IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v66y2017icp74-90.html
   My bibliography  Save this article

Does a new rail rapid transit line announcement affect various commercial property prices differently?

Author

Listed:
  • Cohen, Jeffrey P.
  • Brown, Mike

Abstract

An announcement of new rail rapid transit access to urban commercial centers may lead to greater business activity and agglomeration economies, while causing anticipation of construction disruption and resource diversion away from other infrastructure. Using a rail rapid transit line announcement in Vancouver, BC, Canada, we estimate the net capitalization effect for each individual commercial property price resulting from expected improved urban center access. We focus on 1895 repeat sales straddling this announcement date and use a nonparametric estimation technique - Locally Weighted Regressions - to estimate how travel time changes to the Richmond, BC and Vancouver, BC central business districts, the Olympic Village, and Vancouver International Airport affect various commercial property prices differently. By differencing our estimation equation over the two periods of the repeat sales, the time-invariant variables drop out and we are left with the travel time savings and the difference in temporal fixed effects as regressors. We find travel time savings’ marginal effects on property values can be positive or negative, and patterns vary dramatically across commercial land use types and locations. Falsification and balancing tests validate our findings.

Suggested Citation

  • Cohen, Jeffrey P. & Brown, Mike, 2017. "Does a new rail rapid transit line announcement affect various commercial property prices differently?," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 74-90.
    • Handle: RePEc:eee:regeco:v:66:y:2017:i:c:p:74-90
    DOI: 10.1016/j.regsciurbeco.2017.05.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046216303155
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2017.05.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shihe Fu & Stephen L. Ross, 2013. "Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 271-304.
    2. Gilles Duranton & Matthew A. Turner, 2011. "The Fundamental Law of Road Congestion: Evidence from US Cities," American Economic Review, American Economic Association, vol. 101(6), pages 2616-2652, October.
    3. Stefan Bauernschuster & Timo Hener & Helmut Rainer, 2017. "When Labor Disputes Bring Cities to a Standstill: The Impact of Public Transit Strikes on Traffic, Accidents, Air Pollution, and Health," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 1-37, February.
    4. Bilotkach, Volodymyr & Gorodnichenko, Yuriy & Talavera, Oleksandr, 2012. "Sensitivity of prices to demand shocks: A natural experiment in the San Francisco Bay Area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(7), pages 1137-1151.
    5. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219, February.
    6. repec:wyi:journl:002155 is not listed on IDEAS
    7. Redfearn, Christian L., 2009. "How informative are average effects? Hedonic regression and amenity capitalization in complex urban housing markets," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 297-306, May.
    8. Mi Diao & Yu Qin & Tien Foo Sing, 2016. "Negative Externalities of Rail Noise and Housing Values: Evidence from the Cessation of Railway Operations in Singapore," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 44(4), pages 878-917, October.
    9. Daniel P. McMillen & Christian L. Redfearn, 2010. "Estimation And Hypothesis Testing For Nonparametric Hedonic House Price Functions," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 712-733, August.
    10. Stephan Huber & Christoph Rust, 2016. "Calculate travel time and distance with OpenStreetMap data using the Open Source Routing Machine (OSRM)," Stata Journal, StataCorp LP, vol. 16(2), pages 416-423, June.
    11. Michael L. Anderson, 2014. "Subways, Strikes, and Slowdowns: The Impacts of Public Transit on Traffic Congestion," American Economic Review, American Economic Association, vol. 104(9), pages 2763-2796, September.
    12. Landis, John & Guhathakurta, Subhrajit & Huang, William & Zhang, Ming, 1995. "Rail Transit Investments, Real Estate Values, and Land Use Change: A Comparative Analysis of Five California Rail Transit Systems," University of California Transportation Center, Working Papers qt2hf9s9sr, University of California Transportation Center.
    13. Jin Kim & Ming Zhang, 2005. "Determining Transit’s Impact on Seoul Commercial Land Values: An Application of Spatial Econometrics," International Real Estate Review, Global Social Science Institute, vol. 8(1), pages 1-26.
    14. Ghebreegziabiher Debrezion & Eric Pels & Piet Rietveld, 2007. "The Impact of Railway Stations on Residential and Commercial Property Value: A Meta-analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 35(2), pages 161-180, August.
    15. Robert Bifulco & Jason M. Fletcher & Stephen L. Ross, 2011. "The Effect of Classmate Characteristics on Post-secondary Outcomes: Evidence from the Add Health," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 25-53, February.
    16. Stefan Bauernschuster & Timo Hener & Helmut Rainer, 2017. "When Labor Disputes Bring Cities to a Standstill: The Impact of Public Transit Strikes on Traffic, Accidents, Air Pollution, and Health," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 1-37, February.
    17. Daniel P. McMillen & John McDonald, 2004. "Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983–1999," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(3), pages 463-486, September.
    18. Daniel P. McMillen & Jonathan Dombrow, 2001. "A Flexible Fourier Approach to Repeat Sales Price Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 29(2), pages 207-225.
    19. Winston, Clifford & Maheshri, Vikram, 2007. "On the social desirability of urban rail transit systems," Journal of Urban Economics, Elsevier, vol. 62(2), pages 362-382, September.
    20. Billings, Stephen B., 2011. "Estimating the value of a new transit option," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 525-536.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liang, Cong & Huang, Yaoxuan & Yip, Tsz Leung & Li, Victor Jing, 2022. "Does rail transit development gentrify neighborhoods? Evidence from Hong Kong," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 354-372.
    2. Melser, Daniel, 2020. "Estimating the housing capitalization effects of new infrastructure: Should we be using rents instead of prices?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 138(C), pages 402-421.
    3. Wolf, David & Takeuchi, Kenji, 2022. "Holding back the storm: Dam capitalization in residential and commercial property values," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    4. Zhang, Min, 2023. "Value uplift from transit investment-Property value or land value? A case study of the Gold Coast light rail system in Australia," Transport Policy, Elsevier, vol. 132(C), pages 88-98.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seungwoo Chin & Matthew E. Kahn & Hyungsik Roger Moon, 2020. "Estimating the Gains from New Rail Transit Investment: A Machine Learning Tree Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(3), pages 886-914, September.
    2. Zhengyi Zhou & Hong Chen & Lu Han & Anming Zhang, 2021. "The Effect of a Subway on House Prices: Evidence from Shanghai," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 199-234, March.
    3. Beaudoin, Justin & Lin Lawell, C.-Y. Cynthia, 2018. "The effects of public transit supply on the demand for automobile travel," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 447-467.
    4. Diao, Mi & Leonard, Delon & Sing, Tien Foo, 2017. "Spatial-difference-in-differences models for impact of new mass rapid transit line on private housing values," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 64-77.
    5. Nicholas Rivers & Soodeh Saberian & Brandon Schaufele, 2020. "Public transit and air pollution: Evidence from Canadian transit strikes," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(2), pages 496-525, May.
    6. Stefan Bauernschuster & Timo Hener & Helmut Rainer, 2017. "When Labor Disputes Bring Cities to a Standstill: The Impact of Public Transit Strikes on Traffic, Accidents, Air Pollution, and Health," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 1-37, February.
    7. Daniel P. McMillen, 2010. "Issues In Spatial Data Analysis," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 119-141, February.
    8. Brent, Daniel & Beland, Louis-Philippe, 2020. "Traffic congestion, transportation policies, and the performance of first responders," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    9. Ahlfeldt, Gabriel M. & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease vs. noise: Long-run changes in the value of transport (dis)amenities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    10. Meina Zheng & Xiucheng Guo & Feng Liu & Jiayan Shen, 2021. "Contribution of Subway Expansions to Air Quality Improvement and the Corresponding Health Implications in Nanjing, China," IJERPH, MDPI, vol. 18(3), pages 1-19, January.
    11. Zhong, Haotian & Li, Wei, 2016. "Rail transit investment and property values: An old tale retold," Transport Policy, Elsevier, vol. 51(C), pages 33-48.
    12. Kadek Ayu Vergianti Agustini & Sarah E. West, 2023. "Redevelopment along arterial streets: The effects of light rail on land use change," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(4), pages 891-930, July.
    13. Heilmann, Kilian, 2018. "Transit access and neighborhood segregation. Evidence from the Dallas light rail system," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 237-250.
    14. Léa Bou Sleiman, 2021. "Are car-free centers detrimental to the periphery? Evidence from the pedestrianization of the Parisian riverbank," Working Papers 2021-03, Center for Research in Economics and Statistics.
    15. Gaduh, Arya & Gračner, Tadeja & Rothenberg, Alexander D., 2022. "Life in the slow lane: Unintended consequences of public transit in Jakarta," Journal of Urban Economics, Elsevier, vol. 128(C).
    16. Barnes, Stephen R. & Beland, Louis-Philippe & Huh, Jason & Kim, Dongwoo, 2020. "The Effect of COVID-19 Lockdown on Mobility and Traffic Accidents: Evidence from Louisiana," GLO Discussion Paper Series 616, Global Labor Organization (GLO).
    17. Martin W Adler & Federica Liberini & Antonio Russo & Jos N. van Ommeren, 2021. "The congestion relief benefit of public transit: evidence from Rome," Journal of Economic Geography, Oxford University Press, vol. 21(3), pages 397-431.
    18. Philipp Schrauth, 2022. "The Causal Effect of Cycling Infrastructure on Traffic and Accidents: Evidence from Pop-up Bike Lanes in Berlin," CEPA Discussion Papers 48, Center for Economic Policy Analysis.
    19. Lalive, Rafael & Luechinger, Simon & Schmutzler, Armin, 2018. "Does expanding regional train service reduce air pollution?," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 744-764.
    20. Shengxiao Li & Luoye Chen & Pengjun Zhao, 2019. "The impact of metro services on housing prices: a case study from Beijing," Transportation, Springer, vol. 46(4), pages 1291-1317, August.

    More about this item

    Keywords

    R3; R4; Locally weighted regressions; Nonparametric estimation; Rail rapid transit; Commercial property values;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:66:y:2017:i:c:p:74-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.