Out of Control Policy Blog

Does Transit Spur Economic Development? Maybe "Yes," Maybe "No"

The Center for Transit-Oriented Development has published a report, Rails to Real Estate, on the potential economic development benefits of light rail. For a positive, pro-transit view of the study, take a look at the article in the New Urban Network. The study looks at land development along three relatively new light-rail transit lines in Minneapolis, Denver, and Charlotte. Both transit supporters and transit critics will find ammunition in this study.

I think the results are consistent with my own thoughts on transit-oriented development, namely:

  • Transit investments alone don't drive economic development. Transit access is more of an amenity for new development projects, not a fundamental driver of investment decisions
  • The land development effects are uneven. While some light-rail stations experience a burst in development, the effects are not uniform and downtowns seem to benefit more than other locations;
  • Developoment around rail-transit stations appear to redistribute investment in an area, not necessarily generate new real-estate value on a citywide or regional scale;
  • Urban planning that allows the market to capture the value from transit accessibility and infrastructure improvements (e.g., allowing for mixed uses) is essential for successful project development.

Ironically, the one variable missing from the analysis is transit ridership. At no point (that I could tell) did the authors try to directly link transit ridership (or thresholds) to station-area development. In fact, at one point, they note that the Charlotte Blue line is considerd a very succesful new rail project because ridership exceeded forecasts. The intial target was 9,100 riders per day and ridership had grown to 15,000 riders per day. That's great growth, except that these levels of ridership are amazingly low. I doubt they are sufficient in and of themselves to trigger new investment and, while more realistic, are far below targets set by rail transit forecasters in the 1980s and 1990s. I've discussed the forecast issue elsewhere on this blog along with the problems with TODs.

Also, it would have been useful to see the authors engage in more rigorous quantitative analysis to determine what factors or variables were the most important for influencing development around the stations or along the corridor. David Hartgen analyzed the LYNX line in Charlotte and found that the light rail line could at most get credit for less than 13 percent of the corridor's economic growth.

So, I'm still left looking for the study that answers the fundamental question: Where's the Transit in Transit-Oriented Development?

Samuel Staley is Research Fellow


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