impacts of the hiawatha light rail line on commercial and industrial property values in minneapolis...
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Impacts of the Hiawatha Light Rail Line on Commercial and Industrial Property Values in
Minneapolis
Kate Ko and Xinyu (Jason) Cao
Hennepin-University PartnershipJan. 2010
The Light Rail Transit improves the accessibility of the Hiawatha corridor.
Central question How has the Hiawatha LRT affected commercial and industrial
property sales prices?
Introduction
Why commercial and industrial properties? Local governments and state legislators
anticipate higher property and sales tax revenue as part of their returns on this investment (tax increment financing).
Any impacts on businesses will guide local economic development of other LRT lines.
It provides quantitative evidence for continuous federal support under FTA New Start.
Hedonic Pricing Function
A property is a bundle of the following 5 aspects: Structural: building age, lot size, gross building
square footage, number of stories Transportation network accessibility: distance to
LRT stations and highway on-ramps Economic agglomeration: distance to CBD, Mall of
America, number of workers, land uses Prestige of location (socioeconomic): household
income, owner-occupied housing value, portion of African American
Labor pool accessibility: number of working residents
Hypotheses
Pre and post LRT matters: the opening of LRT generates positive externality
Proximity matters: property premium is driven by accessibility of LRT
Data and Estimation
2000-2008 parcel data from Metropolitan Council and City's Assessors Office
2000 block group level data from Census 2002-2006 Census Longitudinal Employment
and Household Dynamics
Regress transaction prices on 5 types of attributes
Results – Sub-region
Property prices in both periods are mainly driven by structural characteristics. Lot size Gross building area
Agglomeration economy is a factor. Number of workers
We did not find the impacts of access to LRT and highways on property values. Firms benefit from LRT locally.
Results – Station Area
Prices are driven by structural characteristics as before in sub-region. Lot size Gross building area Number of story
Economic agglomeration plays a role. Number of workers
Positive accessibility effect exists only after opening of LRT, but the effect is non-linear. Distance to LRT stations Distance to LRT stations squared