Impacts of Vacant Land Values

The Metro light rail line opened in Phoenix, Arizona, in December 2008 as the nation's largest modern high-capacity transit system starter line. Spanning 24 miles and 28 stations, Metro connected three cities with radically different land use policies. The response of the Phoenix land market to the 1997 announcement of the station locations was investigated as an interrupted time series case study. Studies evaluating public investments commonly use hedonic modeling to calculate one average attributable percentage increase for all properties affected by the investment. Conclusions were drawn about the relative development potential of each individual Phoenix transit station by comparing land sales prices per square foot before and after the light rail announcement. Data on the percentage increase in value were augmented with qualitative observations, and transit stations were compared with Phoenix's most prominent, centrally located, mixed-use intersections not serviced by high-capacity transit to further evaluate the development potential for light rail. Across the three cities served by Metro, station area values increased the most in Tempe, Arizona; only the stations immediately adjacent to Tempe decreased in market value. Sales volume tripled in the 3 years immediately after the station location announcement. The effectiveness of public policy, and of the light rail investment itself, can be gauged by the market for vacant land before, during, and after construction of the light rail system. Additional investigation of these three distinct periods may help local governments plan more effective station areas and recapture land value increases to fund transit improvements.