The NHL’s Edmonton Oilers have officially moved into the $480-million Rogers Place. Those interested in Edmonton’s real estate investment market and Oilers fans alike are ecstatic. From the start, this massive project has challenged the belief that new arenas and sports stadiums are wins for their billionaire owners and millionaire players, but a loss for the local economy.
Recent reports not only put forth evidence the contrary, but also suggest that such projects boost surrounding real estate values, and the economy.
Edmonton’s new arena, which is ready to open the 2016-17 NHL season, is a shining example of a pro sports facility with spinoff benefits to the local economy. It has a well laid-out urban design plan, and excellent links to public transportation. By developing an entertainment district around the arena, hundreds of local amenities will be available for nearby residents.
Investors have started questioning whether this enormous project will come to impact real estate values. Experts often say a new stadium project will significantly boost property values, but does the research support this line of thinking? The concept is that the more attractive the location, the higher the value of the property.
As the cost for homes in an area increases with new amenities, the result is greater housing demand. Supporters of stadiums believe that their creation and presence produces jobs during construction and operation, attracts other businesses to the area, and increases spending in the community.
Research by independent firms such as REIN indicates that the presence of a stadium increases quality of life (cultural importance, civic pride, city image, and community visibility). For many residents in Canada, the largest share of their personal net worth is tied directly to the value of their homes and investment properties, so these issues are of great importance.
The results of a recent report by the Real Estate Investment Network (REIN) openly support the following facts:
- An arena’s positive impact on property values can be felt most within a 5-kilometer radius, and has the biggest effect when appealing architecture, community plazas, park landscapes, retail, commercial, and entertainment spaces, and the stadium’s construction itself are worked into its design.
- An adverse effect on property values is felt when the costs of a proposed stadium necessitate the increase of property taxes.
- Homes in neighborhoods near to new stadium builds (or proposed stadium builds), on average, have premiums ranging between 3% and 15%, depending on the different types of housing, parking options available, and the distance from the stadium itself.
- Housing values increase on average 1.75 % for each 10% decrease in the range from a stadium, with the definite price increase being highest for homes in closest proximity to the stadiums and decreasing gradually outwards within the radius mentioned above.
- When a stadium is built outside the central core of a city and is not attached to any other economic development activities or an urban redevelopment program, residential property values around the facility will still see a definite increase in value. However, this increase will not be as large as those that are built in, or with nearby accessibility, to the Central Business District (CBD).
- While proximity to the stadium usually results in the largest price increases, the regular presence of fans may lead to a constant source of noise, incivilities, traffic congestion and a lack of parking. These are all factors with the potential to create a price depreciating effect.
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