It’s probably the hot topic in Hawaii today. You hear conversations all over town beginning with, “what do you think about rail?” This article won’t get into the debate about whether you’re for or against. The bottom line is that the City & County of Honolulu broke ground for the Honolulu Rail Transit (HART) project in February. The ceremonial groundbreaking and blessing was held on Kualakai Parkway in East Kapolei, near the site of the first of 21 rail stations planned for the 20-mile elevated route. There are pending lawsuits to stop the project, but at this point, all systems are go — so the question is:
If rail transit becomes a reality, what will be its effect be on Hawaii real estate?
According to the HART website (http://www.honolulutransit.org), the project will cost an estimated $5.5 billion to build and is scheduled for completion in 2019. The route stretches from Kapolei to Ala Moana Shopping Center with stops at UH-West Oahu, Leeward Community College, Pearl Highlands, Pearlridge, Aloha Stadium, Honolulu International Airport and Honolulu Community College.
Stations will also be built in the communities of Waipahu, Pearl City, Aiea, Kalihi, Chinatown, Downtown Honolulu and Kakaako. So what does this mean for home prices in close proximity to the rail stations?
Accessibility and Convenience - Potential Investment Opportunity?
A HART fact sheet (http://www.honolulutransit.org/rail-system-guide/station-design-and-features.aspx) on station design, states that the entrance of each community rail station will be based on residents’ input from station design workshops to reflect each community’s character and history. In addition, some rail stations may have parking for commuters with vehicles (park-and-ride lots), vehicle loading zones and short-term waiting areas (kiss-and-rides), bus transit center and taxi, private shuttle and tour bus loading zones.
So how much financial value can an aesthetically pleasing rail station with connections to other modes of public transportation add to a residential property?
A 2002 review entitled “How Will the Centerline Affect Property Values in Orange County: A Review of the Literature and Methodological Approaches for Future Consideration,” took a look at 41 studies of 15 rail systems across the country. Researchers Lee Cockerill and Denise Stanley, of California State University-Fullerton, concluded “…rail transit has enhanced residential property values some 2 percent to 18 percent in Portland, Sacramento, San Diego, and Santa Clara, with larger changes in cities with commuter rail systems.”
In San Diego, properties near commuter rail stops enjoyed consistent price premiums of 17 percent compared to properties further from public transit options, according to a 2003 study by the Urban Land Institute.
According to a July 25, 2011 article by online news site Honolulu Civil Beat , “More than half of the nearly 300,000 different parcels on the entire island of Oahu are within two miles of a rail station, showing just how many Honolulu residents could potentially benefit from the train.”
An analysis of real estate data performed for Civil Beat shows 54.7 percent of the 289,248 parcels in the City and County of Honolulu are within two miles of a rail station — perhaps about 10 minutes on a bike or just a couple minutes in a car. The distance was measured as the crow flies from the midpoint of each parcel to the nearest station.
Real estate experts have long known that public transit increases the development potential of real estate near transit lines, thereby increasing property values. The National Association of Realtors reports this “transit premium” can range from as little as a few percent increase to more than 150 percent. However, the amount depends on the local regulatory environment, regional connections and national and regional economics. Achieving the high-end potential for increased property value also generally requires building more complex, mixed-use projects at higher densities.
Cities from Washington, D.C. to Dallas to San Diego to Portland have seen their transit systems trigger development and redevelopment in association with these transportation systems.
In a 1999 paper by Roderick B. Diaz of Booz Allen & Hamilton Inc. entitled “Impacts of Rail Transit on Property Values,” Diaz presents a summary of studies examining the impact of rail transit on property values. It concludes with a suggestion that the primary positive impact of rail on property values is the impact due to accessibility. “In general, proximity to rail is shown to have positive impacts on property values such as sale prices of single-family homes, apartment rents, and median home value.”
Potential Noise and other Negative Aspects - Urban Blight?
It is important to be close enough to the rail station for convenience, but not too close where the noise, traffic, safety, aesthetics and other negative impacts become a nuisance.
According to the Diaz article and as it relates to the Eastside Metropolitan Area Express (MAX) light rail transit line in Portland, Ore., “properties within the 500 meter walking distance generally experienced higher property values the closer a property was to the station. Within the immediate station area, however, the nuisance effects such as noise and increased traffic reduce the potential property value impacts of those properties closest to the station area.”
Furthermore the article also states, “in a study of the impacts of rail transit in Atlanta, two dramatically different neighborhoods served by the same transit line showed that proximity to rail can have either a positive or negative effect on property values.”
The higher-income neighborhoods did not appear to show value associated with being near rail while the lower income neighborhood did show positive value with that association. The study concluded that rail transit shows positive correlation to property values in areas where the access provided by the transit service is valued. In communities where public transportation may not be as coveted, close proximity to a rail station may indeed be seen in a negative light.
The bottom line is that there are numerous factors involved when attempting to foresee whether property values will increase or decrease once HART is up and running. As more information becomes available in the coming months and years of the project’s progression, real estate experts should be able to make better predictions as far as rail transit’s effects on Oahu real estate.
What do you think? Let us know in the comments.
Simulated before and after pictures of light rail from Honolulu Rail Transit:
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