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Transit-oriented development - Smart city

Does Remote Work Put Transit-Oriented Development in Jeopardy?

For the many developers behind the numerous Transit-Oriented Development (TOD) projects across the country, America’s gradual, exhausting emergence from the COVID-19 pandemic must come across as slightly bittersweet. For these developments, which draw a lot of value as well as tax incentives from proximity to transit lines, the fact that public transit is approaching some semblance of safety is certainly a great thing. On the other hand, humans are creatures of habit and the fact that the vaccine will likely take well over a year to reach everyone means that most people will have already created alternate routines by the time things are really back to normal. Transit-oriented developers will need to refine and expand the ideas behind their property offerings if they are to thrive in this new world.

The greatest market for TOD properties, that is, people who work in urban areas and would like a short commute to their jobs, is rapidly shrinking. The culprit is remote work. According to Mark Dixon, CEO and founder of IWG, the parent company of flex space provider Regus, “My prediction would be that in five years, certainly 10 years’ time you would have to explain to your kids what commuting was. Commuting is just this totally stupid thing that people have been forced to do.” In turn, the attractiveness of an apartment located on a transit line, thus guaranteeing easy access to your place of work (also likely near a transit stop), withers in the face of a job that can be done from anywhere.

This isn’t the only challenge facing transit-oriented projects, either. While remote work nips at the demand for transit, a new study has indicated that one of the benefits of TOD might not be so efficient in the first place. The benefit in question is incentivizing transit ridership. It is pretty much universally considered a good thing in urban planning circles. 

Public transit is much less carbon intensive and generally much more efficient than driving individual cars, right? Well, according to the new research from the Mineta Transit Institute, part of San Jose State University, TOD projects are substantially less effective at promoting transit ridership than expected. They found that these high profile projects were not even as effective at increasing transit ridership than the decidedly less sexy park-and-ride, which is basically a transit stop in the middle of a huge parking lot. 

The ugly (duckling) park-and-ride has other benefits, too. According to the authors of the study, “When asking how much to emphasize parking or housing near transit stations to increase ridership, it’s clear that less space and lower infrastructure costs are associated with creating a parking space than a housing unit.” 

There are a number of reasons why park-and-ride seems to be more effective than TOD for getting people on buses and trains. For one thing, new transit-oriented developments can only attract people who are able to move to a new residence. If you are one of the millions of people who doesn’t have the freedom, either financial or personal, to relocate, then these developments do very little for you.  And let’s not forget the number of automobile owners in the U.S. is enormous. The popular belief was always that if people had to get into their car to commute then they would just prefer to drive. But the effectiveness of park-and-rides proves that this isn’t always the case. Many transit lines are much quicker and more reliable at getting into city centers so being able to park at choke points outside the city is a faster, easier solution to many people’s daily drive. So while TOD projects only help their own residents get to public transit, park-and-rides help anyone with a car, even people who themselves live at transit-oriented properties.

I worry that I set too gloomy a picture here. I don’t want to make it seem like TOD is on the way out. I am, very vocally, pro-transit-oriented development. But, I do think that a possible reduction of ridership due to an increasingly remote workforce is going to cause us to rethink how transit fits into our urban environment.

Remember that developing around transit lines has more benefits than just boosting transit traffic. While reducing cars on the road is a good thing to be sure, TODs also usually boost walking traffic, benefit local businesses, reduce sprawl, and have a positive public health effect by encouraging more healthy, active lifestyles. 

While remote work is reducing the need for some knowledge workers to commute every day, cities are still important activity hubs for their metro regions. According to Craig Jones, a Ph.D. candidate, and researcher focusing on urban transit at the University of British Columbia, “This isn’t the first time in urban history that the value of access to the central city has been questioned. During the 1970s the value of access and proximity to the central city was questioned, but scholars observed that the central city remained important for high-value service industries.” And even if some industries in particular go remote quicker than others, TOD developers can still satisfy an unmet need by focusing on workforce housing, since that market is the most likely to commute. This might take some cutting down for many TOD properties, which often are amenity-rich. But the core value proposition of TOD development, that is, high-quality living in walkable neighborhoods near transit lines, would still apply. 

The other option is for TOD developers to lean into remote work. Sure, jobs might be remote, but coffee shops, bars, and concert venues aren’t. When cities come back to life, living near or on a transit line offers easy access to all the recreational opportunities of the city with few of the hassles. This might not be too hard of a sell; remote workers are already known for paying more rent on average than their location-reliant neighbors. 

Transit-oriented developers should consider extending their investments out into the suburbs, as well. By positioning new transit-oriented properties in these less dense markets already defined by sprawl, TOD could do a lot very quickly to expand density and build walkable districts where they are (arguably) needed the most. These properties could market to young families looking to keep the city ambiance and access to recreation while heading out to where space is more plentiful, potentially near pre-college friends and family. Transit-oriented properties in the future might not only be located near light rail lines, but commuter rail or even bus lines as well.

Remote work is certainly changing the value proposition for transit-oriented developments, but it is not destroying it. Cities are vibrant and full of life. Even without needing to go to the office, the best cities in the world will retail a disproportionate amount of cultural capital. Allowing more suburbanites to live the urban TOD dream life is an opportunity developers should not ignore.

Associate Publisher, Propmodo Research
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