Phoenix light rail system 92 percent complete

Posted By Mike Padgett

Aug. 5, 2008

Like most other parts of the local economy, interest in redevelopment along the $1.4 billion light rail system in metropolitan Phoenix has cooled.

But much could change by the end of this year. December is when three major downtown Phoenix projects will be finished: the $1.4 billion light rail system; the $350 million, 1,000-room Sheraton Phoenix Downtown Hotel; and the second phase of the $600 million expansion of Phoenix Convention Center.

The hotel is gearing up for its opening this fall. The light rail system, officially named Metro in 2004, and the convention center will be finished in December. The convention center is to be ready for business in January 2009.

And of the three major projects, light rail could have the most impact on real estate development because it stretches 20 miles from northwest Phoenix through Tempe to Mesa. There are 28 stations. A few are decorated with exterior art.

Even in a slow economy, Phoenix Mayor Phil Gordon and Valley Metro Chief Executive Rick Simonetta believe light rail has the potential to change the way people live, work and explore central Phoenix. That’s the message they’re sending out.

And they could be right, based on what’s happening across the nation. Several other cities are considering adding streetcars or expanding their unexpectedly popular systems.

A quick check of headlines in the past eight months shows a clear trend:

  • Ridership on rail transit systems is exceeding projections by 33 percent in St. Louis, Mo., and 35 percent in Charlotte, N.C.
  • Suburbs of Dallas-Fort Worth are clamoring to be included in the light rail system started in 1996.
  • Officials in Fort Lauderdale, Fla.; Detroit; Reading, Penn.; and Columbus, Ohio, are proposing streetcars to help boost their cities’ economies and reduce traffic.

The under-projection problem was especially noticeable in Charlotte where, two weeks after the system was started in November 2007, ridership was 35 percent higher than expected.

Light rail popularity

One of the first hints of strong public interest in light rail became obvious in Denver seven years ago. The Jan. 26, 2001, issue of the Denver Business Journal published a story under the headline, “Light rail’s popularity stuns planners.”

The story says Denver transit officials were unprepared for the popularity of their light rail line. It opened in 1999. By 2001, it carried an average of 20,000 people on weekdays, or 43 percent higher than projected, according to the Denver paper.

Simonetta is hoping to see similar ridership when the Metro begins operations in December in Phoenix, Tempe and Mesa. Phoenix originally ordered 36 light rail cars. That was increased to 50 when Phoenix officials began hearing about the popularity of light rail in other cities.

Forecasts in 2003 estimated that Metro would carry an average of 26,000 riders.

“Light rail has just gone crazy in these western growth states,” Simonetta says.

For metro Phoenix, the popularity factor has taken on more significance because of a new factor that no other city faced – fuel prices that, at more than $4 a gallon, are double what they were in 2004.

That pain in the pocketbook is making some motorists rethink their long commutes. They’re wondering about living closer to work or taking mass transit. Or maybe a little of both.

And watching all this urban angst are Phoenix area developers. They’re eyeballing vacant and under-utilized properties along the 20-mile light rail route. The developers also are waiting for the start of public hearings on 37 miles of new routes proposed in Mesa, south Tempe, northeast Phoenix, northwest Phoenix and southwest Phoenix. New routes mean new rail stations, which means new opportunities for development.

Slowdown in the economy

Commercial as well as residential development across the Valley has slowed, along with the economy, and that’s the bad news. But there is a glimmer of hope.

“I guess the good news is that there’s no flight taking place,” says Jason Harris, deputy director of the Phoenix Downtown Development Office. “I don’t see a lot of ‘for sale’ signs going up. I think folks are just battening down the hatches and looking to weather this (economic downturn) out and just trying to plan when they could expect to see the market return.

“A lot of folks are queuing up for the market to turn and evaluating where the market is at,” Harris says.

Simonetta believes redevelopment along the Metro route is only a matter of time. Already, he says, about $6 billion in private and public funds have been spent or earmarked for new projects near or along the light rail line.

That is broken down into $3.7 billion in private investments and $2.3 billion in public investments, according to an analysis in the 2020 Vision Report from Colliers International’s Phoenix office.

Simonetta says developers typically watch for the approval of light rail lines before they begin buying property near the light rail stations. He’s seen redevelopment near stations in other cities where he worked for the mass transit systems.

The Colliers International report says two stations will be of particular importance.

“Two rail stations, one at 44th and Washington streets and the other at Central Avenue and Indian School Road, could see a major influx of private and public investment by 2020 and have a positive impact on the surrounding office market,” according to the Colliers International analysis.

The 44th and Washington streets station is considered a gateway to Sky Harbor International Airport. By 2020, this station and the property between 40th and 56th streets “will be an urban village of office, hotel, retail and residential” developments, the Colliers International report says.

Meanwhile, the Central and Indian School station will be next to what today is a vacant 15-acre property at the northeast corner. And just north of the northwest corner is a vacant 13-acre parcel. By 2020, both properties are expected to be “bustling hubs of activities with mixed-use projects comprised of office, ground-floor retail, high-end residential lofts and condos and boutique hotels,” the Colliers report says.

Corridors of interest

Simonetta and commercial property brokers say areas of major interest along the light rail route include:

  • Camelback Road, between 19th and Central avenues.
  • Central Avenue, between Camelback and Indian School roads.
  • Along Tempe Town Lake, close to the light rail line.
  • Along Apache Boulevard east of Mill Avenue.

Simonetta says interest from the development community has been more intense in metro Phoenix than what he saw in other cities where he worked on their mass transit systems.

“Here we are now, breaking all precedents, with four times as much development a year before we even open,” Simonetta says.

“That’s why I think Phoenix is becoming unique. It’s responding to light rail in a more dramatic way than in the other western cities.”

Aug 5th, 2008

One Comment to 'Phoenix light rail system 92 percent complete'

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  1. Melissa Rzeppa said,

    Great update!

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