Could the LRT Cause a (Good for Us) Real Estate Bubble in Waterloo?

This all started just over a month ago, as I posted a petition, spoke before council, and filed a freedom of information request. And it has been a bit of a crazy ride since. But through this process I have spoken to an incredible number of people, and learned an incredible number of things.

One great conversation I had was with Darshpreet, who is leading the Rapid Transit/ LRT project with his team (and is also a very cool guy). The result was an interesting way to think of the project.

My argument has always been that people will only take the LRT when it becomes faster than the car, which is widely agreed to by experts (see earlier post here for some quotes: http://www.walkablewaterloo.com/seeking-out-experts-jeff-speck-and-walkable-city/). But the argument has been that even though that is a long way off, ONE DAY traffic will get so bad in Waterloo that that the LRT will become faster, and finally make sense. And when that day arrives, we will look back and say thank goodness we were so smart and put in the LRT all those years ago.

Now, in many ways this did make sense. But it was also depressing. That living in our city in the future will be worse than it was in the past. That driving will have gotten so miserable that we will all have given in and started to take the LRT. Surely this couldn’t be the only way.

But there was another way. A way that is better. And that was walking. If cars were free, and gas were free, and insurance were free, and you were the only one ever to be on the roads, you would never take the LRT. But you might still walk. If it was close enough. And if the weather was nice. Therefore, the question became, how do you design a city for walking? To create a future that was better than the past?

This is where the LRT started to scare me. That it wouldn’t concentrate development, as some said it was promised to do, but instead would spread it out, trying to build 16 downtowns all at once. And that if the amount of resources (dollars for development) that were coming into Waterloo was fixed, by spreading out the resources across all the stations it would take 16 times as long to build 16 great neighoburhoods as it would to build just one. And that was also depressing.

But, as I talked with Darshpreet, I (we?) realized that there was another way to look at it. That if everyone was rational, then yes, all the resources would be spread out and getting one great neighbourhood would be delayed. But what if the LRT could cause people to become irrational? Let me try to explain.

One day, 10 years from now, when you Google “Waterloo” that pin will have to drop somewhere. Yes, right now we have a “corridor”, but in my opinion that is only temporary. You can even see it today, as development starts to cluster/compete around downtown kitchener, uptown waterloo, and the universities, among other places. And eventually one of these places is going to “win” as the downtown of our region, the central place everyone wants to live. And with it will come a big monetary reward.

You could argue that all of these clusters will simply become neighbourhoods all tied together, and to some degree that will be true, but the downtown neighbourhood will be worth at least 10 times more than any other, same as in any other big city (yes, Toronto has lots of neighoburhoods, but the real estate downtown is worth 10 times more than anywhere else).

Right now, it is unclear where that downtown will be. Unclear which will “win”. And so we are in what is starting to look like a very lucrative, high stakes race.

This is where the LRT is actually pretty smart. It will tempt investors to become irrational. It will help create a real estate “bubble” in Waterloo. Where each station becomes like a potential team in the NHL, competing to become the cup. Some stations won’t be able to compete (like Conestoga say), but many will. And whoever eventually wins will have a huge windfall, as the rest of region orients themselves around it.

Right now I would say downtown Kitchener is “winning”, but that is only because of decisions made a couple of years ago (Kaufmann, Tannery, Pharmacy), so there is still plenty of time for other teams to enter and catch up. Perhaps this is why the uptown mall was just sold in the largest KW real estate deal ever. Another team is being entered, and they will compete to win.

So when viewed from a rational perspective, yes, spreading out resources over 16 stations will certainly make it take longer to get to one great neighbourhood. But the LRT just might tempt people to become irrational, to compete, as this is a prize incredibly worth winning, in which case it just might get us there sooner.

Interesting to think about. What do you think?

 

 

3 thoughts on “Could the LRT Cause a (Good for Us) Real Estate Bubble in Waterloo?

  1. Adam

    Good way to look at the development benefits that the LRT will provide. Some healthy competition is going to great in pushing up value. Hopefully everything stays on budget!

    Reply
  2. Alex

    My argument has always been that people will only take the LRT when it becomes faster than the car

    How is that claim consistent with the 21 million boardings of the GRT in 2012, which is definitely not faster than the car?

    People will take the LRT when is more convenient than driving a car. This is a combination of travel time, parking costs, cost of ownership and insurance. For people living and working close to an iXpress route this threshold has already been met.

    Reply
  3. David W

    I agree that we should focus on low-tech solutions, like separated bike and walking paths, better and safer pedestrian crossings, improved bus shelters, and look at fare-free zones for buses in the core, which would make the buses go faster, as no-one would be fumbling for change on entering the bus. These solutions would be low-cost or no-cost, but do require vision, which seems to be sorely lacking. Also, what makes anyone so sure that K-W will grow in the future? With RIM going belly-up and economic malaise everywhere, I suspect we will lose population. What few immigrants are let in to Canada in the future will head to Alberta & Sask., but that’s another topic.

    Reply

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