a subsequent jump in economic development. The same correlation between increased spending on parks and added commercial development was also found in two large cities, Atlanta and Boston, and two smaller cities, Plano, Texas, and Boise, Idaho.
Park spending can directly lead to new commercial development, as with Downtown East Commons Park in Minneapolis, the report’s authors found. New parks also provide indirect benefits like the creation of new businesses, job creation and growth in the property tax base.
Still, even with financial incentives provided to developers, there’s no way to ensure they will fulfill promised projects. There’s also no guarantee that the addition of parks in every city will pay off just because it’s working in a number of test cases. And local governments have shown they tend to include the parks department when it’s time to make budget cuts, even knowing planners say it could exacerbate economic weakness.
What’s more, simply putting in grass or playground equipment at a vacant lot to create a park won’t necessarily stimulate economic development, said Rhea Stephen, senior director of market analytics at CoStar in Chicago. But if a park has special attractions and is more than just a standard park, it can lead to economic growth.
For example, Millennium Park in Chicago has a Frank Gehry-designed concert pavilion, a high-profile sculpture, gardens and a pedestrian path to Lake Michigan.
“Millennium Park has become a tourist attraction in and of itself and has really helped the East Loop by increasing foot traffic,” Stephen told CoStar News. “There’s got to be a reason to build a park in a specific location. If you create a park that becomes a destination, that can attract developers, big time.”
Developer partnerships sought
Even if cities avoid the potential drawbacks, there’s something else local officials will probably need to keep in mind: Developers aren’t willing to go it alone.
Local governments and economic development agencies should tell private developers they are willing to be financial partners on park creation, according to Doug McDonald, director of economic development for the city of Plano, Texas. A formal partnership with the business community, he told the authors, can help convince elected officials to not cut budgets for parks.
“We need to be an active partner with our property owners to add value to our campuses and incorporate new amenities being desired by companies post-pandemic,” McDonald said.
Commercial developers actively seek cities that prioritize public parks because it helps their projects attract tenants at higher rent levels, the analysis concluded. Public-private partnerships have been an especially popular vehicle to stimulate development.
“Cities should engage the private sector and other partners to augment public funding [through] philanthropic contributions, sponsorship, development [conditions], special assessment districts, tax increment financing and other mechanisms,” the authors conclude.
The Boston Seaport shows how cooperation between the public sector and private developers on park space can lead to economic benefits. Starting in 2010, the city of Boston spearheaded the redevelopment of an industrial area at the downtown Seaport district. That effort led to new offices, residential, hotels and retail.
What it didn’t include was parks or other areas for the public to gather. The city hired WS Development, a Boston developer, to create a new master plan for the Boston Seaport district to add public parks and plazas. WS Development told the authors it created the plan in partnership with the architecture firm Sasaki and other design firms.
“Open spaces are a canvas for programming and activation, fitness and wellness, concerts and farmers markets,” said Yanni Tsipis, a senior vice president at WS Development. “Those types of amenities can be major needle movers in terms of real estate decision making for large employers.”
The type of privately owned public space that is in development at the Boston Seaport is something that other cities could emulate to spur the creation of more parks, according to the report.
“Thoughtful planning and interesting programming bring nearby workers and visitors into [privately owned public spaces] which enhances their role as drivers of economic development,” the Trust for Public Land and HR&A authors said.
Boston was also found to spend more than the national average of other large cities on parks. The city spent $23,800 per acre on parks in 2021, higher than the average of $4,000 per acre for the 100 most-populous cities and also an increase from the $14,000 per acre that Boston spent in 2011, according to the analysis. During that same time, Boston’s population grew 10% and it posted 17% job growth.
Atlanta, Boise, Plano
In Atlanta, investments in parks more than tripled to $25,000 per acre in 2021, compared to a decade earlier, according to the report. The city’s signature park is the Beltline, a 22-mile walking and bike trail that circles downtown. Dozens of new commercial developments have opened along the Beltline corridor, including Jamestown’s Ponce City Market.
Atlanta also recently opened a new park, Rodney Cook Sr. Park, near the Georgia World Congress Center and Mercedes-Benz Stadium, in the hope of stimulating commercial development in the surrounding low-income neighborhoods.
The city of Boise, Idaho, has nearly doubled investments in parks since 2011 with current spending at $10,000 per acre. The result has been a 60% increase in the formation of new businesses in Boise. One new park in Idaho’s state capital, the Boise Whitewater Park, received half its funding from private donations. New apartments and office buildings have popped up near the park since its opening in 2012 and later renovations.
The Dallas suburb of Plano, Texas, has attracted new office tenants in part because of the city’s increase in spending on park maintenance and enhancements, especially parks like Oak Point Park and Nature Preserve located near office campuses, according to the report.
Other U.S. cities not named in the report are also building new parks and expect to see a boost in economic development. In Houston, marine and offshore construction firm Orion Group chose to locate its new headquarters at Midway’s East River mixed-use development, located next to the recently restored Buffalo Bayou greenways.
On Staten Island, the capping of the former Fresh Kills landfill and its development into a 2,200-acre park is expected to help stimulate economic development in the New York City borough.