Location may be everything in real estate development, but for today's corporate leaders access to transportation — particularly public transportation — is playing an increasingly important role for employees. Take, for example, CentrePort Business Park, a 1,300-acre, mixed-use business park that boasts a daytime population of more than 25,000, located between Fort Worth and Dallas at the southern entrance to Dallas/Fort Worth International Airport. Owned by General Motors Asset Management, it is home to more than 100 businesses, including American Airlines' world headquarters, Travelocity.com, Mercedes Benz, Capital One, Office Max, Keebler and Whirlpool.
CentrePort's main attraction is its connection to the Trinity Rail Express, a commuter railroad that links Dallas and Fort Worth with an international airport. The line averages more than 40,000 riders a week with 21,000 riders a month passing through CentrePort's station.
Around the country, however, new light rail projects are controversial. In Seattle, the long-delayed $2.49 billion light-rail project originally stalled due to cost and construction disputes. The 14-mile project, financed through a combination of local and federal funding, is part of a larger transportation package. When completed, supporters say light rail will alleviate many transportation problems from downtown Seattle to South 154th Street near the airport.
At press time, Rep. Ernest Istook Jr., R-Okla. — chairman of the House subcommittee responsible for approving federal transportation dollars — is withholding approval of $500 million until it is determined that a Supreme Court decision will not cause tax dollars to be drawn from areas not served by light rail.
Despite funding challenges, public transportation is often a magnet for residential, retail and office development, regardless of the method of transport used. At CentrePort, for example, a flurry of corporate build-to-suit development projects and lease commitments, totaling about 700,000 sq. ft., ensued when the project was announced. Now, only 6% of the park's 2 million sq. ft. of office space is vacant.
“Public transportation is good for business,” says Dick Ruddell, president and executive director of the Fort Worth Transportation Authority. “Public transportation sparks business activity, generates jobs, boosts property values and connects employees to their work forces.” The American Public Transportation Association (APTA) estimates that for every $1 billion in public transit funding, 47,500 new jobs are created and every dollar invested in public transportation systems generates at least $6 in economic activity.
Employers also recognize the value of a large labor pool living nearby in the suburbs. Transit-oriented developments and suburban office parks actually help attract and retain employees who seek to improve their quality of life through shorter commute times and access to convenient retail amenities in an aesthetically appealing, pedestrian-friendly environment.
Additionally, developers and clients are attracted to the less-expensive facility costs and tax advantage of transit-oriented developments, which are typically located in suburban areas where land is less expensive and open-space planning reduces employee density. Compared with their urban high-rise counterparts, parking costs for businesses in suburban locations are nominal, yet they share the advantages of an urban site because of access to the region's public transit infrastructure.
Under federal law, employers can provide up to $100 per month in tax-free benefits to employees who ride public transportation to work. The program saves employees up to $1,200 per year, and employers save on payroll taxes. Or, if the employer wishes, the transit commute benefit can be offered a pre-tax benefit, through payroll deduction, with employer and employee sharing the cost.
According to the APTA, roadway congestion costs reached $67.5 billion in 2000, caused 3.6 billion hours of delays and 5.7 billion gallons of excess fuel to be consumed in the 75 urban areas studied. Travelers will encounter congested roadways during seven hours of the day.
Transit-oriented developments decrease automobile dependency, which improves the quality of the environment and may translate into cost savings. Developers may qualify for federal funding if they comply with emissions requirements. Given the cost savings and the reduction of employee turnover, transit-oriented developments will continue to attract business leaders.
Bill Guthrey is senior vice president of Koll Development Company, a full-service commercial real estate firm.