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10 Apr 2013
Developing commercial and residential space around public transport hubs offers a real opportunity to spread risk and gain income from property investments, while helping to build sustainable communities in areas that would most benefit. But it’s no silver bullet and there are still some big challenges to be overcome if it’s going to take off worldwide.
“What do communities living near transport hubs really need?” asks Abigail Thorne-Lyman, director of the US-based Center for Transit-Oriented Development (CTOD). This is the question at the heart of the work that she and her colleagues across the country have been doing since CTOD opened back in 2004.
CTOD is a non-profit partnership of three organisations in the US: Reconnecting America, the Center for Neighbourhood Technology and Strategic Economics, a real estate and development consulting firm. The organisation’s focus is on transit-oriented development (TOD) –mixed-use residential and commercial areas built around transport hubs, such as railways, bus or subway stations, where car use is minimised and pedestrian facilities are emphasised.
In 2004 CTOD published Hidden in Plain Sight, a report highlighting the growing demand for housing in transit-rich communities.
“We wanted to let developers know why they needed to focus on this particular area when considering new housing projects,” says Thorne-Lyman. “We wanted them to see that you can do something different when you build new transit. It’s not always about what developers want to do. It’s about creating a community in an area near transit and developing the area in order to encourage people to build that community.”
Cities such as Amsterdam, Hong Kong and Munich have already demonstrated the effectiveness of this approach. They are known for their large, central railway stations and for the socio-economic benefits that flow from these, including a good traffic-transit balance, thriving city centres and a certain quality of life.
According to Jason Hutchings, responsible for architecture and urban design at Atkins in Hong Kong, the great value of TOD is that it offers attractive development opportunities while being inherently sustainable. It also provides an effective way for transport operators to fund infrastructure projects, thereby reducing the burden on taxpayers.
Hong Kong itself is widely seen as a leading TOD model. Since the mid-1990s the city’s mass-transit authority, the MTR Corporation, has invested in several stations, introducing shops, offices, hotels and leisure amenities on and around these. In the process it has been able to supplement its income, benefiting passengers through better facilities and services, while promoting a sustainable approach.
“The government allowed the MTR Corporation to develop commercially on top of its stations, which means that it not only runs the trains, but it’s also the landlord and, in some cases, the owner of shops, restaurants and residential blocks,” Hutchings says. “It receives money from the property development as well as from operating the trains. An increase in the first activity drives an increase in the second and vice versa.”
The MTR Corporation is now making significantly more profit from its property interests (£290m in 2009) than it is from fares (£171m). Such has the been the quality of its schemes, the company’s retail operation, MTR-Malls, is successfully managing large-scale retail development located further afield from its stations.
Hutchings points out that, as well as providing benefits to transport operators and their passengers, a TOD can give an economic boost to the surrounding area.
“There are collateral benefits of having one in an urban context. It generally uplifts the area and therefore increases property values,” he says.
This position is reiterated by property consultancy Knight Frank, which provides commercial and development advice on TODs in Hong Kong and China. Knight Frank and Atkins’ architects know that integrated transport elements and real estate developments produce the best possible return on investment.
“In land-scarce, high-value cities such as Hong Kong, TODs allow for greater densification and therefore better use of land resources,” says Paul Hart, executive director of Knight Frank Greater China. He adds that the provision of an integrated rail transport solution within a comprehensive development results in significant increases in value. This not only helps to fund the investment in infrastructure but also provides local authorities with an enhanced tax base, as property values in the vicinity will also benefit.
Hart points out that TOD presents opportunities for rail operators to make the most of their non-fare revenues by taking advantage of retail and advertising opportunities within stations. “Non-fare revenue is becoming more important and we are seeing more customer-focused retail being provided in station.”
Professor Chris Hale, a Melbourne-based TOD expert, adds that TODs enable transport operators to plan more easily for the longer term, too. “Mass transit is costly to refurbish and extend. Transit operators need to know how their passenger numbers will increase and how growth is going to occur. Good TOD planning provides some certainty,” he says. “The transport operator wants certainty that it’s not building a white elephant. If development is associated with a transport hub, and the government is behind that hub, there is increased certainty for developers as well.”
While Hutchings and Hale are steadfast TOD enthusiasts, they’re well aware of the challenges involved in realising such schemes. One problem is that pedestrian traffic through TODs tends to be tidal, sweeping in and out during the rush hours. To counteract that, Hutchings says it’s important to integrate different types of commercial business and attractions to fill in for off-peak hours.
On the other hand, TODs can help to solve a common problem with shopping malls: that visitors tend to resist using escalators, stairs and lifts. The normal approach by developers is to put something like a food court on a higher floor in the hope of enticing shoppers there, but that’s not always successful. Stations with underground platforms naturally bring people upwards, though.
“The vertical movement of people is vital to the success of these projects,” Hutchings says. “What’s really good about combining a commercial property development with a metro system is that trains are normally two or three levels down, so people already have to come up through the building from the basement. Integrating this with elevated pedestrian connections and podium facilities encourages vertical movement and activation of multiple retail levels.”
Hong Kong’s TOD success has not been lost on planners in mainland China. Meixi Lake is a new development being built outside the southern city of Changsha. The satellite “eco-city”, which will eventually be home to more than 200,000 people, will be based on four metro stations, each with a distinctive identity. The first incorporates a cultural centre and opera house; the second, a high-end residential area built around a man-made lake; the third, a mixed-use “icon tower”; and the fourth, a business and financial district.
Mark Harrison, senior technical director for Atkins’ urban planning consultancy in China says the idea was to plan high-density, mixed-use cores around the four metro stations.
“The planning strategy located metro stations within 500m walk-in and wider ride-in catchments, to encourage the maximum possible use of public transport.”
The aim is to reduce carbon and other harmful emissions, promote accessibility to a wide range of facilities for all sections of the community, and maximize land values around the stations. An integrated approach to transport planning connects all modes to the key metro station interchanges and there is a transport hierarchy: the focus is on zero carbon (pedestrians/cyclists) and low carbon (metro and other public transit) transport.
The plan facilitates the creation of identity and legibility within each TOD cluster instead of focusing all landmark buildings within the CBD. This approach, together with attention to the public realm, promotes identity and sense of place across the site.
By diversifying land uses, the plan also builds a degree of flexibility into the subsequent implementation stages.
Harrison says that the Meixi Lake masterplan will emerge in phases over the next 15 years. The lake and river corridors are already built as well as some main arterial roads and other service infrastructure.
As TODs have sprung up around the world, they have inevitably taken on different characteristics. Not every transport operator will want, or be able, to take the TOD concept as far as the MTR Corporation has done in Hong Kong, for example. Nor will many developers have the scope to create a city from scratch.
In most cases the TODs will be more modest affairs, perhaps incorporating a few retail and food outlets and a pedestrian area outside. But the starting point of any TOD project can have a big influence on its outcome, as CTOD’s Thorne-Lyman points out. If developers are given free rein, there’s a risk that people at the lower end of the income scale could be pushed out and that doesn’t benefit anyone in the long run.
A lot of CTOD’s recent research in the US, for example, has focused on mixed-income TOD and the preservation of housing. “We call it ‘revitalisation without displacement’, where you’re able to capture those revitalising aspects without sacrificing residential opportunities for lower-income households or displacing people,” she says.
Much of CTOD’s work has focused on communities that are adding fixed-guideway transit lines for the first time – eg, heavy, commuter and light rail, monorail, trolleycars, aerial trams and cable cars – and trying to decipher the potential effects of that investment.
“For many regions, this is an unprecedented investment and we’re trying to help them anticipate its impact on communities and to determine how to get the most out of TOD’s revitalising aspects,” says Thorne-Lyman. “And there can be quite a bit of resistance to the idea: there is no sense of how TOD might change a lower-income community, for example. There is a fear that low-income residents will have to move somewhere further away if property values rise quickly owing to the introduction of a TOD.
“TOD is a complicated build. Mixed-use development is hard enough because you’re pulling from several different lending streams, including retail and offices and residential, but then you add mixed use and all the extra infrastructure and it’s even more complicated. Often the first developer in the door risks not making any money. As such, TOD isn’t a one-size-fits-all solution for developers looking for a quick win.”
Hale, who has a doctorate in TOD-related economics and planning, says that while the US is still at a relatively early stage in its adoption of TODs, East Asia and Europe are most advanced.
“In Asia there seems to be an intuitive understanding of both the value and the scarcity of land close to transit infrastructure,” he says. “The result has been a substantial and dense clustering of residential, commercial and retail activities and development around high-performance rail systems. Asian cities are quite simply the most transit-oriented of all city types.”
He contrasts the ability of East Asian authorities and developers “to get things done” with that of their US counterparts, where even relatively small TOD projects have been stymied by years of planning disputes. Australia, by comparison, has “rhetorically adopted” TODs, but not always followed through. “The big four cities have all adopted big transit-oriented regional plans. But Sydney is doing it: 70 per cent of new housing there is built in these types of locations,” he says.
Certainly, TOD is not for the faint-hearted. Hale describes such projects as “more technically challenging than a lot of developments”. Integrating two different building types can set off statutory and zoning complications. And usually there are many interested parties. “It is quite an intensive form of development in a built-up area, so there needs to be lots of co-ordination with local stakeholders,” he adds.
Still, Hutchings says the challenges are all surmountable and that the benefits, all told, easily outweigh the effort required. “TODs present planning, statutory and infrastructural issues that need addressing, but that’s why transport operators and developers need consultants such as Atkins,” he says. “In truth, I haven’t come across any negative impacts from designing and delivering TODs.”
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