How will light transit affect housing value in Ottawa?

  • +1

Blog by Ottawa Real Estate | Ottawa Homes for Sale | Ottawa Relocation | November 9th, 2016

Amidst the grumbling of commuters stuck behind construction-based traffic snarls, tunnels are being dug and tracks are being laid. Ottawa's long-serving Bus Rapid Transit (BRT) transitway is in transition towards becoming a light rail network that will better serve the city's rising transit needs. The current plan calls for two stages of development. The first stage (in green below) currently under construction, will travel east to west connected Blair Station in the east to Tunney's Pasture in the west. A second proposed stage (in red) would extend these lines east to Orleans and west to Bayshore and Baseline. The currently existing O-train would add a few stations and would be extended to the Ottawa south suburbs.

Phase 1 and proposed phase 2 stations (City of Ottawa, Ottawa Sun)
The introduction of light rail will be a game changer to Ottawa. The federal government is expected to move to new office space nearby light rail stations outside of the downtown core, opening up more space for businesses to move downtown. Most of the outer suburbs (sorry Kanata) will be given a direct connection to the mass transit network, allowing commuters to access the downtown core with ease. It's even energized the proposed movement of the Ottawa Senators to Lebreton Flats, which will be served with a station. All of these changes raise an important question - what will happen to residential property values in Ottawa?

Research has established a fairly strong link between light rail stations and an increase in property value. In Portland homes increased in value $75 for every 100 feet closer they were to a light rail station. In New York, homes decreased in price by $2300 for every 100 feet farther away from the station. A study of light rail in Hamilton found that residential properties close to light rail increased in value by 6%, while commercial properties went up by 14%.

Planned development around light rail stations (Source: The Ottawa Citizen)

According to an LRT economic impact report, Ottawa properties can expect a similar boost from light rail's arrival. All 13 planned stations are expected to boost land values. Land value however will be most immediately impacted in and around the downtown core, where this is already a large concentration of commercial properties. Light rail stations in the east-end of Ottawa are surrounded mostly by greenspace, with residential areas over 600 metres away (a common buffer area when planners talk about the average distance someone will walk for transit).

Planned Light Rail Station and Property Types (Source: Economic Impact Assessment)

(Source: Economic Impact Assessment)
Although the downtown core may feel the impacts of light rail stations first, areas outside of the downtown core could see big impacts if greenfield development takes place. These areas such as Hurdman and Blair would be excellent candidates for Transit-Oriented-Development, an urban planning approach where communities are planned based on their proximity to public transit opportunities. A few years back Tim detailed a great piece of research by a UBC geography student on TOD. Transit-Oriented-Development would help Ottawa intensify, and would bring more access to walkable, public transit-connected neighbourhoods.

(Source: Economic Impact Assessment)
While it's hard to know the exact impact of LRT stations, the economic impact study suggests that for some stations such as the downtown locations, Blair, and St. Laurent, land value could increase between 40-50%. In the most conservative estimates all stations are expected to get a 10% property value bump in their 600 metre radius'. Their final estimates are that neighbourhoods near a LRT station will experience a 15-30% rise in land value. Commercial properties on the other hand will rise in value anywhere from 15-50%.

Source: ( Click on the image for the full infographic.
Connecting back to my last post regarding our housing affordability crunch, a rise in land value is not always a win-win scenario. Rapid rises in land value can easily push out residents who can no longer afford the rent. Toronto is a good example - the inner suburbs are large unserved by the subway network while neighbourhoods along subway lines have risen in value and are largely unavailable to many who are forced to live in the highrise landscapes of Toronto's inner suburbs. A Toronto-based real-estate company found that living a 10 minute walk from a Toronto subway station on average increased a house's price by 10%. For condos this figure increased to 25%.

(Source: Economic Impact Assessment)

With the potential for new Transit Oriented Development on greenfield areas around Ottawa light rail stations comes risks and rewards. Planners must balance increasing housing values with comprehensive plans for mixed-income housing. If we are to add in a number of new homes, and in fact build entire communities around these light rail stations, these communities must be accessible for all income ranges in the city. We've argued in the past that a diverse city is a strong city. Light rail can be an important components towards building an inclusive and connected city that works for everyone.