Mass Transportation, Apartment Rent and Property Values

Rent plays a vital role in property valuation because any positive or negative influence on rent will in turn affect a property's value. This paper examines the effect of mass transportation on apartment rent. Specifically, this study investigates the impact on rent and value for residential income properties located in close proximity to Washington, D.C. Metrorail stations. After reviewing the empirical research which has focused on the effect of mass transportation availability on property values, this paper examines the benefits on apartment rent of Washington, D.C. apartment buildings from location near Metrorail stations. Our empirical results show that distance from a metro station has an adverse effect on apartment rent, i.e., each one-tenth mile increase in distance from the station results in a decrease in rent per apartment unit of about 2.50%. This analysis should be of interest to a host of domestic and international market participants including academics who study real estate markets, tax assessors who determine market value, appraisers who make market-derived rent adjustments, and property managers who set apartment rents.