Abstract
An announcement of new rail rapid transit access to urban commercial centers may lead to greater business activity and agglomeration economies, while causing anticipation of construction disruption and resource diversion away from other infrastructure. Using a new rail rapid transit line announcement in Vancouver, BC, Canada, we identify the net capitalization effect for individual commercial property prices resulting from improved urban center access. We focus on repeat sales straddling the announcement date and use Locally Weighted Regressions (aka Geographically Weighted Regressions), to estimate how travel time changes to the Richmond, BC and Vancouver, BC central business districts, the Olympic Village, and Vancouver International Airport affect various commercial property prices differently. With our nonparametric estimation approach, we find travel time savings’ marginal effects on property values can be positive or negative, and patterns vary dramatically across commercial land use types and locations. Falsification and balancing tests validate our identification strategy.
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