Los Angeles Developers Bet on Transit-Oriented Projects

Transit-oriented development is driving multifamily projects in Los Angeles.

Developers are increasingly chasing density bonuses near rail stations in the hope that renters will flock to the new residences for walkability and transit convenience, L.A. Business First reported. The financial reprieves from permitted upzoning through Los Angeles’ Transit-Oriented Communities Incentive Program have attracted developers looking to get shovels in the dirt faster.

The program has “supercharged housing production” across the city, Martin Leitner, a principal at Nadel Architects, told L.A. Business First. At the end of 2024, L.A. Metro found that more than 110 projects were in development through the Transit-Oriented Communities program; that included more than 11,000 affordable and market-rate housing units. L.A. Metro has helped contribute to construction by aiding in the development of 5,000 units near its stations across Los Angeles County and aiming for 10,000 units by 2031.

Introduced in 2016, Los Angeles’ Transit-Oriented Communities program gives developers tax incentives to build residences within a half-mile of a major transit stop. Developers must designate some housing as affordable units in order to qualify. Incentives are structured in tiers based on proximity to transit stations and the type of transit service offered.

Builders are trying to “follow the money,” according to KWP Real Estate agent Lee Shapiro. “Developers are looking at what can be financed and what can be built based on the cost of the land,” Shapiro said. In a market facing high rates and shifting land values, Transit-Oriented Development could prove especially attractive if interest rates ease in the coming months.”

“We do see a lot of developers come out of the woodwork and start taking some risk on development, and that is [the] growth of multifamily,” Shapiro added. “Often offices will come along with that. Right now, there’s a lot of available office space in Los Angeles, but typically I would anticipate we’d see the trend of increased rental rates and new growth and development.”

A building boom could be on the horizon if economic headwinds begin to clear. As it stands, developers still face high construction costs, tariffs, economic uncertainty and high interest rates, presenting sometimes insurmountable hurdles for builders looking to get to work at the transit stop-proximal sites.

“With a lot of capital still on the sidelines because the market’s tough and projects are penciling, those [transit-oriented development] projects in good, destination-rich, transit-oriented locations are going to be the first to come off the sidelines,” Leitner said, noting that it’s already happening.

— Chris Malone Méndez