The Urban Land Institute last year released a report that confirmed what many developers already know: Demand will increase for smaller homes located in urban areas within walking distance of public transportation.
This means that commercial developers who want to attract the greatest number of tenants to their office buildings and shoppers to their retail centers will increasingly be building in denser urban areas.
This is no shock to Eric Larson, president and chief executive officer of Bloomfield Hills, Mich.-based Larson Realty Group. As chairman of the Urban Land Institute’s Michigan Governance, he’s long been a proponent of the benefits of building houses and businesses close to public transportation.
And soon he will get to see how transit can make a difference in the center of downtown Detroit, where a new rail-based streetcar system is set to go into operation by the late summer of 2016.
“As you know, in Detroit and in Michigan in general, we have a long way to go when it comes to providing more mass-transit options to our residents,” Larson said. “We need a much more robust and serviceable transit system. Fortunately, that work is underway now. I think it will have a major positive impact on downtown Detroit.”
The system, known as the M-1 Rail, will travel a 3.3-mile route along Woodward Avenue from Larnard Street in downtown Detroit to Grand Boulevard in the New Center neighborhood. The project will cost $176 million, and construction is beginning this year.
There have been concerns raised with the project. At a public hearing earlier this year, some residents worried that Detroit officials were investing big dollars in putting permanent rails in the ground without adequately testing that enough commuters will take the streetcars.
Others said that it’d make more sense for Detroit to put money into its existing bus system, to allow residents to travel more easily throughout the city.
But Larson said that the M-1 line has already generated interest and investment from key investors and institutions in the city. And this, he said, bodes well for the future success of the project.
“It’s not just individual investors. It’s large institutions, too, located along the Woodward spine that are not only investing in but are intrigued and excited about transit coming to that stretch,” Larson said. “It’s a 7-mile round trip. It’s just a start, but it’s an important start.”
Larson said that Urban Land Institute research has found that real estate increases in value — and vacancies decline — when properties are located within walking distance of fixed-track and fixed-station public transit options. Rubber-wheeled systems such as bus routes don’t have as great of an impact, he said, because these routes can be redirected at any time.
That is less likely to happen when a fixed-rail route is in place. It takes serious dollars to re-route such a system.
Transit-oriented developments are even more important in cities like Detroit today. That’s because young people across the country — members of the Millennial generation — want to live in urban centers. But to attract these young consumers to condos and apartment complexes, cities need workable transit options.
To Larson, this is why the M-1 line is so important to Detroit.
“The other cities that we are competing against for the educated and younger buyers have had the benefit of solid mass-transit systems for a long time,” he said. “The younger buyers want to spend less time inside and more time outside. The size of their homes and vehicles is significantly less important than their ability to connect with other parts of the community, other friends throughout the community. They spend less money on the ownership of vehicles and are more interested in other forms of transportation.”