Several months ago, Colliers’ U.S. Editorial Board explored a growing challenge that industrial occupiers throughout the U.S. are struggling to solve: the availability of labor. Also discussed were a handful of ways that warehouses can attract talent and offset this challenge in such a tight labor market — such as increasing wages and flexibility, offering perks and introducing more automation in their operations. In this article, we’ll take a closer look at another factor that can help industrial occupiers win the battle for labor: the optimization of public transportation routes near warehouses.

But first, why is public transportation needed in industrial areas? “In higher density residential or mixed-use developments, we often see the concept of transit-oriented developments (TOD), primarily as a means to reduce private vehicle congestion. But now there is a new reason to incorporate mass transit options into an industrial development, mainly to support workers getting to and from these manufacturing and warehouse job sites,” says Gregg Healy, senior vice president and leader of Colliers’ U.S. Supply Chain and Logistics Consulting team.

Further, convenient public transportation options can be perceived by workers as an added benefit for selecting one place of employment over another. “More and more, we’re seeing the tenants of these industrial buildings interested in understanding how public transportation — especially bus lines — are operating to ensure that they have access to a steady flow of employees. Developers are also getting involved in the act as they promote their site as a business solution, rather than just a building,” concludes Healy.

On-Site Intermodal Centers

There are several ways that public transportation systems can be leveraged to support industrial park labor challenges. In Luzerne County, PA, both landlords and local officials are recognizing the increased need for efficient transportation for industrial employees. An example of this is CenterPoint Commerce and Trade Park, an industrial park in Jenkins and Pittston, PA, with 49 tenants totaling nearly 6,000 employees. In late 2018, CenterPoint announced plans to develop a small-scale, on-site intermodal center. The intermodal center would increase overall and direct bus routes to and from the park for employees who live in the surrounding counties, making their commutes more convenient and the participating employers a leg ahead in terms of attracting talent.

E-commerce pet-supply giant is also a major industrial tenant at the nearby Hanover Industrial Estates in Hanover Township, PA. In response to the area’s increased industrial demand, the region’s public transportation system, Luzerne County Transportation Authority (LCTA), created a handful of new night routes. These routes were specifically designed to transport warehouse employees to and from several local industrial parks after hours, catering to the second or third shift schedules that industrial workers often have.

“When we perform site selection services for our clients, understanding where the labor will come from is one of the most critical components to consider,” says Healy. “We regularly perform labor shed analysis to ensure that the workers the business requires would be better suited to work at the location we are considering, rather than commute to a further facility. There is so much great data out there to help drive these location decisions.”

Free Bus Passes

In late 2017, The Capital District Transportation Authority of Albany, NY offered a “universal access” program for their bus system. The transportation authority reached out to area businesses and colleges, offering a wholesale rate for their students and employees to be able to ride for free. Not only did this program benefit employees at local participating companies, but it also optimized route planning as a whole, making it easier for the transportation authority to predict where these riders are looking to travel — a benefit for employees, landlords and municipalities alike.

Ridesharing-Transit Partnerships

Rideshare companies like Uber are noticing the lack of public transportation in certain communities and are partnering with transit authorities across North America to find creative solutions. Back in 2017, a Toronto suburb that had no existing public transportation except for limited stops on a regional bus line, established a partnership with Uber, ultimately outsourcing their city’s public transportation and providing subsidized transportation for its residents.

A similar example quickly followed suit in Monrovia, CA, which lies just northeast of Los Angeles. According to a 2018 study conducted by the Chaddick Institute for Metropolitan Development at DePaul University, the city partnered with Lyft to subsidize transportation and reduce the cost of rides to just $0.50 for all rides starting and ending within the city limits. Monrovia decided to partner with Lyft in response to the rapid employment growth in the area. This employment growth highlighted the current transportation system’s flaws, which were inefficient and often overly expensive for the working-class population. The partnership with Lyft created a public transportation option more aligned with the needs of the area.

Other metro areas, such as Detroit, MI and St. Petersburg, FL, have taken note and implemented a similar partnership. The transit authority in Detroit worked alongside Lyft to give $5 fare reductions to late-night workers, and St. Petersburg created a “Transportation Disadvantage” program with Uber, allowing qualifying residents who meet income and employment requirements (who have a job that begins or ends between 10am and 6am) to receive 25 free Uber rides each month when they buy an already largely reduced monthly bus pass.

In looking at these creative transportation trends, Healy notes, “We’re seeing ride sharing options and shuttle vans become a more viable option for some industrial parks, based strictly on the large footprint of many of these buildings. Studies have shown that most people will not walk more than a quarter mile to/from a bus stop or half a mile to/from a rail station. Many larger industrial distribution centers have greater distances inside their buildings than this, meaning that a typical bus route would require many stops on a route to reach all of the large tenants and thus slowing down the route. The option of having a centralized drop off hub where smaller shuttles serving the local businesses can go circulate back and forth directly at shift times also alleviates may of the parking issues businesses experience during shift changes.”

Redesigning Bus Lanes and Routes for More Efficiency

What else can be done to improve public transportation in order to attract and retain industrial workers in today’s tight labor market? Improving bus lanes and routes to make them more efficient and accessible to riders is another answer. Since the 1970’s, Columbus, OH has changed dramatically — its population has increased by nearly 60%, city boundaries expanded by one-third and job locations and average work hours have shifted. However, amidst the vast change and growth that Columbus has experienced over the last several decades, their bus routes have remained largely unchanged.

It’s imperative for public transportation authorities to focus on adjusting their services to the evolving needs of the population who live and work there, instead of resorting to a system that was built on data and trends from decades ago. These inefficiencies are likely responsible for drops in bus ridership in recent years throughout the U.S. Chicago saw a 20% drop in bus ridership from 2008 to 2016, while New York City saw a 16% dip between 2002 and 2015. “The demand for a low cost, reliable and efficient bus system is there, but unless communities evaluate the correlation between where these associates live and where they work, buses will continue to operate less efficiently on routes which do not effectively work to both the riders, as well as the communities’ best interest,” says Healy.

In Columbus’ case, they did choose to focus on altering their services to adequately serve their riders. Over the course of four years, the city spent $9.4 million studying their current bus routes and gathered community feedback in order to redesign the system entirely. The result? The number of frequent-service bus lines doubled, and the number of jobs within a quarter mile of these stops rose from 155,000 to 265,000 — a substantial increase offering more efficient service to a much wider group of people.

What about bus lanes? While routes themselves can certainly be optimized, improving the actual lanes the busses travel in can impact these systems in huge ways. Unlike subway or light rail systems, busses have to share the road with other vehicles and are subject to inefficiency-laden realities of traffic, construction or unforeseen accidents. Making bus lanes efficient, however, doesn’t have to be an incredibly expensive or large-scale endeavor. The Boston suburb of Everett, MA is a prime example. To pilot test the effectiveness of creating a specific bus lane within the city, transportation employees placed traffic cones on a one mile stretch of a busy main road to mark off the proposed bus lane. The effects were significant for both busses and people commuting in their own cars, with peak bus trip times cut by 20% and slightly shorter trips reported by individual drivers as well.

In San Francisco, CA, transit authorities implemented city bus lanes with a more developed approach, by painting specific lanes in red — and the results were substantial. Between 2013 and 2015, the lanes generated a handful of positive results such as reduced transit delays (even though car traffic increased), a 25% increase in transit reliability and a 16% drop in overall collisions. Further, the bright red paint indicating a bus-only lane reduced the number of drivers wrongfully using transit-only lanes by 44-55%, depending on the time of day.

Benefit for All

Optimizing public transportation is clearly a benefit for industrial workers who need to get to and from work cost effectively and efficiently. It’s also proved to be hugely beneficial for municipalities, transportation authorities and the surrounding population as a whole. Whether it be through creative solutions — like rideshare partnerships or developers building their own intermodal centers, offering free or subsidized bus passes or redesigning bus lanes and routes — there are several ways landlords, municipalities and transportation authorities can work together to relieve some of the pressure that this tight labor market has created, all while improving the lives of the communities they operate in.

“What I think is interesting is that there are both public and private sector responses to this labor challenge. Too frequently, buses in the suburbs have less than stellar ridership. But by reverse engineering their routes to really support those large regional employers, there are benefits to the businesses as well as to the community in terms of a better business environment, which equates to more revenue while also reducing traffic congestion,” concludes Healy. A true win-win for all parties involved.

This article was written by the U.S. Colliers Editorial Board, whose mission is to produce new and noteworthy commercial real estate thought leadership pieces to create conversation around proactive content. The Editorial Board focuses on CRE trends in the United States, and is comprised of Colliers marketing, research, communication and service line leaders.