April 3, 2017
By: Sam Swan, Managing Director, JLL
How much would you pay to own a house within a short walk of your local train station, or bus stop? Anecdotal evidence, as well as data from residential listing services, suggests most buyers are willing to pay a premium.
Residential trends mirror commercial
For instance, last year real estate firm Estately studied home prices within a mile of light rail in the Seattle area and the results were conclusive: houses within a mile of Link stations traded at a premium to homes further than a mile away. The study looked at both existing and planned stations, suggesting that homebuyers were building access to transit into their future as well as immediate plans.
It’s hardly surprising then, that companies take a similar approach to location decisions.
Access to transit
New data from JLL shows that office submarkets with good access to public transportation command as much as a 30 percent rent premium over markets with less access to public transit options, such as BART or Caltrain. Why? Buildings in those markets are more popular with tenants than buildings in less transit-friendly markets. On average, office occupancy rates in transit-served markets are 3 percent higher than other markets.
Here’s a specific Bay Area example: rents in both downtown Walnut Creek and downtown Pleasant Hill — both of which have BART (Bay Area Rapid Transit) stations — now stand at $44.00 per square foot compared with the average East Bay suburban rents of $32.51 per square foot. That’s a 35 percent premium to be closer to BART. These are exactly the sorts of numbers that investors look for when deciding when and where to invest.
Expansion of the BART system southward took a major step last week with the opening of the system’s newest station at Warm Springs in Fremont. In the next five years, the line will extend through San Jose to Santa Clara. Investors are already looking to leverage the future by taking a renewed interest in downtown San Jose investments.
About the author:
As a Managing Director, Sam leads JLL’s Oakland office leasing team. He specializes in the representation of technology companies and large corporate office users in the Bay Area and throughout the United States. Sam has completed many of the largest transactions in the Oakland metropolitan area and is a noted industry expert in tenant representation.
Contact Sam directly by phone at +1 (510) 465-9401 or by email at firstname.lastname@example.org.