How much is a view of nature worth? What about good design? Landscape architecture and interior design are critical disciplines in any new build or big renovation, and they prioritize the visual experience of and from a building, but researchers and investors actually know very little about “the value of aesthetics” in real estate. And visual amenities rarely show up in underwriting models. But what you see matters: New research indicates simply having a view of open space can add 5% to 7.5% to a home’s value, easily $15,000 or more.¹

The prevailing assumption - admittedly one we shared before writing this article - has been that open space adds value to real estate because of its proximity as a recreational amenity. And maybe, we thought, residents and tenants might value being near an open space that plays an important ecological role, like a pollinator garden. These presumptions have dominated the research as well; prior work has been “unable to disentangle” the value of proximity vs. the stand-alone value of views, since “defining the degree of visual amenity is a difficult task,” the researchers note.

“Natural views” is not a filter on Zillow. To assess their value, the authors focused on for-sale housing, and used a clever workaround: Google Street View. They pulled “pictures facing away” from each house. They built an image recognition algorithm to assess the views from these homes - the views “that households consume.” The more a house looks out on park-like amenities, the higher the “view amenity” score.

While the study focused on for-sale homes, its findings suggest directional relevance for apartments and offices as well. That indication fits with related findings from other studies, including one that developed a “Green View Index” and found street-level greenery lifted commercial office rents.

Given the surprisingly high premium households pay for open space views, the study provides food for thought for new builds of any type, whether individual assets, mixed-use projects or larger communities. There’s potential value in designing open space and greenery to maximize “exposure to a view amenity” even if the recreational use is limited.

Surprisingly, proximity to open space does not always add value to nearby real estate. In fact, some studies have found housing prices drop with proximity to parks that may be used “primarily for recreation,” which is most parks in a city. Causality was uncertain, but the authors speculate higher activity around the park and the limited visual value of those parks might both be significant. In any event, the positive impact of the recreational amenity offsets the negative impacts and, on average, proximity or adjacency to parks has no net impact on home prices.

Similarly, views of open space do not always add value. Those views could be of nature, but also of a parking lot, undeveloped land or other elements of a park that are not attractive or calming. Views of a parkway, for example, were shown to have a negative impact on price, which related to the downsides of being near traffic, the authors speculate.

But on average open space views are quite valuable, and the better the views, the higher the premium. That raises two interesting questions.

First, what does this mean for optimal land use? The authors suggest making the edges of open spaces more visually appealing, maximizing the view benefit for nearby homes and offices. But there’s a tradeoff: prioritizing aesthetics might impact the accessibility of the open space or reduce functional components like parking lots and bathrooms that would otherwise increase the recreational value of open space. However, until now only the recreational value has been prioritized. This study suggests aesthetics deserve a seat at the table.

Second, what’s going on? Why are people willing to pay so much for open space views? There’s a strong signal that something psychological is at work. The author of the 1984 book Biophilia theorized that people want to connect with nature, and such a connection “was a deep and complicated process in mental development.” OK, but what does real research say? Generally, that proximity to nature is associated with better health outcomes - better physical and mental health among other things. Although whether that’s through views or recreational use or something else is not clear.

In our view (sorry) the only way to bring any of these ideas into a capitalist system is to validate them economically - basically to prove people will pay for something.

And that’s why we liked this study. It’s the first to really pin a dollar value specifically on natural views, and they did it using highly specific property-level data. Every building with windows has a view of something, and we’d like to see more studies focused on the value of views in commercial real estate contexts, especially in office and for-rent residential. It could go a long way to improving tenant and resident experience and offering opportunities for the best projects to positively differentiate - experientially and economically - from the status quo.

Who: Artio Risk

What: Tech-enabled risk management (read: they help lower your insurance costs).

The Sparkle: Artio’s software starts by digesting a mountain of data about an owner, including operating histories for the assets that need insurance. The firm will, in some cases, tell an owner to continue to procure insurance from the brokerage market, but otherwise will design an “Alternative Risk Transfer” program, which is a fancy way of saying self-insurance. But it’s PhD-level self-insurance: highly structured, backed by reinsurance, much less expensive than retail options and can even evolve into a financial asset for the firm.

Six thousand dollars can buy you a lot of hot meals, but it can also buy you a first-of-its-kind battery-powered induction stove / electric oven that can cook hot meals during a power outage. This 350-pound clean-tech appliance plugs into a normal outlet and knows to charge when electricity costs are low. Also, it looks cool.

Copper Home

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