Transit premiums running out of gas
Uber, driverless cars threaten special value of homes near trains, buses
NEW YORK— The premium that a condo near the train has long commanded is under threat.
Ride-sharing services such as Uber Technologies Inc. and Lyft Inc., and the advent of electric vehicles and driverless cars, are poised to chip away at the higher prices that real estate around subways and bus stops has earned, according to a report from MetLife Inc.’s assetmanagement business released Tuesday.
“People are already willing to pay slightly less than they were before for the same level of transit access, because they now have this complementary transit system,” Adam Ruggiero, head of real estate research at MetLife Investment Management, said in a phone interview.
Take San Francisco. Apartments within a five-minute walk to a public-transit stop have tended to earn about a 20-per-cent premium, according to the report, which considered other possible causes of the premium. The premium began to decline just about two years after Uber started operating and is already down to about 15 per cent, MetLife’s real-estate re- search and strategy team reports. Properties near mass transit will still typically fetch higher prices, but not as high as before, Ruggiero said.
Ride-sharing services are generally more expensive than public transportation, but that might change with the introduction of autonomous vehi- cles, according to the report. With cars going right back on the road after dropping their passengers, parking lots could be freed for redevelopment, Ruggiero said.
All these changes would make it more attractive to develop real estate in areas that offer easy access to less congested roads but that might not be close to public transport, according to the report. People might consider migrating to the suburbs if the commute becomes easier, Ruggiero said.
The changes are expected to occur gradually, MetLife cautions. Some areas, including New York, might not be pre- pared with the infrastructure for many more cars driving at rush hour if people are calling Uber and Lyft, but not using them for carpools. To get them to share rides, governments would need to consider options such as increased tolls or a separate lane for carpools, according to the report.