Museums play a critical role in our communities, bringing vital access to cultural programming and enrichment opportunities for those nearby. That’s not the only thing they do for communities, though. No, as any real estate investor can tell you, museums also greatly
increase an area’s property values. The phenomenon even has a name: the Bilbao Effect, named after the developments that followed the Guggenheim’s opening in Bilbao, Spain. Even small cities like Chattanooga, Tennessee and North Adams, Massachusetts feel the impact, but in big cities like New York, Miami, and Houston, the price increases can be even greater.
Investing Along The Museum Mile
Of all the museum districts in the United States, perhaps the best known is New York City’s Museum Mile. Home to the Metropolitan Museum of Art, the Guggenheim, and the Cooper Hewitt Smithsonian Design Museum, among others, the Museum Mile is also one of the priciest places to buy or rent in an already expensive city. Just this summer,
a 33,000 s/f retail package sold for about $19.5 million – and the property is technically outside of the Museum Mile. The investors saw the property as a potential lifestyle destination, and the location is certainly ideal.
High net worth investors love the Museum Mile, but for these investors it’s not all about culture – it’s also about commerce. New York City is a global business hub, accounting for about 10% of national GDP, with a global GDP only second to Tokyo. For high net worth
investors seeking to diversify their real estate portfolio, New York City is a strong and highly desirable market. Securing property near or in the Museum Mile is just icing on the cake for high net worth investors; the view of Central Park from the area’s high rises doesn’t hurt either.
Other Major Museum Markets
New York City’s Museum Mile is hardly the only desirable area for real estate investors. Houston’s Museum District is also a major player. That’s why it’s no surprise that last August, two major luxury apartments in the area changed hands; both fairly recent construction, the
Venue Museum District complex sold for over $70 million, substantially over its 2018 appraisal at $51.5 million. Like New York City’s Museum Mile, the Houston Museum District is expansive, home to 19 museums,
special offerings like public art installations, and events like film festivals, lectures, and workshops, all of which create high-demand – and high-prices for real estate.
No matter where you go, museums hold the real estate market in their thrall. Whether it’s a
million dollar apartment near Chicago’s museum campus or the arrival of a
Soho House outpost in Los Angeles’ Arts District, the prices are high and the cachet is even greater. Money funds the creation of cultural institutions and then it insists on staying close. That’s why the wealthy invest in properties surrounding museums. The deep roots these museums have in the community ensure that real estate prices will remain stable, providing for financial security; it’s a sure investment, unlike so many others. While property prices rise and fall elsewhere, if there’s a museum nearby, it’s smooth sailing.
