Transit-oriented developments (TODs) are increasingly becoming an essential aspect of urban renewal and a key contributor to sustainability and real estate optimisation, according to a new report from Colliers.

Colliers’ new Advisory Services Report, The Value in Transit-Oriented Developments​, outlines the role of TODs as a vital part of the solution in creating a successful live-work-play lifestyle destination.

“Defined as a mix-use development close to high traffic transit points, and usually offering a mix of residential, retail, office, and open space amid a walkable environment, successful TODs often promote increased public transit usage and can help alleviate urban sprawl by increasing the variety and density of amenities available through carefully curated land use,” Govinda Singh, Colliers’ Executive Director of Hotels, Leisure & Real Estate Advisory in Asia, said.

“Such trends in transit usage often contributes to an increase in urban redevelopment as many successful TODs reutilized low-efficiency land attracting new investment, as seen amid large scale successful TODs such as those in Bangaluru Aerospace SEZ, India and Futian CBD in Shenzhen, China.”

“Despite higher office rents within TOD districts, vacancy rates remain lower than the surrounding region highlighting the desirability of workers to be near transit points at both beginning and end of journey."

According to Colliers research, ​there are five common factors which contribute to the success of a TOD: incorporating human-centric design factors; implementing versatile public spaces accommodating a curated variety of uses that gives it vibrancy; establishing connection and enhancing walkability (the five, 10 or 15-minute city); transit and mobility integration into the urban pattern; and strong corridor level planning at ​the earliest planning stages.

According to Colliers’ research, development of land along rail lines and transportation corridors often creates more equally accessible urban space and increases land value by unlocking the real estate value from the natural footfall from TODs.

“The amenities and commercial real estate developed around such multimodal transit systems, ​and the subsequent efficiency associated with such land use development, typically increases premiums for real estate in close proximity to transit station areas,” Mr Singh said. ​

“Lower vacancy rates amid TODs highlights the potential such developments have for attracting investment and infrastructure development. This trend and stability among tenants, despite higher rents, also represents the potential for a more rapid recovery of the value public infrastructure generates for private landowners.”

Mr Singh said the nature of TODs helped increase demand for developers and government to reap the land value capture of creating transit and neighboring real estate on unused or gentrified land, as demonstrated by the rapid increase of interest and development from private ​and government sectors.​

​“By way of example, companies such as Google, Argent, Sony, Nike, The British Library, and more are projected to have completed 4,805,603 sq.ft. worth of Kings Cross developments by 2027,” he said. “Similar trends can be seen in the land value capture strategies used in Futian CBD ​TOD through the R+P development plan.”​

Download Colliers’ new Advisory Services Report, The Value in Transit-Oriented Developments here.