On the other hand, adding both density and rail stops in the city and close-in suburbs near existing rail may be more viable politically, but it’s physically and economically tougher to do. Land values near urban heavy rail stations—subways—can be measured in dollars per square inch. And that’s before the developer pays for demolition and relocation costs and the government shells out public dollars to build subway tunnels and underground stations in these close-in locations.
Either way, where the will and investment are mobilized to make new stations in combination with approvals for high-density development, the transit-oriented development land cost crunch is just beginning. Because new stations take so long for the public to establish, smart land investors are usually there to greet them when they arrive.
When local transit authorities do have surplus land, they are taking appropriate advantage of opportunities to reap the value sown in this ground by their massive rail and station investments. This is just good asset management.
But so far most transit agencies have had neither the mission nor the budget for buying land around future stations. It’s expensive enough to run trains on time and keep public subsidies at a tolerable level. As a result, most transit-oriented land with additional density is privately owned and will trade at market rates. What does the market look like for such property? Strong. Expensive. And that’s just the land acquisition aspect of the project.
In the most desirable, close-in locations, such as the Metro-served suburbs of Washington, D.C., including Vienna, Va., or Rockville, Md., the preferred planning pattern is for high-rise, concrete buildings. Where land is short, go up. This is definitely the right goal given the desirability and scarcity of walkable land around stations, and it’s the same market logic that built the skyline of Miami’s vibrant South Beach. But high-rise concrete buildings with structured parking pay a large cost penalty. They can be twice as expensive to build per square foot as traditional stick-built housing types. Verticality has a cost.
The good news is that people will pay top dollar for good high-density development near transit, even with this high-rise premium. The bad news is that high density is expensive to build and prices people out of the market. The laudable planning goal of centering high-rises around transit inevitably tends to defeat the most loyal transit users, who have household incomes that don’t give them a prayer of living in hip new high-rise districts. Not many Macy’s shoppers will be walking to the Tysons Corner Center mall when the new Metro station arrives.
So it starts with the land. Every developer knows this. We say yes to density, and yes to well-executed mixed use in existing transit zones. But for establishing new transit zones, where’s the land opportunity?
That’s a story that needs more room than these two pages. But some hopeful trends and new strategies are emerging across the country.
And when all else fails, remember this statistic: There are more 6,000 miles of coastline on the lower 48. Beaches are still out there.
Richard Hausler is president of Kettler, formerly KSI Services, a mixed-use developer based in Vienna,Va.