TOD-The Rise or Demise of the University District

A Transit Oriented City
The Rise or Demise of the University District

Introduction

Over the past decade, transit-oriented developments (TOD’s) have gained popular momentum as a development tool to promote regional growth. This relatively new national paradigm as has opted cities to invest heavily in mass transit capabilities. The objective of this research paper is to develop a strategy to measure and facilitate the success of the University District’s real estate economy. This work builds upon other recent projects related to TOD and suggests a recommendation to best utilize TOD to the University Districts advantage.

The University Link Project
Scheduled to open for service in 2016, Sound Transit’s underground University of Washington station (Montlake Hub) will be located adjacent to Husky Stadium, and will run parallel to Montlake Bld. The light rail extension will connect Downtown Seattle, Capitol Hill, and The University of Washington. Sound Transit plans to extend the University Link light rail line 12.5 miles farther north to Northgate, Shoreline, Mountlake Terrace, and Lynnwood by 2023 as part of a 36-mile light rail expansion plan. The Montlake Hub will provide convenient linkages to UW medical center and adjacent sporting venues, The station will be located within a 1.2 mile radius of the U. District’s major shopping venues, the University Village and University ‘AVE’. The University link extension will stretch 3.15 miles from downtown to the University of Washington. The extension is estimated to make traveling to the UW three times faster than taking the freeway. Once fully completed the light rail is estimated to service an astounding 280,000 riders a day. Sound Transit plans to provide regional access to the largest urban centers in the State of Washington.

A Tale of Two Developments
The University District is a dynamic trade area that is centrally dedicated to the servicing a growing college-aged population. At the commercial heart of the U District is ‘The Ave’, an acclaimed eight-block-long global food court and nightlife venue with scattered street level shopping. ‘The Ave’ is the crossroads of many diverse Seattle subcultures and is comprised mainly of family-owned businesses and local dining amenities. On the east end of the U. District is the ‘University Village’ a centrally owned and operated upscale shopping center. Both of these developments are very much opposites but their success or failure is mutually hinged on the regional reaction to Sound Transit’s new University Link. Sound Transit says its services will lower traffic congestion and create a more efficient free-flowing regional economy. TOD’s have become attractive to city planner in part by their tract record in creating affordable housing and stimulating retail economies. Denver, Portland, and San Francisco are cities that have adopted TOD’s and since implemented they have become recognized as the poster child of ‘green’ revitalization efforts and econometric stimulus. “Mass transit projects like Sound Transit’s regional light rail provides a service to that will impact where Seattleites live, work, shop, eat, and drink”. (Spangethal ). By reducing overall travel expenses on a regional basis, properties in close proximity to transit hubs have historically experienced an increase in demand for both residential and commercial spaces. During Portland’s planning process for their Tri-Met transit system the main goal of the TSAPC (Transit Station Area Planning Committee) was to build support for transit-oriented developments along light rail lines and to create investment opportunities around transit hubs.

Synergies in Regional Transit:

Mass transit providers are well aware of the impacts and potential risks associated with the placement of transit hubs. From a feasibility perspective, transit hubs ideally should benefit the urban core by providing synergies between the regions they service. However the Montlake Hub lacks fundamental characteristics needed to promote local economic stimulus . The Montlake Hub is located exactly 1 mile away from University Village and 1.2 miles away from the main drag of the University ‘Ave’, making it an inconvenient walk for nonlocal consumers. The Montlake Hub is not located in its most efficient location; however land values played a part in this decision. In terms of regional synergies, the Capitol Hill Hub is located just 40 ft from Broadway Avenue, a street renown for being the core of urban shopping on the Seattle eastside. The Westlake Hub is has located in the heart of Downtown with entrances on the north side of Pine St. at Nordstrom, Westlake Center and Macy's, and on the south side of Pine at Coldwater Creek and between The Gap and McDonalds. The Montlake Hub is positioned at an inconvenient location for benefitting the U District’s urban core. Attracting business from nonlocal transit riders will be tough unless its college gameday. Since the light rail offers opportune links to Downtown and Capitol Hill shopping districts, the risk of too many local dollars being spent across other regions may have a negative impact on the U Districts real estate market. The question arises can the Montlake Hub attract enough nonlocal dollars to sustain local U District businesses? The main problem with the Montlake Hub is it does not provide equal convenience therefore making it synergistically obsolete in relation to other hubs. When expanding a into another larger market securing competitive advantage is crucial especially when you’re trying to acquire nonlocal dollars.

Success & Sustainability from a User Perspective:

The key to creating a successful light rail system is having extensive knowledge of each hub’s local marketplace. Each hub is located within a different Seattle market and therefore each hub must have a different business model in order to most resourcefully increase ridership and provide sustainability within the urban core. Models of development should be appropriate to the local character. When looking at the Montlake Hub a couple of issues arise. Will the University District lose its local spenders to other regions? Can the University District attract enough regional money to make up for local dollars lost? While the Montlake Hub has it fair share of logistical problems at the heart of the issue is a behavioral conundrum. If all Seattle consumers can access the Northgate Mall, Downtown Seattle, Capitol Hill, and the University District, where will consumers choose to spend their time and money? By making the city of Seattle more accessible, consumers increase their ability to choose where they live, work, and spend their free time. In a 2009 survey of 124 UW college men and woman, 92% opted that once open, they intent to use the transit service it on a bi-weekly basis. Of those that opted that they would use the light rail service on a bi-weekly basis, the top two reasons for riding were experiencing regional night life and accessibility to regional shopping. The next closest reason for ridership was for work related travel.

Having a transit oriented city will allow UW student to enjoy all amenities within the greater Seattle area. By reducing transportation costs consumers will be able to expand the radius in which they would normally consume goods and services, thereby making surrounding real estate markets more volatile. By creating convenient access to Seattle’s most established census tracks, we are funneling large volumes of foot traffic in and around our region. This increase in ‘traffic’ or volume ideally predicates a rise in local spending around transit hubs and therefore increases the demand for real estate, both residential and commercial. However this is a double sided sword because in making Seattle a more accessible city, consumers have a wider range of choices, which creates huge upside potential for businesses that are within a markets popular demand. Unfortunately for development that are not conveniently located near transit hubs, it will be hard to receive the same benefits even if the business is in popular demand. Location, Location, Location.

Competitive Advantage:

The University District is economically speaking, a self sustaining entity that is fueled by a circulation local spending. The University District does not contain the amenities to compete against super regional shopping centers. In order to circumvent against regional cannibalizing, the University District needs to establish an atmosphere that is worthy of attracting dollars from Downtown and Capitol Hill.
In order for the University District to remain sustainable, local investment opportunities must be appropriated to serve people who live and work in other regions. As mentioned in the sample survey above, 98% of UW students declared that they will be using the light rail as means of traveling away from the University District. In order to hedge against this loss of local consumers, planners need to make provisions to attract regional dollars. Convenient busing services from the Montlake Hub to the U District’s urban cores need to be arranged. In order to insure the sustainability of the University District. Seattle officials must provide the University ‘Ave’ with some sort of central ownership that creates a more versatile consumer experience that lends itself to all age groups. The ‘Ave’ must be upgraded or rehabilitated in order to serve more than just it’s college-aged population. As mentioned above, transit systems make local real estate more volatile, an increase in volume brings about the possibility of huge upsides however at the same time high volume can lead to a huge windfalls and value decay if risk is mitigated correctly.
After assessing the feasibility of the University Link from a user perspective, we will now analysis the link extension from the perspective of local tenants. First off it is important to decipher who benefits and who loses with the introduction of a regional transit hub. It is likely that the Montlake Hub will increase UW ticket sales at sporting events and help promote business at UW Medical Center. The transit hub will also benefit students who live in other regions and commute to and from school. The University of Washington is undeniably the tenant that is benefitting most from the transit line, but how will it influence other local tenants? The key to any business’s success depends on its ability to generate traffic and service its core consumer needs and wants. In order to attract regional spenders, the U District must adapt itself to a broader popular demand which are considerably different than college aged needs and wants. Planners also need to realize the necessity of attracting larger corporations. If the University District is going to support a transit hub it must be able to create job opportunities. According to the 2009 survey, the fourth most popular reason for UW students to ride the transit system is for work related travel. To hedge against an exportation of local worker, officials and developers must import regional companies to counter and stimulate spending. Bringing in large and well established corporations will create jobs as well as funnel in workers from satellite regions of Washington State. Inviting Downtown or Capitol Hill based companies to set up shop in the University District will reverse the live/work flow of travel. This will synergistically lock in the sustainability of the University District by attaching itself to other markets along the light rail line.

Market Timing & Execution:

When looking at other successful TOD projects and the time at which they were constructed, we can gain some knowledge of the TOD demand cycle. In the early 1990’s transit oriented developments in Los Angeles did not meet initial expectations in lieu of a severe economic depression in Southern California. However as the California economy started gaining strength in 1996-97, projects planned during the beginning of the recession became a financially feasibly option. Sound Transit’s light rail is following a similar pattern.

Personal Recommendation:

Transit hubs in Portland and Los Angeles have shown that apartments and retail buildings within a 5 minute walk of transit hubs experience an average value increase of 4.9% per year after light rail completion. The premises of TOD’s are to save local residents money by reducing their daily travel expenses. The people who utilize mass transit are usually the same people that have a high for demand affordable housing. Because of its location and across the street from the UW campus, it would be difficult for a private developer to find adequate space to build affordable housing unless UW agrees to a joint venture.

If the UW where to agree to a joint venture, it would be my recommendation to acquire the corner lot located directly across from the Montlake Hub on UW campus. This area serves as an ideal early-to-market location to spark more new development and investment around the area . This area could be the first of many developments along Montlake Boulevard. Providing an open air campus with an already pre-constructed central courtyard, the building could be home to a variety of food and drink restaurants, ground level retail, and Class A office space on the upper levels. The development would service on-campus staff and students, employees of the UW medical Center as well as local and regional spenders exiting the Montlake Hub. Since this would be the first development of its kind on Montlake, there is no competition for market share and office rents could be held above market because of the corner location and close proximity to the Sound Transit light rail.

Works Cited:
Dominic Holden. Seven Things We Learned While Riding the Light Rail for the First Time. Jonah Spangethal. Publisher The Stranger
Nelsen Dick Look Beyond the Physical Characterists. Integrated Transport Research.
Michael Bernick. Transit Villages in the 21st Century. McGraw-Hills: San Francisco. 1997
Schneider, Fiona. Los Angeles Planning Department. Blayney-Dyett. May 1998.
Action for Public Transport. NSW Inc. 2004. Sydney Light Rail Planning.
Tri-Met. “Key Events Leading to Tir-Met’s Formation” http://www.tri-met.org/keyevents.htm
Arrington, G.B. Beyond the Field of Dreams: Light Rail Growth Management in Portend. Tri-Met.. September 2006