This is one way governments can ease housing shortages and traffic congestion

Picture: Peter Parks / AFP / Getty Images.

Two things that you would think are forever at odds – housing shortages close to cities and traffic congestion on major roads into them – can actually be solved with the same strategy.

Transit-Oriented Development (TOD) is a strategy that aims to develop compact, walkable, mixed-use communities around public transportation nodes, such as rail stations and major bus lines.

The concept has become increasingly popular as municipalities struggle to reduce traffic congestion and pollution and encourage more efficient land use patterns.

But people living in communities centred around viable transportation options have better access to centres of employment and are less reliant on driving.

Transit-oriented development concentrates economic development in specific corridors, thereby reducing sprawl and increasing the efficiency of public service delivery.

A report by The Brookings Institution suggests that transit-oriented development could help to reduce traffic congestion in southern California while at the same time helping to boost housing affordability. This concept would be equally applicable in other large urban areas.

Sydney, in particular, has encouraged the development of high-rise housing options near railway stations and commercial centres.

The Brookings report looks at the example of the development of the Los Angeles Metro. They found that stations have not consistently boosted employment nearby and note that policymakers should be realistic about how quickly station neighbourhoods can change. When stations open in already dense urban environments, new development happens slowly.

Market factors such as fragmented land ownership and institutional barriers such as zoning can delay or deter redevelopment.

The report notes that one necessary condition for transit-oriented developments to be successful is more flexible planning requirements. Incompatible zoning that limits density too much may constrain housing and commercial development.

But TOD-friendly zoning in the absence of a strong neighbourhood real estate market will not induce new building.

Policymakers need to be clear whether the primary goal of investing in infrastructure is to improve access to existing jobs and housing, or to stimulate new activity.

Infrastructure is the mechanism that allows our economy to function and it should be a key focus for business leaders and not just left to governments. Location and accessibility are key factors in attracting and retaining employees. Housing affordability is part of this overall picture.

To read more about the opportunities around transit orientated development and other future development trends, watch out for the BI / Research Smart Infrastructure report next week.

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