Ari Rastegar is CEO of Rastegar Property Company, a vertically integrated real estate company with a focus on value-oriented real estate.
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On ballots across the country, citizens were voting on more than just which politicians to elect. This election season, many municipalities were deciding whether to improve or expand their public transportation offerings. This may come as a surprise to many as reports of low ridership in the U.S.’s largest cities continue to make headlines as a result of the pandemic. However, for many metros, especially those undergoing rapid development, these expansions and improvements are vital to continued growth in the post-pandemic world. It’s these improvements that real estate developers, investors and property managers should be watching over the next several years.
Many renters are flocking to smaller cities eager to get away from the high-cost rental areas now that remote work has become the norm. Those coming from large cities, like New York, often do not have a car and are used to relying on public transportation to get around. Also, as jobless numbers rise across the country, many will be looking to downsize expenses and may be reluctant to make a big purchase like a car. Some property rental websites even have filters to show available units that are in proximity to public transit due to popular demand from renters. Environmental concerns around fossil fuel usage also drive some individuals to utilize public transportation over a personal car and prioritize living in areas with robust public transportation options.
For local residents, the influx of new people to their area could also mean more crowded roads and a strain on existing public transit systems. To avoid frustration from citizens old and new, places like Austin, Texas have voted to expand their public transportation system, which will help as increasingly more people flock to the bustling city. Not only does this help the community access these services but it also helps improve community relations by increasing the likelihood that people will use the system to visit local businesses and attractions more often, further supporting the local economy. Public transit also provides job opportunities to residents living outside of a city’s business hub. In Phoenix, for example, 2020 ridership goals for their light rail were reached in 2018, two years ahead of schedule and only 10 years after its launch back in 2008. Since its launch, 35,000 jobs — along with new development — have come to areas within a half-mile of the city’s light rail system.
The benefits of improved public transportation programs also extend beyond reduced traffic and access to jobs to include green initiatives as well. These expansions and improvements help the environment by reducing the overall carbon footprint of the city. Many cities across the country are focusing on green initiatives like reducing emissions caused by traffic congestion, cultivating green spaces throughout cities and improving access for cyclists and pedestrians to reduce reliance on cars. This heightened interest in the environment and the large influx of people coming to smaller cities means both usage and demand for public transportation services will likely be on the rise and meeting those demands will be paramount for continued success.
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On a national level, public transit improvement is also on the mind of the Biden administration. President-elect Biden has released a five-point plan that looks to encourage development of high-speed rail networks all across the U.S. The program aims to lessen the ill side effects of air travel on the environment, by replacing short-haul flights with rail travel that will be made available through the project. This initiative goes hand in hand with local efforts to reduce the carbon footprint of cities and improve access to regional travel. Rail projects would also bring much-needed jobs across the U.S. as the economy continues to struggle under the weight of the pandemic.
To build on this year’s growth of smaller metros, while providing for the wants and needs of residents old and new, public transit expansion is vital. With populations rising and global consciousness around climate change moving to the forefront of politics and everyday life, expansive public transit will become the hallmark of flourishing, successful cities, and those who act now will reap the benefits of their investments.
Enhanced public transportation is a benefit to U.S. cities, and real estate professionals should target corridors where transit systems are either already in development or likely to be developed. Those that get in early enough can expect property values to rise while benefiting from a greener city with greater accessibility.
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