Olympics and Real Estate
Matthew J. Maksymec, Associate
What do billions of dollars and millions of square feet of facilities have in common? Both are needed to host Olympic Games, and yet, do not necessarily guarantee long term usage and positive results without proper vision and planning. With the 2018 Olympic Games wrapping up this Sunday, it is important to understand the implications of hosting, or even bidding to host an international event attended by over half a million travelers from 200 countries. Over the past several decades, Olympics have gained a negative reputation in the real estate industry due to the costs of hosting. Between the infrastructure expenses for transportation and housing, specific sport venues, operating costs and security costs, the Games have not quite been able to bring in a profit despite the increasing number of attendees and the lavish advertising and sponsorship dollars.
However, success in hosting can be most notably portrayed by London (hosted 1908, 1948, and 2012) and Los Angeles (hosted 1932, 1984, and upcoming 2028). London was able to utilize much of the infrastructure by establishing communities surrounding the Olympic villages and leasing out the spacious facilities. Likewise, Los Angeles 1984 was one of the most profitable Olympic Games to date, largely due to cost-effective development and keeping future interest at the forefront. The end result revealed benefits such as increased tourism, foreign investment and trade and the intangible elements such as city recognition and pride.
The bidding process is now commonly held an entire decade before the events take place. This buffer allows competing cities to more accurately evaluate whether they can support this tremendous responsibility. Additionally, the winning city will have much more time to plan an economically feasible and comprehensive strategy. As an example, South Korea constructed a high-speed railway for the Pyeong Chang 2018 Olympics Games. Not only was this essential for the games itself, but the railway will be able to serve the country’s transportation needs for years to come.
The process for bidding to host the Olympics has numerous similarities with the bidding for Amazon’s HQ2 witnessed throughout North America. Ironically, one of the venues from Chicago’s failed bid for the 2016 Summer Olympics, was also proposed to Amazon (which has yet to announce its final selection). The research and planning that has gone into both proposals shows the depth and breadth of Chicago’s true potential.
- Hosting the Olympics is a considerable responsibility. Los Angeles and London are great examples from which success can be learned. Chicago can strive to realize its potential based on its bids.
- Forward thinking. A city must understand how to translate the infrastructure costs into a long-term investment.
- Not all doom and gloom. Olympics provide an opportunity for cities to share their culture and beauty with the world.