High-Speed Rail May Spur Development

TAMPA, FL-The prospect of a new high-speed rail line between this city and Orlando is still a few years away, which might be a good thing for developers of commercial real estate. Hopefully by the time the train stations open, availability of building capital will be much greater.

President Barack Obama held a town hall meeting Thursday afternoon at the University of Tampa to deliver $1.25 billion from the American Recovery and Reinvestment Act as a down payment on the 84-mile rail line, which will follow the path of Interstate 4. The first train could leave the station as early as 2015, with another 240 miles of track from Orlando to Miami planned later this decade.

Five sites are designated as train stops: Downtown Orlando, a site in Lakeland to be determined, Walt Disney World, Orange County Convention Center and Orlando International Airport. Whether these sites become spots for first-time or additional commercial development remains to be seen, along with access to construction lending when the time comes.

“It’s a phenomenal opportunity,” observes Edgar Jones, vice president and regional development officer with Rockefeller Group Development Corp. in Miami. His company is redeveloping a 113-acre auto racing track near I-4 in Lakeland into an industrial park with at least one million square feet of distribution buildings and the exit there is being considered as a possible train station location, he says.

Jones tells GlobeSt.com that the park could benefit indirectly from high-speed rail by easing auto congestion on the interstate, which reaches capacity almost as quickly as the Florida Department of Transportation can widen it. Fewer cars would make it easier for trucks going in and out of warehouses, he says.

Leading possibilities for development surrounding commuter train stations include multifamily, retail and office, Jones says. However, that type of development would be at a more practical scale, he adds: “I don’t see anybody building a headquarters somewhere because it’s so close to high-speed rail.”

The immediate area surrounding new commuter rail stations would be ideal for development of net-lease buildings such as drugstores, restaurants and coffee shops, says David Sobelman, executive vice president with the Calkain Cos. in Tampa. Putting products and services near stations will drive passenger traffic, he says.

“They only way people will be attracted to commuter rail is to make it convenient for everyone,” Sobelman says, pointing to Washington, DC’s Metro stations as an example. Locating stations in areas with either pedestrian or parking density will aid urban redevelopment efforts, he adds.

Although developers are currently hard-pressed to obtain financing, the ongoing capital freeze may be resolved by the time the Tampa-Orlando line is finished over the next five years, Jones points out. In the meantime, communities can work together to determine the proper type of development surrounding stations, he says.

Even as Obama touted high-speed rail as one of many infrastructure projects leading to jobs creation and economic development during Wednesday’s State of the Union speech, he chastised major US banks for not doing enough to help small businesses. He did not address the lack of capital that has stymied commercial development over the past year, despite a bank bailout that was “about as popular as a root canal” yet did little to prop open vaults.

During Thursday’s speech, which drew an announced crowd of 3,000 to the Downtown Tampa college campus, Obama promised a return to Florida when the 168-mph train is ready to roll: “I’m going to come back down here and ride it!”