Tuesday, August 16, 2011

How Transit Systems Can Make Money By Developing Real Estate

I have mentioned Hong Kong's amazing, cheap and insanely profitable transit system before, but, it seemed at the time that I was talking from another planet.

One big emerging benefit of the financial crisis is that as the seemingly endless well of government cash dries up people are rethinking the way things are done.

Unlike infrequently used sports stadiums or subsidised garages, well planned and executed transit systems add lots of value to surrounding real estate values, by allowing -taller buildings, less space wasted on parking and more sales per square foot of retail.

What if the transit system got a lot of that money? From The Infrastructurist.

The reason Hong Kong’s metro system can afford to pay its chief so much more than New York’s is that, unlike the MTA, which faces a $10 billion shortfall, the MTR actually makes money. Lots of money. Like 8.7 billion Hong Kong dollars lots, according to Bloomberg, which is more than a billion U.S. dollars a year.

This type of thinking is gathering some steam at least in New York City and increasingly is being discussed-partly cause Hong Kong's MTR just lured away the former head of NYC's MTA with a huge boost in salary and no doubt-stock options.

Several posts and related articles...

On Bloomberg

On Cap'n Transit

On WNYC (New York public radio)

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