You Invest in Rail to Get the Dense Development

Here’s an important lesson from the Charlotte Observer: rail is a real estate development tool. You make public investments in rail if you’re prepared to allow a lot more population density near train stations, and not otherwise. What profitable rail lines all have in common is that the areas they serve have sufficient population density to support high ridership. Building rail out into low density areas only to let people waste the valuable land around rail stations on Park-n-Rides (ala SEPTA and Amtrak) is fiscal insanity:

Apartments are sprouting at a rapid clip along Charlotte’s Lynx Blue Line in South End, as developers look to cash in on a booming rental market and cater to young professionals who want to live near uptown.

While commercial development across the region is seeing slow growth at best, the South End neighborhood has seen a spurt of new activity this year with more than $200 million worth of new construction being announced. Apartments near the Lynx line are powering the growth [...]

“(Developers) can get a huge premium being next to mass transit.”

Apartments near mass transit in Charlotte rent for an average $982 a month, compared with an overall city average of $638 a month, CoStar research shows.

Nationally, 65 percent of apartments built in metropolitan cities are within walking distance of mass transit.

“A renter is looking for convenience and lifestyle, and part of that equation is light rail,” said developer Stuart Proffitt, whose firm, Proffitt Dixon Partners, is building Fountains at South End, a 208-unit complex at the New Bern station.

 

Comments

  1. John says:

    Except for one minor issue – the only rail line that makes money (and it’s close) is the Amtrak NY-Washington corridor. And even that’s dicey depending on how you account for capital expenditures.

    None of the others do. SEPTA alone requires hundreds of millions in subsidies to survive.

    So please stop using words like “profitable” when they do not apply.

    • Jon Geeting says:

      Right, in America the Northeast corridor is the only line where the region’s population density is high enough for it to make money. The reason Amtrak loses money overall is because rural bias in Congress makes Amtrak offer very long distance trips through low density areas that make no economic sense. In plenty of other countries rail makes a profit, and it’s the same reason as with the Northeast corridor – population density. If you want SEPTA to stop losing money you need to be for higher density development around rail stations instead of Park-n-Rides.

  2. GDub says:

    It is important to key in on what we’re talking about here–it’s a light rail line, akin to a trolley. Nothing like Amtrak, and somewhat comparable to SEPTA. So far, its one line, and not THAT big (though very nice).

    Charlotte is a very interesting place, and its changed a great amount since I first started going there nearly 20 years ago. While the light rail gets a lot of attention, Charlotte is by no means a densely populated or “walkable” city on the whole. It is a huge metropolitan area in space, and even within the city a lot of neighborhoods are single family homes (some very nice and beautiful homes from the 1910s and 1920s, like the West End in Allentown).

    The downtown area is nice, though the arena (and the Bobcats) have been a bit of a disappointment. “Uptown” has been growing nicely and offering good nightlife even before there was an arena, as young professionals flocked to the city (as they did to Atlanta). Because much of Mecklenburg County was rural, and the “towns” were mostly villages with no history of providing services, merging city and county went much better than in many areas. The school system is fairly well regarded, and there are some good private schools as well.

    That said, Charlotte has been growing for 30 years–in part because it became a regional center for banking, and later a corporate center for some other national and regional companies, which in part drove the downtown office building boom. The corporate development brought people to Charlotte, some of whom began to ask for different housing options. The corporate presence begat a lot of supporting professional services, which increased the overall wealth of the area and the ability to pay for more expensive projects (if memory serves, the light rail was not paid for with borrowed money).

    I just point this out as an antidote to the “Hail Mary” plans that Allentown keeps producing as a “way out” of its current mess. Becoming Charlotte takes a lot of work (and there area a lot of differences) and patience for outcomes over decades. It ain’t just about building an arena or a train or selling the water system. If anything, those kinds of projects are built on the basis of success, and aren’t the basis itself.

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