Inner urban redevelopment projects have great potential to deliver multiple benefits for the community. When done well, redevelopment can dramatically improve the amenity and ‘livability’ of an urban centre. In this study, Synergies was engaged by LaSalle Managed Investments to quantify the social and economic benefits of a proposed project to refurbish the Fortitude Valley Railway Station, just outside central Brisbane.
The $500 million ‘Valley Metro’ redevelopment proposal includes:
a 30 storey, 207 floor residential apartment building,
a new, 25 storey commercial tower on Constance Street, and
the refurbishment of Transport House office building.
The planned redevelopment also includes overhauling the existing retail precinct surrounding the railway station to provide new entrances, natural light sources, and a family entertainment area such as cinemas or bowling. The total site area of the development is 20,302 square metres.
Synergies’ report quantified three types of benefits arising from the redevelopment project:
the positive economic impacts from expenditures over the construction and operational phase of the redevelopment (where operations include commercial retailing within the station complex);
the benefit of increased use of passenger rail to and from Fortitude Valley, which will result in reduced congestion; and
the benefits of enhanced urban amenity and pedestrian safety, measured in terms of improved community wellbeing and enjoyment of the precinct and surrounds.
Synergies’ in-house Economic Impact model was used to determine the direct, indirect and induced impacts expected to be generated by the redevelopment project.
Existing survey data on commuter journeys by mode of transport were used to value the benefits of reduced congestion, applying a standard approach developed by the Bureau of Infrastructure, Transport and Regional Economics (BITRE).
The amenity and improved public safety benefits of the project were estimated using a ‘Benefit Transfer’ technique, which utilises information from previous published studies that have derived values for similar amenity improvements in comparable contexts.
The modelling found that the Valley Metro project, would increase Gross Regional Product by over $500 million and deliver a similar boost to wages, rent and profits.
The project is estimated to support 1100 (full time equivalent) jobs throughout the economy over the 2 year construction period. This includes direct jobs in redeveloping the station and construction activities, indirect jobs supported through the purchase of goods and services as inputs to the project and employment ‘induced’ through the flow-on effect of the spending of wages (for example) on goods and services.
Reduced traffic congestion
By attracting more commuters to travel to and from work by train instead of by car, the redevelopment is expected to reduce the number of cars and traffic congestion in Fortitude Valley – which is currently problematic and will only get worse as more commercial developments are built in the Valley region.
Furthermore, by encouraging greater patronage of rail, the redevelopment will delay the need for new investment in road augmentation. In a sense, this is a “second round” impact from reduced volumes of traffic on the roads.
Synergies calculated that Fortitude Valley car commuters travel, in aggregate, approximately 64 million kilometres each year. This includes those that drive a car as their primary mode of transport, plus occasional car drivers. Following the redevelopment of the Valley railway station, the number of car kilometres travelled is estimated to reduce to between 47 and 62 million kilometres each year.
The congestion cost saving is estimated to range from $2.3 to $3.9 million per annum, which is given by multiplying the kilometres of reduced vehicle movements each year by the 10 cents per kilometre congestion cost from BITRE.
Amenity and public safety benefits
Few previous studies have quantified community willingness to pay for improved urban amenity and public safety through urban renewal. Most of the studies located in our search are from the UK, where it is found that people are prepared to pay up to $75 each year for a package of improvements to the public realm. We applied this figure to the 15,000 rail commuters that use Valley Metro each day to calculate an aggregate benefit of $1.6 million per year, equivalent to a NPV of $53 million.
Based on an extensive scan of the literature, we found that residential and commercial property values in the immediate vicinity of the station could increase by between 2% and 5% due to improved urban amenity and retail activation. Properties within 400 metres of the station could enjoy an uplift of up to 2% due to the value placed on improved rail transit facilities.
This study demonstrates how a holistic approach can be applied to quantify the benefits of urban renewal projects, which can be important for securing community buy-in and support for new developments. Taking a broader perspective can also be important for identifying how to best maximise benefits to the community from design principles, and returns to public investment in renewal projects.
While recognition is growing about the need to identify and monetise community preferences, this is not routinely done in Australia when evaluating investment proposals or assessing potential social returns on public funding contributions to urban renewal projects.