What Impact Could “Bullet” Trains Have on Commercial Real Estate in the U.S.?

Don't confuse "Bullet Trains" with "Silver Bullet" Trains.

If you don’t know what a bullet train is, this scene from “Mission:Impossible” should give you a pretty good idea of its speed. And according to this article from CNN, bullet trains might finally be coming to the United States. The Department of Transportation awarded $8 billion among 31 states to begin developing America’s first nationwide high-speed intercity passenger rail service.
Funded by the American Recovery and Reinvestment Act, these new dollars represent a historic investment in the country’s transportation infrastructure. The obvious benefit of such a development would most obviously be the speed and ease with which we could travel from city to city.  Supporters also believe high-speed intercity rail will cut U.S. dependence on foreign oil, reduce climate-changing pollution and fatten wallets by triggering economic development.

This could trigger more office development in major U.S. cities with a bullet train station or hub.  If more people with lengthy commutes to a major metropolis are able to ride a high speed train to and from work, the more attractive that city becomes to employers, who would be able to draw from a wider geographic range of candidates.  This would increase the demand for office space in cities that offer this mode of transportation.  I would imagine that the northeast corridor would benefit the most from this due to such major hubs as New York City and Washington D.C. in relative close proximity to one another. Most people who work in D.C. live in the surrounding region, and many workers in New York City live in Connecticut, New Jersey, and even as far away as Philadelphia. Clearly, the biggest challenge will not be riders getting from city to city, but how they get from where they live to the closest city that has a bullet train hub.

If office space does indeed become more in demand, that means landlords with building in close proximity to a train station could begin to charge higher rents, viewing their building’s location as an amenity to prospective tenants. However, it will be interesting to see whether such a spurt in demand for urban office space will result in new demand or cannibalistic demand (i.e. increased urban demand at the expense of suburban demand).  For years, there has been an ebb and flow between urban and suburban occupancy rates.  In the past, much of the see-saw battle was a result of pricing premiums relative to one another and business taxation by the local municipalities. Yet, if bullet trains make the pain of interstate travel disappear, I think we could see new economic development in the form of new businesses, especially those which are poised to take advantage of face to face interaction.