On Track to Success
Transit-oriented development attracts real estate investors, along with retail tenants and customers
by Kristin Gunderson
The following is an excerpt from the Jul/Aug 2007 issue (Volume 72, Number 4) of JPM®, Journal of Property Management.
The town of Westwood, Mass., is about to undergo a transformation. Dominated by a 135-acre industrial park, businesses have come and gone—mostly gone—in recent years, and the town has had to rely more heavily on residential property taxes instead of commercial property taxes for its tax base. The park’s visual “appeal” consists of abandoned industrial buildings, and a lack of green, open and walkable space.
But all that is soon to change thanks to a developer with a vision and the industrial site’s close proximity to a Massachusetts Bay Transportation Authority and Amtrak terminal. Cabot, Cabot & Forbes, a Boston real estate developer, is on the verge of transforming the industrial site into Westwood Station, a mixed-use transit-oriented development
Currently in the final approval stage, Westwood Station plans entail 4.5 million square feet of one-story and two-story open-air retail space comprised of restaurants, cafes and specialty retailers; residential units like flats, lofts and conventional condominiums housed above retail; and open space and local streets with landscaping, public art, waterfalls and new landmarks.
Westwood Station might sound almost like a philosophical vision, but it has a practical purpose—money. The industrial site currently generates $1.6 million in property taxes according to information from Cabot, Cabot and Forbes. As a mixed-use development, it’s projected to generate at least triple that amount in property taxes.
More developers and real estate investors nationwide are noticing the value of building projects along transit lines as Americans’ interest in taking public transportation increases. This is spurring transit-oriented development—also called “new urbanism on a train track” because of its compact, dense nature and close proximity to public transportation options.
Areas with transit systems have long propelled growth and development, but today’s transit-oriented developments are more commonly created with a mix of uses and “place making” in mind, said Jay Doherty, president of Cabot, Cabot & Forbes, the Boston real estate firm developing Westwood Station.
“The attempt is to be even denser, even more pedestrian-friendly, and to mix in a complement of uses that have synergy and create a more vibrant place,” Doherty said.
Transit-oriented developments are typically composed of a mix of properties, uses, people and transportation options like light-rails and heavy rails, street cars and bus lines. They promote an urban environment geared toward pedestrians rather than traffic, said Gloria Ohland, vice president of communications for Reconnecting America, a national non-profit organization devoted to promoting transit-oriented development.
“The key point of transit-oriented development is it increases a location’s efficiency so people can walk, bike and take transit,” Ohland said. “It’s a way to bring new investment in a community and create a sense of place.”
The concept is certainly catching on, in both central business districts and the suburbs, as public transportation becomes more popular. Public-transit use has increased by 30 percent since 1995, according to information from the American Public Transportation Association. Additionally, public transportation’s growth rate during the last decade has outpaced the growth rate of vehicle miles traveled on the nation’s highways.
“A little bit of bloom is off the rose when it comes to the American romance with the car,” Doherty said. “Some reconsideration is going on at the individual level, causing people to look at transit-oriented development.”
The rising cost of transportation is one reason people are less enchanted with the car, Doherty said. The average household spends 18 cents of every dollar earned on transportation— percent of which is for buying, maintaining and operating cars, according to the transportation association’s information.
The country’s changing demographics are also influencing demand for transit-oriented development, Ohland said. Families are shrinking; the population is aging; and single Americans make up 44 percent of the population, according to U.S. Census Bureau information. As a result, the “American dream” doesn’t necessarily require owning a single-family home with a white picket fence anymore. Instead, it might involve buying a condo in an urban center with viable transit options.
“There is much more diversity in this country and in today’s households,” Ohland said. “Demographics are redefining the way we want to live. Transit-oriented development is about providing more choices for different types of people. It’s the American dream being reconfigured.”
The full article is available as an online exclusive in the Jul/Aug 2007 JPM® issue.
IREM Members have free access to the JPM® online archives and the “Online Exclusives,” articles that are only available on the IREM Web site. Non-members can subscribe to JPM® at www.irem.org/jpm.