[REN #535] “HyperLooping” Florida Metros Could Speed Up Property Values

Picture of a Sphere for Real Estate News for Investors Podcast Episode #535

Florida may be fast-forwarding into the future with not one, but two hyperloop transit systems. In addition to plans for an Orlando to Miami route, the sunshine state may also get one that runs from Orlando to Tampa. Florida is already a hot real estate market. These transit systems could make it even hotter.

The Orlando to Miami route was picked by Virgin Hyperloop One as one of ten candidates for the very first U.S. hyperloop systems. The list started with more than 26,000 proposed routes so it’s significant the Orlando-Miami route was among the few that were picked. (1)
 

Orlando to Tampa Hyperloop

And now it looks like a California-based company called Hyperloop Transportation Technologies is discussing the possibility of building a hyperloop between Orlando and Tampa. Central Florida officials have been in talks with HTT about the proposed system. The company has also posted an Orlando-based design position on its website.

The Orlando Weekly reports that the system would probably run along the median of interstate 4. That space was already set aside for a voter-approved high-speed rail system that was blocked by Governor Rick Scott back in 2011.

Scott and his tea-party supporters were opposed to the Obama administration’s plan for a bullet train, and rejected $2.4 billion in federal funds to build it, saying it was a waste of taxpayer money. Those funds were then redirected toward California’s bullet train project.

There’s been some political pressure on Scott to show support for the Hyperloop as a way to regain voter support that he lost by rejecting the earlier rail project. According to the Orlando Weekly, he hasn’t shown much interest. (2)
 

Hyperloop Projects Taking Shape

But regardless, the Hyperloop projects appear to be taking shape in Florida, and the right of way that’s already been established for high-speed trains along Interstate 4 will likely move that project along much faster.

That could be the deciding factor for HTT. CEO Dirk Alhborn said during an interview with the Tampa Bay Times that he was frustrated with how long projects take to get approved in the U.S. He said during the interview, “Right now, very honestly, the U.S. is fairly complicated.” He said, “Democracy sometimes in these kind of things is a problem. If the shiekh in the Emirates wants it, it’s going to be build. It’s a little bit faster in other areas.”

He also showed his enthusiasm for the Hyperloop in general saying it’s much more desirable financially than traditional rail systems. He said, “Hyperloop, because again, the operational cost is very low, can be profitable in a very short time span.” That makes it possible to get more money from private investors, and depend less on politically-charged public funds. He said feasibility studies done by his company have shown a return on investment in 8 to 11 years which is something “that’s never been seen so far.” (3)

Virgin founder Richard Branson also told the Independent that the cost of a Virgin Hyperloop One system would be about one-third of the cost of a high-speed rail system. And, he says it will be quicker to build.
 

What is a Hyperloop?

There’s really no comparison between the hyperloop and high-speed rail for several reasons, except that they are both long-distance transit systems. Instead of tracks and trains, the hyperloop uses magnetically-levitated pods that are suspended inside low-pressure tubes. Due to the lack of resistance in that low-pressure environment, the pods are able to travel at high speeds with little effort or energy. The pods are expected to hit speeds near 700 miles per hour.

They can also generate their own energy if they are built above ground, which reduced costs further. Depending on the location and the climate, that energy could be solar, wind, kinetic or geothermal.
 

Orlando to Miami Hyperloop

The Orlando to Miami route would be 257-miles long, and allow passengers to make the trip in just 26 minutes. That opens up a world of possibilities for people who want access to the pricey Miami market without having to live there.

Miami has a median home price of $310,000 and a median rent of $2,200. Just 26 minutes north, by way of a hyperloop, you could buy a home for about $75,000 less in Orlando, or about $85,000 less in Tampa. Rent in those northern metros is cheaper as well, with a median of $1,650 in Orlando, and $1,595 in Tampa. The Hyperloop will turn Orlando and Tampa into Miami suburbs, and vice versa.

Virgin Hyperloop One is conducting a feasibility study for that route and expects to move forward on the project in the near future. The Weekly reports that Hyperloop One expects to be shipping cargo along that route in just two years, and transporting passengers in three. The HTT proposal is still in the preliminary stages of negotiation, but there has also been talk that the Virgin group would expand its hyperloop to Tampa. It’s not clear if that would complement, compete with, or replace the HTT proposal.

Although there are other U.S. hyperloop projects in the works, the combination of “hot real estate market” with “supercharged transportation” seems like a winning combination in Florida.

Links:

(1) Orlando Weekly Article

(2) Orlando Weekly Tampa Article

(3) Tampa Bay Times Article

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