The value of transit for developers
Included in Jeff Wood's Other Side of the Tracks daily newsletter today is an article from the Washington Post describing developer hesitance to plan projects along a proposed new light rail line between Bethesda and New Carrollton.
"Although light rail lines have been credited with rejuvenating parts of Portland, San Diego and other cities," the article points out, "some local developers say they will not line up any architects until they see how many people would actually ride the line."
According to a Center for Transit-Oriented Development report released in November ("Capturing the Value of Transit"), there is ample evidence that transit can measurably increase property values and in theory that process will follow a measurable curve as shown below. In following the value curve, developers along the Purple Line are hoping to see the value increase completed when the line opens.
The Washington Post article pointed out that light rail's greater potential for sparking development was the chief reason Gov. Martin O'Malley endorsed it over less-expensive busway options for both the Purple Line linking Bethesda and New Carrollton and a 14-mile Red Line planned for Baltimore.
CTOD's Value Capture paper also itemized the ways transit can have a positive impact on development:
- Transit is a desirable amenity that can improve the marketability of new residential units, office space and other property types, and result in higher revenues (the transit premium).
- The introduction of transit can make valuable new sites available for development.
- Proximity to transit can improve the likelihood that high-density development will be allowed, and make it easier to obtain development entitlements.
- Transit-oriented development (TOD) can promote partnerships between the private and public sectors that result in a direct subsidy for the project and/or other beneficial neighborhood investments.
- Transit can help to improve the financial feasibility of higher-density development.
These two graphs illustrate the impact of the value of transit on the feasibility of various projects: