Think Bike-Share Doesn’t Pay The Rent? Think Again
Want to get a jump-start on upcoming deals? Meet the major players at one of our upcoming national events!
“Time is money,” as the saying goes, but around the country in apartment buildings new and old, mobility is the new cash cow.
Increased mobility options, including transit, car-share, bike-share or ride-share, have shown to be directly related to higher rents for apartments, according to a recent study conducted by RCLCO and TransitScreen.
Among multifamily projects built across the country in this real estate cycle, the study shows a 10% increase in a project’s MobilityScore correlated with a rent increase of $0.12 per SF, and the difference in MobilityScore accounts for 28% of the variation in rent per square foot.
Mobility scores are measured in more than the number of steps to a bus stop or light rail station. The study analyzed the times between buses that stop in an area (a bus that runs every five minutes scores much higher than one that runs every 30 minutes, for example) and the time spent waiting for a Lyft or Uber driver. The study also factored in bike-share services, both docked and dockless, and car-share services such as Zipcar.
“What this analysis helps us to identify is that there are other options beyond people just owning their own cars,” a co-author of the study, RCLCO principal Derek Wyatt, said. “While it’s going to take time for that to catch up, we’re already starting to see those impacts through this analysis based on the fact that those communities that do offer these different types of mobility options are achieving higher rents than those that do not offer those types of options.”
The type of mobility does make a difference, according to the study. “A higher transit MobilityScore netted a $.03 per SF rate hike. Car-sharing added $.08 per SF. Available bike-sharing gathered an extra $.09 per SF increase. Ride-hailing access added a $.10 per SF increase.”
Rents with mobility conveniences were higher even in markets that love their cars. Multimodal access is not just a big-city phenomenon, where rent differences could also be attributed to the markets inherently being higher-cost, researchers said after studying data from 40,000 apartment complexes around the country.
“This isn’t just about the places you would expect,” RCLCO technology associate and co-author of the study Daniel Warwick said. "It isn’t just just Seattle, San Francisco, or New York or Boston, but also places like Charlotte, places like Austin — that don’t have reputations for being places you could live without a car."
In the Charlotte metro area, the study showed communities with excellent mobility have rents that are 35% higher than market average, and communities with good mobility have rents that are nearly 34% higher than market average. Popular mobility options included ride-hailing and bike-sharing. Car-sharing was not statistically significant.
In Austin, the study showed communities with excellent mobility have rents that are 33% higher than market average, and communities with good mobility have rents that are about 28.5% higher than market average. Car-sharing was more popular than most of the other components, including bike-sharing or ride-hailing.
In addition to Charlotte and Austin, St. Louis, Tampa and Minneapolis also showed correlation between mobility and apartment rents.
Although property owners may not have much control over where a city decides to place light rail and bus stops, developers can take steps to make improvements to mobility on their own properties.
One option includes transit displays, which show real-time locations from sources such as buses, trains and ride-sharing services.
“I’m sure you know what it’s like to wait for a bus and not actually know if it’s coming, which is super-frustrating. If you see that it’s coming in 10 minutes, you’re still waiting the same amount of time, except it’s a better experience. You can come to terms with that,” TransitScreen Marketing Director Rachel Karitis said. “It’s another example of giving people more options and making it easier for people to make sustainable decisions.”
Real-time data could actually have a direct correlation with rent in a different way — via marketing, Karitis said. “For someone trying to lease up the building, it really helps to advertise all those different options.”
Other options can be as simple as adding a bike-share station or dedicating a car-share space in the garage, and the results are quantifiable.
“You can make the impact on your individual development; it’s not just waiting for the cities to make an impact and add a streetcar line, hopefully near you,” Warwick said.
The researchers’ expectations are that real estate owners and developers are going to continue to try to increase the mobility options for their projects.
“We hope that this research highlights that mobility does make an impact — from the market perspective — on what renters are looking for and what they’re willing to pay a premium for,” Wyatt said.
UPDATE, MAY 11, 11:45 A.M. ET: This article has been edited to reflect clarifications that TransitScreen and RCLCO made in the interpretation of their research.