June 18, 2008

Friends,

Those of you who attended the Sixth Annual Friends of Conference in March (view conference presentations, photos and more on our website- www.friendsoftransit.org) heard a panel discussion about the economic impact of the light rail on development. This edition of the Weekly Update includes an article from The Arizona Republic on this topic, reporting that “developers have spent close to $6 billion on public and private projects on and around the future light-rail line.” The light rail has been a catalyst for this development, as we once again see the effects of rising fuel costs.  The ongoing development includes both commercial and residential projects that will enable people to be near enough to ride the light rail as an alternative to driving. Click here to read the full story.

Public Meetings:
MAG Regional Transit Framework Study Scoping Meetings- June 24, 25 and 26 at locations throughout the Valley. Read below for additional details, times and locations.

In the News:
Light rail impacts Valley real-estate market, The Arizona Republic, June 16, 2008
More Gilbert residents boarding buses, The Arizona Republic, June 16, 2008
Shops get advice on surviving light rail, The Arizona Republic, June 16, 2008
Mesa welcomes first light rail train, The Arizona Republic, June 17, 2008
Valley Metro tests E.V. segment, Tribune, June 18, 2008

Don’t forget to visit Friends of Transit on the web at www.friendsoftransit.org!

 

Light rail impacts Valley real-estate market
by Andrew Johnson
Jun. 16, 2008 05:18 PM
The Arizona Republic

Light rail is six months from operation, but the transit system's impact on the Valley's real-estate market has been in full swing with new condos, office buildings and mixed-use developments rising throughout metro Phoenix.

Transit officials estimate that since 2004, developers have spent close to $6 billion on public and private projects on and around the future light-rail line. Critics, however, say the transit system has put a burden on taxpayers and construction of the line has shut down businesses.

The figure is based on information Metro light rail routinely gathers from planners in Phoenix, Tempe and Mesa, the three cities in which the 20-mile system will operate beginning in December.

The price tag includes projects already completed, developments under construction and announced projects within a half-mile radius of the line that officials from those cities say will likely come to fruition, according to Ben Limmer, a Metro light rail planner.

Light rail is not the sole reason why projects in the transit system's vicinity have developed, real-estate analysts note.

But the future system has definitely been a catalyst prompting developers to pay higher prices for property adjacent to the line for condominiums, office buildings and retail centers.

Economic factors, including soaring fuel prices, have caused developers like Eugene Marchese to focus attention on transit-oriented projects.

Marchese's San Diego-based company, Constellation Property Group, bought about 2 acres near Sun Devil Stadium in Tempe on which it intends to develop Stadium Tower.

Current plans for the project, which Marchese expects to break ground on in early 2009, include a 20-story residential building, a 17-story hotel and retail space.

As gas becomes more expensive and drive times grow longer, public transit becomes more attractive, said Marchese, who added that's why developments built with commuters in mind fare well.

"What we find is there's a higher demand for the product because of the location (near light rail)," he said.

Developers also expect the arrival of light rail to deliver a boost to property values in certain areas surrounding the line - a phenomenon that has happened in other cities that have built their own systems.

In metro Dallas, median values between 1997 and 2001 increased nearly 25 percent for office buildings and about 32 percent for residential properties near light-rail stations, according to a University of North Texas study.

That compares to an 11.5 percent increase for comparable office buildings and a 19.5 percent hike for residential properties not located near light-rail stations.

Phoenix-based Equus Development Corp. currently is putting the finishing touches on Century Plaza, a 15-story office tower in midtown Phoenix it has converted into a 17-story condo building.

Equus bought the building at the southeast corner of Central and Lexington avenues in December 2004. The property's location just south of a future light-rail station was one factor that enticed the company to develop there.

"We were very specific to select right around a light-rail station," said Douglas Edgelow, president of Equus.

Equus also is drafting plans to build four new high-rise towers that could include a five-star hotel, office space and more residential units.

The condo project has seen a significant amount of leasing activity. The company has received down payments on about 80 percent of Century Plaza's 145 units, which are currently priced from about $370,000 for a one-bedroom unit to $2.5 million for a two-floor penthouse, according to Michael Webb, a sales representative for Equus Realty LLC.

Webb and Edgelow say the project's location on the light-rail line, which cuts down Central Avenue to downtown Phoenix, has helped spur demand, along with proximity to office buildings and downtown's entertainment venues.

Commercial real-estate brokers say light rail also has become an attractive selling point for non-residential projects.

Marcus Muirhead, an associate vice president in Colliers International's Phoenix office, said the transit system has even helped spur interest in older office properties that are within a stone's throw of the line.

There is "strong interest" among investors for Class B and C office properties, older buildings that do not include the latest amenities and need improvement, that are located within a few blocks of Central Avenue, Muirhead said.

Muirhead and his colleague, Charlotte Christian, say they expect to see properties within a half-mile of the line to get a boost in value down the road.

"It has created demand and I think it will create more price increases when the rail is in operation," said Christian, a senior vice president with Colliers International who specializes in mixed-use projects.

Christian represented Marchese, the San Diego developer, in his purchase of land for his proposed Stadium Tower project. Marchese said he paid $6.5 million for the approximately 2 acres about two years ago.

As the Valley's office market struggles to retain and attract tenants during the economic downtown, light-rail proximity also could be an effective marketing point for landlords trying to lease space.

Mindy Korth, an executive vice president with CB Richard Ellis Inc. in Phoenix, recently highlighted the presence of light rail in a marketing package for Meridian Tower, a 21-story office building at 3550 N. Central Ave. she is marketing on behalf of its owner.

Light rail also could benefit retail centers, which have taken a hit because of the general downturn in the economy.

Mike James, deputy transportation director for Mesa, pointed to the Tri-City Pavilions at the end of the current light-rail line.

The neighborhood retail center, which is anchored by a Safeway, could fare well from people who don't want to drive to do their shopping, said Greg Greenstein, president of JG Management Inc. The Westlake Village, Calif.-based real-estate investment firm bought the center in 2006.

"Our feeling is that (its location) will add trips to the shopping center because of the adjacent park and ride station," said President Greg Greenstein.

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More Gilbert residents boarding buses
by Mike Walbert
Jun. 16, 2008 06:49 AM
The Arizona Republic

Gilbert is experiencing more people climbing on its bus routes that shuttle through the community.

To that end, the town also will be paying more to continue the service.

The Town Council recently approved a $1.2 million contract renewal with Valley Metro/Regional Public Transportation Authority to provide four bus routes for the 2009 fiscal year, which begins July 1.

Ridership on Gilbert-area buses is projected to swell by 74 percent between the 2007 and 2008 fiscal years, according to ridership statistics.

In 2007, Gilbert had 61,300 boardings compared with an estimated 122,600 for this fiscal year.

High gas prices and beefed-up service locally are some factors credited with Gilbert's jump in ridership.

In addition, Valley Metro is reporting that commuter bus ridership on Express and Rapid buses throughout the Phoenix metro area is up significantly the first four months of this year compared to the same time period last year. For example, in April, ridership figures rocketed upward nearly 18 percent compared with the same month in 2007.

Gilbert's routes are Express 531, a commuter bus that travels between the Gilbert park-and-ride lot in downtown and downtown Phoenix; Route 108, a local bus running along Elliot Road; Route 136, which travels along Gilbert Road; and Route 156, a regional bus line along Williams Field Road/Chandler Boulevard.

To keep service going in town, Gilbert will pay about an additional 11 percent, or $115,000, this coming fiscal year. Town officials say the increase is related to higher fuel prices and wages, as well as inflation.

Gilbert ridership experienced a bump in December, before gas prices shot to more than $4 a gallon. Data from January and onward is not available because of fare box issues, officials said.

Councilman Les Presmyk, who is a member of Valley Metro's board of directors, noted the ridership spike in the first part of this fiscal year.

"That tells me that the systems are being used and are being expanded in terms of their usefulness to our residents," he said.

Last summer, Gilbert added Route 156 along Williams Field Road/Chandler Boulevard, which connects to Chandler-Gilbert Community College and Arizona State University Polytechnic in Mesa.

Town Manager George Pettit said Gilbert has budgeted for the increased costs to provide service. Council members approved a preliminary 2008-09 budget in May, with a final vote scheduled for June 24.

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Shops get advice on surviving light rail
Mesa merchants hear from stores that survived
by Angelique Soenarie
Jun. 16, 2008 12:00 AM
The Arizona Republic

The message was loud and clear to Mesa business owners: You can survive light-rail construction.

Several Phoenix and Tempe business operators shared their good and bad experiences with light-rail construction along with some frank advice at a recent forum in Mesa.

Mesa already has 1 mile of track, which will open in December, but it's contemplating a 3-mile expansion in the downtown shopping district.

The city council will make a decision next year on the expansion, which would run along Main Street from about Dobson Road to at least Mesa Drive.

There are no hard numbers from Phoenix or builder Metro light rail on how many businesses crumbled during four years of construction, but with each closing, the rumor mill churned among owners.

"Yes, a lot of the businesses were negatively impacted by the light-rail construction, especially Central Avenue, because it dragged on for too long," said Dan Abrams, who chairs Business Owners and Managers Along the Rail Coalition, a group of businesses that locked arms in the face of light rail.

But Diane Scherer, chief executive officer of the Phoenix Association of Realtors, on 19th Avenue and Camelback Road, said she survived the several years it took to reface her building, relocate utilities and lay miles of light-rail track with patience and a good attitude.

"You will have construction in waves; it will not come all at once," she told the small group of business owners. "If you have a bad attitude, you're going to be miserable the whole time."

"Yeah, it's a big mess, but it's going to be cool."

Other words of advice: Communicate with the city, let them know about any problems and sit on citizen panels to remain involved and informed.

Mesa's mile of light rail, from the Tempe border to just east of Dobson Road, took nine months to lay and took a toll on several businesses.

But the next 3-mile stretch will affect far more merchants, including dozens in the already-struggling downtown area between Country Club and Mesa drives.

Officially, there is no decision yet on whether to extend the light rail, said Mike James, Mesa's deputy director of transportation. A federal study due in several months will determine whether to use light-rail technology or buses to take commuters deeper into Mesa.

But James said merchants can count on customers having access to their businesses at all times, unobstructed sidewalks and plenty of parking on nearby streets and in city structures.

He also hopes to offer free evaluations to create strategies for downtown businesses to stay viable during construction.

Construction schedules would also be built around the Mesa Arts Center's season to create minimal disruption, he said.

David Johnson, owner of Watson's Flowers on the Mesa-Tempe border, said it will be worth it when the trains start running.

Initially a huge opponent of light rail, he was won over by monthly updates from the city and by joining citizen advisory boards.

He said the city was responsive to his concerns, quickly addressing any property damage during construction and answering his questions.

But not all Mesa business owners are convinced. Many have been here before.

Ten years ago, Main Street underwent a yearlong renovation to make it more pedestrian-friendly, and that hurt quite a few businesses.

"I have a trepidation that all the small businesses in downtown are not going to survive," said Susan Clark, who owns the Fiber Factory, a downtown yarn shop.

"We lived through the last one," Clark said of the streetscape project. "But the economy was in a better state then.

With the price of gas and the economy basically in the tank, survival is what you got to think about.

"I'm not thinking about making a profit, I'm concerned about breaking even."

Robert Burgheimer is undecided.

"I'm for it, but I'm just worried about it," said Burgheimer, who owns Form5 Architecture Studio Inc., and acknowledged light rail could be great for the community.

"It's a tough call," he said of a mostly vacant downtown. "This could be the nail in the coffin."

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Mesa welcomes first light rail train
by Gary Nelson
Jun. 17, 2008 01:00 PM
The Arizona Republic

There were no booming speeches by the mayor, no brass bands and no top hats being tossed into the air.

But history was made in Mesa late Tuesday morning as a Metro light rail car rolled into town for the first time.

Accompanied by police cars and several Metro workers in bright safety vests, the train made its way at walking speed from Arizona State University down about four miles of track to the Sycamore Street station.

That's the eastern terminus of a 20-mile system that opens in the Valley in late December. The line extends from Mesa through downtown Phoenix and then northward to Phoenix Spectrum Mall.

The train actually was supposed to have come to Mesa last week, but the test was called off when a camera that monitors its connection to an overhead power line malfunctioned.

That camera won't be part of the train's actual operating equipment. But it was necessary for the test to generate the information engineers needed.

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Valley Metro tests E.V. segment
By JOHN LEPTICH
TRIBUNE
6.18.2008

CONTACT WRITER: (480) 898-5687 or jleptich@evtrib.com

All systems were go Tuesday as Valley Metro tested part of its 20-mile light-rail line.

A single car ran at a walking pace as engineers observed the connection between overhead electrical wires and trains. The seven-hour test started at about 8 a.m. at the Fifth Street and College Avenue station in Tempe. It ended at the Main Street and Sycamore station in Mesa. It was the first time a train had moved along that part of the line.

Valley Metro scuttled a June 9 test of the same area due to the failure of a monitoring camera.

Metro transit system spokeswoman Marty McNeil said engineers checked how much room there is between platforms and trains at stations, overhead lines and track structures. She said a major concern was how the pantograph, a device that collects electric current from overhead lines to power the trains, worked.

“Everything went well this time,” said McNeil, who added that no test reports will be released. “It’s a tedious process, especially the first time out. It’s slow because the guys want to take their time so they get it perfect.

“This was for getting the vehicle out, the big job.”

McNeil said further testing will take place in about two weeks, after work is done on some traffic signals and Valley Metro’s global positioning system. “Safety is the most important thing the first time,” she said. “There were frequent stops to make measurements. As the cars go out more and more, gradually they will take things a little faster.”

The system is scheduled to open in late December. Final light-rail alignment approval came in November 2000.

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