Why Build Near Transit?

By Paul Zykofsky, AICP Director, Center for Livable Communities
Published: Transit California; December 1998/January 1999

Transit stops are not just places for riders to get on and off the bus or train.

In recent years communities all across the nation have begun to recognize that transit, and the areas around transit stops, can play a major role in revitalizing older neighborhoods and in creating new neighborhoods that are more livable.

This article will explore some of the economic and social benefits of transit oriented development. A subsequent article will discuss how we can help insure that development around transit stops contributes to creating more livable communities.

The Economic Reasons

Development near transit helps to maximize public investment in transit. To make a transit system economically viable, a sufficient number of potential riders must live and work near transit stops. To get the most economic benefit from our transit systems we need to ensure that residential and office development is focused around them. The common sense view that people living close to transit stops use the system more frequently has been bolstered by several studies including one conducted by the National Transit/Residential Access Center (NTrac) at the University of California at Berkeley in 1993, which included extensive surveys of people who live near rail transit stations. The study found that approximately 33 percent of the residents living near Bay Area Rapid Transit (BART) stations used rail to get to work compared to only 5 percent of residents in areas not served by BART.1 A 1989 study by JHK and Associates for the Washington Metropolitan Area Transit Authority found that residential use of transit declines by 0.65 percent by every 100 feet in distance from the transit stop.2

Building near a transit stop is not only good for the transit system, it is good for the developer and property owner. Residential and commercial projects near transit typically appreciate in value more rapidly than other projects. As demand for scarce properties near transit stops increases, this trend will continue. A report by Economics Research Associates (ERA) in 1995, documents significant increases in property values for medium density apartments and condominiums and commercial and retail properties located near rapid transit stations.

Similar findings have been made in the case of commercial properties. The 1995 ERA study analyzed a sample of commercial buildings in San Francisco and Oakland and found that “walking distance to a BART station and office rent per square foot are linearly related.”3 A similar trend was found by the ERA study for retail rents. In this case, retail rents close to transit were almost three times higher than in other areas! An article by University of California at Berkeley Professor Robert Cervero in the Winter 1994 issue of the Journal of the American Planning Association concludes that: “Average office rents near stations rose with system wide ridership; joint development projects added more than three dollars per square foot to annual office rents. Office vacancy rates were lower, average building densities higher, and shares of regional growth larger in station areas with joint development projects… Combining transit investments with private real estate projects appears to strengthen these effects.”4

Development near transit stops — especially rail transit — also increases tax revenues for cash-strapped local governments. As pointed out by Australian professors Peter Newman and Jeff Kenworthy, while “freeways usually lower the value of much land along their routes, and disperse commercial developments to their ends… rail systems increase land values all along their routes, and concentrate commercial development (and compact housing) around stations.”5 As the value of property near transit appreciates, property taxes collected by local government also increase. In fact, some cities take advantage of this by using tax-increment financing to help fund expansion of the transit system.

A 1987 study prepared by the Joint Center for Urban Mobility Research at Rice University analyzed property values in transit areas in ten cities and found that in many cases the increase in land value due to the introduction of rapid transit was more than 100 percent of the total construction costs of the transit system investment.6

lightrail imageIn Portland, Oregon a 1993 study found that the assessed value of different station area properties had increased by 112% to 491% from 1980 to 1991, compared to a national average increase of 67.5%.7Portland’s transit agency, Tri-Met, estimates that its light rail line has generated over $1.2 billion dollars in development exceeding ten million square feet, immediately adjacent to MAX, its light rail line. Another $440 million worth of improvements are being planned.8 And in Washington, DC, during the first three years of operation the Metrorail system attracted $970 million in new development to locations near transit stops. This new investment yielded an increase of $50 million dollars in local tax revenues in 1985 alone.9

Pedestrian activity around transit stops is also a natural environment for retail activity. Not only does this improve the viability of small businesses, but it also translates into increased sales tax revenues for local governments. A study prepared in 1992 found that in Atlanta, Georgia “approximately 61 percent of businesses located at downtown stations reported an increase in monthly sales volumes during the first year of transit system operation.”10

The Social Reasons

In addition to the economic benefits, transit-oriented development can help improve the social conditions in decaying downtowns and bypassed neighborhoods. Suburban expansion during the past 50 years has robbed many city centers of their vitality and has created a vacuum at the heart of many communities. As growing numbers of cities try to restore community centers and reassert the importance of the public and civic realm, more attention is being given to transit.

Portland, Oregon revived a downtown that was in decay in the 1970s through a well-planned strategy centered on improving transit services and focusing development near transit stops. The result, according to G.B. Arrington, Jr., Director of Strategic Planning for the regional transit agency, Tri-Met, “is a vital, vibrant downtown, anchored by the Transit Mall and MAX [the light rail system]. The downtown area has grown from some 50,000 jobs in 1975 to 86,000+ jobs today… Transit has done its share. Nearly 40% of downtown work trips arrive on transit.”11 Portland also reestablished the preeminence of the public realm in its downtown by converting a parking lot into Pioneer Square, a gathering place for citizens from all across the region. It is no coincidence that Pioneer Square is bounded by light rail on two sides and by the bus mall on the third side.

The City of Denver pumped new life into its downtown by putting in a light rail line and creating a bus transit mall. Free bus service along the mall, together with the preservation and re-use of historic buildings along the mall and in the Lower Downtown district have reversed the area’s decline and turned it into an inviting location in which to live, shop, work and play.

Smaller cities and towns have also been able to revitalize their downtowns and “main streets” through transit oriented development. City officials in Concord, California, credit a redevelopment project around the BART transit stop with transforming their deteriorating downtown into a commercial center with several major employers.12 The City of Carlsbad, north of San Diego, is using the construction of a commuter rail transit station to revive its “Village Center.” The Carlsbad Village will include a variety of districts combining shopping, and living facilities within a compact, pedestrian-oriented environment.

By attracting new development, transit can be a catalyst for revitalizing deteriorating neighborhoods. Several cities in the San Francisco Bay Area have replaced blighted sections of their community with new residential and commercial development close to transit. For example, the City of Richmond transformed a deteriorated park in its downtown, just one block from a BART station, into a retail and residential center. Anchored by a supermarket and drug store, the 78,000 square-foot center includes several neighborhood-serving shops that combine to create 200 new permanent jobs. Memorial Park also features 64 low-income family apartments, 34 townhomes for first-time buyers and a one-acre park.

bus imageHousing near transit can create more affordable places for people to live in, especially since it gives them the option of not having to own a car, which, according to the American Automobile Association can cost as much as $7,405 per year for a car driven 20,000 miles.13 This can be a heavy burden for most people, but especially for low-income families who may be forced to live in substandard housing to make ends meet. In some regions it may also force middle-income families to move to distant suburban locations that are more affordable. The end result: more money spent on cars and fuel, and more time wasted in long commutes.

Housing near transit can provide more accessible transportation, especially for children, the elderly and disabled. Dependence on automobiles in many communities has severely limited the ability of many people — especially the young and the elderly — to get around. Development near transit not only allows people without cars to get where they want to go, but provides more pedestrian destinations close by because of its more compact, mixed-use nature. This will become even more important in the years and decades to come as a larger percentage of the U.S. population gets older.

This issue has drawn the attention of the American Association of Retired Person (AARP), which in 1994 adopted a policy statement that called for “development of livable communities that meet the life span needs of residents.” To create these types of communities the statement discussed the need for “encouraging housing affordability, a greater diversity of housing types, the location of facilities and services within easy walking distance,” and “accessibility to mass transit.”

The social impact of automobile-dependency on the young should also not be overlooked. A study cited by architect Peter Calthorpe found that 10-year old children in automobile-dependent Orange County, California watched four times more television than the same age children in a small Vermont town. The children in the Vermont town spent much more time playing outside, in spite of a less favorable climate. Calthorpe asked: “What is the maturation of children who can’t go anywhere on their own till they’re 16?”14

Transit-oriented development can also help to provide more housing choices for our changing households. During the past 20 years the composition of the “typical” household in the U.S. has changed dramatically. As pointed out by Calthorpe in his book The Next American Metropolis, “the percentage of singles and single-parent families is increasing, from 29 percent twenty years ago to 38 percent today. Of the approximately 17 million new households formed in the 1980s, 51 percent were occupied by single people and unrelated individuals, 22 percent by single-parent families, and only 27 percent by married couples with or without children. People over 65 made up 23 percent of those total new households. Households with children typically now have two workers. Married couples with children now represent only 26 percent of the households, down from 40 percent a generation ago.”15

This change in the “typical” household requires a wider variety of housing types. Single parents might prefer living in courtyard houses or garden apartments or in a co-housing complex, where support is more readily available, than in an isolated suburban single-family house. Similarly, retirees might prefer a one- or two-bedroom townhouse over a large house with an expansive lawn. Compact residential development built near transit can provide a wider range of housing types and allow seniors and children who live there to be less dependent on others for transportation.


These are only some of the more compelling economic and social benefits of transit-oriented development. But, as the saying goes, “anything worth doing is worth doing well.” The next article will discuss how we can make sure that the development that takes place near our transit stops is of the highest quality and contributes to creating more livable communities.

Paul Zykofsky is Director of the Center for Livable Communities, an initiative of the Local Government Commission, a non-profit membership organization of local elected officials based in Sacramento. He is the co-author of Building Livable Communities: A Policymaker’s Guide to Transit Oriented Development from which this article is adapted.


  1. Cervero, Robert. Ridership Impacts of Transit-Focused Development in California. National Transit Access Center, University of California at Berkeley, November 1993. p.ix.
  2. JHK and Associates, Development-Related Ridership Survey II, prepared for the Washington Metropolitan Area Transit Authority, December 1989. (As cited in Transportation-Related Land Use Strategies to Minimize Motor Vehicle Emissions: An Indirect Source Research Study by Deborah Dagang and Terry Parker. California Air Resources Board, 1995. p.3-13.)
  3. Economics Research Associates (ERA). “Transit Case Studies for the City of Hillsboro LRT Station Area Study.” Prepared for Leland Consulting Group and City of Hillsboro. January 25, 1995. p.25.
  4. Cervero, Robert. “Rail Transit and Joint Development: Land Market Impacts in Washington, D.C. and Atlanta.” Journal of the American Planning Association. Vol. 60, No. 1, Winter 1994. p.83.
  5. Kenworthy, Jeff and Newman, Peter with Robinson, Les.. Winning Back the Cities. Australian Consumers Association. Pluto Press Australia. 1992. p.22.
  6. Assessment of Changes in Property Values in Transit Areas. Prepared by the Joint Center for Urban Mobility Research, Rice Center for the Urban Mass Transit Administration. July 1987. (As cited in ERA report, op.cit. pp.14-15.)
  7. Arrington, Jr., G.B. “Beyond the Field of Dreams: Light Rail and Growth Management in Portland.” Tri-Met. March 1995. p.10.
  8. ibid, p.9.
  9. As reported by Kenworthy and Newman, op.cit., p.24.
  10. Sacramento Regional Transit District Preliminary Benefits Report. Prepared by Krieger & Steward, Inc., David Taussig & Associates, Inc., SAE Communications, and HDA Consulting. July 1992. (As cited in ERA report, op.cit. p.21.)
  11. Arrington, Jr., G.B. op.cit., pp.5-6.
  12. Economic Research Associates, op.cit, p. 28.
  13. American Automobile Association. Your Driving Costs. 1995 Edition. pp.4-5.
  14. Cohen, Susan. “Anybody Home?” San Jose Mercury News, December 18, 1994. p.12.
  15. Calthorpe, Peter. The Next American Metropolis: Ecology, Community, and the American Dream. Princeton Architectural Press. 1993. p.18.