Numerous studies have found that renters pay more to live in apartments near mass-transit stops and, because that’s the case, developers are willing to pay more for such sites, reports Bendix Anderson of National Real Estate Investor.
Those developers are also willing to invest extra time to deal with the demands of local officials who often develop their own, elaborate visions for these highly visible locations.
“Sites surrounding transit continue to attract strong interest from developers and investors,” says Josh Simon, managing director in the Denver office of capital services provider HFF. To attach a number on that, developers are willing to pay a higher price that would work out to an expected return on cost that is about 0.25% lower for a transit development site.
Prices for development sites overall, including land near transit stations, are remaining relatively flat or even declining, however. The rising cost of development and worries about overbuilding have put a limit on how much developers are willing to pay, even for the best sites.
But TOD sites are still considered a safe investment:
TODs have also proven to keep their value over time because they have a natural protection from competition from new apartment development. There are only so many sites near transit stations, after all, according to Simon.