Just going by amount of jobs needed, it could be argued that the Midwest needs new high-speed rail corridors more than any other region. The massive amount of job vacancies in the Rust Belt cities such as Detroit, Cleveland and Indianapolis could be cut dramatically if there was a way to get fast rail between them—and to job-rich Chicago—and dead stations could benefit by the added rail use.
However, even the two major arteries given priority by President Barack Obama's high-speed rail vision, California and the Northeast, have had enormous trouble getting off the ground due to cost issues and other concerns, according to the infrastructure report by ULI/Ernst & Young. After three years, in early July 2012, Amtrak released a visioning plan for the Northeast and California legislators agreed to start building the state's first dedicated high-speed rail line (See Northeast report, page 37, and West report, page 42.)
The Midwest will take much longer, Ray Lang, chief of state government relations for Amtrak, tells Real Estate Forum. He says higher-speed rail is in the works for the Midwest lines, but confirmed that the desire is for "gradual implementation." And while light rail is still expanding in Chicago and some cities like Minneapolis, other cities are still passenger-rail poor, such as Detroit, which recently lost federal government confidence in a light rail project along Woodward Avenue.
In Detroit, the culprit is the lack of confidence of the leaders in charge of the almost-bankrupt city. But most Midwest cities also lack funds. According to a Brookings Institute chart in the Infrastructure report, the Midwest spends the least among the top 10 metropolitan areas on public-private partnerships for infrastructure, about $2.1 billion in 2011, compared to $7.2 billion in the Washington, DC area or $5.2 billion in New York.
However, Amtrak is working with a few Midwest cities to redevelop old train stations, which in many cases are part of mixed-use commercial developments. This push for train use in the Midwest is seen most of all in Chicago, which like all big cities today, is experiencing a surge in workers as suburban companies move downtown. A major leasing point for landlords has been proximity to the train stations, especially Union Station, which links to the Metra Rail and Amtrak line.
Work just wrapped up on a $25-million improvement project to Union Station Downtown, designed to bring back some luster--and office tenants--to the 87-year-old property. Mortenson Construction, hired by Amtrak, upgraded and replaced systems that will allow the historic Great Hall and the eight-story office headhouse to gain air conditioning and modern safety features.
Amtrak owns the station, which was designed by famous architect Daniel Burnham and opened for use in 1925. Jones Lang LaSalle served as project manager for the upgrades, which were paid for with federal funds.
The Great Hall, which during World War II saw more than 100,000 train travelers per day, should get heavy use again, according to Greg Werner, VP and head of the local Mortenson office. To generate more revenue, JLL is working as property manager for the offices above the station. Amtrak is moving local employees into the second and third floors of the headhouse, and the rest will be marketed for lease. "What was previously unrentable space because of life-safety issues and inadequate ventilation systems has become prime real estate," says Amtrak's Lang, who is also president of the Amtrak-owned Chicago Union Station Co.
In St. Paul, MN, the Ramsey County Regional Rail Authority also recently hired JLL to manage and lease the retail portion of the $243-million redevelopment of the St. Paul Union Depot. The new station is expected to total 270,000 square feet, and about 30% of that will be dedicated to retail, says Mark Hunter, SVP with the local JLL office.
The neoclassical station with its signature colonnade was once the main train station in the city, but Amtrak moved the rail service to other facilities in the 1970s. The US Postal Service had been using the property as a truck staging area but has moved that operation to a center in Eagan, MN. The authority bought the station in 2009 and plans to use the facility again for new light and high-speed rail, as well as other local and inter-city transportation.
"It's not an unusual trend; Amtrak and other train companies shut down lines as air and road travel became more popular in the 1970s," Hunter says. "Now, because of the rising cost of those options, railroad transportation has again become popular."
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