Thursday, June 21st, 2012
I previously wrote about the value of transit in terms of direct benefits to motorists. This is marginal in most cities but in the biggest cities with extensive transit systems it is substantial. For example, just the financial benefits to commuters from congestion relief would be sufficient to fund Chicago’s entire regional transit system on an operating basis.
New York City is of course the paradigm of how improved transit drives enormous value. Naturally commuters benefit, but the real big dollars in New York are in real estate values (and potentially in the entire structure of the regional economy).
The connection between transit and real estate is something that New York leaders clearly get. The 7-train extension is being paid for from city funds. Though grossly overpriced, the city figured that it was more than worth borrowing money to build the extension in order to make big expanses of the west side of Manhattan more attractive to development. The payback on this would appear to be a no-brainer, barring some major economic reversal in the city.
We also see something similar at work in a plan to rezone the land around Grand Central Terminal to enable older 20-50 story office buildings (average age 68 years) to be demolished and replaced with modern towers as high as the Chrysler Building. This is a significant upzoning compared with the 1961 code.
This is not just being enabled by the existing transit infrastructure, but also new major investments coming online. Most notable is the East Side Access project, which will bring the LIRR into Grand Central. That project is projected to bring travel time savings of up to 45 minutes for a lot of commuters. It will also help to support the development of higher densities in the vicinity of the station. Likewise the Second Ave. Subway will benefit pretty much the entire East Side of Manhattan by bringing badly needed congestion relief and the ability to carry more passengers on that side of town. (The existing Lexington 4/5/6 trains carry more people than the entire Chicago CTA rail system).
Given Bloomerberg’s lame duck status and New York’s famously challenging politics, the rezoning may not happen. But it’s a perfect example of how a city can go about capturing the value transit can bring, in terms of economic activity if not actual money for transit.