Commuter rail operators are becoming land developers to pay for the service

Last modified: Thursday, October 01, 2015
A MARTA station in Atlanta. Profits from property leasing can help pay for commuter rail and has been more and more in recent years.

Around the country, many transit agencies are becoming land developers because every time they build a commuter rail system, the houses along the route and especially at the terminus become way more valuable.

In a WSJ story yesterday, I read a story by Chelsey Dulaney about how land development is where much of the money to run train systems is coming from. To any skeptics who might think that investing in commuter rail is a bad idea, just look at this: Property values within walking distance of public transit stations were 40% higher than other properties in the same region.

"By their very nature, rail systems are unprofitable. Now that we have a shortfall in funding, we have to get creative," said Christopher Leinberger, from the Brookings Institution. In Dallas of all places, the number of miles of passenger rail track zoomed from less than 50 to 230. In Utah, it more than doubled. In these cities the transit agencies have had to become real estate developers to make their rail systems affordable.

Rail ridership is increasing in the US, up to 4.8 billion rides in 2013 from 3.4 billion ten years ago. The suburbs are not as popular, by far, as urban areas where trains can be used and cars can be ditched. This goes well with the other stat that warms my heart. The number of miles driven in cars is down significantly from previous years. Kids turn 17 and many don't even get their licenses until much later. Driving? Meh.

In Atlanta the local rapid transit system MARTA, leases land to developers and they've built apartments, shopping complexes and other retail spaces, near the tracks and giving MARTA nearly $7 million in revenue. "We can can take advantage of the price value of transit served land and use it to help pay for these expansions," said Leinberger.