The Orientation Toward Transit: Has COVID cooled the hot market of parking and transit-oriented development?

By Jim Zullo, CAPP

As we look ahead to life in a post-COVID world, there will certainly be some level of return to commuting, transit, and parking normalcy. But are the benefits that have traditionally made transit and TODs desirable adversely impacted for the long term? And how will parking and transit-oriented development evolve in response?

FOR MORE THAN 20 YEARS, transit-oriented development (TOD) has been a desired destination for people to live, work, and play. The opportunity to reside in a vibrant locale with convenient access to restaurants, shopping, employment, and alternative mobility options has been a preferred lifestyle for many, especially since the great recession.

The availability of mass transit, and the opportunity to have transportation alternatives to the single-occupancy vehicle to access work, entertainment, and other destinations is critical to TODs’ success. TODs encourage a convenient and sustainable lifestyle, enabling many people to give up their vehicles (or downsize to one) and enjoy walkable amenities while maintaining access to transit options to get them where they want to go. TODs have also helped redevelop and enliven downtown areas and properties that were previously blighted, underutilized, and not the highest and best use given their proximity to mass transit assets.

An essential component of TOD is effective parking and mobility planning and facility design. At TODs, structured parking is often required due to limited and costly land availability, the need to achieve higher densities and a mix of land uses, and the desire to achieve a sustainable and urban experience that make TODs desirable. Unfortunately, we know that structured parking is costly, ranging anywhere from $25,000 to $35,000 or more per typical space depending on location and a host of other factors. That said, critical to the financial feasibility and success of TOD is incorporating innovative mobility options to reduce the amount of parking necessary for a project and to right size the parking resource to provide adequate parking so TOD projects are financeable and marketable.

For the parking professionals working in the TOD and transit arena, addressing the parking challenge has been and will continue to be a key component of advancing TOD projects and their sustainable, social, and economic benefits post-COVID. However, the effects of the pandemic on working, living, and the associated parking and transit-oriented development and downtowns will require renewed assessments and may offer new opportunities.

Parking and Transit-oriented Development: Essential Infrastructure

As communities, developers, planners, and architects strategize about what successful TOD will be in the post-COVID world, considering work-from-home policies and associated commuting patterns, one thing that will remain constant is the necessity and integration of parking. As is the case with any real estate development, economics rule the day and as mentioned, the structured parking so often required in a TOD is a significant financial burden of a project. For example, the cost to cover the expense of financing, operating, and maintaining just one structured park­ing space can be $200 to $250 per month. While many developers bemoan the parking requirements imposed on their projects by host communities and the cost of structured parking, ensuring there is adequate park­ing to enhance the marketability to end users is highly concerning to both developers and their financiers. In addition, parking needs to be provided to offer regional access to the transit system for those who live beyond walking distance to the station. Accordingly, parking is a critical component of the TODs and must be planned and sized in alignment with TOD parking and transit principles.

Parking planners use various strategies to ensure there is adequate parking to support the development, but not too much so that the facility is underutilized and an increased financial burden. Shared parking analyses help determine the extent to which parking, especially in a mixed-use project, can be shared by more than one user group without conflict so parking facilities can be used more efficiently and the amount of parking to be developed can be reduced.

Shared parking principles are applied where the facility serves two or multiple user groups who may use the facility at different times. For example, in a TOD project, a facility may support transit commuters or office employees during the weekday and residents and retail patrons on the evenings and weekends. Not only does the sharing of the facility reduce the amount of parking needed, it also maximizes the utilization of the structure, generating more income to financially support the facility and more activity enhancing its user comfort and security.

Other strategies include the creation and imple­mentation of parking demand management plans by developers that encourage and subsidize trans­portation decisions that are more reliant on transit, ride-sharing, car-sharing, walking, biking, telework, etc. These plans and programs provide information and incentives to promote options that counterbalance incentives to drive, and even if financially subsidized by the developer, can be more cost-effective than build­ing additional structured parking.

Finally, another factor in the successful development of parking within a transit development is facility design. Rather than simply designing them as “ware­houses for cars,” they need to incorporate aesthetic, user comfort, and functional enhancements that com­plement the character of the community they are serving. When possible, these facilities should incorporate ground level mixed-use spaces such as retail and restaurants to activate the streetscape and enhance the walkability of the neighborhood. This idea is often a given now, as many designers and parking owners have been incorporating mixed-use and aesthetic features into structured parking design for years.

TOD and Transit Through the Years

Traditionally, even during financial downtimes, transit and TODs have been a strong investment for developers. During the financial recession of 2008, these develop­ments were ranked as some of the best investments in real estate given demographic trends, rising fuel costs, congestion, and public smart growth policies. People’s increasing desire to live, work, shop, and dine in one com­munity (with minimal need for a vehicle) made TOD a good investment, which accelerated as we emerged from the recession and into more prosperous times. Further, the utilization of mass transit and the associated parking resources were in many regions at all-time highs offering people convenient access to job and entertainment cen­ters. Then COVID hit in March of 2020 and the benefits of TOD and transit associated with their success screeched to a halt in a way that no one could have predicted:

• Convenient commuter access to the workplace? Cit­ies implemented work-from-home orders for months, with many temporarily still in place or companies letting employees work from home indefinitely.
• Downtown dining and entertainment destinations? Restaurants were closed or moved to take-out/deliv­ery only, while entertainment destinations are still shut down completely in many areas.
• A convenient alternative to driving? It may be some time before people are comfortable packing into a train car instead of the comfort and safety of their personal vehicles (especially with parking availabili­ty in cities at an unusual high).

As an example, the parking occupancy rates at most mass transit facilities serving New Jersey Transit (with the primary destination of New York City) were down as much as 80 percent from pre-COVID levels. This occurrence would have been incomprehensible just 18 months ago when many commuter parking fa­cilities were filled to capacity and had extensive wait lists. A review of parking occupancy data gathered from three NJ Transit Train Stations (Metropark, Hamilton, and Trenton), since February 2020, illus­trates a 70 percent reduction of parking occupancy among these three parking facilities from March 2020 through March 2021.

This situation has not only affected transit com­muting facilities, but downtown parking systems that have a significant commuter population. According to parking occupancy data from the City of Summit, N.J., Parking Services Agency, the peak parking occupancy of public parking facilities has decreased 55 to 90 per­cent since the COVID-19 pandemic, depending on the facility’s location and user group breakdown. Parking demand at their previously packed commuter park­ing facilities decreased more than 75 percent. Before the COVID-19 pandemic, the Summit Train Station was one of the most active stations in the New Jersey Transit system, with almost 4,000 riders boarding trains at the station every weekday. To accommodate commuter parking demand, the city implemented a valet program to park more commuters and an inno­vative ride-sharing program where local residents were provided subsidized Lyft rides to the station. In New Brunswick, N.J., where pre-pandemic levels were more than 7,000 boardings per weekday at the train station, commuter related parking occupancy dropped by more than 80 percent.

As we look ahead to life in a post-COVID world, there will certainly be some level of return to com­muting, transit, and parking normalcy. But are the benefits that have traditionally made transit and TODs desirable adversely impacted for the long term? Even before the pandemic, the millennials who loved TODs and the urbane lifestyle were aging, having families, and opting to move to the suburbs to obtain more space and a backyard. The pandemic, low interest rates, and millennials in their prime homebuying years have fast tracked another pursuit of the suburban, car-depen­dent lifestyle. So what is the prognosis for TOD and the associated parking? As Yogi Berra once said, “It’s tough to make predictions, especially about the future.” That said, let’s give it a shot!

Opportunities and Impacts for the Future in Parking and Transit-oriented Development

There are many unknowns that will continue to affect not only TODs, but cities and communities overall. A few questions plaguing real estate developers now re­garding future real estate trends:

• Will companies continue with work-from-home ar­rangements in the future, and at what level?
• How will this affect commercial real estate in terms of occupancy and rents?
• Will people continue to relocate out of more expen­sive cities to more affordable locales and suburbs given flexible work-from-home policies?
• How eager will people be to get back on mass transit?
• How will the already declining retail market be affected both in urban areas and even suburban communities, especially given the greater boost the online shopping market had during this time?
• Specific to TOD, is there a need to live in proximity to mass transit if people are commuting via transit less or infrequently?

In speaking with several specialists in the TOD area, the general sentiment is that while the pandemic may have a short-term effect on the desirability or marketability of TOD projects, the underlying reasons TODs became so popular will prevail in the long term. According to Steve Goldin, former director of real estate for the Wash­ington Metropolitan Area Transit Authority (WMATA), the reasons are simple: People value time and as a result of the pandemic, people have learned that time is also quality of life. A main reason many people select TODs is because they (or their partner) commute to work via mass transit, or empty nesters select TODs because of the convenient access to en­tertainment and cultural options. Prevailing thought indicates that up to 80 percent of workers will be in their office less as a result of the work-from-home experience, much of which is fueled by convenience and the bet­ter quality of life that working from home provides. According to Goldin, “That very same desire will fuel the continued demand for convenience, especially for those who use mass transit. For many, their daily commute, especially to larger urban areas, is a multi-modal, time-consuming process, and living in a TOD elim­inates some of the commuting hassle.”

Another lesson from the pandemic is how essential it is for human beings to have the opportunity to interact socially. In this post-pandemic environment, Goldin believes other uses in TODs may take the form of shared office space within the project and offset the need for larger residential units to accommodate workspaces. “Shared workspaces at TODs, great public spaces, coffee shops, and dining options may be a welcome alternative to work-from-home.”

So, what effect will the pandemic have on parking require­ments for TOD land uses—residential, commercial, retail, etc.?

The residential need for parking in TODs may decrease because of the pandemic. While many TOD units have only one car, those that have two vehicles often do so because one of the unit residents drives to work. If 20 percent of these types of TOD occupants becomes fully remote, there may be less need for the second car, especially when coupled with parking demand management and mobility options. There also may be a need for less transit station parking given the work from home phenomenon resulting in less commuting. Should this occur, there may be a great opportunity to utilize existing TOD and transit parking resources to support fu­ture projects, thereby reducing the need or amount of new parking required. Reducing the amount of parking necessary for TODs and taking advantage of existing parking resources would have a mean­ingful positive financial impact on these projects, leading to more sustainable and affordable development.

Another post-pandemic parking effect is that the demand associated with dining and entertainment increases given both pent-up desire of people taking advantage of TOD and downtown dining and entertainment venues, and the expanded outdoor capacity. The expansion of the outdoor dining experi­ence, and the resulting removal of on-street parking and closed streets, has been an urban planning silver lining that will likely remain permanently. Much like the pandemic proved that work from home is possible and even beneficial, the expanded outdoor dining has illustrated to many municipal officials that curb and street spaces can be dedicated to other uses beyond vehicles without detrimental consequences. Howev­er, this expanded dining and entertainment capacity, combined with the loss of on-street parking may cause parking crunches at peak times. That said, given the potential availability of TOD and transit resources as outlined above, there may be opportunities to reallo­cate parking resources available to meet this need.

In closing, will TOD projects regain their previous appeal? As someone who has spent a considerable part of their career in the TOD real estate sector, it is my sincere hope and expectation that TOD projects and their associated benefits continue to thrive and attract people seeking active, sustainable, transit-accessible, and vibrant communities. President Biden’s American Job Plan, calling on Congress to invest $85 billion (doubling federal funding for public transit) to modernize existing transit and help agencies expand their systems, certainly shows a commitment to transit and TOD, and offers optimism. As someone who has spent an even lengthier part of my career in parking, I am certain that smart, innovative parking and mobility planning will be vital to the continued success and viability of TOD.

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JIM ZULLO, CAPP, AICP, is president of THA Consulting. He can be reached at jzullo@tha-consulting.com.