Board The Bus: Transport Infrastructure Touted As Key Real Estate Value Driver
The presence and solid performance of commercial real estate is a sign of a healthy surrounding transportation infrastructure. The fate of the former is ever-increasingly is linked to the fate of the latter. That’s the message Tishman Speyer President and CEO Rob Speyer had for the assembly at the Urban Land Institute’s Asia Pacific Summit in Shanghai.
“The time may be coming when transportation has a greater effect on real estate than interest rates,” he said. “So, move over banks; here comes the bus!”
Speyer emphasized the importance of city leadership in driving public transit initiatives, which will in turn drive real estate values.
“That leadership will have more of an impact on the real estate we own than even developers and architects,” he said. “We need mayors with energy, confidence, and a sense of destiny. Mayors are often in a better position than national leaders to work together and get things done.”
A common obstacle mayors face is traffic and pollution, he said, which will get worse as a predicted 2.5 billion people move to cities between now and 2050.
“We all talk a lot about connectivity; it is about much more than mobile phones and wi-fi. Connectivity is about where we go on the ground and how we get there,” Speyer said. “In the past, sometimes we built transportation after real estate, and sometimes we built it before real estate. But now, finally, we are building transportation and real estate at the same time.”
Partnerships Between Developers And Transportation Systems Cited
In addition to touting the plans of Los Angeles Mayor Eric Garcetti to add 32 miles of subways to the city over the next two decades, Speyer went on to discuss new and novel partnerships between transportation system providers and real estate developers, where developers acquire land over planned subway stops, trading significant company equity in turn to the state-owned transit provider.
Shenzhen, [China]’s Mayor Xu Qin has a city of 12 million people, which is set to see a 20 percent increase in population in the medium term. To cope with this, Xu plans to build the longest subway in the word.
State-owned transit company Shenzhen Metro has signed a landmark deal with developer China Vanke in which Vanke has acquired property above ten metro stations in Shenzhen, and Shenzhen Metro has taken a 20 percent stake in Vanke.
“So, Vanke gets prime development land, and Shenzhen Metro gets a share of the profits,” said Speyer. “This is a deal that all of us in this room should learn from. What works for Vanke and Shenzhen Metro could work for all of us.
“Property and transportation will increasingly become a single deal. We have 2.5 billion people moving to cities, and as much as they need somewhere to go, they also need some way to get there.”