Do streetcars support commercial development? New Orleans results say yes

New streetcar lines are in the planning stages in Minneapolis and St. Paul. Proponents cite not only the lines’ ability to strengthen the transit system, but also their potential as catalysts for development. Estimating the impacts of streetcars is challenging, however, as most U.S. lines operate in downtown areas with many interrelated factors at play. A recent U of M research project examined the issue through the prism of one city’s experience: post-Katrina New Orleans.

The team—research fellow Andrew Guthrie and Assistant Professor Yingling Fan of the Humphrey School of Public Affairs—analyzed building permits near streetcar stops in the downtown business district and in several urban neighborhoods. “Hurricane Katrina allowed—or required—more redevelopment to occur at a faster pace than normal, potentially allowing existing streetcar lines’ latent development impacts to appear,” Guthrie says. “This created an unfortunate yet rare opportunity for study.”

The researchers estimated how the frequency of commercial and residential permits changed with distance from streetcar stops, controlling for hurricane damage, proximity to existing commercial areas, and pre-Katrina demographics. The streetcar system at the time of data collection (2005–2008) included three lines totaling roughly 12 route-miles, including the central business district, several residential neighborhoods, two universities, and the French Quarter riverfront. (New Orleans has since chosen to expand its streetcar network.)

They found that throughout the system, building permits strongly reflect the distance to stops—and that commercial and residential permits move in opposite directions within the first 750 feet.

“Commercial permits clearly decline the further away a location is from a streetcar stop,” Guthrie says. Downtown commercial permits fell about 20 percent with each 100-foot increase from a streetcar stop. In the residential areas, commercial permits showed some variation depending on neighborhood characteristics, falling 5.6 percent per 100-foot increase in one precinct, for example, and almost 20 percent in another.

In contrast, the number of neighborhood residential permits rose about 24 percent with every 100 feet from a stop. “These trends suggest that commercial uses may have outbid residential uses in the immediate areas near streetcar stops in residential neighborhoods,” Guthrie says. “The result is a diversity of land uses near stops.”

Based on their results, Guthrie and Fan conclude that traditional streetcar lines can help increase commercial development not just in downtown business districts, but in other urban areas as well.

The findings also indicate that streetcars shape development in urban neighborhoods in a fundamentally different fashion than light rail. “Streetcars appear to have impacts that are less intense at each stop, but because they run on continuous corridors with close stops, they act on large geographical areas,” Guthrie explains. “In the right neighborhoods, streetcars may be capable of similar or even larger overall impacts than light rail.”

The researchers caution that New Orleans is a unique city, and Hurricane Katrina a unique event, so applying the findings to other cities or corridors would require consideration of similarities with and differences from the study area.

The full research paper is in the Journal of Planning Education and Research.