Why standalone stadiums are a thing of the past

In US cities, sports stadiums are increasingly the centerpieces of mini-neighborhoods along with hotels, shops and restaurants.

October 29, 2018

On game nights in Atlanta, the streets surrounding the Braves stadium are brimming with action. Bars, eateries, shops, a concert venue, luxury hotels, condos and offices keep the action hot on and off the baseball field.

The thriving neighborhood next to Atlanta’s SunTrust Park, dubbed The Battery, is reaping rewards for investors and the community alike. Since opening in March 2017, the new ballpark and mixed-use development have brought in $19 million of tax revenue, according to a study by Georgia Tech’s Center for Economic Development Research.

Atlanta is one of several U.S. cities where a sports stadium is fostering real estate development in the surrounding neighborhood. League owners and real estate developers are seeing the opportunity to tap into the energy surrounding ballparks and other stadiums to create thriving mini-neighborhoods with mixed use developments, as opposed to the standalone stadiums of yesteryear.

“The Braves’ vision is one that many teams share: a world-class ballpark surrounded by a true ‘live-work-play’ village,” says Don Loudermilk, Senior Vice President, Sports Facilities, JLL Project and Development Services. “The Braves were first to pull this off at so large a scale, and that’s helped prove to other teams that a dynamic neighborhood can be a game-changer when it comes to ticket sales and overall fan experience.”

Stadiums as great neighbors

Developers are increasingly investing in these so-called mini-neighborhoods anchored by stadiums. One clear motivator of cultivating a more vibrant community is that it can translate into higher and more sustained ticket sales.

But there’s potential for positive synergy between the neighbors in these developments, too. The right mix of surrounding businesses can reap significant benefits, says Loudermilk.

“You have a captive audience of a couple of million people a year, most of whom are coming out with the expectation that they will spend money on entertainment,” he says. “For a retail store or restaurant, their revenues are higher around a stadium than they would be in a normal area.”

Of course, a true neighborhood is more than just a happening place to visit. It’s also a place where people live and work.

Unlike a play-only stadium location—where neighboring businesses rise and fall based on the team’s schedule—an attractive neighborhood can sustain economic momentum all year long. That’s one reason why urban planners from San Francisco to Detroit are purposefully incorporating sports arenas into new mixed-use development in their community revitalization efforts.

 The road to a thriving mini-neighborhood

U.S. sports teams are moving downtown, following the mass migration of Americans into cities. And stadium development is unlikely to slow anytime soon. In Arizona, for example, the Diamondbacks are embarking on a years-long process to relocate, and mini-neighborhoods may be a prize part of the strategy.

But not all urban locations are created equal – and achieving a mini-neighborhood is not exactly a short-term feat.

“Finding land—including space to park—is a challenge in heavily populated areas,” says David Demarest, who heads JLL’s sports and entertainment practice group. “But deep, technology-driven analysis can often turn up hidden opportunities—land that’s not only suitable for development of the ballpark, but with a population that can support a thriving mixed-use development.”

Existing stadiums can also invest in thriving work-live-play developments around their current location. It starts with assessing neighborhood readiness for revitalization, then carefully managing logistics throughout the investment, negotiation and development processes.

Purposeful investment strategies can pay off. Around Boston’s Fenway Park, for example, the presence of the Red Sox—paired with 15 years of continual investment in real estate development—has helped fuel one of the city’s most flourishing neighborhoods.

Industry analysis suggests investor interest could heat up for mini-neighborhoods, Loudermilk says.

“Paired with higher ticket sales and thriving next-door neighbors, such a game plan could be a win-win for the whole community,” he says.