March 30


The majority of traffic engineering/transportation planning is driven by new land development.  Of course, there’s the design of the access points into a development and the roads within the development.  But there’s also broader work that needs to be done to address increasing traffic levels.  But with traffic levels plateauing the last five years, local government revenues going down, and less development projects to work on – the public sector has also been significantly impacted by the economic downturn.

It’s no wonder then that a common discussion topic among folks in the industry is, “When is real estate development going to turn around?”  An article in today’s Star Tribune took a stab at answering this:

The Urban Land Institute asked 38 leading real estate economists and analysts from across the country when to expect better times for the commercial and residential construction industries. The consensus? Sunnier times are indeed ahead, but change will come slowly. Here's what to expect over the next three years:

  • Commercial property transaction volume will increase almost 50 percent.
  • Commercial mortgage-backed securities (CMBS) are expected to more than double.
  • Real estate investment trusts (REITs) should provide returns ranging from 8.5 to 11 percent annually.
  • Office, retail and industrial vacancy rates are expected to drop 1.2 and 3.7 percentage points; apartment vacancies will be stable and hotel occupancy rates will rise.
  • Rents (for all property types) will increase from a range of 0.8 percent for retail to 5 percent for apartments.
  • Housing starts will nearly double by 2014, and home prices will begin to rise in 2013, gaining 3.5 percent during 2014.

This lines up with what I'm currently seeing.  The phone's ringing more and developers appear to be cautiously optimistic about the next few years.

p.s.  The Star Tribune had another interesting article today regarding cities being able to assess traffic impact fees to developers:

A Ramsey County district judge has ruled that a Roseville ordinance allowing the city to impose an impact fee on developers exceeds the city's authority.  Judge John Guthmann declared Ordinance 1417 "invalid and unenforceable" in his 20-page ruling released Wednesday. 

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    Mike Spack

    My mission is to help traffic engineers, transportation planners, and other transportation professionals improve our world.

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