The Century's Most Substantial Development Trend - Transit-Oriented Development
What role do the government and transit-oriented developers play in Atlanta—and nine other North American cities? That’s the subject of a Cushman & Wakefield special report called, “Urban Development: Faster Greener Commutes Key to Sustained City Growth.” The results may surprise you.
Beyond Atlanta, the report explores the consequences and solutions of hyper-urbanization within the central business districts of nine other major North American cities. Those cities are: Boston, Los Angeles, Mexico City, Miami, New York, San Francisco, Toronto, and Washington, DC.
First off, the report stresses this: Atlanta’s ongoing population and job growth will demand public and private lenders to collaborate on major initiatives—including transit-oriented development solutions—to prevent congestion and gridlock from growing worse. Drilling down into Atlanta’s market, the report reveals some noteworthy facts.
For example, of the 9,200 multifamily units under construction, over 8,000 units are located within a one-mile radius of at least one MARTA rail station or major transit hub. What’s more, while many of the ongoing and planned multifamily and mixed-use developments are located near MARTA rail stations, there report indicates there is also “heightened development activity” near the Atlanta Beltline and the Atlanta Streetcar project in downtown Atlanta.
Dollars-wise, Atlanta, which ranks third in the number of Fortune 500 corporations in the US, has earmarked $61 billion for transit-oriented improvements. Seventy-percent of those funds will go toward maintaining existing transportation facilities, according to the CushWake report.
Meanwhile, MARTA rail initiatives include the planned extension of the Georgia 400 rail line to Alpharetta. And several major road projects are underway or recently completed that aim of reducing traffic congestion, including the addition of managed lanes on major interstate corridors and the construction of new interchanges and diverging diamond interchanges. All told, the Atlanta Regional Commission forecasts 1.5 million additional jobs in metro Atlanta by 2040, bringing the total to 4.5 million jobs.
“Since 2000, Atlanta’s population has grown by 32 percent—1.4 million—which is the highest percentage growth out of the 10 markets featured in this report, so it’s no surprise that Atlanta has experienced growing pains,” says John O’Neill, CushWake’s senior managing director and Atlanta market leader. “Fortunately, there are strong indications that the renewed commitment to transit-oriented development by both the public and private sectors will move Atlanta forward, helping it to continue attracting business and new residents.”
According to Christopher B. Leinberger, chair of the Center for Real Estate and Urban Analysis at George Washington University School of Business, transit-oriented development is the most substantial development trend of the early 21st century. In fact, he says, “this trend is a majority and in some cases the vast majority of new commercial development, as well as residential development, in many metro areas today. Re-orienting our transportation spending toward rail and bus transit, biking and walking are the most important infrastructure investments North American metropolitan areas can make.”
What about occupiers? Well, the value is less quantifiable but it’s still worth exploring. The CushWake report suggests the value for occupiers lies in their ability to attract talent, efficiently reach their client base, and achieve their sustainable objectives as good corporate citizens. However, there is a downside: the challenges of aging or insufficient infrastructure, NIMBYism, ("Not In My Back Yard"), and lack of funding and cooperation between the public and private sectors are common themes throughout.
“Public-private partnerships are most critical to the successful revival of downtown cities,” says CushWake Americas research director Paula Munger, who spearheaded this study. “Hip eateries, thriving arts districts, and fully occupied offices and residences depend on sustainable, quality transit. Developers and governments must work together to make this happen.”
The value premium on sustainable transit-oriented development in downtown districts—and the dramatic surge in suburban communities now fully-embracing the live-work-play model as a result of geographical nuances—is perhaps the most notable of the report’s conclusions. Leinberger concludes: “As C&W’s research shows, walkable urban development is occurring in both our central cities and urbanizing suburbs. Following the research findings will lead to rental and cap rate premiums that will not be ignored by investors and developers.”