Daniel Gat, Center for Urban and Regional Planning
Technion -- Israel Institute of Technology, Haifa , Israel
Rapid Transit - The Effect of Its Introduction on Real Estate Values and Real Estate Development (assigned to theme
The debate on whether or not to introduce mass-transit into transit-less or transit-poor cities has become a hot topic. The paper sheds light on the theoretic argument that transit investments generate real estate added value. It presents an urban polycentric poly-modal model that is quite simple, yet complex enough to handle automobile traffic congestion as well as transit and park-and ride. The model is descended from a long line of micro-economic mono-centric mono-modal urban models. It is estimable, but not empirically estimated here; instead, it is run as a spreadsheet simulation with artificial parameter values. Results are computed and shown graphically and geographically; they support the value added argument. Modeling strategy is as follows: 1.Create a virtual urban geography with a set of rail connected centers that are also optional transit stations, the rest being residential space, some of which is built up. 2 For every residential cell compute the fastest route to each center, assuming either car or park-and-ride modes. Without loss of generality, the slow mode, walking or biking is not included. 3.Based on (2) a backward folding decision tree is the basis for a discrete choice nested probability model that decides, for each cell, the destination plus travel mode proportions. 4.Thus a transit travel map showing proportion of travelers by transit, from every residential cell, is created for every center. Based on that, travel expenses and bid rent are imputed to each cell. 5.If the expected value of newly created build-able land turns out greater than the existing value of the whole property plus demolition costs plus a suitable rate of return, then the cell is to be re-developed. Simulation results show what is intuitively known: 1.Although land prices always rise close to a new transit station, they do not trigger new construction where viable structures exist even at medium-low FAR. 2.A large new transit oriented center will trigger high FAR construction especially if it is placed on a Greenfield site or in the vicinity of low value property. 3.Speed of transit is important, but station waiting time is crucial for the success of transit in triggering new development. 4.Stations with no accompanying center will also raise land values, but not necessarily sufficiently to trigger re-development.
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