As you probably know, we have an interest in communities and “life” near the light rail line. Occasionally, we are fortunate enough to have people write a “guest post” regarding their particular expertise as it relates to living along the light rail line in Arizona. I am really happy that my friend Doug agreed to write about commercial real estate along light rail lines. Doug Lazovick is a commercial Real Estate agent specializing in multi-family investment sales and is licensed in Arizona. He is also the founder of DeedStreet, a Real Estate community that leverages online social networking tools to bring consumers and industry professionals together.
As a Phoenix commercial real estate professional, I am constantly asked questions on trends/investments/demographics that influence long-term property values. Recently, it seems a lot of these questions are specific to the new light rail.
Predicting future values, while often relying heavily on various mathematical formulas is at best an inaccurate science. However, when cities in the past have invested in light rail projects, the evidence often supports an overall positive impact for properties located within close distance.
Lightrailforcheviot.org – has done a good job of compiling data and studies on various rail projects across the country. I will post a few of their findings, but encourage you to read the entire article for more of a comprehensive look at rail impacts (as well as sources for their findings):
Values of properties adjoining DART light rail stations grew 25 percent more than similar properties not served by the rail system. Proximity to DART light rail stations appears to be a plus for most classes of real estate, especially Class A and C office buildings and strip retail. Average occupancies for Class A buildings near rail increased from 80 percent in 1994 to 88.5 percent in 1998, while rents increased from an average $15.60/sf to $23. Strip retailers near the stations registered a 49.5 percent gain in occupancy and a 64.8 percent improvement in rental rates.
Light rail has both a positive effect (accessibility effect) and a negative effect (nuisance effect) on single-family home values. The positive effect dominates the negative effect, which implies a declining price gradient as one moves away from LRT stations for several hundred meters.
Studies of the impact of twelve rail projects (including both heavy rail and light rail) throughout North America are compared. In general, proximity to rail is shown to have positive impacts on property values. The relative increase in accessibility provided by the new transit investment is the primary factor in increasing property values.
Although the light rail in the Phoenix valley is relatively new, studies are already being conducted to gauge its impact. One such study has already indicated an increase in value for vacant commercial land along the 20-mile light rail, particularly in Tempe, where zoning changes permitted high density near stations.
So, while it is early to make any definitive conclusions on the impact of the light rail in Phoenix on property values, past light rail case studies and early findings suggest a positive outlook.