I've mentioned Hudson Yards in a previous blog post and was incorrect in my assessment of the type of transit value capture at play. I had suggested that the development relied on existing transit, changes in land use regulations, and high land values that made a platform over the rail yard feasible. In actuality, it appears that a new subway station sits at the heart of the new development and the new access it affords is distinct and critical to its success. The new access provided by the subway station is distinct from the existing north-south subway service and regional rail service available at Penn Station.
Reuters reports that the station is anticipated to be one of the busiest in the system and provide direct access to several key hubs.
The new station is intended to be the linchpin of the Hudson Yards development, with more than a dozen skyscrapers, a cultural center and parks replacing a neighborhood once dominated by rundown industrial buildings.
Unfortunately, Reuters also reported that opening day for the subway station at the heart of the new development has been slightly delayed. In 2015, the station should open and soon after new development will also be open. Photos of the development are available in this syndication of the Reuters article.
Even with a population one 1/10th the size of the United States, it's my perception that Canadian news outlets discuss transit value capture at a rate 3.14159 times greater than the US media. For the most part, the chatter is positive. However, in a recent piece out of Vancouver, value capture gets brief mention in a negative light.
Yes, a 0.5% increase in the provincial sales tax — within the Metro Vancouver region — is the best way to fund TransLink’s 10-year, $7.5-billion transit improvement plan. Some may argue it’s the least-worst option picked from a handful of undesirables, which include mobility pricing, a vehicle levy, land value capture or raising the carbon tax — these four being very undesirable.
It turns out that a deep love for transit value capture is not a universal Canadian sentiment. Nor is it a prerequisite for Canadian citizenship. My bubble is burst!
In my recent post, I was spurred by Professor King at Columbia to discuss the transportation and land use connection and where value might be generated by new transit investments. I concluded that there's transit value creation occurring even in today's environment of ubiquitous automobility.
So, to King's questions, I would suggest that the connection does seem to still matter in some places and it's getting stronger in a few of them.
Well, it wasn't a day before someone in the blogosphere produced a story that fits my theory, a tale about a miraculous place where transit is creating value within an auto-oriented landscape. Yonah Freemark just wrote up a story about Calgary, Alberta and all the transit ridership in their sprawling, mid-sized metro (though relative to the United States, I'd note that it's rather dense).
Calgary is one of the places I've wanted to visit ever since a Canadian friend in my PhD cohort (Thank you, Jake Wegmann) pointed out that the high cost of parking in downtown made it a hyper transit-friendly place. Yonah tells the same story: Easy driving on the periphery, difficulty getting into downtown, a bunch of oil and gas firms that need to agglomerate with lawyers, financiers, and other firms in downtown, and transit service that's fast, frequent, and fun (I added "fun" for the alliterative value and can't actually speak to how fun their transit might be).
It’s an environment that looks a lot more like Dallas or Phoenix than Copenhagen.
The result is that Calgary's booming downtown appears to be one of those places where transit has added considerable value in a small area. On the other hand, the suburbs of Calgary seem to have dispersed land uses with value creation that's broad and shallow (perhaps there a few dense nodes around suburban stations where the transit has provided substantial value lift but those were not discussed).
I expect Calgary's greatest value capture potential has been generated in the downtown where landowners have benefited the most from the reduction in parking demand, the FAR that transit service might enable, and the diversification of tenants (whereas most downtowns might have office buildings with a few restaurants, it sounds like Calgary's downtown property owners benefit from a diversity of land uses). All this has inspired me to investigate the role that real estate has played in Calgary's transit financing.
David King writes at the Transportationist blog about the strength of the transportation and land use connection. This is important for those of us contemplating transit value capture because a strong connection means more value creation!
Overall, the contemporary debates about infrastructure tend to revolve around “how much” change to the built environment will be caused by new investment. This assumes a strong and measurable relationship between transportation and land use. Better questions may be: 1) whether the relationship is strong enough to affect change at all, and 2) are the connections between transportation and land use strengthening or weakening?
King suggests that there are two trends in transportation. The public sector is building major transit and roadway investments in hopes of shaping future growth. The private sector is focused on technology enabled personal mobility services that require modest investment and generate numerous transport alternatives.
The public model of large investment in a limited space stands in contrast to the private model of many alternatives working to customize transit to maximize accessibility across regions. The public clearly believes that the transportation and land use connections are strengthening, and the private firms are indifferent or they see a weak connection moving forward[.]
I don't view the public and private solutions to be so dichotomous. For one, the private sector business models benefit from the major public investments in infrastructure, particularly new roadway access. To consider these two distinct bets seems incorrect.
Instead of King's framing, let's answer the questions by considering the macro trends in the transportation and land use connection. In essence, we want to understand whether or not the transit and land use connection is still strong or is getting weaker, whether there will be more or less value to capture as time goes on. (To clarify, when I discuss the connection, I'm considering the empirical economic relationships. I am not focused on the policy connections as written/desired, which falls into the theoretical realm.)
Looking back, the connection between transit and land use was quite high during the streetcar era. While transit offered considerable accessibility and comfort advantages prior to the great depression, since then it has become a less and less attractive transport option. It has been a vicious cycle of land use dispersion and service cuts. Related to the transit decline, the connection between highways and land use was quite high during the highway boom.
Today, the connection between any transportation investment and a corresponding land use response appears less pronounced. Ubiquitous automobility and ultra-dispersed land uses have rendered many new investments impotent in most contexts. It's not just transit. Consider also the inability of new circumferential or intercity toll roads to meet forecasted demand. There appears to be less transportation investment-related influence on property values than in the past.
So the key question then becomes, have we seen or do we anticipate to see an inflection point where transit's attractiveness begins to improve relative to other transport options? Many people (and many transit advocacy organizations) have argued that the transit tide is coming back in. More people are riding than ever (though not on a per-capita basis) and younger generations are showing a greater willingness and desire to ride transit. Yet, it isn't clear that transit has a stronger impact on land use this year than last (an upward trend).
But that's an unfounded assessment and, more importantly, an aggregate view. Some places have seen transit take hold as a important transportation mode. In terms of more transit-oriented regions, Washington DC is perhaps the best example. Other regions have seen transit's attractiveness hold steady. San Francisco, Chicago, Boston, and New York City might fall into that category. Still, other parts of other regions have seen transit hold steady or turn the corner. Few would suggest that transit is not a factor in the real estate market of downtown Portland or the multifamily market of Atlanta.
In some regions and some places within other regions, transit does seem to still have an influence on property values. Some transit investments in those places could yield property value swings. In the process there would still be value to be captured. So, to King's questions, I would suggest that the connection does seem to still matter in some places and it's getting stronger in a few of them.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.