Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
MARCH 19, 2026
Preamble
Motion by:
DIRECTORS YAROSLAVSKY, BASS, DUTRA, SANDAVAL, AND SOLIS
Unlocking Possibilities: Enhancing the Financial and Community Value of Key Metro Stations to Support Long-Term Revenue Generation Motion
Metro faces long-term financial challenges that require the agency to diversify revenue sources beyond fares, sales tax revenue, and government funding. Transit agencies around the world have addressed similar challenges by leveraging stations and surrounding real estate as long-term commercial assets that generate recurring revenue at scale. For instance, rail operators in Tokyo-including JR East, Tokyu Corporation, and Odakyu Railway-integrate retail directly within station concourses through “Ekinaka” (or “inside the station”) retail networks. Hong Kong’s MTR Corporation has successfully implemented a “Rail + Property” model in which rail lines and stations are built alongside housing, office, and retail developments on or above stations, generating long-term revenue. Additional examples can be found in Singapore, Seoul, Paris, and London, where retail kiosks, underground shopping concourses, and station-integrated commercial spaces provide convenient services for riders while generating recurring revenue to support transit operations.
These international transit systems show that large-scale station retail can generate meaningful revenue through high-frequency commuter purchases. In Tokyo, riders routinely spend several dollars per trip on everyday items within stations, such as coffee, prepared food, and convenience goods, illustrating how small daily transactions can scale into substantial revenue streams at high-ridership transit hubs. For example, JR East generates more than $2 billion annually from station retail and related services.
Moreover, international transit systems frequently use retail and commercial activity to increase pedestrian presence within stations, which aligns with Metro’s broader goals of improving rider experience and activating station environments through enhanced services for riders. Activated stations are inherently safer stations for riders.
A comprehensive station commercial activity and services strategy should consider both existing stations across Metro’s network and new stations currently under development.
International transit systems commonly design stations as mixed-use transportation hubs, where retail concourses, grocery stores, cafés, and everyday services are incorporated into station layouts. Strategic planning for commercial space beginning at the design phase for Metro’s future stations would assess financial feasibility and determine a delivery strategy in parallel to assessing utility infrastructure, considering circulation patterns, and identifying ideal tenant spaces.
Metro has already taken steps toward leveraging its real estate assets through the Joint Development Program. The ongoing success of the 10K Homes Commitment in the Joint Development Program sets a baseline and skillset from which Metro can grow. Previous experimentation with retail in certain stations has yielded mixed results, underscoring the importance of developing a strategic, comprehensive, and data-driven approach to station retail moving forward.
Subject
SUBJECT: UNLOCKING POSSIBILITIES: ENHANCING THE FINANCIAL AND COMMUNITY VALUE OF KEY METRO STATIONS TO SUPPORT
LONG-TERM REVENUE GENERATION MOTION
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RECOMMENDATION
Title
APPROVE Motion by Yaroslavsky, Bass, Dutra, Sandoval and Solis that the Board direct the Chief Executive Officer to report back within 180 days with a strategic framework for implementing a Metro Station Commercial District Strategy across the Metro system, positioning stations as active commercial hubs with retail, services, and mixed-use development integrated above, within, and adjacent to stations to support long-term non-fare revenue generation. The report back should include progress on the following components:
A. System Assessment - an evaluation of opportunities and constraints for station retail across the Metro system, including:
1. Review of international best practices;
2. Review of previous and existing retail activations within Metro facilities and lessons learned from both successful and unsuccessful efforts, including but not limited to operational barriers, location factors, and design challenges;
3. Evaluation of passenger circulation, station design, and other factors affecting retail viability;
4. Identification and prioritization of potential locations suitable for initial pilot implementation;
B. Strategic Framework - a proposed strategy for developing station-centered commercial districts across the Metro system, including:
1. Opportunities for commercial development above, adjacent to, and integrated within stations, including underground concourses, mixed-use development, and connections to surrounding districts;
2. Distinct approaches for new stations currently in development and existing stations within the system;
3. Identification of potential partnership structures with experienced retail operators or commercial management firms experienced in station retail environments;
4. Identification of implementation approaches consistent with Metro funding restrictions, including private investment, public-private partnership, concession agreements, and tenant-funded improvements;
C. Implementation Recommendations and Revenue Potential Assessment - a set of recommendations for implementing station retail opportunities, including:
1. Identification of governance structures to ensure long-term success;
2. Execution strategy for a phased pilot program at a limited number of high-ridership stations to test retail concepts, operational models, and revenue performances; and
3. Estimates of potential revenue generation, including a preliminary assessment of start-up and operational costs and revenue potential based on comparable benchmarks from other transit-oriented rail operations.