“Clearly, any sort of big transit infrastructure program can act as a huge stimulus for the development of surrounding real estate,” said Scott Homa, a director of United States office research for Jones Lang LaSalle, a global property company. “It’s starting to emerge as a universal theme across the U.S.”
Office buildings with access to transit are outshining those without, fetching rents nearly 80 percent higher. That amounts to $45.57 a square foot versus $25.39 a square foot, according to a report released this year by Jones Lang LaSalle. Those same buildings have a vacancy rate 3.7 percentage points lower than offices without transit access.
“It’s definitely a factor when tenants are making their final choice,” said E. Nelson Mills, the chief executive of Columbia Property Trust, a New York-based landlord that owns about 7.8 million square feet of office space, primarily in New York, San Francisco and Washington.
A case in point is Columbia Property’s $3 million renovation of the 80 M Street building near the Navy Yard-Ballpark Metrorail station in Washington’s fast-growing Capitol Riverfront neighborhood. The upgrade follows about 84,000 square feet of new leases, including a 15-year, 68,673-square-foot deal with the shared and private office provider WeWork.
The Washington Metropolitan Airports Authority is extending a 23-mile Metrorail line into Northern Virginia to connect downtown Washington to Dulles International Airport and beyond. The first part of a two-phase expansion included four station openings in 2014 in the Tysons Corner suburb, which has numerous office buildings. Since the end of 2012, the average office rental rate has climbed 10.5 percent there, compared with a decline of 4.5 percent in neighboring Merrifield, according to Jones Lang LaSalle.
Just to the east, in Herndon, Va., MRP Realty bought eight office buildings on 32 acres from Liberty Property Trust last year, for $97 million. The office park is near the future Innovation Center Metrorail station, projected to open in 2020. MRP Realty is renovating three buildings and it plans to tear down smaller, out-of-the way office properties to make way for townhouses, apartments and retail space.
“Office decision makers have Metrorail on their radar because it gives their employees an option to commute, which makes it easier to recruit,” said Matthew Robinson, a principal in MRP Realty’s Washington office. “But we have the ability to add mixed-use development at the site, and that was a key component.”
The industrial Fulton Market neighborhood in the West Loop of Chicago began developing a reputation as a vibrant residential, restaurant and bar scene about a decade ago. But investment in the area accelerated when the Chicago Transit Authority said it would open an elevated train station along an existing line in 2012.
Developers swooped in to add offices in new and rehabilitated buildings. Google and Uber are among the companies that have moved into the neighborhood over the past several months, and McDonald’s announced last year that it would move its headquarters there from the suburb of Oak Brook.
“Fulton Market is clearly the shining star in Chicago right now,” said Todd M. Caruso, a senior managing director of the real estate company CBRE Group. “I’m sure we’ll be hearing of more major companies moving there in the coming months.”
Corporations in the Northwest are also gravitating to submarkets served by transit. In September, Weyerhaeuser, a timberlands company, traded its 425-acre campus in a Seattle suburb for a new building downtown that is three blocks from a transportation hub. Citing transit opportunities, the outdoor-gear retailer REI also announced that it would move into new headquarters in the growing, mixed-used Spring District of Bellevue, Wash., in 2020, just a few years before a Sound Transit light rail station opens there.
Bert Gregory, a partner with the architecture firm Mithun, which designed the new Weyerhaeuser headquarters and is working on apartments in the Spring District, recalled a conversation a few years ago in which a developer told him that rail stops had replaced intersecting freeways as “100 percent” sure-to-succeed locations.
Noting the developer’s prescience, Mr. Gregory said he had recently realized that all of his active projects were within two blocks of transit lines. One of those includes turning the site of The Oregonian’s former printing press buildings into housing, as part of a mixed-used project just outside downtown Portland.
“Transit is the nature of development interest and of developer focus today,” he said.