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TODs are Top Choice in the Market

January 4, 2013

Transit-oriented development, loosely defined as mixed-use projects near mass transit stations, has been a relatively bright spot in a dismal real estate market over the last four years.

TOD projects have been built or are under construction in communities around the country that are still reeling from the collapse of the housing market. Those developments are generally holding their value better than other housing options, according to TOD experts. They agree that even though the TOD market is not as strong as it was previously, it’s still holding its own.

Jeffrey Wood, New Media Director/Chief Cartographer at Reconnecting America in Oakland, Calif., said property values “that have dropped precipitously in exurban and suburban areas are staying close to the same in areas that have access to mass transit.”

TOD, a concept that’s been a key element of smart growth planning for about 20 years, has traditionally revolved around light rail stations, but that is changing. More and more communities are building Bus Rapid Transit (BRT) systems because they are considerably cheaper than light rail and produce similar results in terms of ridership and development. The HealthLine in Cleveland, Ohio, is cited by TOD advocates as the outstanding example of a BRT that is playing a key role in an American city’s renewal.

TOD advocates say communities developing light rail and BRT systems should focus on linking downtown with other major employment centers, which typically includes hospitals and major universities. Cleveland’s BRT links downtown with major medical centers and universities.

“The highest riderships have come on transit systems that connect employment centers,” Wood said. I think there are a lot of systems that need to connect their employment centers.”

That was a primary goal when officials in Cleveland, which has had an extensive rail system since the 1960s, opened a BRT line on Euclid Avenue in 2008. The 9.6-mile bus route links Public Square in downtown Cleveland with University Circle, home of the world famous Cleveland Clinic, University Hospitals and Case Western Reserve University, and continues on to East Cleveland, an inner suburb.

Euclid Avenue, the main street running east from downtown, was known as “Millionaires Row” in the early 1900s because the founders of Standard Oil and General Electric lived there. However by the time Cleveland officials got serious about building a BRT line, part of Euclid Avenue, frequented by hookers and drug dealers, was known as a place to avoid.

“It used to be a place where you didn’t even want to stop your car at the red lights,” said Annette Ballou, spokeswoman for the Downtown Cleveland Alliance. “It’s all different now. You can get out and walk around. You can eat at a really good restaurant. It’s a complete turnaround; it really is.”

Known as the HealthLine — the Cleveland Clinic and University Hospitals paid $6.25 million for naming rights — the Cleveland line was rated the No. 1 BRT in the country by the Institute for Transportation and Development Policy.

Urban Land, the Urban Land Institute magazine, reported that $5.8 billion has been invested in development along the HealthLine, $3.3 billion in new construction and $2.5 billion in rehabilitated buildings. HealthLine development includes:

  • $1.3 billion invested in more than 150 high-tech companies;

  • $500-million Cleveland Clinic Heart Center;

  • $500-million University Hospitals expansion;

  • $180-million Cleveland State University expansion;

  • $27-million Museum of Contemporary Art;

  • Health Tech Corridor, featuring a $28-million building, housing startup bio-tech companies and seven business incubators;

  • 5,100 housing units in mixed-use buildings featuring retail, bars and restaurants; and

  • 13,000 new jobs.

HealthLine features sleek, hybrid buses; stylish stations where riders purchase tickets before boarding; dedicated lanes in the middle of Euclid Avenue to avoid traffic congestion; distinctive lighting in each district along the route; and 104 planters where the flora is changed three times a year.

“We wanted to make the physical environment as comfortable as possible,” said Joseph Marinucci, president and CEO of the Downtown Cleveland Alliance.

HealthLine has become a magnet for communities around the world considering BRT systems. Mary Shaffer, spokeswoman for the Greater Cleveland Rapid Transit Authority, said visitors in 2012 included an Australian delegation and Disney World planners.

TOD with Light Rail The

Charlotte, N.C., LYNX Blue Line is frequently cited by TOD advocates as a good example of a light rail project that focused on TOD and got it right.

“I agree completely,” said Stuart Proffitt, a partner in Proffitt Dixon Partners, which is developing a 208-unit luxury apartment complex at the Blue Line’s New Bern station. “The Planning Department in Charlotte is very smart and thoughtful.”

The Blue Line is not consistent with Reconnecting America’s goal of linking major employment centers: the 9.7-mile line runs south from Charlotte’s downtown, which the locals call Uptown, to the suburbs, but it is a model for TOD growth. Proffitt said Blue Line planners did an excellent job of implementing zoning and density policies that made it considerably easier for developers to succeed.

Tina Votaw, TOD manager at the Charlotte Area Transit System, said the projected TOD impact from the Blue Line’s opening in 2007 through 2013 is nearly $1.5 billion. Those projections include 6,887 housing units, nearly 600,000 square feet of retail and more than 638,000 square feet of office. Votaw said the value of property rezoned for TOD has shown an annualized increase of 36 to 143 percent.

A lot of the earlier TOD took place in Uptown, but the trend is moving south, turning the South End neighborhood across the interstate, once dominated by light industrial buildings and warehouses, into a trendy mecca for young professionals who work in the city’s banks. Charlotte is an international banking center, home of two of the country’s largest banks.

Proffitt said his project, Fountains at South End, offers all the amenities a young banker could want, is located next to the New Bern station and will become a centerpiece of a popular neighborhood that features retail, restaurants and a new brew pub. Set to open in 2013, the Fountains will feature a transit lobby with a Starbucks machine, plush seating, news channels on big-screen TVs and a monitor that tells residents when the train is approaching the station.

“It’s a site that was good for apartments before the downturn, and was bought by an apartment developer that went out of business,” Proffitt said. “We bought the property at auction and that made the economics of the deal good enough that we could get over the hurdles of the economy.”

St. Louis, Mo., is a shrinking city, although its metro area is growing at a modest rate. The Gateway to the West has lost population in every U.S. census since the 1930s. Population growth in the downtown area is a bright spot, however. NextStL.com has reported that 83 percent of St. Louis neighborhoods with access to light rail gained population in the last decade.

“St. Louis has had a resurgence of downtown residents in recent years,” said Kimberly Cella, executive director of Citizens for Modern Transit. She said the new residents are mainly young professionals and empty nesters drawn downtown by new housing options and other amenities near transit stations.

St. Louis is served by two MetroLink light rail lines, Red and Blue, that link downtown with the Central West End, an affluent neighborhood featuring an employment center at the Washington University Medical Center. MetroLink extends to the Illinois and Missouri suburbs, and there has been some development near some of those stations.

John Langa, vice president for economic development of the Bi-State Development Agency in St. Louis, said more than $1 billion worth of development, including infrastructure improvements, has been completed, started or announced near MetroLink stations since the start of 2011.

MetroLink has published a TOD primer that discusses the benefits of walkable, mixed-use neighborhoods near light rail stations and offers advice and assistance to developers. Amos Harris, whose company is building a major development at the downtown Convention Center station, said he is talking to transit officials about adding some amenities that will enhance the value of his project, called Mercantile Exchange.

Mercantile Exchange is a $250-million redevelopment of three older buildings near the center of downtown. When all three are up and running in 2013, the development will include a 212-room Embassy Suites Hotel, 205 market rate apartments, 375,000 square feet of office space, 145,000 square feet of retail and 750 parking places.

Harris, principal of Spinnaker St. Louis, said Mercantile Exchange is designed to be a magnet attracting tourists and suburban residents. He said he has set rigorous standards for measuring the success of the project, and one of the most important is a substantial increase in riders getting on and off the trains at the downtown stations.

“What I want is for people to come downtown and feel like they want to spend the day,” Harris said. “You need to have a whole slew of options for them.”

TOD with Buses

Bus rapid transit, the new kid on the TOD block, is rapidly growing in cities across the country. San Francisco, Chicago and Boston, all served by extensive rail systems, are developing BRT routes to provide new transportation options.

Two Western cities, Las Vegas and El Paso, Texas, have rejected light rail as too expensive and are developing BRT systems that will eventually move people along major corridors throughout the city.

Las Vegas has two BRT lines in operation, including one that serves the famous Strip where many of city’s casinos are located, and two more in the works. Being Vegas, the BRT lines are called ACExpress.

El Paso is an especially interesting model as its BRT lines are part of an effort to revamp the city by embracing smart growth principles. City officials have approved a comprehensive plan called Plan El Paso and adopted a Smart Code to guide growth.

Carlos Gallinar, El Paso planning director, said the city is developing a 55-mile system of four BRT lines to provide better transit options than the existing bus system. Now under construction, the Oregon-Mesa line will connect a Mexican border crossing, downtown El Paso, the University of Texas at El Paso and other civic landmarks.

Gallinar said the mixed-use projects built near transit stations will be the first of their kind in the West Texas city. Montecillo, a massive $777-million urban village along the Oregon-Mesa line near downtown, is under construction. The plan calls for more than 2,500 apartments, almost 500 homes and town homes, senior community, schools, retail, offices and 80 acres of open space.

“Basically what we are trying to do is have multiple types of construction, multiple types of product, that people will enjoy,” developer Richard Aguilar of EPT Land Communities told the El Paso Inc. newspaper. “We’re doing the best we can to get as many good projects on the ground that we can.”