The Importance of Transit-Oriented Development
There is no denying that much of the real estate development currently underway in the United States – both commercial and residential – is transit-oriented. In fact, the federal government has funded the Center for Transit-Oriented Development to serve as a national clearinghouse for best practices in transit-oriented development, as this sector continues to grow in popularity.
Why is this occurring exactly?
Mostly, it’s do to the increasing need on the part of developers to cater to the demands of the millennial generation, who are steadily assuming a larger role in the workforce, as well as in the overall economy. At 95 million people strong, millennials are already the largest generation alive today (Generation X is at 89 million and there are currently 68 million living baby boomers). Unlike the baby boomers, whose dwelling preferences tend to lean more to the suburban markets, millennials have a set of demands and expectations that are typically the exact opposite. Millenials are gravitating towards centralized, amenity-rich urban environments that promote a “live, work, play” feel. There are numerous reasons for this.
A character trait that is particularly notable with regards to millennials is their overriding dependence on technology. Going further than that, one aspect of modern technology that is truly valuable to the millennial generation is the freedom is offers them. A survey by DHM Research, for instance, found that 47 percent of millennials wouldn’t give up their mobile phones willingly. While this has no direct connection with real estate, it’s indicative more of an overall mindset: they enjoy being untethered.
In keeping with this idea are the results of another national survey that found that 66 percent of millennials listed high quality transportation as their top factor in deciding where to live. What’s more, in a recent Coldwell Banker Commercial survey, 58 percent of millennials reported access to public transportation being important when considering where to work.
This is because the financial flexibility offered by not having to own a car is of crucial importance to millenials, who are the most educated generation in terms of the percentage of college degrees they’ve attained as a whole. This education has come to them at a high cost, however, as 66 percent of today’s college graduates have accrued an average debt amounting to $23,000 per person. Due to this extra financial pressure, they have eschewed car ownership in the same way as they have avoided the burdens of homeownership, which were previously championed by their parents.
While millennials are definitely the largest driving factor behind the growing popularity of transit-oriented developments, they aren’t the only reason. Urban planners are taking convenient access to local transport into account for a variety of different reasons. Some have gone as far as to say that this new emphasis on public transit, and other construction initiatives, is an effort to make driving in certain areas more difficult, thereby discouraging automobile use altogether. This idea might be considered extreme, but there are those that argue that cutting down on car usage would increase the health and safety of both human beings, as well as the planet. With less pollution and more fit citizens, it would be hard to argue that point.
Outside of such drastic speculation, though, there are more “practical” reasons that transit-oriented development makes sense on a larger scale, namely monetary ones. For instance, in the year following Chicago’s passing of an ordinance meant to promote transit-oriented development, projects have already started in a few communities and are being discussed in many more. This ordinance has been particularly attractive to developers, who are granted the right to cut in half the number of off-street parking spaces they’re required to provide, as long as their buildings are within 600 feet of a transit station or 1,200 feet of a street with a pedestrian designation. These stipulations both serve to cut the costs of developers in terms of providing additional parking spaces, as well as allowing them to devote more square footage to the living space and unit count of their projects. Peter Skosey, an executive vice president for the Metropolitan Planning Council in Chicago, probably put it best by saying, “if we continue to plan our cities around where we’re going to put our cars and not where we’re going to put our people, that’s not a recipe for growth.”
It may sound all well and good, but the transition toward more transit-oriented developments will be a process that will take time, namely due to the drastic costs involved. Some developers in cities like New York, Los Angeles and Chicago have reported price premiums between 10-25 percent for the construction of transit-oriented projects, mainly because of the location and infrastructure improvements required. Inadequate public transportation options and lack of funding are even more impediments preventing transit-oriented projects from getting off of the ground.
In the end, while there are still many hurdles to overcome, a new generation brimming with fresh energy seems to have made it their mission to make transit-oriented development a much more relevant part in all of our lives.