Free Lyft Rides to Light Rail = Higher Rents?

Question

A Denver Suburb Bets Big on Free Lyft Rides to Light Rail

"Centennial thinks it can triple the ridership of its existing dial-a-ride service.

Beginning August 17, citizens within a service area will be able to  summon free Lyft rides to and from the Dry Creek light-rail station that  serves the city of Centennial, which sits southeast of Denver. Riders  will have the option of putting in their request on the Lyft app or on  Go Denver, a mobile platform developed by Xerox that integrates  scheduling and payment information for transit and ride-hailing services  around the metro area."

Being walking distance to rail has always been worth a premium. Will this Lyft deal encourage higher rents further out?

Patricia Miller · Answer

@Bill S. It's tempting to test the theory. If @Matthew Botos is needing to feed that nerd-dom and has some serious free time - together with a real estate agent who would willingly provide the comps - it might be possible to see if there is a greater rise in rents/property-sales-prices in areas near a light rail just after it opened, compared to those at some specified distance from them. No doubt, such a study would be fraught with inconsistencies. And somewhat useless. But, sometimes seemingly useless information leads to new insights. (Notice, however, I'm not volunteering for this endeavor...)

P.S. I believe the light rail map above includes lines not yet open. Also, commute times are not an indicator of direction of travel.

Bill S. · Answer

The problem with data is that it's hard to get a big picture sometimes. Not enough data, not the right kind of data or don't know how to interpret the data. I will say this antidote, land near light rail stops is more expensive than land far away. Now it's also usually the case that land near light rail stops is more desirable for other reasons like there is greater population density near light rail stops. I agree that it's conventional wisdom and conventional wisdom doesn't always hold but so what if it's wrong? You over paid for land near light rail? Property away from light rail is a deal. In reality, the numbers tell the tale for each deal. Rents drive value, rents are obtained from sampling similar properties in the same area with the same amenities. If you run the numbers and the deal works it really doesn't matter if it's near light rail or not.

In reality the one of the ways to take advantage of light rail is to buy before it's operational. Maybe that is already priced into those locations but buyers typically don't have patience to buy and wait. The rail opens and people come looking. That is the historic play. Will it work again, I don't know.

Matthew Botos · Answer

Hehe - if nothing else maybe my nerd skills will lead to a new career as a real estate data consultant...

Heat map for commute times:

Compare to rent prices:

Not much of a relationship :-(

Here's the actual light rail map:

Again there's not much of a relationship to rents. Property descriptions often mention light rail proximity, though, so perhaps it's a softer selling incentive...

Patricia Miller · Answer

@Matthew Botos Good question. As long as the wheels are turning, I predict you will problem solve your way into the Denver RE market one way or another.

I would like to expand your question further to any who care to weigh in... 1) Is there data/evidence to show that rents in the Denver area are, indeed, higher in close proximity to light rail service? And... 2)  Is there a consensus or difference of opinion about how future light rail service will affect rents in the near future?

I think it is common to assume that proximity to light rail service increases prices, but do we know for sure that this is true - and is this true for purchase prices as well as rental prices?

Bill S. · Answer

@Matthew Botos so I live in the green area. Almost the entire area is covered with single family homes which tend to be middle class and above (they are busy and don't have time to wait for public transit). A good chunk of the rest of the area is commercial with the likes of IKEA etc. Perhaps the employees and an occasional customer might use the service. I don't really see it impacting rents in the area. It might impact rents if there was a large number of units occupied by the demographic that uses light rail.