Developers invest in real estate near light rail lines to take advantage of the permanence and popularity of light rail so they can plan for long term rewards.
The underlying theme among developers who invest near light rail lines is the permanence of the line, which allows both riders and developers to have a vision, plan ahead, and build something knowing it has long-term viability.
For the people buying, renting and/or moving offices next to light rail lines, it is rapid access to other places, less congestion/traffic stress, and the benefits of many amenities in one place.
To the developers, the public interest and popularity of light rail combines with the ability to plan out an action over several years, even ahead of time, and build with confidence of long-term rewards (and thus amortizing costs over longer terms).
Professional Builder reports:
"People believe in what they see," adds developer/builder Michael Dieden, principal of Creative Housing Associates in Los Angeles, who has established a national model for creating transit-oriented developments.
"They don't buy based on 'the train may come...'. They want to understand exactly what the neighborhood will look like before they move in."
The Virginian-Pilot reports the following about a planned light rail line in Norfolk, VA:
The first shovel of dirt has not been turned, yet light rail already has helped generate more than $220 million in planned office, retail, apartment and hotel development downtown.
Developers of three projects - Wachovia Center, Belmont at Freemason apartments and a Residence Inn - said the city's starter light rail influenced their business decisions. Having modern transit within a short walking distance delivers a steady stream of potential customers and provides an alternative to driving for residents and workers, they said.
The Ann Arbor News (Michigan) reports:
A streetcar system got up and running in Seattle on Dec. 12. In the first six-plus weeks, streetcars have exceeded 100,000 riders, more than doubling the projection of 41,000 for the first 43 days.
Advocates say increased ridership is only one benefit to streetcars.
In Portland, a study showed more than $2.28 billion has been invested within two blocks of its streetcar system since 1997. That included more than 7,200 new housing units and 4.6 million square feet of office, retail and hotel construction. Developers also are pitching projects with significantly lower parking ratios than anywhere else in the region, the study found.
In Tampa, Fla., $1.2 billion in investments have been made within two blocks of the downtown streetcar system since it started in October 2002, said Ed Crawford, chief of government affairs for the Hillsborough Area Regional Transit Authority.
The Seattle Post-Intelligencer reports:
Developers expect people will want to live, work and shop around transit stops, and that cities will rezone for denser development in those areas, said Sean Hyatt, managing director of the Bellevue office of national apartment developer Trammell Crow Residential.
By creating a short, predictable commute into downtown, the trains will allow neighborhoods such as Columbia City to compete with closer-in areas, HAL Real Estate President Dana Behar said. "I think it's going to change the geography of the city."
"It gives people the opportunity to avoid the tough traffic," he said.
But the streetcar did play a role in HAL Real Estate's decision to build the Braeburn and Cameo condo buildings in the Capitol Hill area, Behar said. "That was a factor even for the buyers who bought at Braeburn -- knowing that there would be a light rail station several blocks away."
And, he said, the expectation of light rail can start to bring gentrification years before the first trains roll by.
Reporting on a planned light rail line in Phoenix AZ, Globe St: writes:
Melinda Korth, executive vice president in CB Richard Ellis' Phoenix office, points out that the metro is predicted to grow by at least 2.5 million people in the next 20 years. Transit-oriented developments present a good start on urban core space that will save space and provide important services.
Korth says she became interested in transit-oriented projects as she prepared to market the 291,000-sf Meridian Bank Tower at 3550 N. Central Ave. In marketing the class A office building, she wanted to understand the impact that light rail would have on the property and the neighborhood. "I was blown away by the proposition and value to this part of central Phoenix," she says.
Korth says the light-rail system also is helping in the marketing of Meridian Bank Tower, which sits on 8.8 acres. Korth says much of the acreage is devoted to parking right now. "The light rail can help whoever owns this facility eventually justify converting that extra land to a higher-density use," she explains. "Whoever buys that project could inventory a future development as part of that deal."
Other developers are preparing for future projects along the line as well. Scottsdale, AZ-based RED Development LLC is well under way on the 2.5-million-sf CityScape at 1 E. Washington St., which broke ground in October 2007. Another local developer, Michael Hallmark, has begun work on the Jackson Street Entertainment District, bounded by Central Avenue and Jackson and 4th streets. The project will be a mixed-use entertainment, retail and residential district that will easily top 1.2 million sf.
And, there is Arizona State University. The light rail will connect the school's Downtown campuses to its main campus in Tempe. Ryc Loope, director of the Masters of Real Estate Development Program at ASU, says the connection not only will link several campuses, but help to move students, professors and others from one to another. Much like Korth, Loope says the light rail presents a great opportunity to strengthen the area's urban core.
Developers and designers, for the most part, have had few problems changing their mindsets from developing standard mixed-use projects to a more vertical approach.