Does Trolley Access Mean More Leasing Activity?

Office investors have favored—among other characteristics that attract millennials—assets that have access to public transit. However, public transit hasn’t necessarily translated to increased leasing activity. According to research from Cushman & Wakefield, the three markets with the most access to public transit ranked third, sixth and eighth for leasing activity since the beginning of 2017. Downtown ranked third with 923,000 square feet leased; Mission Valley came in sixth with 872,000 square feet leased; and UTC came in eighth with 780,000 square feet leased.

“There is currently no empirical evidence to support the claim that properties near public transit have a faster absorption period than properties that are not,” Derek Hulse, managing director at Cushman & Wakefield, tells GlobeSt.com. “However, given recent studies on the transportation trends of the emerging workforce, developers are keenly aware and interested in developing near public transportation. Furthermore, we do consistently hear from tenants wanting to be near major public transportation points—a common question during tours.”

Downtown San Diego is the only office submarket with total access to public transit, however, so it’s ranking at third is significant. “Downtown is the largest office submarket with 9.8 million square feet and is uniquely the only submarket with 100% of its office inventory located within a 10-minute walk of a trolley station,” says Hulse. “For a variety of reasons, alternative modes of transportation are becoming more attractive for downtown workers. In Mission Valley, 40% or 2.4 million square feet of its office inventory is accessible within a 10 minute walk of a trolley station, while in UTC, 3.4 million square feet or 63% of its office space will be located within a 10 minute walk once the trolley extension begins operations in 2021.”