It’s hard to find a kind of housing less loved by the planning world than sprawling cookie-cutter single family subdivisions. Conversely, somewhere higher on the list would be transit-oriented development (or in wonk terms, TOD) projects: typically housing-heavy, mixed-use developments situated near transit hubs like rail or bus lines. TOD projects often receive incentives, particularly via relaxed zoning restrictions and decreased parking requirements, allowing them to build higher and denser than a similar project without the TOD profile. These incentives are meant to promote development in areas that are well-served by public transit but that might not pencil under the prevailing zoning requirements of the area. The goal of this is to guide development, creating healthier cities that promote physical activity, encourage low carbon transportation options, and reduce the amount of pollution from automobiles.
Transit-oriented development has led to a renaissance along the transit lines of many cities. Chicago’s Milwaukee Avenue, which runs parallel to the light rail Blue Line, has been dubbed the Hipster Highway in large part because of the development and accompanying rise in gentrified bars and restaurants that the area has found itself supporting. I know, I just used the G-word. Gentrification is one of the most polarizing of words when it comes to urban planning but it can’t be overlooked as a second-order effect of incentivizing new development in otherwise virgin neighborhoods.
Property developers looking to build transit-oriented projects have faced a real existential threat since the coronavirus outbreak has effectively shrunk public transit use to a fraction of what it once was. May 2020 saw ridership figures 81 percent lower than the previous year, with rail ridership down even more at 89 percent. According to Jeffrey Tumlin, Director of Transportation of the San Francisco Municipal Transportation Agency, “Unless the economy comes ripping right back, and there’s a vaccine, and social distancing is eliminated, we fall off the financial cliff in 2023. That would result in such severe service cuts that it puts us on what is called the transit death spiral.” This would create a vicious, self-sustaining cycle of decreasing service offerings which would then cause even lower ridership figures.
Things are even worse for some developments than others. While many TOD properties still offer a fairly large amount of parking, some developments have gone a different way, eschewing parking entirely. In Chicago, 1611 West Division offers no residential parking for its luxury units, and its residents are prohibited from getting residential permit parking. That means they are limited to renting out space in monthly lots nearby. Shortly after the property was built, back in 2014, Jamie McNally, one of the property’s staff, said that “you can get pretty much anywhere you need to go without a car. It might be counter-intuitive to some people, but providing more options for people to live near public transportation decreases the need for car parking.” That logic makes sense when young renters are happy to take the train or the bus, but when shared spaces are inherently dangerous, things are a bit different.
Or consider the example of another project in Arizona. Culdesac Tempe is also prohibiting residents from bringing their cars, instead relying on its proximity to a light rail station as well as car, bike, and scooter sharing. Ryan Johnson, is co-founder of the development company behind the project (as well as the co-founder of iBuyer Opendoor). He said, “Transportation has changed a lot over the last decade and real estate hasn’t kept up. Now there’s the chance for us to build the first post-car development.” This is a sustainable, futuristic mindset, but amidst a global pandemic, its logic is called into question. Not to mention that Tempe, which is far from walkable in general, is also in the middle of the desert. Summer temperatures frequently exceed 110 degrees Fahrenheit. Not exactly what most of us would call good walking weather.
Both 1611 West Division and Culdesac may be able to succeed in spite of the risk posed by COVID-19 (and the blistering desert heat). It could be that the well-to-do renters of these properties will be happy to pay to Uber to their offices whenever they need to. But many analysts expect the transit ridership dip to last. Utah’s transit authority is now expecting a long-term 15% ridership decline. So for low or no-parking developments to really stick, developers might need to wait for progress from other parts of the real estate world. Both 1611 and Culdesac are (or will, in the case of Culdesac, which is expected to open later this year) be surrounded by retail and amenity spaces. 1611 is on the aforementioned Hipster Highway, with its many coffee shops, bookstores, and bars, and Culdesac is including a large amount of walkable, village-style event, restaurant, and retail spaces spread over its site. But that doesn’t answer the employment question. Many of 1611’s renters probably have to commute to downtown Chicago, and Culdesac’s renters will probably be employed by a variety of companies distributed over the far-flung reaches of the Phoenix area.
That’s where remote work comes in. If more employers embrace full-time remote work arrangements, as they certainly will post-coronavirus, these types of properties could find an ideal market amongst renters who don’t even need to commute to work in the first place. With very attractive retail and activity opportunities within walking distance, these renters would never really need to board a train or a bus to get to their destinations. There are already some cities out there incentivizing new remote workers to move to their areas, such as Tulsa, Oklahoma or Muscle Shoals, Alabama. For instance, the Tulsa Remote program includes a $10,000 grant to remote employees who relocate to the city, as well as co-working space access and various other support programs. Perhaps cities that prove to become long-lasting remote magnets could become focal points for no-parking TOD development alongside the usual suspect big city markets.
In turn, by niching into a particular type of remote-employed renter, the TOD properties of the future could gain an opportunity to better amenitize and equip their spaces. Instead of offering a library, as many luxury developments do, these properties could offer video conferencing rooms. Instead of including pre-equipped IoT gadgets, these developments could come with big-screen conference TVs and high-quality audio equipment pre-installed in the office spaces.
TOD projects are inherently opportunistic, leveraging favorable local geographies and beneficial municipal-level incentive programs to build where it would otherwise not be viable. The risk of contracting a lethal illness is now part of our daily lives. Even after we get an effective vaccine, the memory of COVID-19 will linger on, affecting transit ridership and the use of shared spaces for the long term, just like the Utah Transit Authority has predicted. By getting ahead of these trends and building for the people that will truly be comfortable with no private transportation options, the TOD properties of the future could emerge stronger, more resilient and even more lucrative than their predecessors.