Streetcars in the United States used to be ubiquitous modes of street-level transportation, moving people around major cities to and from work. That changed about halfway through the 20th Century, when many of these routes were dismantled, or changed for other uses, due to changes in infrastructure and the widespread use of the automobile.
Metro areas have been bringing them back this century, and Detroit is now the latest major city with a new streetcar system, which debuted last month. Called Q1, the line makes a 6.6-mile loop from the city’s downtown to major cultural, entertainment and sports facilities, among other stops.
In a national atmosphere in which more people are looking to live in urban cores where they can easily access work, shopping and entertainment, these are convenient modes of transportation to shuttle around an area.
They’re also drivers of commercial real estate development.
Downtown Detroit development is on fire lately, and office vacancies are at their lowest in several years. The Q1 can’t take full credit for this downtown renewal, but observers have said anticipation of the transit mode has helped spark plenty of new businesses open their doors in its path. New stores, restaurants and a hotel are opening on Detroit’s Woodward Avenue, which is home to the streetcar’s path.
This follows suit with what has happened in other cities around the country.
A Kansas City, Mo., streetcar, which runs through its downtown, recently had its first anniversary. Business owners along the path of the KC Streetcar have reported stronger sales and foot traffic since it started operations. New developments are also on the horizon, and it has been reported that since its approval in 2012, roughly $3 billion in commercial real estate development .
Though not common in many U.S. cities, these two streetcar examples are not unique. Since the first contemporary system opened in Portland, Ore., in 2001 (and is used as a positive model throughout the world), streetcars have spurred commercial real estate development across the country.
In Portland’s case, it took less than a decade to hit $3.5 billion of development along the Portland Streetcar’s route. A streetcar line under construction in Oklahoma City gives industry observers high hopes for future commercial real estate growth. Other large cities, such as Baltimore, have groups rallying around a future streetcar.
The main complaint about streetcars is that their routes don’t branch out to more neighborhoods outside of downtowns and bring more transportation opens and the businesses that pop up along with them.
Of course, you just don’t plop one of these systems down on any thoroughfare. They take years of planning and cost hundreds of millions of dollars (at best) to come to fruition. But it seems as though when all of the stars align, streetcars are spark plugs for commercial real estate development.