Gentrifying TOD (updated)

Alan Ehrenhalt’s Assessments column in Governing this month looks bittersweetly at the phenomenon of transit-oriented gentrification. The used bookstore Ehrenhalt’s daughter works at, smack between Minneapolis and St. Paul, will soon front a light rail station. Its owner fears the higher rents and gentrification that he believes inevitably follows.

What, really, is the response here? Sure, the bookstore will gain business from being next to the train; many of the world’s greatest bookstores garner much business from their classic, transit-served urban neighborhoods; indeed, their density and accessibility to broader markets probably make such niche businesses possible. Yet the inevitable transit-oriented development, by realigning an area’s land value and development intensity with its newly expanded transportation capacity, could indeed “force” lower rent, less dense uses out. The usual NU policy prescriptions of “flood the market with TOD; supply and demand will rebalance accordingly” or “give it time; it’ll decay nicely” ring hollow to individuals faced with the considerably less abstract notion of having to move their businesses. (Unlike affordable residences, affordable business space is rarely on any policymakers’ radar.)

Sure, property markets do respond to shifts in supply and demand, but a confounding factor exists: amenities, and with it desirability. The addition of transit (an amenity) increases desirability and thus spurs additional demand. Indeed, adding supply can, through a curious feedback loop (e.g., by introducing high-quality housing or entirely new housing product types), create more demand — first latent demand within the area, and then by drawing in outsiders. Property markets do work, but they do so in very imperfect ways.

Says Patricia Diefenderfer, a new resident of South L.A. (in a well-balanced LA Weekly article by David Zahniser), “The other unfortunate thing is that neighborhoods like South L.A. have… all the right ingredients, and yet somehow, [the amenities] are just not there. And when they get there, the same people will not be there living in it and appreciating it. And I don’t know why that is.”