Wednesday, December 3, 2008

Pent Up Demand, Synergy, & The Market

Chris Leinberger is hopping on the urban train so to speak. Brad Plummer's post over at TNR's The Vine has already gotten some coverage at Greater Greater Washington and The Bellows but here's the money quote that discusses the lacking supply of walkable communities people want but can't afford.
By his count, some 30 to 50 percent of residents in U.S. metropolitan areas want to live in a walkable urban environment—a trend fueled by the growing number of single and childless couples, who will constitute 88 percent of household growth through 2040. Trouble is, he estimates there are currently only enough walkable neighborhoods to satisfy about 5 to 10 percent of metro residents, which is why rents in transit-accessible areas are so exorbitant.
The other side of this as both blog posts noted above is the issue of land use and zoning. I'm going to throw another wrench in and say there has to be a market. There have been a few rail projects that hope the build it and they will come system will work but there needs to be a concerted effort and existing market to make it work precisely because of the problems with our zoning code. An example of this is Cascade Station in Portland. On the way to the airport, the Bechtel company traded building the line for the land at the station. Unfortunately 911 hit a few days close to the opening of the line and the market dropped out from under the developers.

There's also the synergy issue. Places like the Pearl District and the South End in Charlotte were the next places to grow and close to the downtown urban market. I would say the transit was able to shape the development intensity. Further down the South Corridor has been a bit slower to take off. Over time as the prime properties are expanded, I expect the development to move further south along the line.

So while I see there is demand for walkable urbanism as Chris calls it, there are timelines of implementation that should be mentioned as well so that people don't expect overnight change. The Rosslyn Ballston corridor didn't take off over night either. I feel like the synergy point is an important one that gets missed from time to time when people expect TOD everywhere once the line opens. It's a long term investment with long term results. It will be interesting to see what happens in Denver as the opening of the whole transit system almost at once under the Fastracks program. I have heard some state that the push and focus that happened along the Southeast Corridor won't be replicated because the demand will be spread out among all the opening stations. It makes for an interesting test of the synergy idea and whether transit will be able to focus the intensity as it has in other corridors that had all the attention.

On the issue of paying for lines, I think developers will get a major boost from the infrastructure investment and should pitch in, or at least not be able to keep the massive windfalls from the investment that was made by everyone. But its also dependent more on vacant and extremely underutilized property appreciation. More money will be generated through vacant to build out than the appreciation of properties that already exist. Too many people think value capture will always be the answer when sometimes it will not, because the increment is too small to generate the funding needed. These issues and a ton more are discussed in a recent paper on Value Capture by the Center for TOD. We'll discuss that piece another time.

Also, a while ago I covered some key quotes in Chris Leinberger's book, The Option of Urbanism. Here's the series post by post.

Series Intro
The Favored Quarter
The Endless Landscape
Real Development Subsidization
Metro Brings Change
Subsidizing the Rich

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