Real estate, and the infrastructure that supports it, represents 35% of the United States’ asset base – by far the country’s largest asset class. As a result, depressions in real estate have generally caused recessions in the general economy; two of the last three recessions, including the current one, have convincingly shown this. To get the United States’ economy moving again, resuscitating the real estate industry is key.
Transportation infrastructure is a particularly important part of this achieving this goal. Transportation drives development and the transportation system we select dictates the shape of real estate. For the past three generations, U.S. transportation investment policy focused primarily on building roads, as the market wanted. However, this resulted in an over-supply of “drivable suburban” development. In today’s real estate market, particularly among the Millennial generation, demand is rapidly rising for “walkable urban” development, which is denser and mixes uses within walking distance.
By improving access to rail and developing a convenient transit infrastructure, biking and pedestrian systems will spark an explosion of walkable urban development in towns and cities across the country. A national model for this is the Washington, DC metropolitan area which has seen over $100 billion worth of development around Metro rail transit stations over the past 20 years. Metropolitan Denver is emulating this model and expanding their light rail system to include over 50 new stations; the city expects the bulk of new development in the region to take place around these stations.
Many other metropolitan areas are following the models of Washington, DC and the Denver metro region, including Phoenix, Dallas, Los Angeles, Seattle and Houston. Changes to federal transportation policy can help even more cities across the country to follow this lead.
The benefits of a balanced federal transportation policy are many and include:
- Unleashing the pent-up demand for walkable urban development in our center cities and transforming many suburban places, such as redeveloped regional malls, revitalized town centers and green field walkable urban development; and
- Sparking the recovery of the U.S. economy by resurrecting an industry that mobilizes the country’s largest asset class.
Ultimately, our national transportation policy needs to acknowledge that transportation drives development and thus dictates how 35% of the economy’s assets are deployed. The goal of sound transportation policy is not merely moving goods and people, it is to increase economic, land, property tax and sales tax value.