High Speed Rail to Transform the Central Valley

As land use laws in the San Francisco Bay Area and Greater Los Angeles Area continue to become more and more time consuming and land prices continue to skyrocket, developers have increasingly looked to the Central Valley as the next frontier. Construction of California’s High Speed Rail, which is already under way on over 100 miles, promises to deliver much needed connectivity throughout the state, particularly in the Central Valley and the San Francisco Bay Area.

There are 24 proposed stations that will connect the rail system, only four of those 24 will be brand new stations. The newly constructed stations will be in Fresno, Merced, Kings-Tulare, and Bakersfield. One of the primary goals of the rail line, according to the California High Speed Rail Authority’s 2016 Business Plan, is to provide riders the ability to travel from San Francisco to Los Angeles in less than 3 hours.

The rail line will deliver passengers via the Central Valley, which means a trip from most Central Valley stations to San Francisco, will last about an hour, even less from Central Valley to Silicon Valley. To put that in perspective, driving from Brentwood to San Francisco takes 55 minutes without traffic, and at least two hours during peak traffic hours. With the added benefit of WiFi and a comfortable seat to work in, it’s not hard to believe the High Speed Rail Authority’s ultimate forecast of over 40 million riders per year.

Better connectivity for Central Valley communities means increased opportunities for workers who have been historically disadvantaged due to their distance from one of the largest employment hubs in the United States. As of mid-2016, the Central Valley’s unemployment rate, while falling, still stood at double the national rate.

In terms of successful residential land development, jobs are a huge factor, and unless the Central Valley’s fortune changes in terms of employment, residential land values will remain low and the market will continue to stagnate. Builders and investors will continue to overlook the Central Valley until a robust job market is created, paving the way for people to save for down payments and meet their monthly mortgage obligation.

Ground has already been broken at the new stations in Madera and Fresno. Work is also being done at strategic locations where the High Speed Rail will connect in the future including, the Peninsula Corridor Electrification,  the LA Regional Rail Connector, and the San Diego Trolley Blue Line.

California State Legislature has established a constant source of funds for the High-Speed Rail project by appropriating funds from its Cap and Trade proceeds. This provides a much-needed base of funding for the project so the High Speed Rail Authority can continue to supplement required funding with federal and private sources.

With continuous funding, and construction underway, the construction of the nation’s first high speed rail is within sight. What the improved connectivity with central economic hubs will do for the entirety of the state of California is hard to say with precision. But one thing that is a near certainty is that the Central Valley will be a far different place.

From a development perspective, those who are in position to best take advantage of the future transformation of the state, are developers and landowners, but everyone will benefit.

Builders will jump at a well-planned project located near a high-speed transit station will. Additionally, the increased supply of homes will relieve the housing crisis we are currently experiencing. Fewer prospective homeowners will be priced out of the market. California as a state will benefit from revenues coming from High Speed Rail, which will ultimately be self-funded. Even now the Central Valley is benefitting from the three billion in contracts already awarded for work on our nation’s first high speed rail.