Property development around interchanges

Land adjacent to new interchange developments can benefit from better accessibility and connectivity and consequently become attractive for urban development projects. Different national laws and regulations (such as ZAC in France) can facilitate and subsidise such developments. In some countries, specific subsidiary bodies deal with land development around strategically important transport hubs (such as ÖBB Immobilien in Austria). The concept is applied in many countries. In the Anglo-Saxon world, the concept can be mainly summarised by the definition common in the US, Transit Oriented Development, and the UK term Transport Development Areas.

Transit Oriented Development (TOD) – local authorities or governments may encourage property development (residential and/or commercial) close to stations on the promise that improved accessibility leads to higher land value, in order to finance and create a source of revenue to maintain the public transit systems. Corporations can be set up to facilitate this process. The government grants the corporation development rights for land located above or adjacent to the railway stations to help finance the construction of new railway projects, instead of injecting cash or providing direct subsidies.

Transport Development Areas (TDA) – an integrated land use/transport planning approach operating around urban public transport interchanges or nodal points well served by public transport in which a more specific relationship between development density and public transport service level is instituted. Integrating traffic planning with land use planning (e.g. by defining a railway district) provides the basis for urban regeneration and mixed-use development around transport hubs.

As an economic concept, TDAs are also the focus for more institutionalised arrangements whereby public transport operators receive additional funding based on the transfer, where appropriate, of part of the higher financial returns to development which might be achievable in such areas.

A TDA therefore provides the opportunity for three significant transport and development opportunities:

  • Financially more attractive (or at least less uncertain) development opportunities
  • The prospect of additional investment in public transport enhancements
  • A contribution to the sustainability objectives of the Transport White Papers in terms of integration of land use and transport, reductions in the need to travel and less reliance on private transport

Partnerships to take forward the TDA Approach should include:

  • The local authority, normally in the lead or enabling role
  • The landowner
  • The investor
  • The developer
  • The designer
  • The transport operator/provider
  • The occupier

NODES strategic objectiveContribution
Enhance accessibility and integration +
Enhance intermodality +
Enhance liveability +
Increase safety and security conditions 0
Increase economic viability and costs efficiency +
Stimulate local economy ++
Increase environmental efficiency 0
Increase energy efficiency 0

Good practice

Helsinki Kamppi interchange – an example of private exploitation of the surface area using the underground for public transport infrastructures is the case of the Kamppi interchange in Helsinki, Finland. The city council modified the urban conditions in order to benefit from the land by selling property to build a commercial centre, offices, and residential areas. The upgrading of the transport interchange was financed with the profit made from the sale of land. The maintenance of the interchange was handed to a private company.

Hong Kong – Hong Kong’s transport operator, MTR, has transformed into a company that not only builds and operates railways, but also designs and builds communities in urban areas of Hong Kong. In conjunction with railway development, it has played an important and leading role in the establishment of new property complexes as an integral part of stations and depots. As a result, MTR’s property business has focused primarily on development, investment and management. The profits are derived not from the Government, but from developers who offer a share of profits to the Corporation. The business model of translating development rights from the Government into property profits to help bridge the funding gap when financing new railway projects has brought to Hong Kong a railway network of extremely high quality. Opportunities for private developers mean that homes, offices and shops are available to hundreds of thousands of people. The business model is well recognised throughout the world and has been copied in other countries.

Denver Union Station – provides an opportunity to create a dense, mixed-use transit-oriented development adjacent to the transit facility and may include up to 2 million square feet of development on the DUS site. It will be the “Grand Central Station” of the metropolitan region as the center of the regional transit system in the heart of the city. A master plan for the site has been completed and adopted by the four partner agencies (RTD, CDOT, DRCOG and the City and County of Denver).

Austrian Railways (ÖBB) and its subsidiary ÖBB Immobilien for Linz Central Station and Vienna Central Station, including BahnhofCity.

 

Urban planning tools in France: Zone ‘aménagement concerté (Comprehensive Planning Area)

The ZAC (Comprehensive Planning Area) is an urban planning tool embedded in French law and included in the Town Planning Code (Code de l’Urbanisme). The ZAC is a public initiative that enables the development of urban free spaces following the procurement of the development licence. The licence can be used for a specific time, and usually consists of public and private land units. Following the consultation, the development plan sets out all public facilities as well as administrative and financial procedures to carry out the operation to an end. Upon receipt of the works carried out by the developer, public facilities in the programme are made available to the municipalities or public bodies that initiated the development of the ZAC. The development programme is funded by public development that is exempt from development taxes. Land available within the scope of the ZAC changes destination based on the newly formed plan.

Example: As part of a ZAC, a BRT system is created with a multimodal interchange at its terminus. The construction programme of the ZAC provides for the construction of the bus lanes, as well as a Park & Ride facility. The municipality provides the land it owns in the perimeter of the station. The developer finances and builds the dedicated bus lane as well as the Park & Ride facility. After the construction, the municipality reclaims the lane and P&R in the public domain and the temporary owner activates the new bus line. The assembly is fixed, regardless of the amount of work. It is therefore crucial to supervise the work to ensure the quality of the deliverable.

Good practice: ZAC Saint-Exupéry Montaudran, Toulouse. (FR) http://www.ordimip.com/files/Commissions-mixtes/Reunion%20du%20140206/Montaudran%20Malardeau.pdf


Potential interchange performance improvement

The whole interchange zone, including the interchange itself, will benefit from land development in the area. In the long term, the increase in land value due to improved accessibility will finance and create a source of revenue to maintain and develop the public transit systems.


Resources

The initial public investment is high as this tool is most relevant for major infrastructure projects where the surrounding land is of high value. In the long run, the land development around an infrastructure project is expected to generate broader societal benefits and generate additional returns of investment from selling land.

A cost-benefit analysis should be carried out by the investor to evaluate the feasibility of the project.