By Erik Hanson, Vice President, JLL Capital Markets
A new report released by our San Francisco Bay Area research team suggests that transit-oriented development is more than just a snappy slogan.
The researchers’ analysis of office buildings around more than 30 Bay Area metro train stations reveals that office buildings within about a half a mile walk of many of those stations command a 30 percent rent premium over assets in “drive-to-rail” markets (i.e., more than a 10-minute walk away). On average, those same close-in buildings tend to have vacancy rates about three percentage points lower than buildings further away from transit.
Bay Area employers want to be located near to BART or Caltrain stations to ease their employees commutes. With the Bay Area near the very top of the list of most traffic congested areas in the country, employers realize that removing the need to drive from the live-work equation means happier and more productive employees. Office buildings within an easy walk of train stations and amenities such as restaurants, cafes and parks, are among the most appealing in the market. Just as occupiers should choose their location wisely, so should investors.
Bigger and better regional transit options are coming to the Bay Area. BART and Caltrain are expanding and, in the next decade, Caltrain may provide the tracks for a High Speed rail service linking San Francisco to San Jose.
Investments such as these will create additional development opportunities over the next decade for office developers looking to create transit-oriented projects that appeal to a wide range of tenants.