Transit as a Market Extender
There is a lot of discussion on the effect of transit on property values and redevelopment in cities around the country. Usually the boosters claim that transit helps and opponents claim that it does nothing. The truth? As with many other questions the answer is “it depends”.
As we’ve seen over the last decade the demand for living downtown has been increasing as more and more people see this as a viable option and more developers build to the existing demand. But where does this demand come from? And can it be replicated in any part of a region?
The reason for this ability to build more density actually comes from increasing market demand from people who want to live in these areas, and are willing/able to pay the prices necessary to support constructions costs associated with higher density. To build up, developers have to be able to hit a specific price point that justifies their costs and provides an acceptable return on the investment. While all of the future plans TOD hope for density projects, the truth is that without increasing market values, some subsidies that help the developer furnish the required parking or other amenities, may be required, the further you get from an area with higher market values. The same is true for suburban development—in order to make it pencil, subsidies such as roads and utility extensions need to be a part of the deal.
So, like suburban development needing road and freeway access, urban development becomes more valuable with transit access. Markets can be extended. Some of the most successful redevelopment districts and hip neighborhoods are those which are proximate to downtown and were able to use the power of downtown to increase the viability of their redevelopment potential. We’ve seen this in places like the South End in Charlotte or the Pearl District in Portland. Both of these areas have transit connections that have pulled the downtown, which has the major market, a little closer. Ultimately this is where streetcar and light rail corridors are helpful.
Typically, 15 minutes is the time transit can travel before the market extension starts dropping away. Further down the line, development is possible and still warranted, however it won’t be supporting denser steel frame buildings. But why does this matter? If we want to think of creating walkable communities, transit needs to be focused on connecting major destinations. The major destinations are generally employment centers with less opposition to development and the ability to grow up instead of out. This means development closer to downtowns is better, and, for that matter more transit supportive. Suburban oriented transit doesn’t do as much work carrying people or pushing buildings up.
So with that being said, let’s rethink how we’re developing transit today. While we’ve invested further in roads and other subsidies for sprawl, its time that the pendulum swung back and provided opportunities to build up assets around our regional economic engines, creating a critical mass for the next generation and their economic future. Let’s use transit to extend markets where we can.
This was originally posted at City Tank