A "Covid-era" exit (fingers-crossed) reminder about: Major Sports Venues and Commercial Real Estate
Republished from LCI Realty
If you have ever witnessed the construction of new major sports facilities in a big city, you know what kind of massive undertaking it is. There is an precedented [sic] amount of planning and hearings before they ever break ground and then a massive structure is erected to accommodate thousands of fans on game day. These facilities do more than provide a venue for sports, acting more as entertainment venues whenever possible, as well as a showcase for retail and dining experiences that want to represent themselves as part of the demographic. Major sports facilities are also magnets for commercial real estate expansion. In cities where sports facilities have been established for years and years, the real estate around the stadiums grow and change, while cities creating new facilities can do research and locate them in developing areas with room to grow. These gargantuan properties are commercial real estate ventures themselves and one might think that they have a massive effect on the commercial real estate around them. This question has been vexing enough to inspire several dissertations.
Here are the ways that sports facilities in your area affect commercial real estate:
The Ultimate Anchor Tenant
Sports facilities are no longer just venues to watch major sports teams play on game day. Most sports facilities are becoming mixed-use venues and have been going this way for about twenty years, with the sports stadium acting as the ultimate anchor tenant of a number of retail, entertainment, dining and nightlife facilities. At one time, commercial developers only saw the benefit in those 4 types of businesses, hoping to attract the crowds before and after game time in order to make their money. However, more and more mixed use sports facilities are starting to incorporate office space, hotel rooms, medical offices and other commercial properties to attract people to these economic corridors and keep them there longer than the duration of a game.
Subsidies Can Be Good Or Bad
Massive sports facilities are not easy to build and the ones that exist already are not cheap to renovate. Local and state governments do recognize sports facilities and the teams that play there as positive influences on their economy, so many cities subsidize the construction of these massive facilities with taxpayer dollars. This can act as an economic powerhouse for a city and a national franchise, as long as there is enough interest in the local team and there is enough talent on the team to attract viewers and attendees. People are a lot more likely to ignore the taxation as long as they are seeing their quality of life improve, but not everyone is interested in major sports and not every team is earning the subsidy they have been granted. This is yet another reason why so many sports facilities are moving toward mixed use commerce areas, to support economic growth without relying on the success or failure of a sports team.
Civic Pride: Make It Or Break It
A sports team cannot exist without an identity, or at least it can exist very well. Almost every successful sports team is ingrained in the local economy, but they also have to become part of the culture. Those that fail to attract people from their local city and their state see a direct slide in their ticket sales. Furthermore, people will choose not to show up when their subsidies go to teams that constantly struggle to win or at least entertain. The civic discourse can have a huge effect on the team, the sports facilities and the surrounding businesses. Property managers recognize this, so more and more facilities are becoming year round destinations for concerts, festivals, charity events, expos and other uses in order to maintain a connection to the local patrons and continue to support the culture of a city.
A Boon For Certain Types Of Businesses
If there are any types of businesses that see a boost in new expansion and new employment on the construction of new sports facilities, those are the dining/ nightlife businesses and the entertainment business. Retail often gets a boost as well, although it tends to huddle behind the other two in terms of generated new expansion. People that attend games often have disposable income, so investors and developers try to curate a full experience for crowds of game attendees.
What’s The Effect?
Major sports facilities are an exciting part of any city, especially when they bring in the crowds and offer people the chance to escape. These facilities keep getting more and more elaborate and they often take on a personality of their own. Consider the Raiders stadium that’s currently under construction and will function somewhat like a casino as well as a sports stadium. However, while there is a little influence on the economic outlook, these types of commercial giants can drastically raise the costs of property, which can be good for commercial owners that have desirable property. Yet that makes these areas harder to invest in, especially if they are established before you intend to invest.