Professor John L. Renne

The talk starts at: (start at 2:54:00)

On October 24, 2024, I had the privilege of attending the Research-to-Practice Transit Symposium, where I presented insights into the complex relationship between transit-oriented development (TOD), land values, and gentrification.

As a Professor at Florida Atlantic University and a recent Visiting Research Associate at the University of Oxford, I’ve dedicated much of my work to exploring how TODs shape our communities, and I was excited to share this research with colleagues and experts in the field.

As the Co-CEO of Priority Funds, LLC, I put the research into practice as we choose where to invest to get the best risk-adjusted returns.

Exploring the Positive and Negative Impacts of TOD

Transit Oriented Development, or TOD, is often celebrated for promoting sustainable travel, reducing greenhouse gas emissions, and supporting local economies. By concentrating housing, jobs, and services around transit stations, TODs create walkable, connected communities that encourage people to choose public transit over cars, and increase real estate values, which is good for local economies. However, as I discussed during my presentation, these positive outcomes can also bring consequences, one of the most significant being gentrification.

How We Measure Gentrification in TOD Areas

In our research, we examined how gentrification unfolds in areas around TODs, focusing on demographic shifts that often occur as transit investments increase property values and attract higher-income residents. This influx can put pressure on long-standing, lower-income residents, potentially leading to displacement. We tracked changes in factors such as household density, median income, employment types, and racial demographics to understand the shifts happening in these areas over time.

Our study analyzed data spanning from 1970 to the present, comparing demographic changes in transit-focused areas with control tracts that didn’t have TOD. This approach allowed us to pinpoint shifts specifically linked to TOD.

Key Findings: Rising Land Values and Shifting Demographics

Our findings clearly showed that TODs are associated with increased land values and rent growth. These developments bring undeniable environmental and economic benefits, such as reduced reliance on cars and enhanced walkability, which can attract new residents and businesses. However, the data also confirmed that gentrification has been happening alongside these developments, raising important questions about when these shifts began and what they mean for communities in the long term.

The Need for Balanced Housing and Transportation Policies

One of the critical points I raised was the need for more thoughtful coordination between housing and transportation policies to support equitable outcomes in TODs. With gentrification becoming an increasing concern, it’s essential for policymakers to consider strategies to preserve affordable housing and protect vulnerable populations from being priced out. I emphasized the importance of creating policies that strike a balance between TOD’s benefits—like sustainability and economic vitality—and the need to maintain inclusivity and affordability.

My Takeaways from the Symposium

Presenting this research reaffirmed for me the dual nature of TOD: while it brings sustainability and economic growth, it can also accelerate gentrification and displacement. I believe that aligning housing and transit policies thoughtfully is essential to allow TODs to thrive without pushing out the very people they are meant to serve.

As cities continue to invest in public transit and TOD, my hope is that these findings will remind us all of the need for a holistic, inclusive approach. We need market-based solutions to increase the supply of housing near stations. My prior research found that two-thirds of station areas in the United States do not even have enough density to support transit ridership. We can substantially increase the supply of housing in TODs by simply relaxing zoning codes, which are too often restrictive and do not allow for density where it’s most needed – next to rail stations.

We should also look to community land trusts, such as the South Florida Housing Link Collaborative, to create more affordable and resilient housing projects near stations. Directing Low Income Housing Tax Credits (LIHTC) and other affordable housing subsidies to walkable transit-oriented communities is also a must.

Finally, Christopher Leinberger has written extensively about the importance of shifting how real estate investments are made. REITs and other institutional investors typically ignore the fundamental principle of real estate – location, location, location. TOD is all about the location.

At Priority Funds, we Invest in Places People Love, because it’s all about the location. For decades now, the Urban Land Institute has picked TOD as the leading risk-adjusted form of real estate, yet most real estate investment companies ignore it.

We know TODs are associated with gentrification, which means they are outperforming. We also know that investment in TOD is not the problem. The problem is a lack of supply and high demand. So investing more in TOD helps solve this problem.