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Any big city needs to have a public transit system in place in order to support its citizens and it’s local economy. These public transit systems act as a central nervous system for the city and they have a profound effect on commercial real estate. Larger cities such as Chicago or New York City have employed heavy rail systems that can manage the amount of people that take public transport daily. In smaller cities, a more practical approach is the construction of light rail systems to transport commuters. Cities like Phoenix, Portland and Denver has implemented light rail systems with varying degrees of success and use. Light rail systems are intended to relieve some social, economic and environmental effects of big city life, but there are definite pros and cons to a rail system, especially on a new or budding business. If you are thinking of purchasing or leasing commercial property near the light rail or if you are in an area where a light rail is slated to get constructed, take a quick look at this pro and con list from LCI Realty.

Traffic Congestion And Urban Planning

One of the biggest reasons to adopt a light rail system in an urban core is to stem the flow of traffic and decrease congestion. A light rail with enough riders should take people out the flow of traffic and increase safety on the roads. In theory, this works and over time, a light rail should at least take a few people off the roads. However, most research shows that ridership on light rail transit is limited to an urban core, where as people from the suburban areas are more likely to take their own vehicle to work. This can cause a problem during the construction phase because traffic will have the added congestion of construction closures and restrictions. Overall, a light rail system might not save a city from the traffic problems they hope to alleviate. However, there is some speculation that a light rail system can help reduce parking issues in downtown areas which are notoriously full and expensive. These speculations don’t necessarily hold water, as many cities see little to no change in their traffic congestion.




Job Creation

Light rail expansion tends to create jobs. In temporary terms, it takes years to plan, develop and construct a light rail system. Many jobs are created in the interim that feed into the economy. Once light rail is established, there are jobs needed to operate and maintain the system, but these are often taxpayer funded positions, which do not contribute to the new income of an area. However, in the case of areas like Phoenix, light rail accessibility is directly responsible for attracting events such as the Super Bowl and the NCAA Final Four, as well as other mega events. These votes of confidence increase private development along light rail corridors. In fact, in Phoenix, Valley Metro estimates that there has been $11 billion in private and public investment within a half mile of the light rail since it was opened in 2008. This investment has influenced more businesses to move to the area, which creates more jobs. On the flipside of that coin, several businesses suffer and close during the construction light rail systems. In Minnesota, the light rail between Minneapolis and St. Paul was looked at with optimism. The state government promised businesses that could prove financial hardship during the construction funds and loans to keep their businesses open. Still, many closed and those that stayed open saw a 36% downturn in sales. In the long run, public transit can create jobs, but it can also have a profound effect on certain areas.

Pollution and Environmental Effect

A big motivator for many cities to invest in a high capacity rail transit system is the ability to reduce the environmental impact and pollution on their city. Less cars on the road obviously means less carbon emission, making for greener air and less impact on the local environment. If cities can create less roadways or expand less in urban sprawl, less erosion occurs and more of the local environment is preserved. However, if many of the riders on the light rail system are going to and from the urban core, while suburban residents prefer to drive, there is likely to be less of an impact than some people expect. Still, the numbers are more encouraging than taking no action. Using Phoenix as an example, the Valley Metro light rail has saved more than 27,000 car trips daily, preserving 60 million gallons of gas and keeping 19,000 tons of pollutants out of the Valley sky. This is a vast improvement for any city.

Property Values And Development

Along with the creation of new jobs and a reduction in the environmental impact, cities that have adopted light rail systems have found that they can be a real boost for the economy and the value of property near the light rail. As mentioned, Phoenix saw nearly $11 billion dollars in new investments along the 26 mile corridor. This investment added 50 million square feet of new construction on many properties that had sat as empty eyesores for a long time. The light rail expansions in Phoenix and the Valley have attracted high wage jobs, unique retailers and urban-style apartments and condos. For property owners in the area that are getting new neighbors, they are seeing their property values go up. And studies have shown that residential properties within 1,500 feet of the light rail could be worth between $75 and $100 more per square foot. As long as your property isn’t subject to eminent domain and you can find a way to compete during the construction phase, you could see a tidy return. However, it takes working with the right team of professionals to accomplish your goals.

Contact the LCI Realty team today and see what our team of innovators have been able to do for property owners across the Valley. Call 480-565-8981 or send us an email at info@lcirealty.com.