The Socioeconomic Impact of a Large High-Tech Development Project on the Surrounding Residential Community: An Exploration of Residential Property Prices and Community Disruption

In 2017, a new, high-technology children’s hospital was constructed near the center of a northern U.S. city. The new facility is adjacent to established but economically challenged neighborhoods. Using historical sale prices and difference-in-differences hedonic price methodology, we determine that the neighborhoods surrounding the hospital experienced increases in residential property prices. The associated increase in property taxes impacts the existing property owners’ ability to remain on the property. We find that residential property prices increased during the development within two defined 1- and 2.5-mile perimeters surrounding the new facility. Residential houses located within a 2.5-mile radius of the new hospital that sold after the opening date of the new hospital were valued 42.8% higher than properties sold outside of the 2.5-mile radius, and we see sales prices 30% higher within 1 mile of the new hospital. We note that this is one of the first known studies to quantify the economic impact of a new high-technology hospital on the adjacent neighborhoods.