Transport and land use

How public transport impacts on land use and land value: capturing the full benefits of investment

Key Summary

“In any city, patterns of urban development are inseparable from the evolution of urban transport and mobility. Likewise, urban transport cannot be considered independently from urban form”

Rode and Floater (2014: 3)


Transport influences the amount of land available for development and the spatial distribution of economic activity. In turn, this has an impact on land prices, housing affordability, business costs, productivity, and, ultimately, economic performance.

At a finer level, transport infrastructure has an impact on the quality of urban realm, and, indirectly, on the economic use which is made of different places. Urban areas require transport infrastructure to function, with transport generating value by enabling some of the most productive land uses and often the highest land value (Bannister and Berechman, 2000).

When transport is not implemented efficiently, valuable land can be taken up by activities that do not generate value, for example free parking (Shoup, 1997). By linking transport and land use, it is possible to make urban areas more efficient, enabling denser more productive economies to develop. Transport infrastructure determines how many people can get to a location using a given amount of space and set infrastructure, with some modes of transport capable of delivering greater benefits more efficiently (Bannister, 2002). 

Transport can also impact on the health and wellbeing of the population, in terms of air quality, safety, levels of participation in work and training, and social interaction (TfGM, 2013). By reducing the amount of space required to transport people, allowing for quicker journey times and making more space for leisure and more productive activities, transport infrastructure can transform urban environments, increasing the value that people attach to urban spaces. This presents a complex interdisciplinary challenge if the full value of transport schemes is to be understood and measured.

Accessibility and Capacity

Transport infrastructure has the ability to change the geography of urban areas, influencing the degree of separation between locations (Townroe, 1995). Efficient transport networks enable greater accessibility and higher density of developments, which in term generates economic benefits through agglomeration.

The relationship between accessibility and the economy is self-reinforcing, with economic activity drawn towards more accessible areas (Bannister and Berechman, 2000: 60). Value is generated as those wanting to live, work or do business near to transport links bid up land prices due to their ‘willingness to pay’, reflected in higher land prices.

Development and location decisions can be shaped by transport investment, as residents and employers seek to locate close to transport infrastructure, increasing demand and causing people to bid up the price of land (De La Barra, 1989). A study by Cervero and Deok Kang (2009) found accessibility improvements increased development density and property values, with Cushman and Wakefield, (2014) finding rent premiums of 27% for properties within a mile of the Mexico City subway.

Voltera (2008) found that an expansion to the Manchester Metrolink delivered agglomeration benefits in central Manchester and increased house prices along the network. Enabling more productive jobs in central Manchester, values increased as much as 5.4% adding 12,000 to property prices within a mile of stations stops.

Similarly, APTA found that house prices in the USA performed 41% better than city averages when located close to high quality public transport (transit sheds). People living close to public transport could access up to three times as many jobs per square mile, with their willingness to pay for access to opportunities protecting/driving up land prices.

Through attracting investors and tenants, accessibility and capacity can also impact on the nature of urban form and development (Vickerman, 2007). Transport infrastructure is directly linked with land use, with some land uses (e.g.: retail or high density offices) requiring higher capacity than others (e.g.: low density residential areas). Shoup (1997) found that transport has often been dealt with badly in urban planning, taking land away from more valuable activities and preventing economic development. Where public transport is not available or adequate, people are more likely to travel in cars, compounding the initial problem of congestion and placing increased demands on the amount of space transport requires to meet the needs of travellers.

In 2010, KPMG estimated that overcrowding on Northern Trains could lose Manchester and Leeds 20,000 new jobs by 2013/14, worth £500 million in Gross Value Added, as employers would not be able to link jobs to people. A further 22,000 jobs could be lost in West Yorkshire by 2026 due to worsening transport constraints (Steer Davies Gleave, 2014). To unleash the potential of these dense city centre economies, transport supply needs to be closely linked to planning policies and economic developments.

Where public transport networks have developed it is possible to transform local places, developing dense productive economies. The London Docklands demonstrate how changes in transport infrastructure can attract investment, with a step change in accessibility and capacity required for the development to succeed.Costing £3 billion, the aim was to attract 120,000 new jobs, which would require the effective transportation of people in and out of a previously underused space. Now carrying 102 million passengers per year, DLR increased the capacity between “London Docklands’, the City and Stratford from about 15,000 in 1988 to 200,000 a day by the end of 1995” (London Docklands Development Corporation, 1991: 12).

Urban form

Urban form is both shaped by transport and determines travel patterns, with the efficiency and cost of transport systems determining how urban areas develop. The interaction between transport and wider areas of planning policy, such as housing, shapes the transport options that are open to us and how we travel. Understanding this relationship is vital for urban function as not all forms of transport are equal, with some enabling more productive urban economies that are better for the environment and protect quality of life (Cervero and Landis, 1995).

The UK Department for Transport Local White Paper: ‘Creating growth, cutting carbon: making sustainable local transport happen’ (2011) states that:

“Where places (e.g. shops, work and other services) are located in relation to where people live is a significant factor in determining how much people need or want to travel. It is vital that sustainable transport is a central consideration from the early stages of local planning – for example whenever new houses or retail areas are being developed”

With urban policy enabling greater suburban development in line with improved transport technologies and lower costs from the 1950s onwards, the average length of journeys by mode increased by 66% between 1972 and 2013.



Average trip distance (miles)





Local bus (outside London)




Surface rail



Source: National Travel Survey 2013, Table NTS0306

Whilst enabling lower density living, this trend places increasing stress on transport networks, with longer journeys more likely to be undertaken by car. It is increasingly recognised that a stronger connection needs to be made between transport and planning policy to reverse this trend.

One such example is Transport Orientated Developments (TODS), which are increasingly used as a delivery vehicle to reduce trip lengths and the dominance of the car. By providing a high class pedestrian and public transport infrastructure that links to services and employment, TODs are designed to encourage more active forms of travel and reduce reliance on the car.

Many places have struggled to keep pace with examples emerging from Scandinavia, where planning policy has helped to achieve 80% of trips made by non-car modes. Through planning where transport infrastructure investment is to be located, we can begin to plan/shape the future fabric of our cities.

“What is significant is the urban structure: cities with strong concentrations of central jobs, and accordingly a better-developed public transport system, have much lower energy use than cities where the jobs were scattered” (Hall, 2003: 73).

TfQL (2011) set out that the link between transport and urban form needs to be central to policy decisions to enable efficient sustainable cities. The report recommended ‘three golden rules’ for future planning policy:

  • All major development should be public transport centred;
  • All major development should aim to achieve a design where car journeys are a minority of mode share;
  • Development should primarily occur as infill, or at least adjacent to, major centres. 

The importance of bringing transport planning into the centre of developments is being increasingly recognised to help achieve numerous policy goals, including increased economic competitiveness, improved quality of life, reduced congestion, lower transportation costs, improved air quality, and reduced costs for providing services (ECOTEC, 1993).

Quality of urban realm

Because transport takes up spaces and creates pollution, it has a direct impact on the quality of urban realm. Transport interventions provide opportunities to release surface area for more productive uses and move towards higher efficiency transport modes, generating major benefits by removing cars, reducing congestion, pollution and accident rates as well as preserving quality of life (Living Streets, 2014).

The UITP (2009) recognised that “current (appraisal) methodology does not do justice to the full benefits public transport schemes can provide to the wider public” (UITP, 2009: 2). Living Cities (2014) found urban realm improvements coupled with improved walkability could increase residential and commercial property values by 10-30%. High quality environments were also found to boost business rents by 20% and deliver increased occupancy rates (Living Streets, 2014). WebTAG guidance may fail to evaluate all the value generated as it does not fully capture the street as a place to be and a location for activity meaning that we need to look towards alternative methodologies (ITS Leeds, 2011).

Transport for London (2012) developed an ‘urban design toolkit’ to value and evaluate urban realm elements of transport interventions. Schemes that encourage a shift to active modes and public transport were found to have a positive impact on land values, creating benefits beyond the physical scheme. This principle has been applied to the recent Crossrail project in London with 190,000 square metres of space outside 31 stations turned into shared spaces, improving the environment and creating 1,335 new bike parking spaces. Reducing the dominance of the car, Crossrail enabled the development of a modern urban realm and will generate an estimated 10% uplift in property values, adding £5.5bn to real estate along the route by 2021 (Crossrail, undated C).

Living Streets (2014) found that good quality pedestrian environments increase footfall and shop trading by up to 40%. Business owners regularly overstate the importance of the car by over 100%, failing to realise the importance of pedestrians and the quality of built environment. Attempts to boost footfall have often focussed on providing more free parking rather than improving the urban environment (Shoup, 1997). However, this takes valuable land away from other activities, providing little value and reinforcing the original problem as an increase in free parking conversely increases demand (See ITS Leeds (2011).

Key Reads

  1. TfQL, (2011), Thriving cities: integrated land use and transport planning

    This report focuses on how integrating land use and transport planning can deliver a range of benefits in our largest cities. The report explores previous and current planning policy and makes recommendations of how we can move forwards. 

  2. Banister, D. Berechman, J. (2000), Transport Investment and Economic Development, UCL Press, London

    This book sets out the wider economic benefits of transport investment. The book uses case studies to explore the impact of transport schemes and explores methodologies, focusing on how this had changed over time and how benefits can be measured. 

  3. Living Streets, (2014), The pedestrian Pound: the business case for better streets and places

    This report explores the importance and value of creating high quality pedestrian spaces. The report recognises the importance of high quality walkable environments in attracting investment and supporting economies. 

  4. UK Tram. (2014) Investigation into the economic impact of light rail on cities.

    This report focuses on the economic impact of light rail schemes, looking at both UK and world-wide examples. Detailed information is given about the nature of schemes and the benefits created.

  5. Cervero, R. (2003), Effects of light and commuter rail transit on land prices: experiences in San Diego County

    This paper explores the impact of rail-transit on house prices in San Diego, USA. There is a focus on how important the local context is and the methodology through which benefits are measured.

Further Reading

  1. Bannister, D. (2002), Transport planning second edition, Spon press, London

  2. De La Barra, T. (1989), Integrated land use and transport modelling: decision chains and hierarchies, Oxford University Press, Oxford

  3. KPMG, (2010), Value for money in tackling overcrowding on northern city rail services, Report to the Northern PTEs. 

  4. Townroe, P. (1995), The coming of Supertram: the impact of urban rail development in Sheffield, in Banister, D. (Ed), Transport and urban development, E & FN Spon, London, pp162-181

  5. TfGM, (2013), Transport for sustainable communities: a guide for developers

  6. Vickerman, R. (2007), Recent evolution of research into Wider Economic Benefits of transport infrastructure investments

  7. Wheelan, J. (2005), Developing a methodology to capture land value uplift around transport facilities

  8. Whitehead, T. (2002), Road user charging and business performance: identifying the processes of economic change, Transport policy, 9 (4), 47-66

  9. Whitehead, T. Simmonds, D. Preston, J. (2006), The effect of urban quality improvements on economic activity, Journal of Environmental Management, 80 (1), 1-12

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