EFFECTS ON NEARBY RESIDENTIAL PROPERTY VALUES

Introduction

As identified during the public scooping process, the potential effects of a major retail facility such as the proposed Mall at Oyster Bay on residential property values is an important community concern. Clarion Associates, a national recognized appraisal, land use, and zoning consulting firm, has provide an expert analysis of the potential impacts of the proposed Mall at Oyster Bay on residential and commercial property values within the trade area. The full report is included in Appendix D. This section of the EIS examines the relationship of regional malls to surrounding residential communities and draws conclusions about the proposed Mall at Oyster Bay.

Existing Conditions

As detailed in Chapter 2, "Land Use," the proposed project site is located in a relatively benign location immediately adjacent to the Long Island Expressway, the closed former Syosset Landfill to the east, Robbins Lane to the west, and the Long Island Railroad to the north. Beyond these immediately adjacent land uses, there are two well-established residential neighborhoods close to the proposed mall site.

To the west and along Robbins Lane is Birchwood Park neighborhood, which is comprised of single-family homes in a self-contained subdivision with lot sizes typically ranging from 7,000 to 11,000 square feet. Curved streets help to create an insular community buffered from surrounding transportation corridors. To the east an just beyond the former Syosset Landfill is the Syosset Grove subdivision, which is also a detached single-family neighborhood with internally oriented streets.

As part of the analysis of property values, the national appraisal and real estate research firm of Clarion Associates conducted extensive assessment of real estate sales data of Birchwood Park and Syosset Grove, as well as two additional residential neighborhoods south of the project site and just north of Birchwood Park (see Figure 4-4). As presented in detail in Appendix D, the Clarion analysis examined data from 1988 to 1997 in order to track the trend in real estate values for these neighborhoods and for Nassau County as a whole. As shown in Table 4-38, in 1997 the average house price was $352,000 in Birchwood Park, $218,000 in Syosset Grove, and $272,000 in the small subdivision just south of the LIE. The neighborhoods have held to a similar pattern to the County as a whole, namely, that real estate values slumped in the late 1980's but have rebounded since 1992 as the Long Island economy adjusted to massive lay-offs in the aerospace industry. The neighborhoods have an appreciation trend in the last few years that exceeds overall County performance. The individual neighborhoods show more price volatility than on a County level, which is expected since older established subdivisions often have more difficulty in holding value during a down time but offer a faster appreciation and better purchase value during market expansion.

New housing to the west of Birchwood Park (Ivy Hill and Pond Edge) is currently being developed with larger lots and houses, and with typical selling prices in the $460,000 to $800,000 price range. The presence of these new housing developments is indicative that the trade area is capable of supporting high real estate values and that the key factors to value are age of houses as well as lot and house size. It is noted that the Birchwood Park development has larger houses and lot sizes than the other study area neighborhoods.

Future Without the Project

If the proposed Mall at Oyster Bay were not constructed, it is assumed that local residential property values would remain stable or vary in relation to real estate trends in the larger marketplace.

Potenial Impacts of the Proposed Project

To evaluate the potential for project-generated impacts on local residential property values, the EIS summarizes the findings of case studies researched by Clarion Associates as well as Clarion's review of available literature on the effects of commercial development on adjacent residential property values (see Appendix D).

Based upon extensive empirical data, Clarion has concluded that, in general, there is no correlation between proximity to a regional mall and a decrease in residential property values. Based on the characteristics of the proposed project, as well as the assessment of regional malls in Long Island and upscale fashion malls around the country, it is Clarion's expert opinion that the proposed project will not adversely affect home prices in adjacent residential neighborhoods. In fact, the empirical data suggests that homes in close proximity to certain retail centers may retain their value and experience greater appreciation than homes farther away. (Ten of the thirteen malls studied by Clarion were built after residential neighborhoods had already been established.)

CASE STUDY ANALYSIS

Methodology

Clarion conducted an extensive case study analysis to evaluate the potential impacts of the proposed mall on residential property values in the surrounding neighborhoods (most notably the Birchwood Park and Syosset Grove neighborhoods). The case study analysis includes a total of 13 regional malls. Five of the malls are located in Long Island (the Broadway Mall, Roosevelt Field, Sunset Mall, South Shore Mall, and the Smithaven Mall) and Taubman malls located in West Hartford, Connecticut, Short Hills, New Jersey, and Cherry Creek, Colorado. In addition, Clarion surveyed five regional malls in the Chicago area (Northbrook Court, Stratford Square, Spring Hill Mall, Gurnee Mills, and Randhurst Mall).

The methodology used in conducting the Long Island case study involved identifying key neighborhoods adjacent to the subject facility. A most immediate or proximate neighborhood is identified and compared with one or two nearby neighborhoods that are not directly proximate to the mall. These latter neighborhoods are "control" neighborhoods, since they are not in direct proximity to the mall. To assure compatibility of the case studies with physical situation around the proposed project, many if not most of the case study malls selected are wholly or partially separated from proximate neighborhoods by major roadways or other land uses. For example, the Roosevelt Field Shopping Center is partially separated from Neighborhoods 1 and 3A by office buildings; a retail center separates the Smithaven Mall from Neighborhood 1; neighborhood retail uses separate the Cherry Creek Mall from the North Mall Proximate Neighborhood; and office buildings and a golf course separate the Short Hills Mall in New Jersey from the case study neighborhoods.

Overall, 20 neighborhoods and more than 2,600 home sales were studied around the 13 regional malls. In each of the case studies in Long Island and New Jersey, except the Smithaven Mall, price trends were studied for a 10-year period, in Connecticut for a 16-year period, and in Colorado and Chicago case studies typically for a 4- to 5-year period. The number of years of comparison and the number of case studies analyzed are intended to offset the risk that anomalies in any one case study neighborhood would skew the result of the entire research undertaking. This long-term picture of trends in home prices and values also avoids the pitfalls of short-term pre- and post-construction comparisons where trends can be affected by fears, unbalanced media coverage, or other passions of the moment. The analysis of long-term trends relied on computerized data sources with records going back in some cases to the late 1980's. This too helped avoid pitfalls of spotty or non-existent hard copies of data on home sales around the time of mall construction, since all but two of the case study malls (Cherry Creek in Denver and Gurnee Mills in the Chicago area) were constructed prior to 1980. At two Chicago-area malls, however, (Gurnee Mills and Northbrook Court), pre- and post-construction trends were able to be studied, and the results confirm those elsewhere.

In addition, the case study neighborhood selection process was designed to eliminate the potential for anomalies to affect the validity of the case study analysis. For example, one criterion for neighborhood selection was similarity of age and physical condition of the housing stock. Another was school districts (there was only one exception, the South Shore Mall neighborhoods). Adjustments were also made to sales to account for some potential anomalies such as house size and lot size. Finally, all of the neighborhoods were inspected by Clarion staff as part of the selection process.

To the extent possible with available data, factors such as price trends and value in case study neighborhoods were compared with the community at large, for example in the Connecticut and Colorado case studies. Unfortunately, sales data from Long Island are not reported on a community-by-community basis, leaving possible comparisons only with Nassau County as a whole.

Variations in property values or appreciation trends are examined for whether the differences are a result of the mall or other factors (e.g., age of the housing stock, home size, lot size, etc.). This methodology is also utilized for the Taubman malls to the extent that information was available. The Taubman malls were studied to determine if fashion malls developed by the applicant affected their neighborhoods in a manner different than the other case study malls.

Taubman Malls

The Clarion case study analysis also examined three Taubman regional malls located in West Hartford, Connecticut; Short Hills, New Jersey; and Cherry Creek, Colorado. The findings of the case study analysis are summarized below.

Westfarms Mall, West Hartford, Connecticut. As with the Long Island malls, the Hartford area case study also indicated that the construction and operation of the mall had no adverse impact on property values in residential neighborhoods around the facility. Property prices in both Farmington neighborhoods to the west and West Hartford neighborhoods east of the mall were studied. Average sales prices for the years 1994 to 1997 studied by Clarion confirm an earlier 1993 study from another firm over a multi-year period (1979 to 1993) and indicate that property value trends in three neighborhoods located west of Taubman's Westfarm Mall (including one neighborhood proximate to the mall) were generally significantly higher than in Farmington as a whole, and the price appreciation trends during the entire study period in the Farmington neighborhood closes to the mall (Maple Ridge) were generally superior to those in the other neighborhoods located farther from the mall to the west. In years when lower average home prices in proximity to the mall were found, it was generally due to smaller home sizes in the mall-proximate neighborhood by comparison to the Farmington control neighborhoods. Similar trends were found when the two closest neighborhoods to the east of the mall, in West Hartford, were studied by Clarion Associates. Home prices were generally higher in the neighborhood in proximity to the mall (even after adjusting for differences in lot and home size) and were increasing faster in recent years. And while average home prices in West Hartford as a whole declined between 1993 and 1997/1998, average home prices increased in both the West Harford neighborhoods studied. Figure 4-10 shows the location of the mall and study neighborhoods.

Short Hills, New Jersey. The Taubman Company's Mall at Short Hills, constructed in 1980 and enlarged and renovated in 1995, is a large regional mall with approximately 1.35 million square feet and upscale anchors such as Neiman Marcus and Saks Fifth Avenue. The mall is somewhat isolated from surrounding residential neighborhoods due to its location bounded by John F. Kennedy Boulevard to the west and north and Route 24 to the south, and an office park to the east. Two neighborhoods have been examined to the east of the office park, the most proximate to the mall being immediately east of Canoe Brook road and bounded by White Oak Ridge Road to the east. The second, or control neighborhood is east of White Oak Ridge Road and is bounded by Parsonage Hill Road to the north and Hartshorn Road to the southeast. Homes and lots are significantly smaller (and therefore prices lower) in the mall-proximate neighborhood (with 15,000- to 20,000 square foot lots and a 1997 average sales price of $434,000) when compared to the control neighborhood to the control neighborhood (20,000- to 30,000-square-foot lots and a 1997 average sales price of $515,000). Both neighborhoods, however, pre-date construction of the Mall at Short Hills, and the differences in prices are due to the differences in home and lot sizes. Appreciation trends show more stability in the mall-proximate neighborhoods (6.24 percent increase from 1988 to 1997) compared with a flat rate of price appreciation for the control neighborhood during the same period (with roughly 10 percent growth from 1988 to 1992 and a 10 percent drop from 1992 to 1997). In summary, lot and house size are the key factors, and proximity to the mall has no discernable adverse effect on home prices or appreciation patterns. Figure 4-11 shows the location of the mall and study neighborhoods.

Cherry Creek, Colorado. Cherry Creek Mall is located approximately 3 miles southeast of downtown Denver and was built by The Taubman Company in 1990. With its recent expansion in 1998, the mall contains approximately 900,000 square feet of leasable space. A smaller open-air shopping center was in place at Cherry Creek when The Taubman Company began construction of the Cheery Creek Mall in 1990. The mall has grown into an important economic anchor of the area and is generally recognized by Denver real estate professionals as a positive influence on residential property values in adjacent neighborhoods. Sales data for four residential neighborhoods were analyzed by Clarion Associates to determine property value trends from 1994 to 1998. Two of the neighborhoods are proximate to the mall, one to the north and one to the south, and two are control neighborhoods located just to the north and south of the mall-proximate neighborhoods (see Figure 4-12). All four areas are experiencing new construction and home appreciation (in line with the overall upturn in Denver's economy during the past five years). As indicated by the Clarion data, home prices in one of the proximate neighborhoods have been appreciating at a faster pace than in one of the control neighborhoods, and in one neighborhood, faster than in Denver as a whole. The development of the Taubman mall has created an economic center for the neighborhood and has not adversely affected property values but, in fact, spurred demand for new construction and a more rapid appreciation in home prices in the most proximate residential neighborhoods.

Chicago Case Studies

As part of a 1996 study, Clarion examined five Chicago-area regional malls for their effects and relationships to adjacent residential neighborhoods. These case studies are summarized below.

Northbrook Court. This upscale fashion mall, opened in 1976 and later renovated in 1996, is surrounded by residential neighborhoods built both before and after the mall was opened. New homes continue to be built on in-fill lots in close proximity to the mall. After an examination of sales data from 1992 to 1996, the analysis concluded that the mall has had no adverse effect on property values in adjacent neighborhoods. Four mall-proximate neighborhoods surrounding Northbrook Court were studied. In three of them, home price comparisons clearly indicate that proximity to the mall has had no adverse impact on property values, and, in fact, home prices were higher in each of those neighborhoods than in their larger suburban community as a whole. In the fourth neighborhood (Glenbrook Countryside), home prices were lower than in the suburb as a whole, but this was shown by the analysis to be due to the age of the housing stock by comparison to Northbrook as a whole. Comparing these homes in the fourth neighborhood with others of the same age elsewhere in the town indicated no adverse impacts due to Glenbrook Countryside's proximity to the mall. In fact, appreciation of these homes exceed that in the community as a whole and in other nearby neighborhoods in recent years. Additional research from historic multiple listing service sales sheets from before and after mall construction confirmed the results of the 1992 to 1996 research efforts.

CONCLUSIONS

The weight of the case study evidence examined in preparing the assessment of potential adverse impacts on local residential property values indicates that there is no correlation between proximity to a regional mall and a decrease in property values. This is true even when the mall is built following the establishment of adjacent residential neighborhoods.

Case studies conducted for malls on Long Island and elsewhere showed little or no adverse impact on home price and many instances where a mall acted to stabilize or increase demand and home values. Ten of the thirteen malls analyzed by Clarion were built after adjacent residential neighborhoods were constructed.

Key factors that influence comparative housing values were external to the presence of a mall, specifically, the age, house size, and lot size of the typical homes in the neighborhoods. The Clarion case study data suggest that when regional malls do adversely impact home prices, the causes include the design and location of residential streets that back up directly to the mall itself (unless there is buffering or landscaping) or to ring roads supporting extensive collateral retail and commercial development. These are not conditions that are associated with the proposed Mall at Oyster Bay.

In conclusion, it is Clarion's opinion that residential property values in neighborhoods near the proposed Mall at Oyster Bay will not be adversely impacted by the proposed mall. This is based on the characteristics of the proposed mall (its protected location with no subdivision backing directly to the mall) as well as the general assessment that regional malls, and most notably high-end fashion malls, generally do not adversely affect adjacent residential neighborhoods.



Source: Excerpted from The Mall at Oyster Bay DEIS (December 1999)