The Olympics are known for many things, but how do they impact the host cities real estate markets?
In case you somehow missed the fliers, Boston is vying to hose the 2024 Summer Olympics.
A couple weeks back, Boston 2024, the city’s organizing committee, sent a detailed hosting proposal to the U.S. Olympic Committee; in January, the U.S. committee will select the country’s representative (Los Angeles, San Francisco and Washington, D.C. have also submitted proposals), and in 2017, the International Olympic Committee (IOC) will make the final selection among the world’s cities vying for the hosting.
There remain considerable questions behind how Boston’s hosting of the Olympics would impact the city, but for brevity’s sake, we’re going to look at the city’s housing market, and how the Olympic games could sway the way we see real estate in the Bay Area:
1. Infrastructure Improvements? – Whenever a city attempts to hosts the Olympic games, it boasts that preparation for the competition will bolster infrastructure spending throughout the area. As Erin Murphy Rafferty, the executive vice president of Boston 2024, put it in a statement printed by Boston.com, “We believe Boston would benefit…in the form of new housing, improved infrastructure, smart urban planning, new green space and much-needed transportation upgrades.”
One counterpoint to that line of thinking, though, is that infrastructure Boston is already developed; would the Olympics really improve it by that much more?
2. It All Comes Down to Organization – Hosting the Olympics is a big deal. As Boston.com explained, the host city must provide “30 to 35 competition venues, an Olympic Stadium requiring at least 100 acres, an Olympic Village requiring another 100 acres, and media facilities.” Though Boston 2024 has floated the idea of using existing structures to meet those demands (such as Gillette Stadium and Boston Common), they’ve also tinkered with the idea of building a temporary stadium at Widett Circle, which would avoid the chief problem of modern Olympic games – the “white elephant.”
White elephants are structures built for the Olympic games that quickly fall out of use after the torch is extinguished; the myriad stadiums from Athens’ 2004 games, which are today corralled by fencing and littered in graffiti, are the most infamous examples. Atlanta, meanwhile, which hosted the 1996 games, converted its venues into permanent dwellings – its stadium, for instance, houses the Atlanta Braves.
So in the end, long-term planning will be the key, should Boston nab the games.
3. Stealth Attack? – Supporters of Olympic hosting often point to Salt Lake City, and how that city’s hosting of the 2002 Winter Olympics put the city on the map, so to speak, and led its real estate market to considerable gains. At the same time, though, the 2002 games put Salt Lake City on the map because…not many people had previously considered it; Boston, meanwhile, is already a world-class city, and research from Jones Lang LaSalle finds that well-known cities, from Sydney to even Atlanta, benefit far less from Olympic exposure than do lesser-known metros.
4. Geographical Boosts – One area, though, would undoubtedly benefit from the Olympics, and that would be the housing market surrounding the main stadium. In London, for instance, property prices rose $300 per week after London won its bid in 2005, and on average, homeowners in the area enjoyed a $94,000 boost to their home values.
The rental markets, though, see short-term gains. In Salt Lake City, vacancy rates plummeted in 2002 and rents increased, but after the games ended, vacancy rates rose from 2 percent to 10 percent. “Long-term effects on the market are unpredictable when the athletes, camera crews, event staff and fans pack up and leave,” Boston.com noted.
Boston still has to secure just the U.S. nomination for hosting the games, but one thing is clear – the housing benefits from the games are no sure thing.