NFL Stadiums Impact on Local CRE Markets Drives Investment, Development, and Growth

The kickoff of the 2024 NFL season attracted nearly 29 million viewers for the Baltimore Ravens vs. Kansas City Chiefs game. In comparison, the average NBA game draws 1.6 million viewers, while MLB averages 1.3 million. However, football’s significance in American culture goes beyond sports. The 2024 Super Bowl drew 50 million more viewers than recent presidential debates. The event has become the second-most-watched TV program in U.S. history, surpassed only by the Apollo 11 moon landing. Annually, the NFL contributes around $5 billion to the U.S. economy. While much of the discussion centers on the league’s impact on TV rights, sports gambling markets, and tourism, the NFL also drives economic growth for small businesses and real estate investors in its host cities.

The economic impact of NFL stadiums manifests in both direct and indirect ways. Direct effects include:

1. Ticket sales, concession sales, and merchandise revenue
2. TV rights, sponsorships, and sports gambling income
3. Employment opportunities from hosting games and events

In addition, being home to an NFL team brings several indirect benefits:

1. Community pride and unity-NFL teams often serve as key marketing assets for their cities and support the community through outreach, charity work, and youth programs.
2. Increased infrastructure investment from cities to support stadium operations.
3. Major events and concerts at NFL stadiums can dram crowds comparable to the games, boosting local businesses year-round.
4. Increase private development around newly build or renovated NFL stadiums.
5. Heightened consumer spending on hotels, retail, and even housing in the areas surrounding the stadiums.

When new stadiums are built, the local economic impact is immediate. Data shows a 5% increase in local employment, a 20% rise in infrastructure spending, and a 10% growth in retail sales. For commercial real estate investors, perhaps the most important metric is the 15% boost in business formation near new NFL stadiums within the first five years. This is primarily driven by new stores, restaurants, and shops catering to fans before and after games and events.

Levi’s Stadium

San Francisco 49ers| North Santa Clara, San Jose, California

Widely regarded as favorites or co-favorites to win the NFC this year, the San Francisco 49ers have been playing at Levi’s Stadium since 2014. The stadium is estimated to have generated around 12,000 jobs, contributing $550 million in wages to local workers. Its success in driving economic growth has been so significant that team officials announced they are 15 years ahead of schedule in repaying the initial development loans, saving millions in interest payments.

Developers are currently active in the areas surrounding the stadium. Nearly 2,000 new apartment units are under construction less than a block away, just across Lafayette Street. These new units are expected to lease quickly, as the apartment vacancy rate in the submarket is just 3.4%—140 basis points lower than the rate in San Jose overall. Developers are likely drawn to North Santa Clara’s strong rental growth. Apartment rents are increasing at an annual rate of 4.4%, outpacing the overall metro area.

Retail properties in the submarket are also outperforming metro and state averages. Retail space in North Santa Clara rents at a 40% premium compared to the rest of the city. This is primarily due to limited availability near the stadium. This strong performance has driven up property values, creating a similar premium for investors looking to enter Santa Clara’s retail real estate market.

The stadium has hosted a wide range of events, including neutral-site Pac-12 football games, MLS matches, and WrestleMania 31 in 2015. It is also slated to host games for the 2026 FIFA World Cup as well as another Super Bowl in 2026. Major non-sporting events have included concerts by megastars like Taylor Swift, Elton John, and Beyoncé. From 2014 through 2023, the stadium is estimated to have contributed more than $2 billion to Santa Clara’s local economy.

NRG Stadium

Houston Texans | Inner Loop University, Houston, Texas

Led by rising star quarterback C.J. Stroud, the Houston Texans are widely considered favorites to win the AFC South this year. Since its opening in 2002, NRG Stadium (formerly Reliant Stadium), located next to the iconic Astrodome, has been the home of the Texans and has hosted two Super Bowls. Houston is also set to be a host city for the 2026 World Cup. Early projections are estimating that the economic impact of hosting FIFA games will be equivalent to hosting six consecutive Super Bowls. Additionally, NRG Stadium hosts the Houston Livestock Show and Rodeo, which attracts over 2.5 million visitors annually.

The surrounding submarket has 150,000 square feet of industrial space under construction, along with several apartment, medical, and educational projects. Elevated rental rates continue to drive investor interest in the area. Retail rents are nearly $34 per square foot, while apartment rents exceed $1,600 per unit, representing premiums of 40% and 20% above the market average, respectively. Consequently, both retail and apartment investors typically pay about a 30% premium over the market average for properties in this submarket. Hotels, benefiting from the area’s many major events, command even higher premiums, with guests paying 22% more per night and investors paying nearly 40% more per room. Despite the anticipated tourism boom in the next three years, relatively few hotel projects are underway.

Inner Loop University has also seen deal flow recover more quickly than the national real estate market. While commercial real estate transactions in Southwest Houston remain below peak levels, they have already risen significantly above their lows. Investors can expect this positive momentum to continue as Federal Reserve interest rate cuts make CRE lending more viable. Retail deal activity in the third quarter of 2024 surpassed that of the entire first half of the year. This trend is expected to continue into Q4.

Lincoln Financial Field

Philadelphia Eagles | South Philadelphia, Philadelphia, Pennsylvania

The Philadelphia Eagles have solidified their position as an NFC powerhouse, entering this season with three consecutive playoff appearances. Lincoln Financial Field, located in the South Philadelphia submarket, has played a key role in transforming the area from a primarily residential neighborhood into one of the metro’s premier weekend destinations for younger residents. The stadium hosts Eagles games, Temple Owls football games, and often the annual Army-Navy game. Due to the highly urbanized nature of the submarket, retail construction is limited and primarily confined to ground-floor spaces in mixed-use developments. These factors, along with gameday demand, have contributed to reducing retail vacancy in South Philadelphia to just 2.0%.

Foot traffic data from stadium visitors highlights the CRE demand generated by the Eagles fanbase. Only 15% of attendees arriving directly from their homes, and just 20% returning home immediately after the game. Popular post-game destinations include Xfinity Live! Philadelphia, an event space currently undergoing renovations to add over 460,000 square feet of retail space,  along with a new concert venue. Restaurants and shops along Passyunk Avenue, just north of the stadium, are also popular for post-game socializing and spending.

The Eagles aren’t the only team drawing crowds to the area. The nearby Wells Fargo Center and Citizens Bank Park, home to the Flyers, 76ers, and Phillies, contribute to year-round foot traffic. The busy season in the submarket extends beyond Sundays in the fall. Weeknight basketball and baseball games bring consumers to the area, supporting local businesses throughout the year.

Traditionally a hub for single-family housing, the submarket is seeing a surge in multifamily construction, resulting in a 13.5% increase in apartment inventory. This spike in development has temporarily elevated vacancy rates in 2024. Regardless, the area’s retail expansion and popularity among younger residents suggest that new units won’t remain vacant for long. CoStar projects 2025 will be the strongest year for apartment leasing in South Philadelphia’s history.

Raymond James Stadium

Tampa Bay Buccaneers | Westshore, Tamp, Florida

The Tampa Bay Buccaneers have played their home games at Raymond James Stadium since 1998. The Buccaneers have famously become the first team to win a Super Bowl in their home stadium in 2021. The stadium is located in Westshore, one of the most active submarkets in the city. This location has attracted over 100,000 workers daily, with 4,000 businesses and 32 hotels. Despite Westshore’s two major malls offering over 2.5 million square feet of retail space, retail vacancy is astonishingly low. The rate stands at just 1.1%, as businesses strive to cater to workers, tourists, and Buccaneers fans. Rentable space in neighborhood and power centers is even scarcer, with average vacancy rates for these types of centers below 0.5%.

Bucking the national trend, office vacancy in Westshore has decreased by 300 basis points since 2022. The state’s favorable laws and regulations supported in-person operations early in the pandemic. With this, many people and companies that relocated to Tampa have remained, even as other states loosened restrictions. In-person work has fueled lunchtime demand for restaurants and shopping. This is unlike many former U.S. office hubs, where retail demand has declined due to fewer workers coming into the office. In Westshore, this bustling in-person work environment has helped drive retail rents up by 5.7% over the past 12 months.

Retail investors have been so confident in the area’s performance and growth potential that cap rates have continued to decline. Even as the Federal Reserve raised interest rates by over 500 basis points, this confidence remains prevalent. This confidence stems from the competition tenants face for space, elevated rental rates, and the consistent daily foot traffic provided by one of the strongest post-pandemic office markets in the country. Pricing has also risen despite higher capital costs. Substantial growth is forecasted as interest rate cuts are expected to materialize further in 2024 and 2025.

The NFL Drives Consumer Spending In All Of Its Host Cities

There are numerous recent examples of neighborhoods transformed by NFL-related development. In Las Vegas, sports-related spending doubled after the Raiders relocated to the metro. The number of tourists visiting for sporting events has also tripled. This has resulted in a boost in the performance of the city’s hospitality and retail sectors. In Cleveland, the 2021 NFL Draft generated $42 million for the local economy, while Huntington Bank Field (formerly FirstEnergy Stadium) regularly hosts U.S. Men’s soccer games, attracting international tourism to Northeast Ohio.

While this analysis focused on the impact of high-performing NFL teams on local real estate markets, examples like Las Vegas and Cleveland demonstrate that winning games isn’t a prerequisite for NFL teams to drive local growth and economic development.