Monograph 48 / Institute of Urban and Regional Development Rail Transit Investments, Real Estate Values, and Land Use Change: A Comparative Analysis ofFive California Rail Transit Systems John Landis, Subhrajit Guhathakurta, William Huang, and Ming Zhang with Bruce Fukuji and Sourav Sen July 1995 University of California at Berkeley $16.00 Monograph 48 Rail Transit Investments, Real Estate Values, and Land Use Change: A Comparative Analysis ofFive California Rail Transit Systems John Landis, Subhrajit Guhathakurta, William Huang, and Ming Zhang with Bruce Fukuji and Sourav Sen This paper was produced with support provided by the U.S. Department of Transportation and the California State Department of Transportation (Caltrans) through the University of California Transportation Center. University of California at Berkeley Institute of Urban and Regional Development Table of Contents Executive Summary Chapter One: Introduction 1 1.1 Introduction 1 1.2 The Policy Context 2 1.3 California's Rail Mass Transit Systems: An Overview 3 1.4 Report Organization 11 Chapter Two: Theoretical Foundations and Literature Review 13 2.1 The Economics of Land Uses, Land Prices, and Urban Form 13 2.2 Transportation Technologies and Metropolitan Form 15 2.3 The Effects of Transportation Investments on Land Use Change 17 2.4 Transportation Investments and Property Values: The Empirical Record 21 2.5 Summary 25 Chapter Three: Rail Transit Access and Single-Family Home Prices 27 3.1 Model Development and Specification 27 3.2 The Capitalization Effects of Heavy Rail Systems: BART and CalTrain 31 3.3 Three Light Rail Systems 39 3.4 Caveats and Conclusions 41 Chapter Four: Rail Transit and Commercial Property Values 43 4.1 Data Issues 43 4.2 Alameda, Contra Costa, and San Diego Commercial Property Price Trends: Analysis of Variance 44 4.3 Alameda, Contra Costa, and San Diego Commercial Property Price Trends: Regression Analysis 46 4.4 Summary and Caveats 50 Chapter Five: Rail Transit Investments and Station Area Land Use Changes: 1965-1990 53 5.1 Land Use Changes at Selected BART and San Diego Trolley Stations 54 5.2 Modeling Land Use Changes Near Transit Stations 67 5.3 Model Results: Explaining Patterns of Land Use Change 70 5.4 Patterns of Vacant Land Development 74 5.5 Summary and Interpretation 79 Chapter Six: BART and Metropolitan Land Use Changes: 1985-90 81 6.1 Alameda and Contra Costa County Land Use Changes: 1985-1990 81 6.2 Model Specifications 93 6.3 Model Results 96 6.4 Summary 105 Chapter Seven: Summary, Conclusions, and Policy Implications 107 7.1 Summary of Findings 107 7.2 Explaining the Findings 108 7.3 Policy Implications 110 Appendix A: Regression Analysis of 1987 Single-family Home Prices in Alameda and San Diego Counties 113 Appendix B: Dominant Land Uses Around Nine BART Stations: 1965, 1975, 1990 117 Appendix C: Dominant Land Uses Around Four San Diego Trolley Stations: 1985, 1994 129 Notes 135 References 137 i List of Tables, Figures, and Maps List of Tables 1.1 System Comparisons between BART, CalTrain, the San Diego Trolley, Sacramento Light Rail, and San Jose Light Rail 4 1.2 Level of Service Comparisons between BART, CalTrain, the San Diego Trolley, Sacramento Light Rail, and San Jose Light Rail 4 1.3 Ridership, Market Area, and Market Capture Comparisons between BART, CalTrain, the San Diego Trolley, Sacramento Light Rail, and San Jose Light Rail 10 2.1 Intra-metropolitan Growth Trends: 1910-1960 17 2.2 Summary Comparisons of Selected Highway and Transit Capitalization Studies 22 3.1 Mean Values of the Model Variables by County Sample 31 3.2 Capitalization Effects of Heavy Rail Transit Investments on Single-Family Home Prices: Common Specification 32 3.3 Capitalization Effects of BART on 1990 Alameda County Single-Family Home Prices 36 3.4 Capitalization Effects of BART on 1990 Contra Costa County Single-Family Home Prices 37 3.5 Capitalization Effects of CalTrain Service on 1990 San Mateo County Single-Family Home Prices 38 3.6 Capitalization Effects of Light Rail Investments on Single-Family Home Prices: Common Specification for Sacramento, San Diego, and San Jose Cities 40 4.1 Analysis of Variance Results: 1988-93 Commercial Property Sales Prices by Land Use Type and Proximity to a BART/Trolley Station 45 4.2 Stepwise Regression Results Comparing 1988-1994 Alameda County Commercial Site and Building Transaction Prices by Proximity to BART 47 4.3 Stepwise Regression Results Comparing 1988-1994 Contra Costa County Commercial Site and Building Transaction Prices by Proximity to BART 48 4.4 Stepwise Regression Results Comparing 1988-1994 San Diego County Commercial Site and Building Transaction Prices by Proximity to the San Diego Trolley 49 5.1 1965, 1975, and 1990 Distribution of Dominant Land Uses at Nine BART Stations 58 5.2 1985 and 1994 Distribution of Dominant Land Uses at Four San Diego Trolley Stations 66 5.3 Binomial Logit Model Results for Grid-Cell Land Use Changes at Selected BART Stations: 1965-75 and 1975-90 70 5.4 Binomial Logit Model Results for Grid-Cell Land Use Changes at Each BART Station: 1965-90 71 5.5 Binomial Logit Model Results for Grid-Cell Land Use Changes at Selected San Diego Trolley Stations: 1985-94 72 5.6 Binomial Logit Model Results for Grid-Cell Land Use Changes at Each San Diego Trolley Station: 1985-94 73 5.7 Binomial Logit Model Results for Grid-Cell Land Use Changes [Undeveloped to Residential] at Selected BART and San Diego Trolley Stations 75 5.8 Binomial Logit Model Results for Grid-Cell Land Use Changes [Undeveloped to Commercial] at Selected BART and San Diego Trolley Stations 77 5.9 Multinomial Logit Model Results for Undeveloped Grid-Cell Land Use Changes at Selected BART and San Diego Trolley Stations 78 6.1 Changes in Alameda County Land Use Distribution: 1985-90 82 6.2 Changes in Contra Costa County Land Use Distribution: 1985-90 85 6.3 Binomial Logit Model Results for All Land Use Polygon Changes: 1985-90 97 6.4 Binomial Logit Model Results for All Vacant Land Use Polygon Changes: 1985-90 100 6.5 Binomial Logit Model Results for Vacant Land Use Polygons: Changes to Residential Uses: 1985-90 101 6.6 Binomial Logit Model Results for Vacant Land Use Polygons: Changes to Commercial Uses: 1985-90 102 6.7 Ordinal Logit Model Results for Redeveloped Land Use Polygons: Changes to Commercial Uses: 1985-90 104 List of Figures 3.1 Distance Decay Functions of Single Family Home Sale Prices: Alameda and Contra Costa Counties, 1990 34 5.1 Distribution of Dominant Land Uses at Nine BART Stations: 1965,1990 57 5.2 Land Use Changes at Each of Nine BART Stations: 1965-75, 1975-90 59 5.3 Distribution of Dominant Land Uses at Four San Diego Trolley Stations: 1965, 1990 65 5.4 Land Use Changes at Each of Four San Diego Trolley Stations: 1965-75, 1975-90 65 6.1 Composition of Alameda County Land Use Changes: 1985-90 84 6.2 Alameda County Distribution of Developed Land Uses: 1985, 1990 84 6.3 Composition of Contra Costa County Land Use Changes: 1985-90 86 6.4 Contra Costa County Distribution of Developed Land Uses: 1985, 1990 86 6.5 Alameda County Land Use Changes as a Function of Distance to the Closest BART Station: 1985-90 87 6.6 Alameda County Land Use Changes as a Function of Distance to the Closest Freeway Interchange: 1985-90 89 6.7 Alameda County Land Use Changes as a Function of Distance to Downtown Oakland: 1985-90 90 6.8 Contra Costa County Land Use Changes as a Function of Distance to the Closest BART Station: 1985-90 91 6.9 Contra Costa County Land Use Changes as a Function of Distance to the Closest Freeway Interchange: 1985-90 92 6.10 Contra Costa County Land Use Changes as a Function of Distance to Downtown Oakland: 1985-90 94 List of Maps 1.1 BART System 5 1.2 San Diego Light Rail System 6 1.3 CalTrain System 7 1.4 Sacramento Light Rail System 8 1.5 San Jose Light Rail System 9 5.1 Land Use Analysis, BART Station Areas 55 5.2 Land Use Analysis, San Diego Station Areas 64 ui Executive Summary Transportation systems are the glue that binds together American cities. From the first boule- vard, through the horse-drawn streetcars of the 19th Century, through the electric trolleys of the early 1900s, to the freeways of the post-World War II era, transportation investments have long played a defining role in guiding the growth and development of metropolitan areas. What is today called the "transportation-land use connection" has been the object of study by geographers and economists for more than 150 years, and the focus of attention for developers and speculators for even longer. This report explores the transit-land use connection from the transit side. Drawing on data for five urban rail transit systems here in California (BART, CalTrain, Sacramento Light Rail, the San Diego Trolley, and Santa Clara Light Rail), it uses statistical models to clarify the relationships between transit investments, land uses, and property values. Four types of transit-land use/property value relationships are considered: • Relationships between rail transit investments and single-family home prices; • Relationships between rail transit investments and commercial property values; • Relationships between rail transit investments and station area land use changes; and, • Relationships between rail transit investments and metropolitan-scale land use changes The Policy Context This report responds to two policy questions. The first is fiscal in nature; the second relates to issues of development policy.