Transit Agencies Leasing Real Estate to Raise Revenue

With ridership "plummeting" during the pandemic, cash-strapped transit agencies are turning to leasing real estate to recover lost revenue, reports Jenni Bergal. "Many large transit agencies already have their own real estate departments and for years have been leasing property—often parking lots near rail stations—to development companies," with rent subsidizing operations and maintenance. Encouraging transit-oriented development near stations is "seen as a way not only to create a long-term revenue stream, but also to increase ridership, minimize traffic congestion and help communities by providing jobs and housing, some of it affordable, near transit."

"Agencies have been experimenting with scrapping or reducing fares or adding service to bring back riders and ensure access for disadvantaged communities. During the pandemic, the majority of people who continued to ride buses and trains were essential workers with low incomes, often people of color." The shift toward cheaper or free fares, along with the precipitous fall in ridership caused by the pandemic, has "prompted many transit agencies to look at various ways to diversify their funding beyond relying on fareboxes and federal, state and local dollars."

"[S]ome transit agencies that have gotten into the real estate business are trying to develop affordable housing projects. They often lease to private developers, but sometimes they work with nonprofits, community groups or local governments." Jessie O'Malley Solis, an agency program manager for the Santa Clara Valley Transportation Authority, says "transit-oriented development offers the agency the opportunity to fund normal operations as well as service improvements and enhancements" that will prove solid investments in the system's future.