Even Transit-Oriented Development Can't Stop The Ridership Drop

It's been nearly three years since State Farm opened its new office campus in the Atlanta suburbs.

The project was touted as an ideal example of transit-oriented development: It sits on top of MARTA's Dunwoody station. But despite the influx of about 2,000 State Farm workers in 2017, average daily ridership at the Dunwoody station has dropped.

The Dunwoody station saw an average of 4,200 daily riders in July 2015. That number shrank to 3,670 by July 2018, according to MARTA figures provided to Bisnow. With the exception of a massive ridership spike in April 2017 following the collapse of Interstate 85 after a fire, overall ridership is heading south. In December, the station averaged 3,299 riders, down nearly 1,000 a day from three and a half years earlier.

State Farm’s arrival could not cushion Dunwoody from MARTA’s systemwide ridership decline. The transit agency is experiencing the broader national trend of dipping transit ridership since 2014: Atlanta, Miami and Los Angeles have seen public transit ridership drop more than 20%, according to the Cato Institute. Overall, transit ridership dropped 7.5% nationally from 2014 to 2018.

This trend has emerged even as businesses have been returning to the city’s heart after decades of suburban sprawl. Developers have touted projects’ access to transit as a major selling point, and companies are willing to pay higher rents to be close to a MARTA station.

A confluence of commuting attitudes and new technologies are holding transit systems back from growing their ridership in the time of the TOD.

“Certainly the phenomenon that's occurring right now, and it's really a national sort of situation, is there have been some decreases in transit uses for the last few years,” Atlanta Regional Commission Transportation Manager John Orr said. “There's no doubt about it.”

More People, Fewer Riders

Fewer Atlantans are using MARTA, but that does not mean there are fewer Atlantans. In 2010, the 29-county Atlanta region was home to 5.3 million people. That number was approaching 6 million as of last year’s estimates.

The U.S. Census Bureau predicts that by 2022, Atlanta will overtake Philadelphia as the eighth-largest metropolitan area in the country. The ARC projects Metro Atlanta will grow by 2.5 million people by 2040.

As the metro area’s population has swelled and companies have added jobs, commercial developers have heavily focused their construction efforts around MARTA in an effort to capitalize on millennials’ desire to work near transit. MARTA has capitalized on this trend, partnering with developers to build mixed-use projects at three of its stations.

More and more people, especially millennials, are receptive to using transit to commute. According to the ARC survey, 93.7% of millennials responded that transit was somewhat or very important to them, and another 60% responded that they would be willing to pay higher taxes to expand transit.

“There are regions [with] over 8 million people, which we certainly will be,” Orr said. “I don't know any other region that size in the country that moves that amount of people other than through a very strong and healthy transit system.”

The reasons for ridership declines vary. Some maintain that relatively low fuel prices and easy, cheap car loans as continuing to fuel a vehicle-based economy. Other experts point to the advent of ride-sharing services like Uber and Lyft. A 2018 study by researchers from the University of Kentucky found that for each year after a ride-share service is introduced to a city, train ridership declines 1.3% and bus ridership by 1.7%. Uber debuted in Atlanta in 2012.

Jacob Vallo, MARTA’s senior director of transit-oriented development and real estate, said a larger drop in the system’s bus ridership may be the system’s biggest source of ridership loss. Two-thirds of all of MARTA’s patrons use the buses, but many of the system’s bus stops expose passengers to the elements and offer no real seating, dissuading commuters who have a choice.

“I call it friction associated with getting into the system. In order to get into the rail system from your home, you can either walk to a station if it's feasible, or you can walk to a bus stop. People are voting with their willingness to not ride,” said Vallo, who is speaking at Bisnow's Future of Central Perimeter event May 30. “There's still a cultural shift that needs to take place. It takes a while for people to change.”

MARTA is eyeing a program to improve bus stops, Vallo said, including building shelters from the elements, more comfortable seating and possible amenities like WiFi and food.

He likened it to Delta Air Lines' Sky Club Lounges, where passengers can go while on a layover at an airport. In the end, it is about improving a transit patron's experience in all facets of the MARTA system, Vallo said.

“You're less likely to realize you have a two-hour layover if you're in a Delta lounge,” he said.

State Farm estimates close to 10% of State Farm's current employee base in Central Perimeter takes transit to work, Administrative Services Supervisor Machelle Clarke Pellegrini said.

Two more buildings on its planned campus are expected to deliver by 2020, and the insurance giant expects to employ 7,000 people there when complete. Ridership figures should increase with it. But, Pellegrini said, locating on the Dunwoody Station was never solely about MARTA.

“[It's] what works best for our employees,” she said. "We want them to have a healthy work-life balance."

Pellegrini said a majority of the company's Atlanta employees don't live close to transit in hot markets like Midtown or Buckhead. They live in North Fulton, Gwinnett, Forsyth and DeKalb counties.

Mind The Gaps

While there are plans afoot to expand MARTA in its existing counties of operation and add Clayton County service, others are still in the transit dark. Gwinnett County voters just turned down a penny sales tax increase to help fund MARTA heavy rail expansion into Norcross for a third time.

“They're going to either have to go on a bus or drive to a certain area ... and by the time they did that … they could have already driven here, even with rush hour traffic,” Pellegrini said.

Homrich Berg recently moved to Three Alliance Center in Buckhead to take advantage of its access to the Buckhead MARTA station, even offering its employees a generous incentive package to encourage transit ridership.

But Homrich Berg event planner April Jones lives off I-20 West in Douglas County. She would have to take a bus and shuttle to the H.G. Holmes station, then get off the train at Five Points and transfer to get to work in Buckhead.

“To me, I can still use my car and get to work [easier],” she said.

Despite a rise in population and drop in transit ridership, car commuting has not grown either. While the number of people who drive alone to work and back has increased since 2008 in Metro Atlanta, the percent share has remained steady, between 76% and 78%, of all commutes, according to the ARC.

That is also true for public transportation, including taxis, at around 3%. Walking and biking have remained constant at around 1% to 1.5% of all commutes each year.

The only form of commuting that has gained market share is not commuting at all. In 2008, an estimated 150,000 Atlanta residents worked remotely, or 5.7% of total workers, according to the ARC. By 2016, the last time the ARC surveyed the population, that number had risen to more than 196,000, 7% of Atlanta workers.

“That really has made a huge difference,” ARC’s Orr said. “Not only on the transit side, but it's helping us handle demand on the roadways as well.”

Livable Buckhead Executive Director Denise Starling sees telecommuting as a big reason so many companies in the city have been switching to flexible workspaces.

“There is a lot more teleworking going on than any time we've seen in the past,” Starling said. “I'd be willing to bet there's a little bit of cannibalization going on.”

Still, Starling is not seeing a decline in appetite for MARTA passes. Livable Buckhead operates a program that offers discounted monthly MARTA passes to companies with offices in Buckhead. Many of those businesses further subsidize those passes for their employees.

When the program started in 2010, 37 companies took advantage of it. As of 2018, 103 companies are participating in the program.

“We're on a trajectory right now to increase our pass sales over 15% this year from last year,” Starling said.

The Tide Has To Turn. Right?

The development community remains bullish on the future of transit and on the real estate around it. Atlanta only promises to become more congested. According to Inrix, an analytics firm that tracks traffic data, each Atlanta commuter lost 108 hours to congestion last year. 

“We’re big believers in MARTA,” Zeller Realty Principal Director of Acquisitions Bill Rogalla said. “That’s just the investment thesis for us.”

Zeller owns 100 Peachtree, two blocks south of the Peachtree Center MARTA station, and Resurgens Plaza, directly connected to the Lenox MARTA station in Buckhead. Zeller Senior Vice President Mark Vollbrecht said tenants’ reasons for wanting to be close to MARTA vary, from the proximity to a number of new apartments near the stations to easy access to Hartsfield-Jackson Atlanta International Airport, which has its own MARTA stop.

“The belief of tenants here [at Resurgens] is that [MARTA] could be a differentiator over a recruit choosing to work here over someplace else,” Vollbrecht said. “I have heard conversations on MARTA being held by consultants … talking about how they dread if their firm ever moved off a MARTA line because then they'd have to buy a car, and they don't want to buy a car.”

Zeller sees MARTA as a long-term benefit for its office buildings in Atlanta, despite the fact that fewer people are taking it than before.

“The [ridership] numbers may not be trending that way today, but we think that's going to be a plus for the future,” he said.

State Farm's Pellegrini said her company tends to attract the younger generation of workers who care more about transit — in all its forms.

“The millennial group or younger are asking for that. What we're finding [is] that if they work where they live then they are more apt to take transit, whether it's Uber or whether it’s the rail,” she said. “If you provide it, they'll come.”