fall 2014 urban development · 2014-10-28 · fall 2014 urban development faster greener commutes...

1Urban Development | a Cushman & Wakefield research Special report Fall 2014 Urban Development | a Cushman & Wakefield research Special report Fall 2014

Fall 2014

Urban DevelopmentFaster Greener CommUtes Key to sUstaineD City Growth

a Cushman & wakefield research special report

Gridlock and slow commutes, which take a toll on productivity and the quality of life, are unfortunate side effects of record downtown growth. Cushman & wakefield research looked at how major north american cities are coping with mounting transit and transportation challenges and what real estate developers are doing to ease the journey for people traveling to and from their properties.

Contents

executive summary 1

mexico City 2

new york 6

los angeles 10

Chicago 14

toronto 18

washington D.C. 22

miami 26

atlanta 30

boston 34

san Francisco 36

Conclusion 40

1 Urban Development | a Cushman & Wakefield research Special report Fall 2014

a sweeping transformation is underway in major urban centers

throughout north america. not only are people moving into

downtown areas, but businesses that employ, as well as provide

services to them, are following suit to tap into a growing talent

pool and consumer population. we’ve seen skylines shoot up

with astonishing speed in less than ten years and construction in

many cities continues unabated.

a main driver of urban rejuvenation is of course the millennial

generation, those born roughly between the early 1980s and

late 1990s. Unlike their parents, this age group has famously

chosen to live in the heart of amenity-rich and high-density

urban centers, reducing the need for long commutes and car

ownership. in just six years, millennials are expected to make up

more than half of the global workforce so it’s no wonder that

occupiers and investors are seeking accessible locations close

to where they live – and driving the construction of transit

oriented Developments (toDs), both inside and outside urban

cores.

while this trend is transforming many metropolitan regions,

our report focuses on 10 major cities: mexico City, manhattan,

los angeles, Chicago, toronto, washington, D.C, miami, atlanta,

boston and san Francisco. we explore the consequences of

sudden growth such as inadequate public transit, gridlock and

lack of funding, along with the innovative solutions being applied

by cities and developers to meet the new demands.

From an investor/developer perspective, it’s important to note

that toDs come with an added land-based construction price

tag due to the need to develop location and infrastructure

improvements. most of the markets included in this study

report a price premium of 10-25%, with the exception of

manhattan and san Francisco where almost all developments

fall under the toD category. Clearly, for occupiers, toDs offer

crucial accessibility for their workers and clients.

as more people, including empty nesters heed the siren call of

downtown living, city governments, developers and businesses

will continue to be pressured by the need to reduce commute

times to support the fight for talent, improve productivity and

enhance the overall experience of urban life. those that manage

their growing pains the best will strengthen their positions as

world-class cities.

the GrowinG pains oF Urbanization

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Chicago

New York

Los Angeles

San Francisco

Boston

Mexico City

Miami

Washington, D.C.

Toronto

Atlanta

Population Growth by Metro Area, 2000-2014

*Source: Moody’s Analytics

Executive Summary

Contents

executive summary 1

mexico City 2

new york 6

los angeles 10

Chicago 14

toronto 18

washington D.C. 22

miami 26

atlanta 30

boston 34

san Francisco 36

Conclusion 40


MEXICO CITY

Mexico City Grapples

with Highest Congestion

Rateit’s hard to fathom the

complex challenge of managing the safe

and efficient transit of 22 million people a day,

but mexico City is taking action to protect its

strengthening economy

Corporativo Glorieta insUrGentes, a new Development revitalizinG insUrGentes CirCle, loCation oF bUsy sUbway anD

metrobUs stations


Providing mobility to the 20.5 million residents of metropolitan Mexico City is an ever-growing monumental challenge. Coordinating the policies and budgets of 60 municipalities in the State of Mexico and 16 boroughs of the Federal District is complex to say the least. Scheduling infrastructure upgrades in one of the world’s largest cities, which has seen economic activity increase by 25% in the last decade, is another giant hurdle. Individual travels have reached the astronomical 22-million-a-day mark, with 53.3% work related. The number of cars per 1,000 inhabitants has grown from 130 in 1995 to an estimated 245 in 2014.

All this combines to create painful commutes that have placed Mexico City at the top of the North American metropolis congestion index (50% over Los Angeles). To tackle the problem, an unprecedented authority-coordination system was implemented called the City Manager Authority, and the infrastructure investment pipeline increased to a record $3 billion in 2013.

The Urban Development Authority (SEDUVI) is designing solutions with deep implications for real estate development. Also, the Transit Authority (SETRAVI) works to implement innovative transport plans that coordinate with gigantic-scale older solutions to help tackle mobility issues. Developers are enthusiastically aligning their plans with these mobility improvements, along with price/construction pipeline indicators.

Central DistriCt rejUvenation Drives Development

two key trends are impacting real estate value in relation to

mobility. the first is the redensification of central districts.

better use is being made of investments already in place, such

as the 140-mile subway system which, as the third busiest

in the world, moves 4.4 million passengers every day. this

strategy, which often involves changes in zoning to permit the

redevelopment of former industrial land, encourages the denser

use of land and promotes mixed-use developments near existing

transport hubs.

the second key strategy is to improve the connectivity of

peripheral areas with the CbD and among districts. this aims

to close a big infrastructure gap that has produced significant

bottlenecks. new highways, like the supervía poniente, and

upgrades, like the 35-mile double-deck enhancement of the

beltway, represent investments over $1.5 billion.

reClaiminG olD inDUstrial sites

large-scale mixed-use developments anchor local plans to

revive CbD submarkets. prominent examples include two large

former automotive assembly plants that were converted to

premier mixed-use complexes, parques polanco and antara.

their combined office component adds 1.1 million square feet

to the CbD; the latter positioned its retail element as the city’s

luxury fashion mall and has 100% of its office space preleased.

also, thanks to the redensification of former industrial land

adjacent to the CbD, the 3.3-million-square-foot plaza Carso,

including theaters and art museums, epitomizes the innovative

mixed-use developments under construction. reforma 222’s

overview: taCKlinG the mobility issUes oF one oF the worlD’s larGest Cities

20.5 millionResidents OveRall

25%ecOnOmic GROwth in the last 10 yeaRs = Million Passengers Per Day

= Million Residents

= Billion Dollars

MOST CONGESTED NORTH AMERICAN METROPOLIS

= Million Passengers Per Day

= Million Residents

= Billion Dollars



high-profile design has played a leading role in enhancing the

city’s main boulevard.

outside of mexico City’s CbD there are successful land-

recycling projects, such as tecnoparque, but the farther they

are from public transport or efficient access roads, the more

compromised their value. asking rents quote a 26.8% premium

for developments located less than a mile from transport hubs.

pUbliC investors FoCUs on sUstainability

along with making strong highway investments in recent

years, private investors are increasingly representing the

builder-operator in long-term projects. examples include the

suburban rail network and the metrobus system, which support

the subway network as the backbone and feeder structure,

respectively. as well, the high-speed train project connecting

toluca and mexico City will go to tender this year.

these projects will significantly change the balance of real

estate value and development in the city, in some cases

strengthening density and in others bringing order and

structure to existing developments. it’s also significant to note

the rise of “walkability” and gentrification taking place. the

“pedestrianization” of madero street attracted an impressive

influx of retailers and shoppers to a decaying area and the

shared-bicycle system ecobici monthly ridership averages

400,000 and keeps growing.

sUCCess Drives inCreaseD DemanDs

mexico City is historically a very dense urban area, but

alternating waves of suburban expansion and redensification

have always widened the infrastructure gaps affecting transit.

today, this phenomenon has reached an unprecedented scale.

the problem is that denser-repopulated areas with good

infrastructure in place only intensifies demands for continuing

transit improvements, while remedial road investments to the

peripheral areas attract a growing number of residents to the

suburbs. and so the loop continues. the successful reordering

of mobility will need to overcome many political, economic and

even geographic obstacles, while preserving the integrity and

flexibility of master plans.

the Rise, Fall and ReinventiOn OF santa Fe

In 1994, Santa Fe was an area where trash dumps alternated with sand quarries. An ambitious redevelopment plan turned this dilapidated area into 11.5 million square feet of class A corporate space, offering an alternative to the CBD. Unfortunately, just ten years later, the car-centric approach of the urban master plan resulted in severe traffic problems. Rents plummeted and vacancy increased fourfold.

Today, the market is being turned around thanks to heavy investments for new access roads followed by plans to add high-capacity public transport, including a stop for the high-speed Toluca-Mexico City train. Also, an emphasis in 24-hour livability is transforming the zone. Stabilizing rents and vacancy are expected to support a healthy upside in the middle run.


= Million Residents

= Billion Dollars



MEXICO CITY

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2015 F2014 F20132012201120102009

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

MSF

New Supply Direct Vacancy Rate

Mexico City Office – Class A New Supply vs Vacancy

26.8%Rent pRemium FOR develOpment lOcated less

than a mile FROm tRanspORt hubs

0%

10%

20%

30%

40%

50%

60%

70%

80%

1Q20142013201220112010

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Buildings Within 1.5KM of Transportation HubAsking Price Average Within 1.5KM

% o

f SQ

M

Buildings Outside 1.5KM of Transportation HubAsking Price Average Outside 1.5KM

Comparative Market Indicators

140-mile subway system mOves 4.4 milliOn passenGeRs peR day

$3 billion 2013 inFRastRuctuRe investment pipeline


= Million Residents

= Billion Dollars

MOST CONGESTED NORTH AMERICAN METROPOLIS= Million Passengers Per Day

= Million Residents

= Billion Dollars



NEW YORK

Manhattan Kicks into High Gear

as its population swells and development booms,

the city confronts the urgent need for

improved transit

hUDson rail yarDs anD manhattan west projeCts


As the nation’s largest city with over 8.4 million residents, New York’s population has swelled by 11% in the last 20 years. Remarkably, over 40% of this expansion took place in the last five years. As anyone who lives and works here knows, this sudden growth, while exciting, has seriously strained existing transit infrastructure, making difficult commutes ever worse.

Due to the magnitude of this urban revival – over 61,000 new residents moved in between July 2012 and July 2013 – The Port Authority Bus Terminal and Grand Central Terminal are grappling with significant spikes in ridership. And, according to the 2014 Tom Tom Traffic Index, New York City now ranks fifth among major U.S. cities for traffic congestion on its highways, bridges and tunnels.

With almost 70% of the city’s four million workers commuting to work in Manhattan every day, it’s safe to say that the “island” will always be challenged on an infrastructure front and that developers will always play a leading role in helping to manage the smooth flow of people. About 91% of the 8 million square feet of commercial projects under construction fit into the category of transit-oriented developments.

transFormative Developments

the world trade Center and hudson yards/manhattan west

are by far the most significant transit-oriented developments

underway right now.

the new world trade Center in lower manhattan will link

together the new jersey-originated port authority trans-

hudson (path) train to 11 subway lines underground for

an investment of nearly $3.2 billion by the Federal transit

administration and the port authority of new york and

new jersey. an 800,000-square foot transportation hub will

accommodate 250,000 commuters per day. new office and

retail space development at the site totals nearly 14 million

square feet in six buildings.

the immense hudson rail yards and manhattan west projects,

located between 9th avenue and the west side highway and

30th and 34th streets, will transform their midtown locations

into a vibrant, pedestrian friendly, transit-oriented mixed-use

district. a key component is the extension of the no. 7 subway

line from its current terminus at times square to a new terminal

station at 34th street and 11th avenue.

Development exCeeDs 25-year level

at 8 million square feet, new office construction in manhattan

is at its highest level in more than 25 years. the last time it

came close to this was back in 1989 when 7.8 million square

feet of space was delivered. while most projects in the 1990s

and 2000s were build-to-suit, current developments are mostly

speculative, another sign of growing confidence.

even though office-using job growth has been slower than in

previous recoveries and companies have generally reduced

their occupancy footprints, current overall office vacancy in

manhattan rests comfortably at 10.3%. residential conversions

and the loss of the world trade Center in 2001, among other

factors, offset the square footage added to the market over

the last 15 years. today, with its growing population, increased

overview: the ChallenGe presenteD by FoUr million CommUters

8.4 millionResidents OveRall

61,000new Residents in 2013

70% cOmmute

30% Residents

wORkeRs in manhattan


tourism and massive office projects underway, manhattan has

become a global poster child of urban revival – and the future

looks bright.

related Companies and oxford properties are co-developers of

the hudson yards project and brookfield is the developer

of the manhattan west project. after the hudson yards project

was re-zoned to commercial use, it acquired the capacity for

26 million square feet of office space. Combined, the hudson

yards area and the world trade Center could add 10%, or

39 million square feet, to manhattan’s 394-million-square-foot

office inventory. Upon completion of hudson yards, the penn

station submarket will become the third largest in manhattan.

east miDtown vision marries Development with transportation

the east side of manhattan is also in line

for an infusion of capital for a major transit

hub and new, long-awaited commercial

development. proposed rezoning was the

catalyst to develop new office product

around Grand Central terminal – and revitalize the market.

Ultimately, the plan aims to replace nearly 10 million square

feet of older office stock and add an additional 5 million

square feet of new space. a 73-block area surrounding

Grand Central terminal would be rezoned, allowing for

taller and larger office buildings in exchange for substantive

transportation improvements.

sl Green realty Corp. announced it will build one vanderbilt

on the block bound by 42nd and 43rd streets between

vanderbilt and madison avenues. the project will create a new

underground connection between one vanderbilt and Grand

Central terminal as well as a public waiting room in the new

tower for commuters.

ChallenGes: CoorDinatinG with improveD mass transit

since hudson yards was originally a 26-acre train storage and

maintenance yard for the metropolitan transit authority and long

island railroad, the first challenge was to create a development

platform over the existing tracks for 6 million square feet of

office, retail, residential and cultural space – with expected

completion in 2018.

the second challenge was the location’s inaccessibility to

mass transit. in 2007, construction began on the extension of

the no. 7 subway line. this line will ultimately extend to 34th

street and eleventh avenue, allowing a direct route to the

site. Construction delays have pushed the

opening to February 2015.

the world trade Center will reach a

milestone this year with the completion

of one world trade Center – the largest

office building on the site. Four world

trade Center was delivered in late 2013.

progress on three world trade Center was

challenged but construction is about to resume.

the emergence of Downtown as a 24/7 neighborhood and

influx of large corporate tenants migrating from midtown have

highlighted the need for improved access to mass transit. the

Fulton street transit Center, which recently opened, links 11

different subway lines at six different stations and will join the

port authority’s world trade Center transportation (Calatrava)

hub in 2016. in addition to this connection, the world trade

Center hub will connect to the path rail, battery park Ferry

terminal, the world trade Center memorial site, world trade

Center office buildings and brookfield place. Completion is

slated for 2015.

hudsOn yaRds pROject:

6 million sq. Ft.OF OFFice, Retail, Residential and cultuRal space

new ROle FOR histORic pOst OFFice

The long-awaited transformation of the Farley Post Office into Moynihan Station is now underway. The post office is located directly across from Pennsylvania Station where Amtrak, the Long Island Railroad, New Jersey Transit and major subway lines converge.

This conversion will help ease overcrowding and eventually provide a gateway to Hudson Yards and Manhattan West. The first phase of the project, upon completion in 2016, will extend the concourse and provide new entrances to the post office and Penn Station. Phase two, once funded, will include a train hall in the Farley Building – with plans for Amtrak to relocate from Penn Station to the new Moynihan Station.


majOR new OFFice cOnstRuctiOn pROjects: worlD traDe Center

hUDson yarDs

manhattan west

GranD Central rezoninG

MANHATTAN

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2015 F2014 F2013201220112010200920082007200620052004

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

9.0%

10.5%

12.0%

13.5%

15.0%


Manhattan Office – Class A New Supply vs Vacancy

MSF

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

All Ages Excluding 25-44

% C

hang

e

Ages 25-44

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 ’15 F’14 F

Manhattan Population Change (year over year)


91%tRansit-ORiented develOpment

8 millionsq. Ft. new OFFice space

= Million sf Office Space


LOS ANGELES

Los Angeles Gets

Moving – Slowly

Denser living is helping to relieve long commute times, but

local opposition groups are growing hurdles

to infrastructure improvements

taylor yarD apartments projeCt, los anGeles


Los Angeles sprawl has been well documented for over 70 years. The love affair with the car and the American Dream of owning a home with a yard, considered a luxury today, spurred housing developments across the 4,080 square miles in the county. Congested freeways in turn triggered the development of commerce clusters.

Today, Los Angeles is moving toward denser living and ranks 21st on the list of cities in a study by Smart Growth America with the least amount of sprawl and 7th among cities with over one million people. In fact, the same study also states that LA is the second densest city in the U.S. overall, after New York.

The push for light rail and transit-oriented development is helping to halt sprawl as more people seek to live, work and play in close proximity. The logical place for that is Downtown Los Angeles, a transit hub where 12 rail lines and 44 bus routes converge, in addition to seven freeways and where over 100 projects are in some stage of development. However, smaller enclaves are also cropping up in cities with good transit options and the right mix of amenities and housing. Projects with affordable housing components are even awarded density bonuses to encourage such development.

aDDressinG the ConCerns oF loCal interest GroUps

while several projects have been completed and others are

underway, many are delayed for years by activists and lawsuits.

the transit oriented District program works with the

communities to address issues up front.

the goals of the toD specific plans are to: 1. increase walking,

bicycling, and transit ridership and reduce vehicle miles traveled

(vmts); 2. Facilitate compact, mixed-use development;

3. increase economic activity; 4. Facilitate the public

investment of infrastructure improvements; and 5. streamline

the environmental review process for future infill

development projects.

the toD specific plans will analyze existing conditions, parking

supply and demand, the residential and non-residential markets,

and infrastructure supply and demand. a comprehensive

stakeholder outreach strategy will encompass input from

residents and County staff and set priorities for transportation,

housing, open space, and public safety along with local context

and existing neighborhood character.

many plans, some aCtion

the toD planning Grant program is designed to spur the

adoption of local land-use regulations supportive of transit-

oriented development in los angeles County. Goals include:

• Increase access to transit by assisting local governments to

accelerate the adoption of toD regulatory frameworks;

• Improve utilization of public transit by reducing the number

of modes of transportation necessary to access regional and

local transit;

overview: now the seConD Densest City in the U.s.

major projects

westlake/ macaRthuR paRk

170units

One santa Fe

480units

avant

247units

taylOR yaRd

665 units

sieRRa madRe villa

212units


• Further the reduction of greenhouse gases by encouraging in-

fill development along transit corridors and transit use; and

• Support and implement sustainable development principles.

CUrrent projeCts

• Westlake/MacArthur Park (Phase A): 170 units, 38,000

square feet of retail, 170 transit parking spaces.

• One Santa Fe: 480 units, 80,000 square

feet of retail, replacement parking.

• Taylor Yard: 665 units, 28,400 square

feet of retail, open space.

• Sierra Madre Villa (Phase II): 212

units, 300-seat theater, 15,000 square feet

of office space.

• The Paseos: montclair north. Glj

partners’ 385-unit, mixed-use project

located between ontario and Claremont.

proposeD projeCts:

• The Platform (Hayden Tract): 25 designers, brands,

and specialty merchants; 5 chefs; and 7 lofts for leaders in

entertainment, media, and fashion in close proximity to the

expo line on washington blvd and landmark st.

• 645 S. Ardmore: a 268-unit residential development in

K-town on the corner of ardmore and sixth street, a block

north of the wilshire and normandie station.

• College Station: two 20-story residential towers along

with a few retail units at the northeast corner of spring and

College on the Gold line.

• The Park Fifth: Fifth and olive streets Downtown. the

transit-oriented development on the 99,000-square-foot site,

kitty-corner to the historic millennium biltmore hotel, will

include 600,000 square feet of residential and retail space, and

incorporate developer mcFarlane’s signature smart growth

and new urbanism concepts. it will break ground in 2015.

• The Wrapper: samitaur Constructs’ 12-story, creative

office development adjacent to the expo line’s la Cienega/

jefferson station.

ChallenGes: loCal opposition anD laCK oF Collaboration

local opposition groups across los angeles

present numerous obstacles for developers

and city agencies alike. most notably, in

recent months the bergamot transit village

multi-use development, which was seven

years in the making, was quickly undercut

from a nimby-fueled charge of 13,500

santa monica resident signatures. the lack

of collaboration among citizens, public

agencies, and private entities was the true

downfall of the entire project.

agencies such as the mayor’s office, neighborhood councils,

and the la housing Department have been tasked to move

mountains with no single agency charged with integrating goals

and objectives as well as co-leveraging resources. this obviously

becomes too cumbersome for one agency to handle, slowing

progress and bottlenecking each step of the timely process.

Fiscal constraints within los angeles make it difficult to fund

new projects when resources are commonly used elsewhere.

planning initiatives are typically undertaken when funding is

available, not when a need is shown. the overextended los

angeles budget offers little help to kick start projects that

private entities are too nervous to undertake because of

these obstacles.

sales tax helps Finance pROjects

Measure R took effect in July of 2009 and has slowly transformed transit-oriented development. The law created a half-cent sales tax for Los Angeles County to finance transportation projects and aims to raise approximately $30 billion for 11 new light rails along with other forms of transportation.

Measure R will have a direct impact on transit-oriented development when combined with an existing 100 miles of track and 71 stations citywide. As new rails are added, the economic success and growth of the city will accelerate, putting pressure on private groups and the public sector to find new ways to collaborate for the betterment of all.

SECOND DENSEST CITY IN U.S. AFTER NEW YORK


LOS ANGELES

0.0

0.5

1.0

1.5

2.0

2.5

2015 F2014 F2013201220112010200920082007200620052004

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

MSF


Los Angeles County Office – Class A New Supply vs Vacancy

How Do People Get To Work?

72.19%

10.62%

4.97%

7.31%1.15% 3.76%

Drive Alone

Telework

Carpool or Vanpool

Public Transport

Other

Bike or Walk

*Source: Alteryx

as urban sprawl improves, local opposition and funding shortfalls hinder transit-oriented development

“

”


CHICAGO

Chicago Struggles

to Balance Uneven Growth

Downtown Chicago is flourishing, while other

areas remain stalled

Cta train on a briDGe between river north anD the west loop


With 9.5 million people, 4.2 million employees, over 270,000 businesses and 31 Fortune 500 headquarters, the metropolitan Chicago area is definitely a major player in the United States. However, compared to other cities, it has been in slow growth mode over the last two decades. While the population in the six-county region grew by 10% between 1994 and 2014, Cook County, home to Chicago, actually lost 1% of its population, or almost 300,000 people, 200,000 in the city alone. On the other hand, according to a recent study by the Philadelphia Center City District, downtown Chicago’s population escalated between 2000 and 2010, by 46% to 144,000 people. More people, especially recent college graduates and retiring baby boomers, are drawn to the convenience of downtown living.

The Regional Transit Authority (RTA) is the public transportation system servicing the entire Chicagoland area via bus and rail. The second largest system in the U.S., more than 1.7 million riders use the system on an average weekday. Both Union Station and Ogilvie Transportation Center are located on the west side of the Central Business District, one reason why the West and Central Loop have seen the most leasing activity over the last 10 years.

In 2010, 1.9 million people, or 23% of the region’s population, had access to a CTA or Metra station within half a mile of their home. The vast majority

of people still get to work by driving their own cars, leading to congested roads and highways. According to a 2012 Urban Mobility Report, the yearly hours of delay per auto commuter increased from 13 in 1982 to 51 in 2011.

Overall, Chicago is a public transportation-friendly city – from Divvy bikes to water taxis. A big plus is that both airports have rail access, directly to and from the CBD. But, despite its extensive transit system, Chicago has not been capturing the benefits outside of the CBD. There has been no focus on creating housing and jobs near transit stations.

bUilDinG a new ChiCaGo: FoCUs on transit

mayor rahm emanuel implemented the “building a new

Chicago” program to update the existing aging infrastructure.

as part of this program, the Cta is working on rejuvenating

existing stations and the rail system. one of these projects is

the loop track renewal program, which started in 2012.

technical innovations such as the Cta tracking system

application, available on computer or mobile devices, help

people decide on their best option based on their current

location. at the same time, old Cta rail cars are being

replaced by 700 new rail cars with advanced technology and

safety features.

overview: aGinG inFrastrUCtUre intensiFies CommUter FrUstrations

13 to 51incRease in yeaRly autO cOmmute

hOuRs FROm 1982 tO 2011


= Million Residents

= 3 hours


= Billion Dollars


1982 201112

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12


new ConstrUCtion FoCUses on ease oF aCCess

there are no specifically marketed transit-oriented projects

under way in Chicago, but new office construction in the CbD

over the last 15 years has been taking place close to public

transportation and the highway system. For example, over

9 million square feet were added in the west loop. Currently,

river west is experiencing a renaissance, with new office

developments appealing to companies that target workers who

have bought into high-density living.

the morgan street Cta stop close to Google’s future location

at 1K Fulton is the latest addition to the

Cta system. another initiative is the bus

rapid transit (brt). the goal is to have more

dedicated bus lanes that will allow buses to

move independently from general traffic.

maKinG the best oF existinG inFrastrUCtUre

the regional transportation plan “Go to

2040” by the Chicago metropolitan agency

for planning has focused on maintaining

and improving the existing infrastructure as

opposed to taking on new so-called “mega

projects” such as high-speed rail. Goals

include:

• Double daily transit ridership on weekdays

to 4 million;

• Increase percentage of residents who can

walk to public transit from work to 80%,

from 76% today;

• Increase percentage of residents who can walk to public

transit from home to 75%, from 68% today.

zoninG ChanGes to enCoUraGe toD

mayor rahm emanuel is also working on removing barriers

to transit-oriented development. in 2013, an ordinance

was introduced to change zoning requirements in favor of

toD. Current zoning demands a high parking ratio. the new

ordinance would reduce the minimum parking standard by

50%, while at the same time increasing the Far and allowable

building height.

ChallenGes: sUbUrban DisConneCt

although most of the suburbs are fairly well

connected to downtown Chicago via public

transportation, the system is dated and requires

significant investment to bring it up to speed.

between the suburbs, there are virtually no

public transportation options and there are

no easy remedies for this situation. in some

areas, such as Deerfield, companies have

banded together to pay for bus transportation

out of their own pockets to ensure that

their employees get to and from work. while

commendable, such actions are seen as

potentially hampering the development of actual

long-term solutions.

advocacy groups, such as transit Future, are

drawing attention to the subject and are

proposing initiatives. however, due to the dire

financial state of the City of Chicago as well

as the state of illinois, funding will remain a

stumbling block.

initiatives aim tO Rejuvenate subuRbs

palatine: A five-year plan includes for the renovation of the Metra station, 1,000 new housing units and 200,000 square feet of office/commercial space in place of parking lots.

blue island: A recent study showed the potential for transit-oriented development, along with Cargo-Oriented Development (COD), to reinvigorate this old industrial corridor.

elmhurst: The city introduced a comprehensive plan that includes Tax Increment Financing and other incentives to encourage developers to realize live-work-play concepts.

evanston: The city made zoning changes 25 years ago to reposition itself for higher density and various uses of sites close to four of its commuter rail stations.


= Million Residents

= 3 hours


= Billion Dollars


1982 201112

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OveRall pOpulatiOn

9.5 million


OFFice space added tO west lOOp in last 15 yeaRs

9 million sf

CHICAGO

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2015 F2014 F2013201220112010200920082007200620052004

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

21.0%

24.0%

MSF


Chicago Metro Office – Class A New Supply vs Vacancy

-2.0%

-1.0%

0.0%

1.0%

2.0%

% C

hang

e

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 ’15 F’14 F

Chicago Metro Population Change (year over year)

*Source: Moody’s AnalyticsAll Ages Ages 25-44


= Million Residents

= 3 hours


= Billion Dollars


1982 201112

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TORONTO

Upsides and Downsides of Record Growth

as the downtown boom continues, intensifying gridlock and transit delays fray nerves

photo CreDit: viK pahwa (www.viKpahwa.Com)

Union station re-Development


Downtown Toronto is in the thick of a development boom, marked by a 20-year-growth record in both office and condo construction, which has completely transformed Canada’s largest city. Between 2009 and 2011, 4.5 million square feet of new office space came to market. This was quickly followed by a second development wave, which will see an additional 5.1-million square feet of office space arrive between 2014 and 2017 – and there are more potential projects on the horizon.

Similarly, condo development has been a big story in this city for the past 15 years. Construction has continued unabated, causing many to speculate about bubbles, only to see steady demand, rising prices, and new communities springing up seemingly overnight. Currently, there are some 154 cranes in the air that will bring another 46,000-plus high-rise units to market; the first quarter of 2014 alone saw 14 new projects launched in the GTA.

Downtown Toronto’s transformation is due to a steady influx of younger people and empty nesters attracted to urban living. According to TD Economics, between 1991 and 2006, the growth rate in the suburbs was between 15.7% and 18.6%; downtown it ranged from 4.3% to 4.6%. But between 2006 and 2011 a massive reversal took place. Growth in the suburbs dropped from 18.6% to 13.7%, while growth in the downtown spiked from 4.6% to 16.2%. And, according to the

2011 census, nearly half of the downtown core’s population is comprised of 19-to-39-year-olds.

Companies are following the talent and in the process sustaining a near-record boom in office development that lends itself to cutting edge occupancy strategies.

To say investment in transit and transportation infrastructure has not kept up with this growth is an understatement. Between 1978 and 2000, new investment slowed to only 0.1% per year, while previously growing at an average rate of 4.8% per year between 1955 and 1977, keeping pace with population growth. The consequences have become daily topics in the media, in offices and on the street – and major political footballs, with all parties at all levels of government promising different plans and faster relief. Meanwhile, congested roads and inadequate transit cause insufferable delays and lost productivity. According to the 2013 TomTom Traffic Index, Toronto is ranked as the ninth most traffic-congested city in the Americas.

slow proGress oFFers some hope

to address this urgent situation, the provincial government’s

metrolinx introduced “the big move”, which set out a 25-

year, $50-billion plan to deliver a more efficient, accessible,

sustainable and reliable transportation network.

a number of projects are underway. a six-station underground

subway extension of the University-spadina line will be the first

overview: reD tape anD laCK oF FUnDinG stalls relieF

240,000numbeR OF daily cOmmuteRs seRved by

uniOn statiOn = Million Passengers Per Day

= Million Residents

= 3 hours


= Billion Dollars

= 40,000 Passengers Per Day


1982 2011

= 3 Million sf Office Space

12

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9TH MOST CONGESTED NORTH AMERICAN CITY

9TH

19 39


= Million Residents

= 3 hours


= Billion Dollars



1982 2011


12

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9TH

19 39


in the Gta to cross the municipal boundary into york region.

it will replace the shuttle bus connection from Downsview

station to york University that carries a daily average of 20,000

riders, and offer residents of york region faster access to jobs

in the city.

in addition, the long-awaited eglinton Crosstown is slated for

completion by 2020. this 25-stop, 11-mile light-rail transit line

is the largest expansion in toronto’s history. it will provide fast,

reliable transit in dedicated right-of-way transit lanes separate

from regular traffic and ultimately ease traffic congestion along

this main city artery.

aCCessibility Key to new Downtown soUth marKet sUCCess

Four of the six new office developments

brought to market in toronto between

2009 and 2011 are located in fast-emerging

Downtown south market. three of these

towers are less than 10 minutes walking

distance from Union station, toronto’s

main transportation hub serving more than

240,000 users daily. all are close to main

freeway arteries and an underground path

system that connects to transit, shopping

and the Financial Core.

the four projects in Downtown south, totaling 2.1 million

square feet, are 100% leased. along with condo and

entertainment development, these sustainable office towers

completely transformed Downtown south, which has gone

from a “fringe” market to the fastest growing area in toronto.

now the second wave will add three more towers totaling

2.4 million square feet by 2017. once the construction dust

settles, this vibrant new market will grow by 4.5 million square

feet to a total of 6.8 million square feet in less than ten years.

the three towers underway are already over 50% preleased,

further underscoring this market’s popularity.

the rapid growth and success of Downtown south is directly

attributed to its close proximity to Union station and highways,

giving it a faster reach to the wider Gta labor force.

ChallenGes: GriDloCK anD laCK oF investment

even though gridlock and difficult commutes have become a

burning issue among residents and business, only about

$16 billion of the big move’s required $50 billion budget has

been funded since its launch in 2008.

today, the population of the Gta is just

over six million people. by 2031, it is

projected to reach 8.6 million. according

to the toronto region board of trade,

gridlock costs the toronto region $6 billion

annually in lost productivity and could reach

$15 billion by 2031.

the lack of consensus among all levels of

government on how the funding shortfall

should be covered, along with the endless

debates about what’s better – extending

subway lines or constructing lrt lines

– has created years of delays and mounting problems as the

population and city grows. Gridlock and public transit were

main campaign issues in ontario’s recent provincial election and

are at the top of the agenda for toronto’s upcoming municipal

election.

Given public pressure, optimism is growing that a funding

formula, probably a mix of private and public, will be resolved in

the near term and more projects will finally get off the ground.

uniOn statiOn: key tO sustained GROwth

Union Station is Canada’s busiest, most important multi-modal passenger transportation hub, a designated national historic site and a significant part of Toronto’s history and identity. It currently serves over 240,000 users daily (GO Transit, Via Rail, Toronto Transit Commission) and passenger traffic is expected to increase by as much as 300% by 2031.

This striking building is undergoing an $800-million dollar revitalization to triple the interior space, add new PATH connections to an underground mall and provide access to office tower developments, including those in the Downtown South market. Substantial project completion is expected by 2015 just in time for the Pan Am Games, with final completion expected in 2016.

9.6 milliOn sq. Ft.

OF new dOwntOwn space cOmpleted and undeRway FROm 2009 tO 2017 = Million Passengers Per Day

= Million Residents

= 3 hours


= Billion Dollars



1982 2011


12

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9TH

19 39


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2015 F2014 F 2013201220112010200920082007200620052004

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

21.0%

MSF

New Supply Overall Vacancy Rate

Toronto Central Area Office – Class A Vacancy Vs New Supply

Submarket ExistingInventory (msf)

Future Developments 2014-2017 (msf)

total inventory by end of 2017 (msf)

Financial Core 34.0 1.9 35.9

Downtown East 2.3 0.5 2.8

Downtown North 15.0 15.0

Downtown South 4.4 2.4 6.8

Downtown West 11.7 0.3 12.0

King West 2.0 2.0

Downtown Total 69.4 5.1 74.5

aGe RanGe OF neaRly One halF OF dOwntOwn pOpulatiOn

TORONTO

Looking Way Up – Downtown South Office Size: 6.8 Million sf by 2017

2.4 million sf

2.1 million sf

2.3 million sf

Inventory Prior to New Developments

Development Activity 2009-2011

Future Developments 2014-2017


= Million Residents

= 3 hours


= Billion Dollars



1982 2011


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9TH

19 39


WASHINGTON D.C.

Washington D.C.

Confronts Painful

Commutes Development near

transit hubs supports the case for improved

public transit

hines’ CityCenterDC


Although the office real estate market in Metropolitan Washington D.C. is in its third year of lackluster performance, assets in close proximity to public transit have been outperforming their suburban counterparts. The flight to quality, with selling points such as walkability at the top of the list, shows no signs of letting up. In addition to the Downtown core, development along transit hubs in the suburbs has been robust.

According to a 2011 Washington Metropolitan Area Transit Authority (WMATA) report, the value of real estate within a half mile of a Metro station comprises 28% of the area’s total, accounting for nearly 70% within the District, 15% in Virginia and 10% in Maryland. Developers and investors have clear expectations of this value premium as they continue to acquire assets and development sites on or near Metro.

The D.C. Metro area’s population has grown by 25% since 2000. At 646,000, population in the District alone is at its highest level since the 1970s. Much of the growth downtown has occurred east of 15th Street NW in neighborhoods not only well-served by public transportation, but with all of the amenities needed to satisfy the growing wave of people who want to live, work and play within a finite geographical area.

short-term strateGies: jobs anD transit

several transit-oriented projects are underway in the area. the

first phase of the metro expansion recently brought four new

stations to tysons Corner, one of the area’s largest employment

hubs. the D.C. streetcar, with one line currently under

construction, will ultimately link the district’s neighborhoods,

offering residents better access to jobs, retail and entertainment

venues through 37 miles of rail. in maryland, the purple line,

which is expected to kick off in the spring of 2015, will directly

connect montgomery County to prince George’s County.

in addition to public transportation, several initiatives have

recently been completed or are underway to improve traffic

congestion in the region. in northern virginia, the 495 express

lanes opened in late 2012, employing a dynamic toll system

that provides relief from congestion on the Capital beltway. the

express lanes were funded by a public/private partnership. and

in maryland, the inter County Connector links i-270/i-370 in

montgomery County to i-95 in prince George’s County. these

initiatives not only help with fluidity along major roadways, but

also help decrease congestion on surface roads.

Development pipeline: the Closer to transit the better

all of the 3.7 million square feet of office development currently

under construction is located less than a mile from a metro

station; an astounding 81% is located within a quarter of a mile.

projects within a quarter mile from a metro station are already

over 50% preleased. in a market that has seen steep declines

in leasing activity since 2010, this speaks volumes for the

importance of locating close to transit.

overview: real estate valUe DireCtly linKeD to transit

4.7 million metRO aRea pOpulatiOn

25%GROwth since 2000


= Million Residents

= Billion Dollars



outside of office space, mixed-use development is also on the

rise as a result of healthy population growth and stable job

growth in the region. on the site of the former convention

center in DC’s downtown core, CityCenterDC’s 2.5 million

square feet will be comprised of office, retail, residential, public

spaces and a hotel. phase i is nearly completed and has drawn a

healthy roster of tenants in every sector.

in the non-core areas of downtown, the yards in southeast

D.C. is well underway and will total 5.5 million square feet at

completion; Capitol Crossing, which will be built on a platform

above i-395, is a 2.2-million-square-foot

development with construction on the

platform anticipated to start later this

year; and the wharf, a 3.2-million-square-

foot development in southwest, held

its groundbreaking last spring. although

located in the non-core areas of the

District, all of these developments are

within close proximity to metro.

shrinKinG aUto Use is lonG-term priority

today, commuters in the District of

Columbia are second only to new york

City in terms of walking, biking or using

public transport. by 2032, the sustainable

D.C. plan aims for 75% of all commutes to be within these

modes, shrinking auto use among commuters from 42% to 25%,

a goal no major city has yet attained.

in the suburbs, more live-work-play communities can be

expected to crop up over the coming years as both the public

and private sectors push for denser development around

metro. in fact, the long-term plan for tysons calls for 75% of

new development to occur within a half mile of a metro station.

and in montgomery County, there is a potential for 13 million

square feet of commercial space and 14,000 residential units

within three quarters of a mile of the red line’s white Flint

metro stop. Development among all sectors is underway along

these metro stops and future metro stops in maryland and

virginia.

ChallenGes: painFUl CommUte remains a reality

while transit-oriented projects promise less dependence on

automobiles, the area remains very car-centric today. and with

population growing, traffic congestion

will continue to be a problem in the

foreseeable future. according to a report

released by the texas a&m transportation

institute, D.C. ranked first in the U.s.

among all urban areas in terms of wasted

time commuting: a total of 67 hours

per year for each commuter. express

lanes, road widening, and new roads will

put further stress on transportation

departments, which struggle to keep up

with repairs to existing infrastructure.

public transportation has its challenges

as well. with the arrival of the silver line,

which runs along the blue and orange

lines through the District, concerns have already been raised

about overcrowded trains and fewer blue and orange trains

in service.

shaRinG the cOsts

In an era of leaner government resources, public-private partnerships are more important than ever. Community involvement from the get-go and a commitment by all parties to support a healthier, more mobile environment are seen as the key to success of future transit-oriented projects.

In April of 2013, Maryland joined Virginia and 31 other states in enacting legislation enabling the establishment of public/private partnerships for transportation projects. Virginia, an early leader in PPPs, has become a national role model with several states adopting similar initiatives and processes.


= Hundred Thousand Residents

= 3 hours


= Billion Dollars


1982 2011

2014

42% 25%

2032

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9TH MOST CONGESTED NORTH AMERICAN CITY SHRINKING AUTO USAGE

AN AMBITIOUS GOAL

9TH

19 39

50%PRELEASEDOffice projects within one quarter mile of a Metro station


WASHINGTON D.C.

0

1

2

3

4

5

6

7

8

2015 F2014 F2013201220112010200920082007200620052004

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

MSF


Washington, D.C. Office – Class A New Supply vs Vacancy

-1.0%

0.0%

1.0%

2.0%

3.0%

% C

hang

e

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 ’15 F’14 F

Washington, D.C. Metro Population Change (year over year)

*Source: Moody’s AnalyticsAll Ages Ages 25-44



= 3 hours


= Billion Dollars


1982 2011

2014

42% 25%

2032

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9TH MOST CONGESTED NORTH AMERICAN CITY SHRINKING AUTO USAGE

AN AMBITIOUS GOAL

9TH

19 39

50%PRELEASEDOffice projects within one quarter mile of a Metro station


MIAMI

As Miami Heats Up,

Traffic Bogs Down

Downtown miami’s population has doubled

in just ten years, and all of south Florida is braced for continuing growth and change

briCKnell City Center


Miami-Dade County, with over 2.5 million residents, is the most populous county in the southeastern United States and the seventh most populous county. Miami’s urban core is undergoing a transformation unlike any other seen in the market before, including the development boom of the mid-2000s.

The CBD is a mere 1.7-mile area with a daytime population of over 200,000 people – and growing. More than 74,000 people live in the Downtown Miami market, which is double the number from just ten years ago. Specifically in the CBD, households have increased 93%, and a substantial portion of residents are young (57% in the 20-44 age range).

Miami has become a worldwide magnet to cultural organizations and retail sectors, particularly north of the CBD, where Wynwood, Midtown and the Design District are now hotspots for international visitors as well as locals. These areas were littered with outdated dilapidated warehouse structures that were sold at premium prices and renovated to house high-end retail, art galleries and restaurants.

Miami’s CBD will be welcoming Brickell City Center, a $1.05-billion 5.4-million-square-foot mixed-use project at the end of 2015. Saks Fifth Avenue, the first retailer to sign on, will anchor the project with a 107,000-square-foot store scheduled to open in fall 2016. In addition, Miami Worldcenter, also in the

city’s urban core, will be adding a 750,000-square-foot multi-phased mixed-use development project west of Biscayne Boulevard and in close proximity to the Arts and Entertainment District. Macy’s and Bloomingdales have both committed to anchor the project slated for opening in 2017. These two projects alone, as well as new museums, restaurants and entertainment venues, will have a huge socio-economic impact on Miami’s entire metropolitan area.

The heart of Miami’s financial district is located on Brickell Ave, just over the bridge from the Downtown area. As more companies look to have a presence in South Florida, the office market continues to tighten. With limited options for any new construction in the CBD to serve the growing demand, CBD office product will see rising rental rates and significantly decreasing vacancy rates.

South Florida is in store for many changes during the next few years – increased trade through PortMiami, increasing passenger traffic, world-renowned cultural events, and several retail developments. Local governments are diligently working to address foreseen mobility and sustainability challenges in the region.

overview: payinG the priCe oF popUlarity

2.5 millionOveRall Residents in miami-dade

cOunty= Million Passengers Per Day


= 3 hours


= Billion Dollars


1982 2011

2014

42% 25%

2032

12

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9TH MOST CONGESTED NORTH AMERICAN CITY DOWNTOWN RESIDENTS

DOUBLES IN TEN YEARS

9TH

19 39200,000

40%PRELEASEDOffice projects within one quarter mile of a Metro station to be completed in 18 months

74,000

93%cbd hOusehOld

incRease in 10 yeaRs


= Million Residents

= Billion Dollars



biG Data helps to relieve ConGestion – anD stress

in an effort to address ongoing transportation issues, the

Department of transportation (Dot) implemented the use of

ibm big Data, a software application that draws data from over

35 districts to provide residents with real-time information on

transportation options to improve traffic flow, especially during

peak travel times.

in addition, the Dot has implemented the rider alert system

and the miami-Dade transit tracker app, which contains the

train tracker and Google map trip planner

features. intelligent transportation systems

(its) cameras and sensors being installed

in all updated roadways allow for real-

time traffic updates, as well as assisting in

the rapid deployment of first responders

and road rangers to clear disabled and

accident vehicles from travel lanes.

biG projeCts Get oFF the GroUnD

836 Expressway Expansion: one of

the most long-awaited projects, the s.r.

836 and s.r. 826 expansion project will

link the CbD to suburban markets. the

reconstruction and widening of both roadways in addition to

the construction of a four-level interchange will provide new

connections in every direction thereby reducing congestion and

travel times. the average travel time from suburban markets in

western miami-Dade to the CbD could vary from 45 minutes

to over 75 minutes.

Port of Miami Tunnel: one of the most significant projects

in miami-Dade to date is the port of miami tunnel (pomt)

project. nearly 16,000 vehicles travel to and from the port

through downtown streets each weekday, with truck traffic

accounting for approximately 28% of this number. the project

reduces congestion downtown by providing a direct connection

between highways and port of miami for truck traffic and port

activity. port of miami is miami-Dade County’s second leading

economic generator, providing 176,000 jobs, $6.4 billion in

wages and $17 billion in economic output. (source: 2007 port of

miami economic impact study).

All Aboard Florida: this 235-mile track linking miami to

orlando in less than three hours with stops in Ft. lauderdale

and west palm beach is scheduled to open

by 2016.

tUrninG aroUnD one oF the worst reCorDs

the hard reality is that miami suffers from

some of the worst driving conditions in

the United states. with i-95 roadway being

the only major roadway connecting south

Florida, bottlenecks and accidents are only

too common. according to inrix analysts,

242 traffic-related deaths were recorded

in miami-Dade in 2011, more than any

other interstate segment in the country.

as the trend to move back to urban

areas continues, miami’s core markets are faced with a

myriad of challenges, which include an increasing population

– both seasonal and permanent residents – a lack of public

transportation options and geographical limitations. enormous

growth in retail, residential and cultural sectors in the city’s core

also present major challenges. Going forward, miami’s public

transportation system has been and will continue to be a hot

topic in the private and public sector.

innOvative OptiOns tO the Rescue

The City of Miami trolley makes three loops around downtown stopping at major business and retail and entertainment locations.

Car2go is a car-sharing service offering exclusive two-seat cars. The cars are available in pre-paid on-street parking spots and easily identified by their white and blue color scheme.



= 3 hours


= Billion Dollars


1982 2011

2014

42% 25%

2032

12

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9TH

19 39200,000


74,000


MIAMI

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2015 F2014 F2013201220112010200920082007200620052004

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%


Miami Office – Class A New Supply vs Vacancy

MSF

2.20

2.25

2.30

2.35

2.40

2.45

2.50

2.55

2.60

2.65

2.70

2014201320122011201020092008200620052004

Miami Dade Population Growth (year over year)M

illio

ns




= 3 hours


= Billion Dollars


1982 2011

2014

42% 25%

2032

12

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12

12

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9TH

19 39200,000


74,000

200,000 daytime Residents

miami¹s core markets are faced with a myriad of challenges, which include an escalating population – both seasonal and per-manent – a lack of public transportation options and geographical limitations

“

”


ATLANTA

Explosive Growth Spells

Greater Congestion

to avoid lengthy commutes, office and

residential developments congregate close to

public transportation

Downtown i-75/85 ConneCtor showinG the sKyline oF oF miDtown anD Downtown atlanta


While Atlanta’s commercial real estate market is slowly picking up, areas offering close access to public transportation hubs have seen the greatest momentum in terms of activity.

Ranked as having the third most Fortune 500 headquarters in the nation, Atlanta is a popular location for corporations and residents that see the value of living and working in areas offering walkability and easy access to transit. Although Atlanta’s transit-oriented development initiatives have fallen behind compared to its peers, leaders in public and private sectors have renewed their commitment to transit-oriented development and moving the city forward.

Since 2000, Metro Atlanta’s population has mushroomed by more than 1.4 million – an increase of 32%. The resulting traffic congestion has fuelled demand for land sites within close proximity to rail stations and other non-automotive transportation options. According to a 2012 Metropolitan Atlanta Rapid Transit Authority (MARTA) Market Overview, the areas within a half mile from a rail station house 15% of the jobs in the 10-county Atlanta region and have a five-to-one job-to-housing unit ratio. This presents a clear opportunity for additional multi-family and mixed-use transit-oriented development in the near term.

transit anD roaDway UpGraDes UnDerway

while much of the existing activity is focused on multi-family

and mixed-use development near marta rail stations, sites

around other transportation systems such as atlanta’s beltline

project and the new atlanta streetcar are also seeing new

activity. in terms of transit initiatives involving rail, marta is in

the planning phases of additional rail improvements including the

extension of the Georgia 400 transit line up to alpharetta.

other transit initiatives include the atlanta beltline, which

has created a network of parks, trails and transit by re-using

22 miles of historic railroad corridors circling downtown and

connecting 45 neighborhoods. additionally, the atlanta streetcar

system will offer last-mile connectivity to marta, the atlanta

beltline and other transit options.

in addition to public transportation, several roadway

improvements have recently been completed or are underway

that aim to improve traffic congestion and manage heavy traffic

flow during peak traffic times. projects include the addition

of managed lanes on major interstate corridors, several new

interchanges, and overpass reconstruction to a diverging

diamond concept.

FoCUs on mUlti-Family transit-orienteD Development

much of atlanta’s transit-oriented development is focused on

multi-family projects in its urban core. of the 9,200 multi-

family units under construction, more than 8,000 units are

located within a one-mile radius of at least one marta rail

station or major transit hub. there are three projects planned

in partnership with marta including a proposed multi-family

overview: atlanta’s reneweD Commitment to transit-orienteD Development

1.4 million+pOpulatiOn incRease

up 32% since 2000



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12

9TH MOST CONGESTED NORTH AMERICAN CITY COMMUTER STATS

PERCENTAGE OF ATLANTA COMMUTERS WHO DROVE ALONE TO WORK IN 2010 WITH AN AVERAGE ONE-WAY COMMUTE TIME OF 30 MINUTES

COMMUTES ALONE

MINUTE COMMUTE9TH

19 39

200,000


up 32%


residential complex to be developed by walton Communities

around the King memorial marta station scheduled to begin

in mid-2015. the project will be the first to break ground and

is expected to include 385 apartments and 15,000 square feet

of retail space. marta also expects to add a fourth project

to their pipeline for the redevelopment of the brookhaven/

oglethorpe station and released an rFQ to developers during

the third quarter of 2014.

in addition to multi-family development, there are major mixed-

use projects either currently under construction or scheduled

to begin soon that are connected to major transit centers.

ponce City market, a major adaptive reuse,

will create a vibrant urban centerpiece that

combines retail, restaurant and office space,

along with 259 residential flats. the project

will incorporate a pedestrian network, city

parks and access to new beltline trails. in

addition, state Farm and KDC real estate

Development & investments are planning to

build a massive project to turn 17 acres near

the Dunwoody marta rail station into a

2-million-square-foot development including

retail, multiple office towers and a 200-room

hotel. as a part of the project, KDC will

construct a new entrance to the Dunwoody

marta station to provide access for the state Farm workers

and those approaching from the south.

$61 billion earmarKeD For CritiCal improvements

according to a study conducted by the Center for

transportation and the environment, 82% of atlanta commuters

drove alone to work in 2010 with an average one-way commute

time of 30 minutes. Due to its exploding population and

economic growth, there is an urgent need to re-evaluate the

metro area’s existing transportation infrastructure to create a

sustainable plan offering more alternatives.

the atlanta regional Commission’s 2040 regional

transportation plan is focused on increasing mobility options

for people and goods, while promoting places to live with easy

access to jobs and services. it has earmarked $61 billion for

critical investments and expansions. these improvements will

create a range of new options for residents and help keep

atlanta’s economy competitive. the plan’s highest priority is

maintaining existing transportation facilities, with 70% of the

investment going towards this objective. system expansion

comprises the second largest portion of the

plan, accounting for 26% of the projects, and

demand management focuses on reducing

and shortening vehicular trips within the

region, accounting for 4%.

ChallenGes: FaCinG Up to a GrowinG anD aGinG popUlation

the atlanta regional Commission (arC)

forecasts 1.5 million more jobs by 2040,

bringing the total to 4.5 million jobs. the

region will also undergo a dynamic shift in its

racial and ethnic composition in the next 30

years. metro atlanta’s share of residents aged

65 years and older will more than double by 2040. meeting the

needs of a changing population requires a built environment,

along with services and supportive transportation systems that

allow all residents to be active, productive and independent.

as the metro’s population and job numbers grow, traffic

congestion and gridlock will worsen unless major infrastructure

improvements and alternatives are addressed. both public

and private leaders are actively collaborating to address these

challenges, which in many cases includes transit-oriented

development solutions.

cOmmunities play a key ROle

A community engagement process is key to realizing the goals of the Atlanta Regional Commission’s 2040 plan. This will help identify community values and develop policies and plans that matter to residents and communities. Including the community is integral to preserving long-term sustainability and the highest quality of life for those living and working in the metropolitan region.



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12



COMMUTES ALONE

MINUTE COMMUTE9TH

19 39

200,000


up 32%


ATLANTA

0

.5

1.0

1.5

2.0

2.5

2015 F2014 F2013201220112010200920082007200620052004

0.0%

6.0%

12.0%

18.0%

24.0%

30.0%

New Supply - Suburban Direct Vacancy Rate - Suburban

New Supply - CBD Direct Vacancy Rate - CBD

Atlanta Office – Class A New Supply vs Vacancy

MSF

How Do People Get To Work?

2010 Center for Transportation & the Environment Study on behalf of the GA DOT

82%

7%

5%3% 2% <1%

Drive Alone

Telework

Carpool or Vanpool

Train

Bus

Bike or Walk

4.5 millionjObs by 2040

up FROm 1.5 milliOn jObs in metRO atlanta tOday



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12



COMMUTES ALONE

MINUTE COMMUTE9TH

19 39

200,000


up 32%


BOSTONBoston’s Seaport:

Infrastructure Success Story

wilDly popUlar DistriCt rises From the ashes oF neGleCt

Once a predominantly commercial and marine district that fell into a period of dark decline, Boston’s Seaport has enjoyed a sweeping rejuvenation that began 15 years ago.

Crucial to its second debut was the Big Dig, a decades-long engineering project that resulted in the relocation of Interstate 93, which bisected the city, to an underground tunnel system. With an extension of the public transportation system, which included the addition of the Silver Line from South Station, the Seaport was effectively and efficiently reconnected with Boston.

Where unsightly overpasses and heavy traffic once served as an intimidating divide, the pedestrian-oriented Rose Kennedy Greenway park system now connects the Financial District to South Station and the Seaport beyond.

Ample space and a commitment from City Hall to rejuvenate the Seaport quickly made the waterfront both attractive to developers and companies seeking a lower-priced alternative to increasingly steep rents commanded elsewhere within the city and in Cambridge. The high-ceilinged and open brick-and-beam architecture offered by renovated buildings proved well suited to the collaborative nature of tech startups, while former industrial warehouses were readily transformed to meet the specifications of pharmaceutical and life sciences tenants.


innovation DistriCt sUCCeeDs as nexUs

in 2010, then mayor thomas menino designated more than

1,000 acres of waterfront land as the innovation District, with

the goal of creating an entrepreneurial and collaborative nexus

for live, work, and play. according to the boston redevelopment

authority (bra), more than 200 new companies and 5,000 jobs

have since moved to the district. the agency reports that 30%

of new job growth is in the technology sector, while creative

industries and green tech/life sciences account for 21% and 16%

of new jobs, respectively.

a first-of-its-kind civic space dedicated to innovation, the

12,000-square-foot District hall, opened in the fall of 2013

as the result of a public-private partnership. with extended

operating hours, it offers space for workshops and meetings,

drop-in collaboration sessions, and an onsite coffee house and

restaurant. new residential housing within the district provides

shared innovation space and live-work options.

seaport attraCts Diverse ranGe oF bUsinesses

the seaport is not just home to incubator firms, however.

manulife Financial and Fidelity were among the first to move

to the district in the early part of the last decade and since

then a number of major corporations have made plans

to follow suit. vertex pharmaceuticals began moving from

Cambridge to its new 1.07-million-square-foot build-to-suit

headquarters in December of 2013, while state street bank’s

new 485,000-square-foot headquarters was completed earlier

this year. in the fall of 2015, accountancy pwC is slated to take

approximately 334,000 square feet of a 455,000-square-foot

building that sKansKa is developing in seaport square. as well,

law firm Goodwin procter llp recently announced plans to

take 378,000 square feet of a 500,000-square-foot building that

Fallon will deliver at Fan pier in 2016.

Suburban Migration: in addition, the seaport has seen an

influx of tenants moving in from suburban locations. increasingly,

firms are recognizing the benefit of locating in 24/7 transit-

oriented locations that appeal to their workforce and targeted

talent pool. the in-migrating firms run the industry spectrum

from tech companies to law firms to venture capitalists.

investor confidence is high, evidenced by tiaa-CreF’s

December 2013 acquisition from Divcowest of 51 sleeper

street, a fully leased class b building, for $60.2 million, or $400

per square foot, and senior housing properties trust’s 2014

purchase of the vertex headquarters and parking garage for $1

billion.

Popular Place to Live: residential development has rapidly

accelerated in the seaport with more than 1,000 new housing

units underway and planned retail development of more than

1.25 million square feet. the relocation of the institute of

Contemporary art from the back bay to Fan pier in 2006 and

the expansion and renovation of the boston Children’s museum

along the Fort point Channel in 2007 brought important social

and cultural dimensions to the district.

the 2.1-million-square-foot boston Convention and exhibition

Center, which opened in 2004, is expected to generate more

than $680 million in economic activity in 2014 – its most

significant year since opening, according to statistics compiled by

the massachusetts Convention Center authority. the first new

hotel in boston since 2009, a 120-key marriott residence inn

opened in the seaport in 2013, with two more hotels expected

to open there next year, adding nearly 300 more rooms.

while rising rents and increased vehicular traffic are among the

district’s concerns, the pace of expansion does not appear to be

abating. indeed, the bra reports that $1.6 billion is invested in

current mixed-use construction projects within the innovation

District. now firmly a part of the connected city, the seaport

District has indeed reinvented itself as one of boston’s premier

24/7 neighborhoods.

the big Dig initiative played a crucial role in reconnecting the seaport with boston – and creating one of the city’s most prized work-live areas



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12


COMMUTER STATSPERCENTAGE OF ATLANTA COMMUTERS WHO DROVE ALONE TO WORK IN 2010 WITH AN AVERAGE ONE-WAY COMMUTE TIME OF 30 MINUTES

COMMUTES ALONE

MINUTE COMMUTE

9TH

19 39

200,000


30%

jOb GROwthin tech sectOR – innOvatiOn distRict


SAN FRANCISCO

Tech Epicenter

Focuses on Commuter

Relief relentless economic

growth is driving office and residential

development, but infrastructure is falling behind and gridlock is

worse than ever

projeCt arChiteCt: pelli ClarKe pelli. renDerinGs CoUrtesy oF the transbay joint powers aUthority (tjpa).


As the epicenter of the 2.0 tech explosion, the San Francisco Bay Area has become one of world’s most famous urban transformation stories. “Re-urbanization”, led by an ambitious millennial generation, has spiked demand for office and housing in the city’s urban core and close to transit stations down the Peninsula and into Silicon Valley and east out to Oakland and Walnut Creek.

The San Francisco Bay Area, including Silicon Valley and Oakland, has added more than 365,000 new jobs since the economic recovery began in 2010. In this fast-paced tech-rush, adequate residential and commercial real estate, transportation and infrastructure support continues to fall behind demand. Developers are responding as fast as possible. However, the much-needed upgrade to the public transportation system and taxed infrastructure has lagged.

According to the 2013 Tom Tom Traffic Index, the Bay Area ranks as having the second worst congestion in the U.S. behind Los Angeles. Thankfully, one major infrastructure project now underway should not only alleviate much of the tension, but also bring much-needed commercial and entertainment amenities to the area.

relieF CominG in 2017

Dubbed the “Grand Central station of the west,” the transbay

transit Center currently underway at First and mission streets

in Downtown san Francisco will be a new state- of-the-art

bus, commuter and high-speed rail station. scheduled for

completion in 2017, it will serve as the regional transportation

hub, linking 11 transit systems to the eight county bay area

and the state. more than 100,000 passengers daily and up to

45 million passengers each year will benefit once the new

Caltrain, amtrak, and the California high-speed rail service

connecting san Francisco to southern California are all up

and running.

the new transit Center is expected to spur additional

development, give an economic boost to both the immediate

area and region, and also support local government’s land-

use policies. in addition to the 5.4-acre public park located

above the five-story leeD Gold Certified transit Center, the

development will include outdoor recreational, retail, residential

and office space. most importantly, it will offer its riders fast

access to diverse housing and employment opportunities from

san Francisco to san jose.

transit Center spUrs reGional Development

in addition to the $4.5-billion transit Center, a range of office,

residential and retail development connected to the project

promises to transform surrounding neighborhoods and ramp

up property values. the Center is located in the red-hot tech-

centric submarkets where the vacancy rate is at or below the

mid-8% range.

overview: sUDDen Growth harD to manaGe



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12

2ND MOST CONGESTED AMERICAN CITY


COMMUTES ALONE

MINUTE COMMUTE

2ND

19 39

365,000


32%

NEW JOBS SINCE 2010


the recently named salesforce tower will help address the

shortage of prime office space. sitting adjacent to the transit

Center, the 1.4-million-square-foot, 61-story tower scheduled

to open in 2017 is 50% pre-leased to salesforce.com. Cushman

& wakefield represented salesforce.com in the record-breaking

714,000-square-foot office lease that will house about 3,000

employees. the transaction was the largest office lease in san

Francisco’s history. when completed, salesforce tower will be

the largest office building west of the mississippi.

san Francisco’s apartment vacancy rate sits below 3% and,

clearly, an additional 4,500 new residential units to be developed

in the combined transbay redevelopment area and transit

Center district plan area will bring welcome relief. lastly, this

new development will also include 100,000 square feet of

retail space.

popUlation explosion maKes hoUsinG anD seats on pUbliC transit harD to FinD

surrounding areas are following the success of transbay terminal

to steer the direction of transit-oriented development in their

markets. Caltrain, the commuter rail line connecting Downtown

san Francisco to southern san jose is the only existing transit

line linking the region. as a result of the booming economy,

ridership increased by 11.8% between February 2013 and

February 2014 and by an astonishing 39.3% since February 2011.

Developers, seeing the advantages of transit-oriented

development, are looking at the Caltrain line for potential

locations. Crossing 900, a 300,000-square-foot office building

is being built adjacent to the redwood City Caltrain station.

in addition, 1,200 new apartments located near Caltrain are

planned for Downtown redwood. additional projects are

planned for san jose including the Coleman highline, a class a

office building that will be linked to public transportation,

the san jose airport and other commercial spaces via an

elevated terrace.

ChallenGes: lonG wait For relieF

as with any major regional development initiative, new

infrastructure cannot come soon enough to this dynamic

market. the long lead-time, political obstacles, nimbyism,

additional costs and more complex plans all contribute to

challenges of building infill transit-oriented developments and

can extend the timeframe.

infill development, especially in such a dense area, requires

carefully orchestrated moves by the developers. in the case of

the transbay Center, this includes temporarily relocating the

bus terminal to a nearby location as well as coordinating the

efforts of the construction teams. in addition, the importance of

a good private-public partnership cannot be overestimated as

an essential factor in moving these types of projects along. local

players need to work closely with not only local government

officials, but also with regional planners and regional

government agencies, to ensure the needs of a broader

area are met.

baRt: encOuRaGinG tRansit-ORiented develOpment

The planned extension of Bay Area Rapid Transit District (BART) linking San Francisco to San Jose is also key to improving the regional transportation system. This massive project will extend BART from the new Warm Springs stop (opening in 2015) down through Fremont, extending through Milpitas south to San Jose and ending near the Santa Clara CalTrain station. Completion is slated for 2018. BART is currently engaged in 18 transit-oriented development projects at its stations, representing over $2.7 billion in private investment. By promoting high-quality, intensive development on and near BART-owned properties, the District expects to increase ridership, support long-term system capacity and generate new revenues for transit.


SAN FRANCISCO

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2015 F2014 F2013201220112010200920082007200620052004

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%


San Francisco Office – Class A New Supply vs Vacancy

MSF

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

201420132012201120102009200820072006200520042003200220012000199919981997

Average Weekday Passenger Boardings Current Ridership Limit*

Caltrain Average Weekday Ridership – 1997-2014

*Budget cuts e�ective Jan '11 reduced CalTrain’s schedule from 90 to 86 trains each weekdaySource: CalTrain, Cushman & Wake�eld Research



= 250,000 Jobs

= 3 hours


= Billion Dollars


1982 2011

2014

42%

82% 30

25%

2032

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

12

6

39

12

12

12

12

12

2ND MOST CONGESTED AMERICAN CITY


COMMUTES ALONE

MINUTE COMMUTE

2ND

19 39

365,000


32%

NEW JOBS SINCE 2010


while our research special report focuses on just ten major markets across north america, the transit-oriented Development phenomenon is playing out in markets around the globe. in 2007, a shift occurred that saw for the first time the majority of the global population living within urban areas. while many cities are experiencing epic growth and development in their downtown markets, others are seeing expansion in suburban markets that have good transit and/or have embraced the live-work-play model.

the one thing all growing cities have in common is the value premium of toDs. For investors and developers, the economic value of contributing to improved accessibility is indisputable as more businesses and residents demand and will pay for ways to shorten their commute times to workplace and entertainment facilities. it¹s about improving the quality of life – an absolute priority for people buying into urban living.

For occupiers, the value is less quantifiable, but lies in their ability to attract talent, efficiently reach their client base, and achieve their sustainable objectives as good corporate citizens. on the down side, the challenges of aging or insufficient infrastructure, nimbyism, and lack of funding and cooperation between the public and private sectors are common themes throughout.

Conclusion


ameriCas

Maria T. Sicolaexecutive managing Directorhead of americas researchsan Francisco, Calic. #00616335t +1 (415) 773-3542e [email protected]

speCial report projeCt manaGer/washinGton D.C.

Paula F. Mungermanaging Director, mid-atlantic | southeastresearchtysons, va t +1 (703) 847-2785 e [email protected]

mexiCo City

José Luis Rubímarket research manager, méxicoCuajimalpa, méxico, D.F.t +52 (55) 8525 8058e [email protected]

manhattan

Donald N. Noland, Jr.managing Director – new york tri-state | new england americas operationsresearchnew york, ny t +1 (212) 841-7733e [email protected]

los anGeles

Petra Durninmanaging Director – research los angeles, Calic. #00616335 t +1 (213) 955-6445 e [email protected]

ChiCaGo

Simone Schuppanregional Director – Central regionresearch Chicago, il 60606t +1 (312) 470-1891e [email protected]

toronto

Stuart Barron, CPA, CAnational Director of research Canadian marketstoronto, on t +1 (416) 359-2652e [email protected]

miami

Mirta DeCespedes senior analystresearch – south Florida miami, Fl t +1 (305) 533-2882e [email protected]

atlanta

Logan Mennemanager – atlanta researchatlanta, Ga t +1 (404) 853-5384 e [email protected]

boston

Sharon JoyceDirector – new englandresearcht +1 (617) 204-4183 e [email protected]

san FranCisCo

Caroline Rooneymanaging Director – Capital markets and northern Californiaresearchsan Francisco, Ca lic. #00616335t +1 (415) 658-3677e [email protected]

Cushman & wakefield is the world’s largest privately‐held commercial real estate services firm. the company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world’s major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and management assignments. Founded in 1917, it has approximately 250 offices in 60 countries, employing more than 16,000 professionals. it offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. the firm has nearly $4 billion in assets under management globally. a recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge.

CUshman & waKeFielD researCh ContaCts

fall 2014 urban development · 2014-10-28 · fall 2014 urban development faster greener commutes...

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