The future of urbanization and transit-oriented development
Real Estate Predictions 2019
The next generation of urban mobility presents unique opportunities for cities around the globe. Autonomous vehicles, ride-sharing services, and wideranging technology adoption are set to change the transportation ecosystem and with it, the urban landscape. Tomorrow’s smart cities will operate with increasing levels of connectivity, creative collaboration, and networked communities along with intricate and substantially enhanced transportation ecosystems.
Sheila Botting (CAN)
- TOD and the urban future
- So, what are TODs?
- The TOD opportunity
- Successful TOD planning
- TODs: a catalyst for economic growth
And yet, even as the future unfolds, today’s average urban commuter still spends hours stuck in traffic, sustainable community building remains a challenge, and cities struggle with the cost of transportation infrastructure. Unlocking the high value of land and real estate can be a key ingredient toward transportation affordability and adoption. In this context, are there innovative paradigms that can unlock value for citizens, communities, and cities alike? The answer may lie in re-imagining transit hubs in our urban centers through transit-oriented development (TOD).
The future of urbanization and transit-oriented development
The next generation of urban mobility presents unique opportunities for cities around the globe.
Autonomous vehicles, ride-sharing services, and wideranging technology adoption are set to change the transportation ecosystem and with it, the urban landscape. Tomorrow’s smart cities will operate with increasing levels of connectivity, creative collaboration, and networked communities along with intricate and substantially enhanced transportation ecosystems.
TOD and the urban future
Modern cities are evolving at a rapid pace and exponential advancements in technology have changed the way we live, work, and play. A new generation of workers not only prefer to live close to work but actively seek to live closer to work. At the same time, cities around the world have seen a rise in the use of public transport by nearly 20 percent between 2000 and 2015. In Canada, for example, 70 percent of public transport ridership comes from the three largest metropolitan areas: Toronto, Montreal, and Vancouver.
This presents an incredible opportunity for cities as they plan their future transit hubs— those key points of convergence, such as train stations, and mobility hubs. Maximizing this opportunity requires strategic thinking to incorporate the vision of a sustainable urban future. Careful design of TODs could mean revitalized neighborhoods and highly connected communities.
So, what are TODs?
TODs are a type of community development that integrates mixed use development, including housing, office, retail, and potentially other amenities into a walkable neighborhood, preferably located within a kilometer of a quality public transportation node. TODs are ecosystems unto themselves and propose mutual benefits across the spectrum of participants. Commuters enjoy better facilities at transit nodes, retail businesses benefit from foot traffic, connected businesses have a ready pool of talent that can walk to work, and residents benefit through a highly vibrant connected community with low pollution levels and potential for high-value growth. Overall, the city benefits from a high-intensity value generating neighborhood and land value capture. TODs have the potential to accelerate true city-building and Smart Cities for the benefit of all.
TODs provide an array of benefits ranging from lifestyle to environmental to economic, including:
- Reduction in drive times and hence increased productivity
- Opportunity to gain back commute times and focus on quality of life (that is, live, work, and play) • Expanded mobility choices at lower costs, freeing up disposable income • Walkable communities that accommodate more healthy and active lifestyles
- Long-term sustainable development of neighborhoods \
- Reduction in automobile air pollution and greenhouse gas emissions • Improved property valuations in the community catchment areas
- Increased ridership and fare revenue
- Increased urban intensity and hence land value capture
- Improved economic opportunity and access
The TOD opportunity
The question is, how can cities leverage and maximize the TOD opportunity? One of the immediate options is to transform surface and structured parking areas at stations into high-density, mixed-use developments. Often joint ventures between the public and private sector can help finance the costly infrastructure investments required. With the advent of ride-sharing and autonomous vehicles, the relevance of parking is fast declining—potentially reducing parking areas around stations and opening them up for alternate uses. This however requires careful and strategic planning. Singapore MRT and Hong Kong MTR have effectively influenced planning and zoning to advance transit-oriented development projects.
Value release through sale of air rights above tunnels and yards, in the case of underground railway or subway systems, presents another opportunity. New York’s largest development in the past generation is Manhattan’s Hudson Yards, where the vacant rail yard site—owned by the Metropolitan Transportation Authority (MTA)—in the far West Side of Manhattan is being turned into a hub of development and of commercial activity. Leasing their air rights over the yards, the MTA has entered into a long-term arrangement with The Related Companies and Canada’s Oxford Properties to develop over a million square meters of office, retail, and residential space along with a new cultural facility.
Another prime example of value capture through TOD is Bond Street Station in London. In this case, two booking halls to the underground station were redesigned to accommodate new, highly valued development above one of the world’s most expensive real estate catchment locations. The revenue from this opportunity has made a significant contribution to the governing authorities and supported financing of transport schemes.
The environmental benefits that TODs enable through reduced dependence on vehicular transit and resulting reduced air pollution is one of the major factors in the increasing interest in this concept. Tianfu, a city in China, is an example of a TOD that propagates highdensity, mixed-use urban environments with easy access to mass transit as a basis for green sustainable development. With such incredible and wide-ranging benefits, governments have begun to recognize the value of TODs through policies that encourage densification of economic activity in proximity to key transit hubs.
Successful TOD planning
It is clear that successful TOD projects are able to achieve a range of results from reduced carbon emissions to socio-economic benefits intrinsic to sustainable and livable cities. But successful TOD implementation requires careful planning, strategic finance, and marketing along with site design. So what are the key factors to the success of TODs? According to an Institute for Transportation and Development Policy (ITDP) report, government intervention and land potential are two critical factors.
What matters most to a TOD’s success is government intervention and promotion. When local governments did not effectively promote a TOD, a new transit line generated only a nominal amount of economic investment. For example, the south and west busways in the U.S. city Pittsburgh had weak support and produced limited TOD investment, but the city’s moderately supported east busway produced US$903 million.
The second most important factor in TOD success is land potential, that is, regional market strength, expected real estate growth, corridor quality, proximity to desirable catchment areas etc. According to the ITDP Report, land potential does not have to play a direct role in TOD success—even locations with modest land potential could still succeed if the local government supported the development and played a lead role in marketing and promoting the project.
In addition to these two critical aspects, the TOD Standard 3.0 outlines eight elements that could be included in the planning and design of the development in order to deliver projects that maximize benefits.
- Walk: Develop neighborhoods that promote walking
- Cycle: Prioritize non-motorized transport networks
- Connect: Create dense networks of streets and paths
- Transit: Locate development near highquality public transport
- Mix: Plan for mixed use
- Densify: Optimize density and transit capacity
- Compact: Create regions with short commutes
- Shift: Increase mobility by regulating parking and road use
TODs: a catalyst for economic growth
The dizzying pace of change for our cities and urban mobility will likely only accelerate. What is most exciting about TODs is that they bring together a spectrum of solutions to help build vibrant, people-focused communities.
With global cities set to venture into this new era of urban mobility and Smart City frameworks, they will face a completely new set of challenges. With local government intervention, smart strategic planning, and policy definition, TODs offer a chance to act as a catalyst for growth into a sustainable future.
Real Estate Predictions 2019
21/03 - Transit Oriented Development and Land Value Capture