Good freeway access is often at the top of a developer’s wish list. It’s no surprise that major developments often get built near exits.
Image source: Flickr CC user Francisco Anzola
Weary travelers needing gas or food on the freeways need only look for the inevitable roadside oasis at the next exit. The kind of quick-stop businesses that cluster off the highways live and die on whether they can be seen from the road at these stops. But other developments that aren’t necessarily trying to pull drivers off the freeways can also benefit by paying close attention to the locations of the exits.
In a 2011 survey, for example, more than 97 percent of the polled companies considered freeway access to be important. One of the main reasons was that companies do not want their trucks to be parked in traffic for the first and last mile of their journey. It wastes gas and time and puts additional wear and tear on the vehicles. Large distribution companies are especially wary of locations that leave their drivers stuck in traffic.
The Importance of Freeway Access in Real Estate
But we already know this. However, freeway access isn’t just important to companies that move products across the country. It’s important to everyone that relies on the freeway to get to their shopping and services. Many shoppers aren’t willing to spend an hour inching through traffic-choked streets to go buy a pair of shoes and most commuters don’t want to wake up at 4 a.m. so they can beat the 90-minute queue to get onto the highway at rush hour.
For these reasons and others, good freeway access often runs near the top of a real estate investor’s wish list. It’s no surprise that many developers have chosen to build major projects near the highway. For example, in Columbus, Ohio, a developer recently announced plans to build a 224-room hotel and conference center in a former business park. That project is expected to anchor more restaurants, retail, and office space. The developer told a news reporter that he was looking for “a prominent” location. This site fit the bill because a road leads directly to the highway.
What Happens When Freeway Access Is Taken Away?
There is a flip side to all of this, however. States sometimes change the configuration of the road or undertake a highway project that closes an exit for a couple of years. When highway access is taken away, businesses – and even entire small towns – have dried up as a result.
In one recent project in upstate New York, for example, the New York Department of Transportation rerouted the highway around a little hamlet called Parksville. That place once had a small, yet thriving, restaurant row. The highway project essentially split the town into two halves and bypassed the half with the restaurants. All the businesses had to sell out, leaving Parksville more or less a ghost town for a couple of years. It is unclear whether that community will ever fully recover.
Interestingly, however, just a few miles down the road, the state reconfigured an exit in Monticello. That project was expected to spur development of a defunct shopping center that had been shuttered for code violations and seized by the county for back taxes. Once the exit project was announced and underway, developers began to show an interest in the property again, and it was eventually sold and is currently under redevelopment. This is the more typical case when the state decides to update its freeways and exits, as a city often gets the benefit of a spark in development.
Real Estate Investors Need to Be Aware of Freeway Access
The point of this is that investors and companies should pay attention to freeway projects. We have previously written that a major road or infrastructure project can be a sign that a downtown Main Street could be on the upswing. The same is the case for a major freeway reconfiguration that will provide visibility and easier access to a subdivision or city. This area could become a new hotspot for development.
Likewise, an investor should also not forget the pitfalls of locating near a freeway. Major cities, such as Dallas, Seattle, and Los Angeles, have heavily developed around the highways. As a result, this has caused extreme gridlock at times on the freeways, which is a problem that could discourage some types of businesses. It’s important to always consider your unique location.
Timing Is Often Key with Freeway Access Projects
Timing can also be everything for a business. These projects sometimes take years to complete. While future companies may move into the area after the project is completed, often the preexisting businesses can’t survive the lost business during the construction period, as seen last year with a bridge project near New Orleans.
Companies shouldn’t attempt to gauge their potential risks alone. As with any commercial real estate deal, a company or investor should consult with a commercial real estate consultant, who can investigate any and all road projects that could affect development trends and the value of a property.
If you are investigating the value of a property or looking for property with good freeway access, you don’t have to go it alone. You can get a thorough analysis of the market with all the available options from a consultant whose community values align with your own. Contact DCG Real Estate today to learn more.