Transit-oriented developments (TODs) are popping up all over Chicagoland. Here is what you need to know about them.
WHAT IS TOD?
TOD classification is based on the site’s proximity to public transportation – specifically Chicago’s elevated train system (the “L”) and the Metra, the Northeast Illinois commuter rail system. As it currently reads the ordinance requires that TODs must be within a quarter-mile of an “L” or Metra stop or within a half-mile of a pedestrian-designated street.
If passed revisions to this ordinance would expand these transit categories to include high ridership bus stops. The Mayor’s office has identified stops along Western, Ashland, Chicago Avenue and 79th Street as high ridership.
WHY FOCUS ON PUBLIC TRANSIT?
Since the arrival of ridesharing apps like Uber and Lyft, Crain’s reports that Chicago’s public transit systems have seen a 20% decline in riders. Not only does public transit provide a steady stream of revenue for the City of Chicago but it also reduces air pollution and road congestion.
To increase use of public transportation, the city has put into place incentives for developers to build residential and mixed-use buildings in close proximity to transportation hubs. Developers receive substantial tax incentives and in turn build communities that rely heavily on use of public transit.
According to the Tribune, since 2015 when the TOD ordinance was first expanded, more than $2B in projects representing more than 8,000 new housing units have been approved and/or developed.
WHAT ARE THE BENEFITS OF TOD?
Typically, the City requires one parking space per apartment unit. If classified as a TOD, developers can reduce the amount of parking required by up to 50%.
Other benefits of classification as a TOD include…
- More units. Unit mix can be adjusted to allow for more studio floor plans (efficiencies) and developers can accommodate more units resulting in higher overall density.
- More space. Less land is used for surface parking and/or parking garage space and can instead be repurposed into revenue generating rental units or attractive amenity space.
- More stories. Zoning can be adjusted to allow for a larger development
The bottom line: If your site is classified as a TOD, land value surges.
Although the TOD has led to increased development throughout the City, Uptown is one neighborhood that has seen a surge in new, multi-family development. The neighborhood has two Red Line L stops which allow several properties to meet the TOD distance requirements. In addition, little development has occurred in Uptown in the last 30 years. That’s about to change as 1,500 units will be added in the next 24 months.
33 has represented both buyers and sellers in the transaction of TODs or land classified as such. If interested in learning more about how the TOD ordinance could impact your land or building value, please contact our Investment Brokerage team at [email protected]