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Economic Benefits
Light Rail Transit and the Real Estate Market



Access to people, markets, goods, and services is what makes any property location desirable. Light rail transit provides enhanced travel options and expands access, which means rising market value for adjacent properties and buildings. Throughout the United States and worldwide, it is clear that real estate (residential, commercial and business) served by light rail transit can command higher rents and maintain higher value than similar properties not as well served. In fact, a study by Economics Research Associates in 1995, states that property values increase significantly for medium density apartments and condominiums and commercial and retail properties near transit stations. Rent for retail space close to transit stations was almost three times higher than in other areas.

While no historical data exists for the Los Angeles region, experience in other cities suggests that access to rail transit will gradually cause a measurable increase in property values. Indeed, it is the experience of the Metro Gold Line in South Pasadena that the market value of condominiums within a 5-minute walk of the South Pasadena Metro Gold Line station increased 10-15% over other similar South Pasadena condominiums further away from the station during the last three years before operations even began.

In recent years communities all across the country have begun to recognize that transit, and the areas around transit stations, can play a major role in revitalizing older neighborhoods and in creating new neighborhoods that are more livable. Moreover, there exists no empirical data that would imply that the cities along the Foothill Extension of the Metro Gold Line would not experience the same benefits of light rail service to their communities.

SUMMARY OF LIGHT RAIL TRANSIT AFFECTS ON PROPERT VALUES:

ATLANTA. MARTA East Line. +$1,000 on home prices for each 100 feet a house is closer to a rail station in low-income neighborhoods adjacent to transit. Benefit of accessibility offsets nuisance effects of heavy rail line. Source: “Effects of Elevated Heavy-Rail Transit Stations on House Prices with Respect to Neighborhood Income,” Transportation Research Board, 1992.
 
BOSTON. Commuter Rail. +6.7% increase in value of single-family residential property values in communities served by commuter rail. Source: “Impacts of Commuter-Rail Service as Reflected in Single-Family Residential Property Values,” Transportation Research Record, 1994.

DALLAS. Office properties near suburban DART (Dallas Area Rapid Transit) rail stations increased in value 53% more than comparable office properties not served by rail. Values of residential properties rose 39% more than a group of control properties not served by rail. Source: Center for Economic Development and Research, University of Northern Texas, September 2002.

MIAMI. Miami Metrorail. +5% higher rate of appreciation in real estate values near heavy-rail line compared to the rest of the city of Miami. Residential values positively impacted by announcement of new rail system. Higher priced neighborhoods near rail stations experience greater increases in property values. Source: “The Impact of the Miami Metrorail on the Value of Residences Near Station Locations,” Land Economics, 1993.
 
NEW JERSEY. Southern New Jersey Commuter Rail. +10% premium for median home price in census tracts served by rail line. Source: “Transportation Sorting and House Values,” AREUEA Journal, 1991.
 
PHILADELPHIA. Suburban Philadelphia Commuter Rail (SEPTA). +3.8% premium for media home price in census tracts served by rail line. Source: “Transportation Sorting and House Values,” AREUEA Journal, 1991.
 
PORTLAND. MAX Eastside Light-Rail Line. +10.6% for homes within 500 meters of light-rail stations. Source: “Light-Rail Transit Stations and Property Values A Hedonic Price Approach,” Transportation Research Board, 1993.
 
SACRAMENTO. Light Rail. No discernable positive or negative impact. Source: “BART at 20: Property Values and Rent Impacts,” Transportation Research Board, 1995.
 
SAN DIEGO. Commuter rail. 46% premiums for condominiums and 17% premiums for single-family homes near Coaster commuter rail stations. 17% and 10% premiums, respectively, for multifamily hosing near East Line and South Line Trolley stations, 91% premiums for parcels near downtown Coaster stations and 72% for parcels near Trolley stations in the Mission Valley. Source: National Association of Realtors, 2002.

SAN FRANCISCO. Bay Area Rapid Transit Light Rail. Single-family homes are worth $3,200 to $3,700 less for each mile distant from a BART station in Alameda and Contra Costa counties. Apartments near BART stations rent for 15% to 26% more than apartments more distant from BART stations. Average land price per square foot for office properties also decreased as distance from a BART station increased, from $74.00 per square foot within one-quarter mile of a station to $30.00 per square foot for more than a half-mile distant. Source: The Sedway Group, 1999.
 
SAN FRANCISCO. Bay Area Rapid Transit Light Rail. +$2.29 higher value per meter closer to BART in Alameda County. +$1.96 increase per meter in Contra Costa County. The extent to which a rail system captures ridership from its market area affects the extent to which property values increase. Source: “BART at 20: Property Values and Rent Impacts,” Transportation Research Board, 1995.
 
TORONTO. Spadina Heavy Rail Line. $2,237 premium for the average home near the line. Source: “The Effects of a New subway Line on Housing Prices in Metropolitan Toronto,” Urban Studies, 1983.
 
WASHINGTON, DC. & ATLANTA. Data examined for five rail stations. Where regional market conditions are favorable, rail appears capable of positive impacts on station area office markets. Average office rents near stations rose with system-wide ridership. Joint development projects added more than $3 per gross square foot to annual office rents. Office vacancy rates were lower, average building density was higher, and shares of regional growth larger in station areas with joint development projects. Source: Journal of the American Planning Association, winter 1994.