Development-oriented transit: How value-capture launched DC’s newest neighborhood

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The 2013 LOCUS Leadership Summit was held on June 3-5, 2013 in Washington, D.C. A walking tour of NoMa was one of the many items in this year’s agenda.

At certain times of day, competition for an available bicycle can be fierce at the Capital Bikeshare station on the corner of 1st and M Street NE in Washington, D.C. That intersection serves as the unofficial crossroads for the city’s newest and fastest growing neighborhood, NoMa (short for “North of Massachusetts Avenue”), where a building boom is in full swing. On a typical weeknight, the sidewalks of NoMa brim with young professionals, who stop in at the new Harris Teeter grocery store or CVS pharmacy before heading to one of the nearby apartment buildings or the local Metro station. High above, the numerous construction cranes dotting the neighborhood serve as reminder that the frenetic pace of growth in the area shows no signs of slowing.

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NoMa in 2003. NoMa in 2013.

Fifteen years ago, the NoMa of today would have been difficult to imagine. Despite its proximity to Union Station and the U.S. Capitol, the area (roughly bounded by Massachusetts Avenue, North Capitol Street, Florida Avenue and 3rd street NE) was home to an uninspired collection of vacant lots, surface parking and low-slung warehouses. It wasn’t until the City teamed with local property owners and the federal government to construct a new Metro station that the area began its rapid transformation into one of the city’s most dynamic neighborhoods. Since then, the neighborhood has become a poster child for successful transit-oriented development, while providing a model for communities across the country looking to take advantage of a changing real estate market in a time of constrained public budgets.

Innovative partnership leads to unprecedented success

It’s no coincidence that the genesis of NoMa involves a transit station. Transportation has always driven real estate, and rail transit has clearly reclaimed its role as a catalyst for development after decades of auto-oriented growth. Recognizing NoMa’s potential but lacking the funds to construct a new station along Metro’s extant Red Line, officials designed a plan to share the costs between the city, the federal government and local landowners, who stood to benefit from increased property values the station would likely create. Despite some initial hesitation, property owners agreed, ultimately contributing $35 million in land and funding towards the $110m cost, with the city and federal government providing the balance.

It’s fair to say the station has exceeded the expectations that accompanied it at the outset, and contributing property owners are realizing a substantial return on investment. Since the NoMa station opened in 2004, the area added 7,000,000 square feet of new office, residential, hotel and retail space with another 3,000,000 more currently under construction. The NoMa Business Improvement District (BID), which launched in 2007 to support and manage the nascent district, estimates the station has “catalyzed $3 billion in private investment” while also generating a significant upside for the city’s tax rolls.

A Levittown for the Millennial generation

Beyond serving as a poster child of transit-oriented development and public private partnerships, NoMa also provides a glimpse into how communities are changing as the Millennial generation (those born roughly between 1978 and 1995) increases its influence over the real estate market. Just as Levittown, NY came to embody the needs and aspirations of the Post-War generation, NoMa has grown to represent the realities of its patron, the Millennial generation, whose large numbers and changing preferences portend an urban development upheaval every bit as drastic as the suburbanization ushered in by their predecessors.

noma3Studies continue to show Millennials place a higher value on connectivity and walkability than car ownership, and are driving less than previous generations. This preference is clearly evident in NoMa, where competition for bike parking at Harris Teeter exceeds that for spaces in the grocery’s underground garage, and the local metro station has the fastest growing ridership in the entire system. According to the NoMa BID, 82% of NoMa residents walk, bike or take Metro to work. The national average is 8.5%.

NoMa also reflects the evolving makeup of households in the Millennial generation, where fewer people are getting married and having children, and those who do tend to wait til later than their parents did. As a result housing in NoMa is largely designed for single professionals or couples with no children, who value location and communal amenities over private space. Of the thousands of new housing units in NoMa, most are small studio and one-bedroom apartments. Despite sizes that rival that of a two-car garage in a typical suburban house, these units lease quickly at prices north of $2,500 per month.

Lessons from NoMa

All neighborhoods are unique and few can rely on stunning views of the U.S. Capitol and proximity to Union Station as selling points in pursuit of redevelopment. Still, the story of NoMa contains valuable lessons for developers and officials looking to transform their communities and take advantage opportunities created by the Millennial demand. The most critical lesson concerns the importance of transportation. Convenient and connected neighborhoods require a range of transportation options, and NoMa has shown these options can be provided in a cost-effective way. Partnering with the private sector to harness the value created by transit improvements to fund part of the cost can be an equitable way to share the costs, and benefits, of transit investments among multiple stakeholders. Likewise, improved bike and pedestrian facilities, as well as car and bike sharing programs are relatively inexpensive ways to create mobility options beyond driving. NoMa also demonstrates the benefit of thoughtful, mixed-use zoning to encourage around-the-clock activity, and the critical role that place management organizations can play in coordinating and guiding activity at a neighborhood level.

Whether or not NoMa comes to embody the generational zeitgeist the way Levittown did, the neighborhood provides a hopeful case study for leaders trying to understand the future of urban development, and a few helpful lessons for those looking to harness that future to improve their community.

All photos by Sam Kittner via NoMa BID.

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    3 Responses to Development-oriented transit: How value-capture launched DC’s newest neighborhood

    1. CubsFan says:

      Great story overall, and NoMa is a great neighborhood. However, the mention of “one-bedrooms for $2,500 per month” calls out an important policy concern – preserving/creating affordable housing with connection to transit. 2nd, I would argue the mixed-use zoning hasn’t encouraged around-the-clock activity in the neighborhood to the extent desired. Summer Screen is great in that regard. But businesses that do attract late-night and weekend activity, suck as the McDonalds, or clubs Ibiza and Fur, seem to be frowned upon. I worry NoMa is in danger of getting and office-park city feel. When does that potbelly’s close on a weekend night? More Millenials and others would be willing to pay the high rents, if they didn’t have to walk to H street and Bloomingdale for night life. Watershed in the Hilton is the only “bar.” I think more diverse offerings of the ground-floor retail is key.

    2. Cythia Burger says:

      Are seniors and persons with disabilities supported by initiatives that will enable to stay in their own homes while the community transforms around them. If there is an accessibility audit of mulch-family buildings and of commercial businesses it will lead to improvements in accessibility and into more of a feel of a community as those who are in during the day remain an integral part of the community.

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