Seattle’s Real Estate Boom is Driving Up Transit Costs

Overruns on Federal Way Link extension blamed on housing market trends.

Photo:  Atomic Taco/Flicker/CC
Photo: Atomic Taco/Flicker/CC

The same issues that are driving up the price of housing in Seattle are having an impact on transit costs.

The price tag for the Federal Way Link light rail project, connecting the airport to the suburb of Federal Way, ballooned from $2.09 billion to $2.55 billion, an increase of 22 percent, reported Peter Johnson at Seattle Transit Blog and confirmed by the SeattlePI.

Rising real estate prices and a busy construction market are the cause, Johnson says:

The Federal Way cost increase is driven by the same issues that drove up Lynnwood’s budget. The Puget Sound region’s gobsmacking real estate market has increased the price of land acquisition. Right of way, stations, and parking garages are all much more expensive than the agency’s 2015-16 cost estimates predicted.

Construction is similarly pricey, as the development boom has created a hypercompetitive contracting bid market, especially for technically sophisticated projects like light rail. According to construction firm RLB, the U.S. average for construction costs increased from 2017 to 2018. Seattle had one of the highest local cost increases, trailing only Portland, San Francisco, and Los Angeles among major markets.

According to Johnson, cost overruns on the earlier Lynnwood Link Extension into Snohomish County were absorbed by eliminating some bells and whistles at the station: removing down escalators, shrinking the platform size and using a different concrete. Sound Transit may be able to do the same with the Federal Way Link extension, he says.

In the meantime, Johnson warns, this could become an issue with other projects in the region’s big $5-billion expansion plans, which were approved by voters in 2016. The plan calls for adding 62 miles of light rail across three counties. The Federal Way Link is the second project to come in over budget since the tax hike was passed less than two years ago.

6 thoughts on Seattle’s Real Estate Boom is Driving Up Transit Costs

  1. Instead of building expensive money-losing parking garages on that valuable land, they should lease it to developers, which could actually subsidize the transit operations over time. That’s what they do in Singapore.

  2. And I-5 and I-405 are packed at all hours. Alabama wishes they had the same problem.

  3. This is why you’re supposed to throw money at public works when the economy is bad. It employs people, and then you can enjoy the benefits when the economy picks up again. We do it backwards.

  4. When the economy is hot, bids come in 20%-50% higher than expected. When the economy took a nose dive in 2008, bids came in 20%-30% under estimates. Smart thing to do is wait for the economy to slow so costs are lower and jobs are created during recessions.

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