The Growing Importance of Rail-Served Real Estate Development
The Growing Importance of Rail-Served Real Estate Development
Rail-served real estate is emerging as a critical component of industrial development, offering significant advantages for businesses, communities and investors.
Why Rail-Served Real Estate Matters
Rail-served sites are uniquely positioned to support large-scale industrial operations by providing cost-effective and efficient transportation solutions. Rail transport offers safety, scalability, and cost savings—up to 51% compared to long-haul trucking. These benefits are driving demand for rail-accessible properties in sectors like metals, chemicals, renewable fuels and consumer goods.
Area Site Assessment: Laying the Groundwork
The foundation of any successful rail-served development begins with a thorough area site assessment. Key considerations include:
Utility Infrastructure: Proximity to high-capacity electric transmission lines, substations, and natural gas pipelines is vital. Sites near these resources can better accommodate large-scale industrial users.
Water and Wastewater Needs: Industrial users often require 200,000–1,000,000+ gallons of water daily. Sites lacking this capacity can still compete if grants or public-private partnerships fund infrastructure upgrades.
Land Availability: Modern rail-served developments need substantial acreage—often 100+ acres—to accommodate rail spurs, truck parking, roads, and stormwater management systems.
2. Industrial Market Trends: A Shift Toward Rail
The industrial real estate market is increasingly recognizing the value of rail-served properties. However, less than 0.5% of U.S. warehouses are rail-accessible today4. This gap highlights a massive opportunity for developers and communities to meet growing demand.
Trends such as the rise of e-commerce and global supply chain shifts are fueling interest in multimodal logistics hubs that integrate rail with other transport modes. Examples like the Savannah Gateway Industrial Hub demonstrate how strategic investments in rail-served sites can lead to long-term success.
3. Site Rail Network Connectivity: The Backbone of Success
Rail network connectivity is a critical factor in site selection:
Proximity to Class I Railroads: Sites connected to major rail lines offer businesses access to extensive national and international markets.
Dual Rail Access: Properties served by multiple railroads provide flexibility and reduce reliance on a single carrier, enhancing operational efficiency.
Intermodal Facilities: Sites near intermodal hubs enable seamless integration of rail and truck transport, boosting supply chain efficiency.
Programs like CSX’s Select Site initiative are helping communities identify and market their best rail-served properties by evaluating factors such as connectivity and infrastructure readiness.
4. Commodity and Existing Customer Assessment
Understanding the commodities that will flow through a site—and the needs of potential customers—is essential for success:
Commodity Focus: Sectors like agriculture, construction materials, and chemicals rely heavily on rail for bulk shipping. Developers should tailor sites to meet these industries' specific requirements.
Customer Proximity: Sites close to suppliers or end-users reduce transportation costs and improve delivery times. This proximity is especially critical for industries with high-volume shipping needs.
Railroads can play a pivotal role by sharing data on regional demand for rail-served facilities. Transparent communication between rail operators, developers, and economic development agencies can unlock billions in investment capital for new projects.
Overcoming Challenges
Despite its advantages, developing rail-served real estate comes with challenges:
Complexity of Development: Building rail spurs and ensuring compliance with safety regulations requires expertise and collaboration with railroad operators.
Limited Awareness: Many developers overlook the potential of rail due to a lack of knowledge about its benefits. Education campaigns by railroads can help bridge this gap.
Site Readiness: Preparing sites for industrial use—especially in rural or urban infill locations—requires significant upfront investment in infrastructure.
Programs like CSX’s Site Shepherd platform are addressing these challenges by providing data-driven analytics to optimize site selection and readiness.
The Path Forward
To fully realize the potential of rail-served real estate developers must prioritize sites with strong rail connectivity and robust infrastructure. Communities should partner with railroads to protect and promote strategically located properties.
Rail operators also need to share data on demand trends to attract investment in new facilities. By aligning efforts across stakeholders, we can unlock the transformative power of rail-served development—creating jobs, boosting economic growth and enhancing supply chain resilience.
Bottom Line: The future of industrial real estate lies in leveraging the unique advantages of rail-served sites. With strategic planning and collaboration, these developments can drive long-term value for businesses and communities alike.