Experts try to quantify economic benefits from transit

Groups hope to capture value

Steve Hawley, May 13, 09.

A number of experts and organizations around the country are trying to figure out just how much transit investment is worth, according to a Planetizen article.

It states:

It has become increasingly clear over the past decade that the presence of transit increases property values and opens up valuable new development and redevelopment opportunities. There are many reasons for this, including the fact that traffic congestion has made driving less and less appealing. At the same time, demographic changes (an aging populace, smaller households without children) have boosted interest in city living.

Transit investments in the last decade have increased property values in Portland, Dallas, Denver, and Tampa, among others. The article notes, “The annual ‘Emerging Trends in Real Estate’ report has called out sites near transit as a “best bet for investors” five years in a row, and anecdotal evidence suggests these properties are holding their value relative to more suburban locations even in the current market downturn.”

However, officials are unsure of the exact causes and values and are particularly concerned with how to capture that value.

Capturing the Value of Transit, a report released by the Center for Transit-Oriented Development in November, revealed that not every transit project increases property values. The study identified four major driving factors behind these figures:

• The size of the transit system and whether it connects to major destinations
• Whether the local real estate market is active
• Supportive public policies that leverage value through density bonuses, reduced parking and other incentives
• Traffic congestion, which clearly increases the value of sites that provide accessibility without driving.

Planetizen notes:

[The] study finds values begin to rise when public discussion of a new line or system begins, and they increase as the project is funded and construction begins. Most of the value is realized by the time transit service begins, though there is potential for increases if a system is expanded, or if there are other existing factors such as rising gas prices, increased traffic congestion, or station area improvements. In some regions with new systems, including Minneapolis-St. Paul, Houston, Denver and Charlotte, speculation over created value has made the price of land so high that it has stifled development.

The study elaborates further, saying:

the combination of high land costs and high construction costs is stifling new development near the transit line in favor of locations further from transit. In Midtown Houston, for example, most of the recent new development in the neighborhood consists of relatively low-density townhouse and mixed-use development, which is occurring on less expensive sites located further from transit. The real estate market may eventually catch up with property owner expectations about the value of their properties, but so far speculation has choked off the potential for TOD in Houston.