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San Diego’s $2.1B Trolley Expansion Could Boost Transit-Centric Development

Light-Rail Extension Likely to Reshape Neighborhoods Near New Stops
September 12, 2018
Credit: Gaslamp Quarter, San Diego



As trolley lines make a resurgence in major cities across the country, landlords and developers may look to the $2.1 billion expansion of San Diego's trolley system as a sign of just how big a lift public transit can give commercial real estate.

San Diego’s proposed Blue Line trolley expansion stands to make nearly a quarter of the region’s existing offices public transit-friendly for the first time -- and is spurring officials to consider rezoning three areas around the proposed light-rail route for more transit-oriented development of higher-density projects.

The trolley line expansion, aimed at reducing traffic in a region with a 3.3 million population, is under construction to stretch 11 miles from downtown San Diego northward to University Town Center, a large employment hub known as UTC that's considered the city’s second downtown. It would give people in areas such as La Jolla and UTC access to the light-rail line for the first time with nine new stations.

Credit: San Diego Association of Governments



It’s one of a number of trolley lines coming back to major cities across the country including Detroit, Milwaukee and St. Louis, as officials work to take cars off roads to reduce pollution and rush-hour congestion. The development discussions around it also follow a trend of transit-oriented mixed-use projects that have been completed or come under discussion in major cities ranging from San Franscisco and Portland in the West, to Philadelphia and Washington, D.C., in the East.

Just 12 percent of the San Diego region’s 77 million square feet of offices are located within a five-minute walk from a trolley station now, according to a recent report from brokerage firm Cushman & Wakefield. Only 17 percent is within a 10-minute walk from the trolley.

The Blue Line expansion is projected to add an additional 3.8 million square feet of local offices to the list of walk-friendly places for trolley riders by the time it’s estimated to be complete in 2021.

In total, about 22 percent of all local office inventory would suddenly be within 10 minutes of a trolley stop, said Jolanta Campion, Cushman & Wakefield’s director of research in San Diego.

The biggest office impact would hit University Town Center. Nearly two-thirds of UTC’s offices -- about 3.4 million square feet, or 63 percent of the inventory there -- would be within a 10-minute walk from the trolley by the time the trolley is fully extended, including its new terminus station currently under construction next-door to the Westfield UTC mall, Campion noted.

That would surpass the amount of offices within walking distance to the trolley in Mission Valley, which has the second-highest concentration of offices near the light-rail, with about 40 percent of its inventory within walking distance. Both would trail downtown San Diego, where 100 percent of the nearly 10 million square feet of offices is within no more than a 10-minute walk from a trolley stop.

It’s not just benefiting landlords, but developers, too. Transit-oriented developments are already popular in places such as downtown San Diego, Mission Valley and North County, where the trolley or other transit lines operate. In a limited number of locations, developers have been able to build higher density projects near public transit in areas that would otherwise face opposition from neighborhood groups concerned about projects that might draw increased vehicle traffic.

The timing couldn't be better: The project comes right as the population along the trolley extension corridor is projected to increase 19 percent by 2030, and employment rises 12 percent, according to the regional planning agency known as San Diego Association of Governments.

Transit-oriented development can generate about one-third to one-half of the new vehicle traffic that a similar-sized development would create if it were not located near public transit, according to research released in 2009 by Transit Cooperative Research Program, an agency of the U.S. Department of Transportation.

The study found residents of those developments are more likely to use an efficient public transit option rather than take their own vehicles on the road. And commercial businesses located in transit-oriented projects are likely to be accessed by larger numbers of people coming to them from other stops along the transit line than people coming in cars.

In theory at least, the study notes, if a transit-oriented developer is able to pay lower city impact fees than would apply to a traditional development, that could also help the project pencil-out from a financing perspective.

The San Diego Blue Line’s new stops have officials seeking to figure out how to encourage more development -- which could bring in additional revenue to the city along the extended route.

CLICK TO ENLARGE MAP (Credit: SANDAG)

Brokers, regional planners and community planning committees are reviewing changes that could create new mixed-use villages in at least three budding hubs of new development near stations between San Diego’s Old Town neighborhood to the south and UTC to the north.

At all three stops, which are primarily residential neighborhoods with the nearest homes about two miles away, current plans call for basic amenities such as parking and bicycle racks. Planners are fielding proposals for compatable adjacent commercial elements, such as apartments, retail and offices.

Michael Prinz, senior planner with the city’s Planning Department, said officials are currently at work on environmental impact reports for proposed zoning changes in several neighborhoods where the extended trolley will have new stops. More community discussions are in the works, with a target of having trolley-centric zoning changes finalized before the end of 2019.

Prinz said what’s likely to be developed is along the lines of what’s already in place in trolley-focused areas like Mission Valley, though at smaller scale. Those largely include new apartments surrounded by locally focused retail and service businesses catering to those new residents.

At the proposed Tecolate Station, the city said it will allow up to 109 residences per acre to be developed, making it a good candidate for multifamily projects, Cushman and regional officials note. A commercial “Artisan District” to the northeast could make it an attractive option for developers and residents. There is currently no commercial development where the station is going to be placed.

At Claremont Drive, the area around a pending new trolley stop is zoned for medium-high residential development and is already surrounded by commercial space. At the upcoming new Balboa Avenue station, officials have plans for a new community village west of Interstate 5, with light-industrial uses that could be permitted to the north of that village.

The development might not stop with the Blue Line. San Diego regional planners are looking at a proposed extension of the trolley’s Purple Line, which could bring similar development scenarios to the region’s southernmost communities, including San Ysidro, Chula Vista and National City.

The Blue Line trolley extension is being overseen by local agencies including the San Diego Association of Governments, city of San Diego and the regional Metropolitan Transit System.


Lou Hirsh, San Diego Market Reporter  CoStar Group   
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