This is Part Two of a three-part series called Multifamily and the Future of Transportation. Read Part 1
City Club Apartments (CCA), a multifamily developer from Detroit, Michigan, recently finalized plans for their second Kansas City community. The firm chose a block in the Crossroads Arts District, a neighborhood just south of downtown that is undergoing a renaissance of development and culture.
But it wasn’t just the Crossroads’ 50 restaurants or 100 art studios that sold CCA on the Crossroads. It was the streetcar.
“I’d like to thank the city for the streetcar and the Crossroads for creating such a creative neighborhood,” said City Club CEO Jonathan Holtzman.
The new mixed-use community will be located right along Kansas City’s 2.2 mile downtown streetcar line. CCA regularly targets highly walkable neighborhoods with access to mass transit. They have built communities along streetcar lines in Detroit and Cincinnati as well.
Why does CCA choose to build their communities along transit lines? That’s the question we’re going to answer here in Part 2 of our miniseries: Multifamily and the Future of Transportation.
In Part 1 of the series, we looked at the transportation trends most important to multifamily developers. Those trends, as we discussed, are leading to a fundamental shift in the way we move: Mobility as a Service (MaaS).
In this article, we’re going to look at what multifamily developers have to gain by embracing MaaS.
But First, What is Mobility as a Service?
Mobility as a Service (MaaS) is a network of public and private transportation services that create a complete mobility solution. With MaaS, people shift away from private car ownership to shared mobility.
MaaS includes, but is not limited to:
- Public Transit (Buses, Streetcars, Light Rails, Rapid Transit Systems)
- Ride-hailing (Taxis, Uber, and Lyft)
- Car-sharing (ZipCar, Car2Go)
- Vehicle subscriptions (Carma, AccessByBMW)
- Bike-sharing (Bcycle, Jump, Lime)
- E-Scooters (Lime, Bird)
- Private shuttle buses (Chariot, Google employee bus)
The goal of MaaS is to make transportation accessible and affordable to everyone, everywhere. To do this, MaaS will rely on technology innovations like autonomous vehicles and Data as a Service.
Benefits of MaaS for Multifamily
If Mobility as a Service is the future, what’s in it for multifamily developers? There are several benefits to embracing MaaS:
Higher Demand and Higher Rents
The study looked at 40,000 apartment developments around the US and compared rental rates with access to transit. The study found that apartments that scored an “Excellent” rating on MobilityScore demanded 59% higher rates than average, while communities scoring “Good” on the MobilityScore had 22% higher rents.
An “Excellent” MobilityScore means the apartment is in short walking distance to bike-share, car-share, public transit, and ride-hailing services. Apartments in “Good” mobility neighborhoods might have access to three of those services, but not all. Anyone can check their apartment’s MobilityScore on TransitScreen’s interactive map.
However, not all transit modes had the same impact on rental value. The study also found that increasing access to ride-hailing and bike-sharing had a larger impact on rental values than other mobility services.
Increasing ride-hailing and bike-sharing access by 10% led to a 10- and 9- cents-per-square-foot increase in rent, respectively. Carsharing services increased rent by 8 cents per square foot, while traditional transit options increase rents by only 3 cents.
More Resilient Properties in a Downturn
Mobility has a longer-term impact on real estate values as well. In the wake of the 2008 recession, researchers wanted to know which neighborhoods were hit the hardest and which maintained their value.
They looked specifically at neighborhoods with access to fixed-guideway transit (i.e. light rail, heavy rail, commuter train, and streetcar). After researching five different metros around the country, the study found that neighborhoods around transit outperformed their region by 41.6%.
In addition to more resilient property values, residents of transit-rich neighborhoods also had better access to jobs and lower transportation costs, both of which are crucial in an economic downturn. As the second largest expense for most households, transportation costs can make or break a family during a recession.
This study also found that not all transit was created equal. Transit options that were well-connected and had a higher frequency of service had the biggest positive impact on property values.
In other words, better transit options led to more resilient property values.
Higher Quality of Life for Residents
Transportation and access to jobs are inextricably linked. As Americans moved out of city centers into suburbs, well-paying jobs moved with them, leaving poorer Americans in the urban core with few opportunities. The lack of job prospects further widened the gap between the rich and poor.
“For many of these people, inadequate or unaffordable transportation
is a significant barrier to employment,” said The Leadership Conference Education Fund, a civil and humans right group, in a 2011 study on transportation policy and access to job opportunities.
Many multifamily developers are targeting areas of opportunity within city centers around the country. Historic neighborhoods, gutted by suburbanization, are seeing new life with the development of housing and revitalization of culture.
However, along with affordable housing requirements, these communities need access to better jobs. Developers can give their residents more employment opportunities by embracing Mobility as a Service on their properties.
While car ownership hit an all-time high in 2016, the number of car loans also hit record highs in recent years. Governing.com said that as car dealers try to sell more vehicles, “that’s led to an increasing number of sub-prime loans.” Taking on more debt is certainly not a long-term solution for anyone, which is why access to shared transportation is so important.
By helping residents get the transportation they need, developers can do their part to ensure everyone in their community has a good-paying job. Not only does this help the residents, but this could also decrease turnover rates in multifamily communities.
How Multifamily Developers Can Embrace MaaS
The benefits of MaaS are clear for both developers and their residents, but what does it look like in practice? In Part 3, we will look at examples from around the world of how multifamily developers are embracing MaaS.