Thursday, September 15, 2011

Transit Can Be Profitable

I spent many years living and working in Asia. I've used smart, modern and efficient transit in several cities, chiefly Singapore and Hong Kong. In both cities and more so in HK, millionaires use the city's MTR.

Recently, the former head of New York's MTA subway system left his $350K a year job to become the head of Hong Kong's Metro system at $1M annually. This at a time when pressure was being applied to reduce his NYC salary.

How can Hong Kong pay their director $1M per year? Very simple...because the transit system in HK makes money. Unlike the metro Vancouver area where private developers have been allowed to build office towers, condos, restaurants and other structures near SkyTrain stations, Singapore and Hong Kong reserve that right in a big way. That money from real estate ventures helps make the transit system profitable.

It should be noted that several years ago, TransLink created a real estate division. They have been operating fairly quietly and they only thing I've heard about them in the past 5 years or so, was the fact that they will develop some land near the new Langley Park & Ride at 86th Avenue and 200th Street. I also know that Langley area developers have been quietly assembling land in that area for office and mixed use (commercial & residential). Why didn't TransLink simply acquire the whole length of 86th Avenue before the announcement? Cash I gather. These negotiations to assemble and acquire land also require a high degree of confidentiality. I'm sure they will report their success in time.

Many years ago I worked on a Singapore project where biotech laboratories were being built to grow that industry in that city-state. While other cities would be installing perimeter fencing and razor ribbon, Singapore was busy planning their MRT to route itself right into the middle of this development, designing shops and restaurants to be located below the labs and providing for some housing options that created a mini city. Hong Kong is no different.

Here are a few articles regarding Hong Kong's successful transit funding model and this latest turn of events with the head of the NYC system moving across the pond. There is also a great audio interview available here on the subject of HK's success.

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