Next Stop: Home
January 1, 2007
One oft-cited California study predicts that within 20 years, 15 million American households will want homes within walking distance of mass transit. If that means living near rail, then many people will be disappointed. With only 2,900 light, heavy, and commuter rail stations currently on-line around the country, simple math tells us that meeting this level of transitoriented development demand would require wrapping dense communities averaging about 5,000 homes around each and every station.
As we all know, that's never going to happen. Getting approval is a problem, of course. But in the years to come, the real bottleneck for transit is in available land. Development sites in transit zones have become the new beachfront property: prized, scarce footage with scant new supply.
In a majestic country of some 2 billion acres, talk of any land supply shortage might seem a little premature. But even allowing for a modest increase in stations, only 300,000 of those two billion acres are within walking range of rail transportation. And with many of those acres already built-up, undevelopable, or devoted to untidy necessities like parking, development land in transit station zones has become highly desirable, very rare, and extremely expensive.
Meanwhile, ridership is growing and land planners are working overtime. A Web search for “transit oriented development” yields 592,000 hits, or about 200 for every actual rail station. Every urban and suburban jurisdiction within eyesight of rail transit is looking for mixed-use transit-oriented opportunities. Industry conferences and investor conversations also stress the importance of investing in transit and transit-oriented development. And real estate investment is a leading indicator of future living and travel patterns.
Looks like the turnstiles are getting crowded at the transit-land market.
But surely the supply of transit-oriented real estate is more elastic than of beachfront property. When supply gets tight and prices go up, won't the market simply respond by creating more supply? That's what an economics textbook might say.
Land supply is tough to create, though, both on the coasts and in transit zones. One way to make new transit-zone land is to build new stations and (often) miles of new track. New rail line extensions and stations cost tens of millions, hundreds of millions, or even billions of dollars. As a result, these important public investments usually take decades of planning and concentrated political will to implement. Many rail corridors were established more than a century ago, and it's getting harder to find new places to put rail over, under, or through the urbanized suburbs that need it the most. Growth in the supply of stations and adjacent land is key, but it's a ground game. A couple of yards at a time.
Another way to make new, transitoriented land is to stack existing land: to create density. This is the most hopeful avenue for planners, who have advanced the cause of higher density at sites close to transit with courage, persistence, and the support of motivated developers.
But Manhattan-style density is not politically or physically available around many rail stops in the country. Take a look at the leafy suburbs along Chicago's lakeshore, Philadelphia's Main Line, or New York's Metro North, and you sense the political challenge in creating transit zones through intense rezonings in these settings.Nationally, the average commuter rail trip is more than 23 miles, usually from distant suburb to city. Land for higher-density projects on these long commuter lines does appear at times, but it's often in places where people moved generations ago to avoid such urban-style living.
On the other hand, adding both density and rail stops in the city and close-in suburbs near existing rail may be more viable politically, but it's physically and economically tougher to do. Land values near urban heavy rail stations—subways—can be measured in dollars per square inch. And that's before the developer pays for demolition and relocation costs and the government shells out public dollars to build subway tunnels and underground stations in these close-in locations.
Either way, where the will and investment are mobilized to make new stations in combination with approvals for high-density development, the transit-oriented development land cost crunch is just beginning. Because new stations take so long for the public to establish, smart land investors are usually there to greet them when they arrive.
When local transit authorities do have surplus land, they are taking appropriate advantage of opportunities to reap the value sown in this ground by their massive rail and station investments. This is just good asset management.
But so far most transit agencies have had neither the mission nor the budget for buying land around future stations. It's expensive enough to run trains on time and keep public subsidies at a tolerable level. As a result, most transit-oriented land with additional density is privately owned and will trade at market rates. What does the market look like for such property? Strong. Expensive. And that's just the land acquisition aspect of the project.
In the most desirable, close-in locations, such as the Metro-served suburbs of Washington, D.C., including Vienna, Va., or Rockville, Md., the preferred planning pattern is for high-rise, concrete buildings. Where land is short, go up. This is definitely the right goal given the desirability and scarcity of walkable land around stations, and it's the same market logic that built the skyline of Miami's vibrant South Beach. But high-rise concrete buildings with structured parking pay a large cost penalty. They can be twice as expensive to build per square foot as traditional stick-built housing types. Verticality has a cost.
The good news is that people will pay top dollar for good high-density development near transit, even with this high-rise premium. The bad news is that high density is expensive to build and prices people out of the market. The laudable planning goal of centering high-rises around transit inevitably tends to defeat the most loyal transit users, who have household incomes that don't give them a prayer of living in hip new high-rise districts. Not many Macy's shoppers will be walking to the Tysons Corner Center mall when the new Metro station arrives.
So it starts with the land. Every developer knows this. We say yes to density, and yes to well-executed mixed use in existing transit zones. But for establishing new transit zones, where's the land opportunity?
That's a story that needs more room than these two pages. But some hopeful trends and new strategies are emerging across the country.
And when all else fails, remember this statistic: There are more 6,000 miles of coastline on the lower 48. Beaches are still out there.