In the world of real estate private equity, sports and entertainment venues have long been the ultimate box-checkers. Impressive? Check. Revenue-generating? Check. Community asset? Well... let's talk about the parking lots.
With the 2024 Paris Olympics now behind us, we're reminded of the perennial question that accompanies these colossal structures: What happens when the crowds go home? Historically, these venues have been the epitome of "build it and they will come" thinking - massive, isolated entities designed for entertainment but now largely dormant. We believe it's time for a paradigm shift.
The New Playbook: Venues as Vibrant Local Ecosystems
Imagine walking out of a thrilling game or concert and stepping directly into a lively district filled with restaurants, shops, and public spaces. Nearby, residents go about their daily lives, benefiting from the constant hum of activity. This isn't just a fan experience upgrade - it's a complete reimagining of what a sports venue can be for a community.
The future of sports and entertainment real estate lies not in creating occasional destinations, but in fostering always-on neighborhoods. By reimagining these venues as anchors for 24/7 mixed-use developments, we see a new playbook being built for value creation that extends far beyond game day revenues.
As hybrid work reshapes traditional Central Business Districts, Sports/Entertainment Mixed-Use Developments are emerging as new centers of economic gravity. Critically, we are moving from a one-dimensional Traditional Model to a three-dimensional Raised Floor Model that generates "exponential value" by capitalizing on venue yield, district foot traffic, and the increased productivity of integrated live-work-play environments.
This approach opens possibilities for forward-thinking investors and developers to create consumer-driven real estate businesses that deliver superior returns while becoming cultural cornerstones and economic catalysts. By integrating venues at the center thoughtfully designed neighborhoods, we transform them from occasional destinations into the beating hearts of thriving, resilient urban ecosystems.
Why Now: The Growth of Established and Emerging Leagues
The sports and entertainment landscape is rapidly evolving, presenting a unique opportunity for mixed-use development strategies in the North American market. Four key trends that are converging to create an especially opportune moment for investors and operators include:
1. The Expansion of Major League Sports:
It has been widely reported that prospective franchises have pitched the NHL with an eye on expansion, while the NBA is also rumored to be assessing cities for future league growth. This expansion paves the way for the potential development of new, large arenas across North America within the next decade. These arenas are poised to serve as anchors for new sports and entertainment districts, creating prime opportunities for mixed-use developments. With the increasing demand for high-quality, immersive fan experiences, these projects are expected to drive significant economic activity and urban revitalization in their respective regions.
2. The Rise of Women's Sports:
Women's elite sports are experiencing unprecedented growth, with revenue projected to reach $1.28 billion by 2024 - a staggering 300% increase from 2021. This surge is driving tangible real estate development, as exemplified by the $218 million CPKC stadium in Kansas City, dedicated solely to a women's professional team. As women's sports continue to gain commercial value and attract significant investment, the demand for tailored facilities and surrounding mixed-use developments is likely to grow.
3. Minor League Renaissance:
Mid-sized cities across North America are discovering the transformative power of minor league sports, particularly baseball, in driving downtown revitalization. Cities like Fayetteville, North Carolina; Sugar Land, Texas; and High Point, North Carolina have successfully used stadiums as catalysts for broader mixed-use development. These projects go beyond simply building a ballpark; they're comprehensive urban renewal initiatives that spur the development of apartments, businesses, and public spaces in the surrounding areas.
4. The E-Sports Explosion:
The rapid rise of esports, with industry revenue expected to exceed $1 billion by 2031, presents another compelling opportunity for mixed-use development. E-sports venues have unique characteristics that make them ideal anchors for mixed-use districts, including smaller footprints and extended engagement periods that create significant opportunities for complementary retail, dining, and entertainment offerings.
Each of these sectors brings its own unique audience and requirements, but all share the potential to anchor vibrant, multi-use developments that can transform urban areas and create long-term value.
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‘Raising the Floor’ of Urban Economies
Traditional venue economics focused narrowly on the direct yield - ticket sales, merchandise, concessions, and maybe some adjacent parking revenue. But this myopic view misses the true potential of sports and entertainment venues as catalysts for broad-based urban value creation.
The future of this asset class will be all about 'raising the floor' - a fundamental shift in how we evaluate the economic impact of these developments. Instead of fixating on the stadium's balance sheet, this approach considers how an integrated, mixed-use development anchored by a sports or entertainment venue can elevate the baseline economic value of entire neighborhoods or even cities.
How it works:
Density Catalyst: By integrating the venue with entertainment, residential, retail, office, and hospitality components, these developments create a critical mass of activity. This increased density drives foot traffic, supports local businesses, and attracts further investment.
24/7 Activation:
Unlike standalone stadiums that may sit dormant between events, mixed-use developments create constant activity. This persistent energy maintains economic momentum, supporting a diverse ecosystem of businesses and services.
Value Amplification:
As the area becomes more desirable, property values increase not just within the development, but in surrounding neighborhoods as well. This ripple effect can dramatically increase the value per square foot across a broad area.
Self-Reinforcing Economics:
The diverse mix of uses creates a self-reinforcing economic ecosystem. Office workers patronize local restaurants, residents attend events at the venue, and visitors support retail establishments. This interconnected web of economic activity raises the productivity of every square foot of real estate.
Infrastructure Magnet:
These developments often catalyze significant infrastructure investments, further enhancing the area's value and attractiveness.
The result?
The October 2023 issue of PREA's Journal of Portfolio Management features research on using interpretable machine learning to enhance transparency in commercial real estate pricing. The study highlights how proximity to cultural and entertainment institutions increases property value per square foot across various sectors.
Instead of a single high-value asset surrounded by underutilized land, we create a high-value district where the economic productivity per square foot is dramatically increased across the board. It's not just about building a bigger, better stadium - it's about leveraging that stadium to create a rising tide that lifts all boats. These diversified developments provide resilience against market fluctuations, effectively 'Raising the Floor' and expanding opportunities in the real estate market.
SoFi Stadium: More Than a Field of Dreams
Inglewood California's SoFi Stadium stands as a testament to this new approach. Once a city grappling with economic decline, Inglewood has been transformed into a thriving cultural hub. The key? A development strategy that prioritized community integration from day one.
Stan Kroenke and his team didn't just build a stadium; they orchestrated a wealth of public and private interests. Through extensive community engagement and savvy negotiations, they secured a development agreement that went beyond typical concessions. Local hiring initiatives, affordable housing commitments, and substantial infrastructure investments ensured the stadium's benefits rippled far beyond its walls. Ultimately, it's resulted in an economic rejuvenation that touches every corner of Inglewood. From construction jobs to permanent positions in retail and hospitality, SoFi has become an employment powerhouse. Local businesses are riding the wave of increased foot traffic, while the city itself enjoys renewed vitality and improved infrastructure.
For investors, SoFi represents a masterclass in diversified revenue streams. Beyond the expected ticket sales and concessions, property value appreciation and ancillary development opportunities have created a value proposition that extends far beyond the end zone.
Beyond the Major Leagues: Scaling the Model
While SoFi showcases the potential at the highest level, we believe the real opportunity lies in scaling this model across the lower-middle market. From minor league facilities to community sports complexes and entertainment venues, the principles of integrated, mixed-use development can breathe new life into neighborhoods across the country.
Atlanta's Summerhill: From Parking Lots to Thriving Community
The transformation of Atlanta's Summerhill neighborhood offers a compelling case study in the power of sports-anchored urban infill. Once dominated by Turner Field and its vast parking lots, this 83-acre site has undergone a remarkable metamorphosis since 2016. Where game-day crowds once dispersed into a virtual ghost town, a vibrant, year-round community now thrives.
Led by Carter, an Atlanta-based development firm, the Summerhill project demonstrates the potential of reimagining underutilized urban spaces. The redevelopment has replaced acres of asphalt with over 1,000 new apartments and 100 townhomes, bringing new life and energy to the area. Georgia Avenue, once a strip of empty storefronts, now buzzes with activity, hosting a diverse mix of restaurants, offices, and even a local brewery.
Central to Summerhill's rebirth is its seamless integration with the surrounding city fabric. The project has reconnected the neighborhood to adjacent areas, healing the urban scars left by decades of stadium-centric development. This integration extends beyond physical infrastructure; it's reflected in the project's collaborative approach, which brought together developers, Georgia State University, and local stakeholders to ensure the new Summerhill met genuine community needs.
The former Turner Field itself has found new purpose as Georgia State University's Center Parc Stadium, anchoring a growing campus that includes new educational and athletic facilities. This repurposing exemplifies the project's commitment to creating multiple, diverse attractions that keep the area vibrant throughout the year.
Summerhill's transformation represents a fundamental shift in how the neighborhood functions. What was once a place defined by periodic influxes of sports fans has become a thriving, self-sustained community. This holistic approach to value creation has not only revitalized Summerhill but has set a new standard for how former stadium sites can be reimagined to serve their communities.
Austin's Waterloo Park: Harmonizing Music and Urban Life
In Austin, a city renowned for its vibrant music scene, Waterloo Park demonstrates how cultural venues can serve as powerful catalysts for urban renewal. The park's transformation from neglected green space to a dynamic 11-acre recreational and cultural hub exemplifies the potential of music-centered mixed-use development.
Opened in 2021 after a $75 million renovation, Waterloo Park is more than just a green oasis in the urban core. Its centerpiece, the Moody Amphitheater, can host up to 5,000 people for concerts and events, providing a new focal point for Austin's renowned live music culture. But the park's impact extends far beyond its role as a performance venue.
The project, overseen by the Waterloo Greenway Conservancy in partnership with the City of Austin and private developers, embodies a comprehensive approach to urban planning. From the outset, it was envisioned as an integrated part of the city's fabric, complementing and enhancing the surrounding urban environment. Scenic trails wind through the park, connecting various areas and integrating with the city's broader green space network. Public art installations dot the landscape, turning the park into an open-air gallery that celebrates local creativity.
Waterloo Park's success lies in its ability to create a multi-use destination that serves diverse community needs. Regular events, from concerts to cultural festivals, have made it a pivotal gathering spot for locals and tourists alike. This constant activity has had a ripple effect on the surrounding area, boosting local businesses and enhancing the urban lifestyle.
The mixed-use developments surrounding the park, including residential units, commercial spaces, and dining options, further contribute to a bustling district that's active day and night. Featuring two 37-story apartment towers with over 772,000 square space feet of living space plus 28,000 square feet of retail space from the street level park that is planned to occupy another 30,000 square feet, connecting downtown and the capital with the University of Texas. This synergy between the park and its surroundings demonstrates how thoughtfully developed cultural landmarks can generate lasting value, meet community needs, and promote broader urban renewal.
Pittsburgh's Lower Hill District: Reconnecting a Divided City
The Lower Hill District redevelopment in Pittsburgh, led by Clay Cove in partnership with the Buccini/ Pollin Group and Fenway Sports Group, stands as a powerful example of how sports-anchored development can help heal the wounds of past urban renewal efforts. This 28-acre site, adjacent to the PPG Paints Arena, is being transformed from a symbol of community division into a mixed-use neighborhood that promises to reconnect the Hill District with downtown Pittsburgh.
The $1 billion project, spearheaded by the Pittsburgh Penguins hockey team, is more than just a real estate development; it's an attempt to right historical wrongs. In the 1950s and '60s, misguided urban renewal efforts razed a vibrant, predominantly African American neighborhood to make way for civic projects that never fully materialized. The current redevelopment aims to bridge this literal and figurative divide, creating a seamless urban fabric that reconnects the Hill District to the city's core.
Central to the project's approach is its emphasis on comprehensive planning and community engagement. The master plan envisions a complete, mixed-use neighborhood that includes office space, housing, and entertainment venues. But perhaps more importantly, it has been shaped by close collaboration with local organizations and residents, ensuring that the development addresses long-standing community needs and aspirations.
The project leverages multiple venues and attractions to create a vibrant, diverse neighborhood. The existing PPG Paints Arena serves as one anchor, while plans for a new Live Nation venue add another entertainment draw. These are complemented by office spaces, including the new FNB Financial Center, diverse retail, and a mix of market-rate and affordable housing options.
What sets the Lower Hill redevelopment apart is its commitment to holistic value creation. Beyond the physical transformation of the space, the project includes significant commitments to local hiring and minority-owned business participation, both during construction and in ongoing operations. This approach recognizes that true urban renewal must encompass economic opportunities and community empowerment, not just new buildings and spaces.
As the project unfolds, it stands as a testament to the potential of sports-anchored development to not only create economic value but also to address historical injustices and foster genuine community renewal. The Lower Hill District redevelopment is more than a real estate project; it's an attempt to reweave the urban fabric and create a more equitable, integrated city.
Aligning Public and Private Interests: A Winning Strategy
Realizing this vision requires a collaborative approach that brings together private investors, sports operators, and public sector stakeholders. Success hinges on creating true partnerships where all parties see clear benefits and shared goals.
As Duncan Peterson, global leader of Gensler's Mixed Use & Retail Centers and the architects for the FNB Tower, told us, ‘It’s best to harness private and public resources, since private developers are better at understanding the market and delivering built products, but public bodies are better placed to tie individual projects into the city at-large.’
For the public sector, these developments offer opportunities to revitalize urban areas, create jobs, and boost local economies. Public resources—like land grants, tax incentives, and infrastructure investments—can be leveraged to attract private capital and ensure the development aligns with broader community needs.
For operators and community stakeholders, the benefits extend far beyond the balance sheet. These developments become significant employment centers, offering jobs across various sectors and enhancing residents' quality of life with easy access to entertainment, amenities, and public spaces.
Key Success Factors: Lessons from the Field
Drawing from our experience as the lead investor in projects like the Lower Hill District redevelopment in Pittsburgh, we believe are the critical factors that contribute to managing risk and driving success in sports/entertainment mixed-use developments:
- Comprehensive Planning: Securing entitlements for a master plan upfront is crucial. This approach enables the creation of an integrated ecosystem from the outset, avoiding the barriers that can arise when development occurs piecemeal.
- Seamless Integration: The development should blend with surrounding neighborhoods, creating a cohesive urban fabric where it's difficult to discern where one area ends, and another begins.
- Community Engagement: Ensuring buy-in and understanding of shared benefits among all stakeholders is vital. This creates a sense of collective ownership and helps position the development as a community asset rather than an isolated entity.
- Multiple Venues and Attractions: Having diverse anchors in the masterplan is optimal. This allows energy and vibrancy to flow in multiple directions, amplifying the vitality of the neighborhood.
- Holistic Value Creation: Rather than focusing solely on incremental revenue from the venue itself, successful projects take a holistic approach to generate long-term value for the entire community.
The Bottom Line: A Game-Changing Opportunity
As cities and towns across the country seek to revitalize urban cores, create distinctive identities, and build more livable communities, the demand for these integrated, venue-anchored developments is likely to grow. This presents a significant opportunity for investors, developers, sports operators, and communities alike.
Why is this approach distinct from the retail-centered “New Urbanism” of the early 2000s, which produced mixed results at best? The trend of embedding roller coasters, ice rinks, and entertainment centers into malls was too vulnerable to the shift brought about by the rise of e-commerce, rendering many malls obsolete and vacant. As evidenced during the pandemic, the energy and atmosphere created by fans both inside and outside of stadiums are crucial elements of the sports experience. The absence of this vitality was palpable, and the urgency to bring fans back was clear—because their presence is an irreplaceable part of the experience.
The New Urbanism movement made strides in integrating residential spaces above retail in “Lifestyle Centers,” but it overlooked a critical detail: retail often winds down long before sports arenas and entertainment venues, leaving these centers devoid of activity during key hours. Without a main event to draw in crowds, these lifestyle hubs struggled with the same vulnerability to online shopping that plagued malls, resulting in dwindling occupancy rates and a lack of vibrancy.
In contrast, today's forward-thinking strategies involve more than just blending residential and retail; they are about creating mixed-use developments where sports and entertainment venues are the beating heart of a thriving, around-the-clock community. These venues are no longer just places to visit on game day—they are the anchors of neighborhoods that pulse with activity day and night, creating economic vitality and community engagement in a way that the New Urbanism era could never fully achieve.
The future of sports and entertainment venues lies not in their ability to stand apart from their surroundings, but in their power to bring everything and everyone together. By fostering a mindset of consumer-driven development and reimagining these facilities as integral parts of thoughtfully designed neighborhoods, we can create spaces that serve as true landmarks—not just physically, but in the hearts and minds of their residents.
In this evolving landscape, the most successful projects will be those that balance the needs and interests of all stakeholders—financial returns for investors, enhanced experiences for sports and entertainment operators, and lasting value for communities. By embracing this collaborative, integrated approach, we can transform how we think about sports and entertainment venues, turning them from occasional destinations into the beating hearts of vibrant, thriving neighborhoods.
The game has changed. We believe the winners will be those prepared to play.
